Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 32809-32813 [2023-10813]
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Federal Register / Vol. 88, No. 98 / Monday, May 22, 2023 / Notices
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[FR Doc. 2023–10875 Filed 5–19–23; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97513; File No. SR–
CboeBZX–2023–033]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
May 16, 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 May 1,
2023, Cboe BZX Exchange, Inc.
(‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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32809
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) proposes to
amend its Fee Schedule. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fee Schedule applicable to its equities
trading platform (‘‘BZX Equities’’) by:
(1) introducing a new Add Volume Tier;
(2) introducing a new Non-Displayed
Add Volume Tier; (3) eliminating StepUp Tiers 1 and 4 and the Non-Displayed
Step Up Tier; and (4) reducing the
enhanced rebates associated with
certain fee codes. The Exchange
proposes to implement these changes
effective May 1, 2023.3
The Exchange first notes that it
operates in a highly competitive market
in which market participants can
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. More
specifically, the Exchange is only one of
16 registered equities exchanges, as well
as a number of alternative trading
systems and other off-exchange venues
that do not have similar self-regulatory
responsibilities under the Securities
Exchange Act of 1934 (the ‘‘Act’’), to
3 The Exchange initially filed the proposed fee
changes on May 1, 2023 (SR–CboeBZX–2023–032).
On May 1, 2023, the Exchange withdrew that filing
and submitted this proposal.
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which market participants may direct
their order flow. Based on publicly
available information,4 no single
registered equities exchange has more
than 16% of the market share. Thus, in
such a low-concentrated and highly
competitive market, no single equities
exchange possesses significant pricing
power in the execution of order flow.
The Exchange in particular operates a
‘‘Maker-Taker’’ model whereby it pays
rebates to members that add liquidity
and assesses fees to those that remove
liquidity. The Exchange’s Fee Schedule
sets forth the standard rebates and rates
applied per share for orders that provide
and remove liquidity, respectively.
Currently, for orders in securities priced
at or above $1.00, the Exchange
provides a standard rebate of $0.00160
per share for orders that add liquidity
and assesses a fee of $0.0030 per share
for orders that remove liquidity.5 For
orders in securities priced below $1.00,
the Exchange provides a standard rebate
of $0.00009 per share for orders that add
liquidity and assesses a fee of 0.30% of
the total dollar value for orders that
remove liquidity.6 Additionally, in
response to the competitive
environment, the Exchange also offers
tiered pricing which provides Members
opportunities to qualify for higher
rebates or reduced fees where certain
volume criteria and thresholds are met.
Tiered pricing provides an incremental
incentive for Members to strive for
higher tier levels, which provides
increasingly higher benefits or discounts
for satisfying increasingly more
stringent criteria.
ddrumheller on DSK120RN23PROD with NOTICES1
Add/Remove Volume Tiers
Under footnote 1 of the Fee Schedule,
the Exchange currently offers various
Add/Remove Volume Tiers. In
particular, the Exchange offers six Add
Volume Tiers, that each provide an
enhanced rebate for Members’
qualifying orders yielding fee codes B,7
V,8 or Y,9 where a Member reaches
certain add volume-based criteria. The
Exchange now proposes to introduce a
seventh Add Volume Tier. The
proposed criteria of Add Volume Tier 7
is as follows:
• Proposed Tier 7 will provide a
rebate of $0.0031 per share for securities
4 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (April 21, 2023),
available at https://www.cboe.com/us/equities/
market_statistics/.
5 See BZX Equities Fee Schedule, Standard Rates.
6 Id.
7 Fee code B is appended to displayed orders
adding liquidity to BZX in Tape B securities.
8 Fee code V is appended to displayed orders
adding liquidity to BZX in Tape A securities.
9 Fee code Y is appended to displayed orders
adding liquidity to BZX in Tape C securities.
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priced above $1.00 to qualifying orders
(i.e., orders yielding fee codes B, V, or
Y) where a Member has an ADAV 10 as
a percentage of TCV 11 ≥0.40%; and
Member adds an ADV 12 ≥0.05% of the
TCV for Non-Displayed orders that yield
fee codes HB,13 HI,14 HV 15 or HY; 16
and Member has a Tape B ADAV
≥0.65% of the Tape B TCV.
Also under footnote 1 of the Fee
Schedule, the Exchange currently offers
five Non-Displayed Add Volume Tiers,
that each provide an enhanced rebate
for Members’ qualifying orders yielding
fee codes HB, HV or HY, where a
Member reaches certain non-displayed
add volume-based criteria. The
Exchange now proposes to add a sixth
Non-Displayed Add Volume Tier. The
proposed criteria of Non-Displayed Add
Volume Tier 6 is as follows:
• Proposed Non-Displayed Add
Volume Tier 6 will provide a rebate of
$0.0025 per share for securities priced
above $1.00 to qualifying orders (i.e.,
orders yielding fee codes HB, HV or HY)
where a Member has an ADAV as a
percentage of TCV ≥0.40%; and Member
adds an ADV ≥0.05% of the TCV for
Non-Displayed orders that yield fee
codes HB, HI, HV or HY; and Member
has a Tape B ADAV ≥0.65% of the Tape
B TCV.
The Exchange notes that its proposal
to introduce a new Add Volume Tier 7
and a new Non-Displayed Add Volume
Tier 6 is designed to provide Members
with additional ways in which to
receive an enhanced rebate if certain
criteria are satisfied. The Exchange
believes that by introducing proposed
Add Volume Tier 7 and Non-Displayed
Add Volume Tier 6, Members are
incentivized to add both displayed and
non-displayed volume on the Exchange,
thereby contributing to a deeper and
more liquid market, which benefits all
market participants and provides greater
execution opportunities on the
Exchange.
10 ‘‘ADAV’’ means average daily added volume
calculated as the number of shares added per day.
ADAV is calculated on a monthly basis.
11 ‘‘TCV’’ means total consolidated volume
calculated as the volume reported by all exchanges
and trade reporting facilities to a consolidated
transaction reporting plan for the month for which
the fees apply.
12 ‘‘ADV’’ means average daily volume calculated
as the number of shares added or removed,
combined, per day. ADV is calculated on a monthly
basis.
13 Fee code HB is appended to non-displayed
orders adding liquidity to BZX in Tape B securities.
14 Fee code HI is appended to non-displayed
orders adding liquidity to BZX that receive price
improvement.
15 Fee code HV is appended to non-displayed
orders adding liquidity to BZX in Tape A securities.
16 Fee code HY is appended to non-displayed
orders adding liquidity to BZX in Tape C securities.
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Step-Up Tiers
Under footnote 2 of the Fee Schedule,
the Exchange currently offers four StepUp Tiers that each provide an enhanced
rebate for Members’ qualifying orders
yielding fee codes B, V, and Y, where a
Member reaches certain add volumebased criteria, including ‘‘growing’’ its
volume over a certain baseline month.
The Exchange is proposing to
discontinue Step-Up Tiers 1 and 4, as
no Members have satisfied the criteria
within the past six months and the
Exchange no longer wishes to, nor is
required to, maintain such tier. More
specifically, the proposed change
removes these tiers as the Exchange
would rather redirect future resources
and funding into other programs and
tiers intended to incentivize increased
order flow.
Also under footnote 2 of the Fee
Schedule, the Exchange currently offers
a Non-Displayed Step Up tier that
provides an enhanced rebate for
Members’ qualifying orders yielding fee
codes HB, HV, and HY, where a Member
reaches certain non-displayed add
volume-based criteria, including
‘‘growing’’ its volume over a certain
baseline month. The Exchange is
proposing to discontinue the NonDisplayed Step Up Tier, as no Members
have satisfied the criteria since its
introduction and the Exchange no
longer wishes to, nor is required to,
maintain such tier. More specifically,
the proposed change removes this tier as
the Exchange would rather redirect
future resources and funding into other
programs and tiers intended to
incentivize increased order flow.
Fee Codes and Associated Fees
Currently, fee codes HB, HV, and HY
are appended to non-displayed orders
that add liquidity and receive an
enhanced rebate of $0.00100 per share.
The Exchange now proposes to reduce
the amount of the enhanced rebate from
$0.00100 per share to $0.00080 per
share for orders appended with fee
codes HB, HV, or HY. The purpose of
lowering the rebate associated with
orders appended with fee codes HB, HV,
or HY is for business and competitive
reasons, as the Exchange believes that
reducing such rebate as proposed would
decrease the Exchange’s expenditures
with respect to transaction pricing in a
manner that is still consistent with the
Exchange’s overall pricing philosophy
of encouraging added liquidity. The
Exchange notes that despite the modest
decrease of the rebate associated with
fee codes HB, HV, and HY, the lower
rebate remains competitive and is inline with the enhanced rebate paid to
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non-displayed orders adding liquidity
on other exchanges, including the
Exchange’s affiliate exchange.17
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2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
section 6(b) of the Act.18 Specifically,
the Exchange believes the proposed rule
change is consistent with the section
6(b)(5) 19 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) 20 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers as
well as section 6(b)(4) 21 as it is designed
to provide for the equitable allocation of
reasonable dues, fees and other charges
among its Members and other persons
using its facilities.
As described above, the Exchange
operates in a highly competitive market
in which market participants can
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. The
proposal to adopt Add Volume Tier 7
and Non-Displayed Add Volume Tier 6
reflects a competitive pricing structure
designed to incentivize market
participants to direct their order flow to
the Exchange, which the Exchange
believes would enhance market quality
to the benefit of all Members.
Additionally, the Exchange notes that
relative volume-based incentives and
discounts have been widely adopted by
exchanges,22 including the Exchange,23
and are reasonable, equitable and nondiscriminatory because they are open to
17 See e.g., EDGX Equities Fee Schedule, Fee
Codes and Associated Fees.
18 15 U.S.C. 78f(b).
19 15 U.S.C. 78f(b)(5).
20 Id.
21 15 U.S.C. 78f(b)(4).
22 See e.g., EDGX Equities Fee Schedule, Footnote
1, Add/Remove Volume Tiers.
23 See e.g., BZX Equities Fee Schedule, Footnote
1, Add/Remove Volume Tiers.
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all Members on an equal basis and
provide additional benefits or discounts
that are reasonably related to (i) the
value to an exchange’s market quality
and (ii) associated higher levels of
market activity, such as higher levels of
liquidity provision and/or growth
patterns. Competing equity exchanges
offer similar tiered pricing structures,
including schedules of rebates and fees
that apply based upon members
achieving certain volume and/or growth
thresholds, as well as assess similar fees
or rebates for similar types of orders, to
that of the Exchange.
In particular, the Exchange believes
its proposal to adopt Add Volume Tier
7 and Non-Displayed Add Volume Tier
6 is reasonable because the revised tiers
will be available to all Members and
provide all Members with an additional
opportunity to receive an enhanced
rebate or a reduced fee. The Exchange
further believes the proposed Add
Volume Tier 7 and Non-Displayed Add
Volume Tier 6 will provide a reasonable
means to encourage liquidity adding
displayed orders and liquidity adding
non-displayed orders, respectively, in
Members’ order flow to the Exchange
and to incentivize Members to continue
to provide liquidity adding volume to
the Exchange by offering them an
additional opportunity to receive an
enhanced rebate or reduced fee on
qualifying orders. An overall increase in
activity would deepen the Exchange’s
liquidity pool, offers additional cost
savings, support the quality of price
discovery, promote market transparency
and improve market quality, for all
investors.
The Exchange believes that its
proposal to eliminate Step-Up Tiers 1
and 4 and the Non-Displayed Step Up
Tier is reasonable because the Exchange
is not required to maintain these tiers or
provide Members an opportunity to
receive enhanced rebates. The Exchange
believes the proposal to eliminate these
tiers is also equitable and not unfairly
discriminatory because it applies to all
Members (i.e., the tiers will not be
available for any Member). The
Exchange notes that no Members have
satisfied the criteria of Step-Up Volume
Tier 4 in any of the past six months.
While certain Members have recently
satisfied the criteria of Step-Up Volume
Tier 1 and the Non-Displayed Step Up
Tier, the Exchange believes these
Members will have the opportunity to
receive enhanced rebates under other
tiers offered by the Exchange. The
Exchange also notes that the proposed
rule change to remove these tiers merely
results in Members not receiving an
enhanced rebate, which, as noted above,
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32811
the Exchange is not required to offer or
maintain.
The Exchange believes that the
proposed introduction of Add Volume
Tier 7 and Non-Displayed Add Volume
Tier 6 are reasonable as they do not
represent a significant departure from
the criteria currently offered in the Fee
Schedule. The Exchange also believes
that the proposal represents an equitable
allocation of fees and rebates and is not
unfairly discriminatory because all
Members will be eligible for the
proposed new tiers and have the
opportunity to meet the tiers’ criteria
and receive the corresponding enhanced
rebate if such criteria is met. Without
having a view of activity on other
markets and off-exchange venues, the
Exchange has no way of knowing
whether this proposed rule change
would definitely result in any Members
qualifying the new proposed tiers.
While the Exchange has no way of
predicting with certainty how the
proposed changes will impact Member
activity, based on the prior months
volume, the Exchange anticipates that at
least one Member will be able to satisfy
proposed Add Volume Tier 7 and at
least two Members will be able to satisfy
proposed Non-Displayed Add Volume
Tier 6. The Exchange also notes that
proposed changes will not adversely
impact any Member’s ability to qualify
for enhanced rebates offered under other
tiers. Should a Member not meet the
proposed new criteria, the Member will
merely not receive that corresponding
enhanced rebate. Furthermore, the
proposed rule change to eliminate StepUp Tier 4 enables the Exchange to
redirect resources and funding into
other programs and tiers intended to
incentivize increased order flow.
In addition, the Exchange believes
that its proposal to reduce the enhanced
rebate associated with fee codes HB,
HV, and HY is reasonable, equitable,
and consistent with the Act because
such change is designed to decrease the
Exchange’s expenditures with respect to
transaction pricing in order to offset
some of the costs associated with the
Exchange’s current pricing structure,
which provides various rebates for
liquidity-adding orders, and the
Exchange’s operations generally, in a
manner that is consistent with the
Exchange’s overall pricing philosophy
of encouraging adding liquidity. The
proposed lower enhanced rebate
($0.00080 per share) is reasonable and
appropriate because it represents only a
modest decrease from the current
enhanced rebate ($0.00100 per share)
and remains competitive with rebates
offered by other exchanges, including
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the Exchange’s affiliate exchange.24 The
Exchange further believes that the
proposed reduction of the enhanced
rebate associated with fee codes HB,
HV, and HY is not unfairly
discriminatory because it applies to all
Members equally, in that all Members
will receive the lower rebate if their
orders are appended with fee code HB,
HV, or HY.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Rather, as
discussed above, the Exchange believes
that the proposed changes would
encourage the submission of additional
order flow to a public exchange, thereby
promoting market depth, execution
incentives and enhanced execution
opportunities, as well as price discovery
and transparency for all Members. As a
result, the Exchange believes that the
proposed changes further the
Commission’s goal in adopting
Regulation NMS of fostering
competition among orders, which
promotes ‘‘more efficient pricing of
individual stocks for all types of orders,
large and small.’’
The Exchange believes the proposed
rule changes do not impose any burden
on intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Particularly,
the proposed introduction of Add
Volume Tier 7 and Non-Displayed Add
Volume Tier 6 will apply to all
Members equally in that all Members
are eligible for each of the Tiers, have
a reasonable opportunity to meet the
Tiers’ criteria and will receive the
enhanced rebate on their qualifying
orders if such criteria are met. In
addition, the proposed change to
eliminate Step-Up Tiers 1 and 4 and the
Non-Displayed Step Up Tier and the
proposed reduction of the enhanced
rebate associated with fee codes HB,
HV, and HY will not impose any burden
on intramarket competition because the
changes apply to all Members
uniformly, as in, the tiers will no longer
be available to any Member and all
Members will be subject to the lower
enhanced rebate for orders appended
with fee code HB, HV, or HY. The
Exchange does not believe the proposed
changes burden competition, but rather,
enhances competition as it is intended
to increase the competitiveness of BZX
by adopting pricing incentives in order
to attract order flow and incentivize
participants to increase their
participation on the Exchange,
providing for additional execution
opportunities for market participants
and improved price transparency.
Greater overall order flow, trading
opportunities, and pricing transparency
benefits all market participants on the
Exchange by enhancing market quality
and continuing to encourage Members
to send orders, thereby contributing
towards a robust and well-balanced
market ecosystem.
Next, the Exchange believes the
proposed rule changes does not impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
As previously discussed, the Exchange
operates in a highly competitive market.
Members have numerous alternative
venues that they may participate on and
direct their order flow, including other
equities exchanges, off-exchange
venues, and alternative trading systems.
Additionally, the Exchange represents a
small percentage of the overall market.
Based on publicly available information,
no single equities exchange has more
than 16% of the market share.25
Therefore, no exchange possesses
significant pricing power in the
execution of order flow. Indeed,
participants can readily choose to send
their orders to other exchange and offexchange venues if they deem fee levels
at those other venues to be more
favorable. Moreover, the Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 26 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
25 Supra
note 3.
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
26 See
24 Supra
note 16.
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18:54 May 19, 2023
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market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’ . . . .’’.27 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to section 19(b)(3)(A)
of the Act 28 and paragraph (f) of Rule
19b–4 29 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2023–033 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
27 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
28 15 U.S.C. 78s(b)(3)(A).
29 17 CFR 240.19b–4(f).
E:\FR\FM\22MYN1.SGM
22MYN1
Federal Register / Vol. 88, No. 98 / Monday, May 22, 2023 / Notices
All submissions should refer to File
Number SR–CboeBZX–2023–033. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–CboeBZX–2023–033,
and should be submitted on or before
June 12, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–10813 Filed 5–19–23; 8:45 am]
BILLING CODE 8011–01–P
Commission (the ‘‘Commission’’),
pursuant to section 107(b) 1 of the
Sarbanes-Oxley Act of 2002 (‘‘SOX’’)
and section 19(b) 2 of the Securities
Exchange Act of 1934 (the ‘‘Exchange
Act’’), a proposal to adopt amendments
(the ‘‘Proposed Amendments’’) to
existing PCAOB Rule 6100 to align with
recent changes to SOX that relate to
Board determinations under the Holding
Foreign Companies Accountable Act
(the ‘‘HFCAA’’).3 The Proposed
Amendments were published for
comment in the Federal Register on
April 4, 2023.4 We received no
comment letters in response to the
notice. This order approves the
Proposed Amendments, which we find
to be consistent with the requirements
of SOX and the securities laws and
necessary or appropriate in the public
interest or for the protection of
investors.
II. Description of the Proposed
Amendments
On March 28, 2023, the PCAOB
adopted the Proposed Amendments.5
The Proposed Amendments would
amend existing PCAOB Rule 6100 to
align the rule with recent changes to
section 104(i)(2)(A)(ii) of SOX enacted
by the Consolidated Appropriations Act,
2023.6 These amendments would allow
the Board to make a determination
regarding its inability to inspect or
investigate completely a registered
public accounting firm based on
positions taken by authorities in any
foreign jurisdiction, not just the foreign
jurisdiction in which the firm is
headquartered or has an office.
III. Effective Date
The Proposed Amendments would be
effective immediately upon Commission
approval.
1 15
ddrumheller on DSK120RN23PROD with NOTICES1
[Release No. 34–97514; File No. PCAOB–
2023–01]
Public Company Accounting Oversight
Board; Order Granting Approval of
Proposed Amendments To Conform
PCAOB Rule 6100 to the Consolidated
Appropriations Act, 2023
I. Introduction
On March 29, 2023, the Public
Company Accounting Oversight Board
(the ‘‘Board’’ or the ‘‘PCAOB’’) filed
with the Securities and Exchange
30 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
18:54 May 19, 2023
Jkt 259001
U.S.C. 7217(b).
U.S.C. 78s(b).
3 The HFCAA requirements were amended by the
Consolidated Appropriations Act, 2023 (Pub. L.
117–328, 136 Stat. 4459 (Dec. 29, 2022)).
4 See Public Company Accounting Oversight
Board; Notice of Filing of Proposed Rules on
Amendments to Board Rule Governing
Determinations Under the Holding Foreign
Companies Accountable Act, Release No. 34–97223
(Mar. 30, 2023) [88 FR 20002 (Apr. 4, 2023)],
available at https://www.sec.gov/rules/pcaob/2023/
34-97223.pdf.
5 See Amendments to Board Rule Governing
Determinations Under the Holding Foreign
Companies Accountable Act, PCAOB Release No.
2023–002 (Mar. 28, 2023), available at https://
assets.pcaobus.org/pcaob-dev/docs/default-source/
rulemaking/docket-050/pcaob-release-no.-2023002--rule-6100-amendments.pdf?sfvrsn=c4c270d0_
4.
6 Public Law 117–328, 136 Stat. 4459 (Dec. 29,
2022).
2 15
SECURITIES AND EXCHANGE
COMMISSION
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
32813
IV. Comment Letters
The comment period on the Proposed
Amendments ended on April 25, 2023.
We received no comment letters in
response to this notice.
V. Effect on Emerging Growth
Companies
Pursuant to section 103(a)(3)(C) of
SOX, the rules and related amendments
to PCAOB standards are subject to a
separate determination by the
Commission regarding their
applicability to audits of emerging
growth companies (as defined in section
3(a)(80) of the Exchange Act). The
Commission would approve such rules
only if it makes a determination that the
application of such additional
requirements is necessary or appropriate
in the public interest after considering
the protection of investors and whether
the action will promote efficiency,
competition, and capital formation.7
The PCAOB concluded that section
103(a)(3)(C) of SOX does not apply to
this rulemaking because the
Amendments neither require
‘‘mandatory audit firm rotation or a
supplement to the auditor’s report in
which the auditor would be required to
provide additional information about
the audit firm and the financial
statements’’ of issuers nor do they
impose any ‘‘additional requirements’’
on audits of emerging growth
companies. We agree with the PCAOB’s
conclusion that section 103(a)(3)(C) of
SOX does not apply to this rulemaking.
While we agree with the Board’s
conclusion that section 103(a)(3)(C) of
SOX does not apply to the Proposed
Amendments and thus do not need to
make the additional determination
described above, we nonetheless believe
the Proposed Amendments are
necessary or appropriate in the public
interest, after considering the protection
of investors and whether the action will
promote efficiency, competition, and
capital formation. Specifically, all firms,
including auditors of EGCs, and
investors will benefit from the
clarification regarding the Board’s
determinations set forth in the Proposed
Amendments.
VI. Conclusion
The Commission has carefully
reviewed and considered the Proposed
Amendments and the information
submitted therewith by the PCAOB.
In connection with the PCAOB’s filing
and the Commission’s review, the
Commission finds that:
A. The Proposed Amendments are
consistent with the requirements of SOX
7 See
E:\FR\FM\22MYN1.SGM
Section 103(a)(3)(C) of SOX.
22MYN1
]]>Agencies
[Federal Register Volume 88, Number 98 (Monday, May 22, 2023)]
[Notices]
[Pages 32809-32813]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10813]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97513; File No. SR-CboeBZX-2023-033]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule
May 16, 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 May 1, 2023, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to
amend its Fee Schedule. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fee Schedule applicable to its
equities trading platform (``BZX Equities'') by: (1) introducing a new
Add Volume Tier; (2) introducing a new Non-Displayed Add Volume Tier;
(3) eliminating Step-Up Tiers 1 and 4 and the Non-Displayed Step Up
Tier; and (4) reducing the enhanced rebates associated with certain fee
codes. The Exchange proposes to implement these changes effective May
1, 2023.\3\
---------------------------------------------------------------------------
\3\ The Exchange initially filed the proposed fee changes on May
1, 2023 (SR-CboeBZX-2023-032). On May 1, 2023, the Exchange withdrew
that filing and submitted this proposal.
---------------------------------------------------------------------------
The Exchange first notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of 16 registered equities exchanges, as well as a
number of alternative trading systems and other off-exchange venues
that do not have similar self-regulatory responsibilities under the
Securities Exchange Act of 1934 (the ``Act''), to
[[Page 32810]]
which market participants may direct their order flow. Based on
publicly available information,\4\ no single registered equities
exchange has more than 16% of the market share. Thus, in such a low-
concentrated and highly competitive market, no single equities exchange
possesses significant pricing power in the execution of order flow. The
Exchange in particular operates a ``Maker-Taker'' model whereby it pays
rebates to members that add liquidity and assesses fees to those that
remove liquidity. The Exchange's Fee Schedule sets forth the standard
rebates and rates applied per share for orders that provide and remove
liquidity, respectively. Currently, for orders in securities priced at
or above $1.00, the Exchange provides a standard rebate of $0.00160 per
share for orders that add liquidity and assesses a fee of $0.0030 per
share for orders that remove liquidity.\5\ For orders in securities
priced below $1.00, the Exchange provides a standard rebate of $0.00009
per share for orders that add liquidity and assesses a fee of 0.30% of
the total dollar value for orders that remove liquidity.\6\
Additionally, in response to the competitive environment, the Exchange
also offers tiered pricing which provides Members opportunities to
qualify for higher rebates or reduced fees where certain volume
criteria and thresholds are met. Tiered pricing provides an incremental
incentive for Members to strive for higher tier levels, which provides
increasingly higher benefits or discounts for satisfying increasingly
more stringent criteria.
---------------------------------------------------------------------------
\4\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (April 21, 2023), available at https://www.cboe.com/us/equities/market_statistics/.
\5\ See BZX Equities Fee Schedule, Standard Rates.
\6\ Id.
---------------------------------------------------------------------------
Add/Remove Volume Tiers
Under footnote 1 of the Fee Schedule, the Exchange currently offers
various Add/Remove Volume Tiers. In particular, the Exchange offers six
Add Volume Tiers, that each provide an enhanced rebate for Members'
qualifying orders yielding fee codes B,\7\ V,\8\ or Y,\9\ where a
Member reaches certain add volume-based criteria. The Exchange now
proposes to introduce a seventh Add Volume Tier. The proposed criteria
of Add Volume Tier 7 is as follows:
---------------------------------------------------------------------------
\7\ Fee code B is appended to displayed orders adding liquidity
to BZX in Tape B securities.
\8\ Fee code V is appended to displayed orders adding liquidity
to BZX in Tape A securities.
\9\ Fee code Y is appended to displayed orders adding liquidity
to BZX in Tape C securities.
---------------------------------------------------------------------------
Proposed Tier 7 will provide a rebate of $0.0031 per share
for securities priced above $1.00 to qualifying orders (i.e., orders
yielding fee codes B, V, or Y) where a Member has an ADAV \10\ as a
percentage of TCV \11\ >=0.40%; and Member adds an ADV \12\ >=0.05% of
the TCV for Non-Displayed orders that yield fee codes HB,\13\ HI,\14\
HV \15\ or HY; \16\ and Member has a Tape B ADAV >=0.65% of the Tape B
TCV.
---------------------------------------------------------------------------
\10\ ``ADAV'' means average daily added volume calculated as the
number of shares added per day. ADAV is calculated on a monthly
basis.
\11\ ``TCV'' means total consolidated volume calculated as the
volume reported by all exchanges and trade reporting facilities to a
consolidated transaction reporting plan for the month for which the
fees apply.
\12\ ``ADV'' means average daily volume calculated as the number
of shares added or removed, combined, per day. ADV is calculated on
a monthly basis.
\13\ Fee code HB is appended to non-displayed orders adding
liquidity to BZX in Tape B securities.
\14\ Fee code HI is appended to non-displayed orders adding
liquidity to BZX that receive price improvement.
\15\ Fee code HV is appended to non-displayed orders adding
liquidity to BZX in Tape A securities.
\16\ Fee code HY is appended to non-displayed orders adding
liquidity to BZX in Tape C securities.
---------------------------------------------------------------------------
Also under footnote 1 of the Fee Schedule, the Exchange currently
offers five Non-Displayed Add Volume Tiers, that each provide an
enhanced rebate for Members' qualifying orders yielding fee codes HB,
HV or HY, where a Member reaches certain non-displayed add volume-based
criteria. The Exchange now proposes to add a sixth Non-Displayed Add
Volume Tier. The proposed criteria of Non-Displayed Add Volume Tier 6
is as follows:
Proposed Non-Displayed Add Volume Tier 6 will provide a
rebate of $0.0025 per share for securities priced above $1.00 to
qualifying orders (i.e., orders yielding fee codes HB, HV or HY) where
a Member has an ADAV as a percentage of TCV >=0.40%; and Member adds an
ADV >=0.05% of the TCV for Non-Displayed orders that yield fee codes
HB, HI, HV or HY; and Member has a Tape B ADAV >=0.65% of the Tape B
TCV.
The Exchange notes that its proposal to introduce a new Add Volume
Tier 7 and a new Non-Displayed Add Volume Tier 6 is designed to provide
Members with additional ways in which to receive an enhanced rebate if
certain criteria are satisfied. The Exchange believes that by
introducing proposed Add Volume Tier 7 and Non-Displayed Add Volume
Tier 6, Members are incentivized to add both displayed and non-
displayed volume on the Exchange, thereby contributing to a deeper and
more liquid market, which benefits all market participants and provides
greater execution opportunities on the Exchange.
Step-Up Tiers
Under footnote 2 of the Fee Schedule, the Exchange currently offers
four Step-Up Tiers that each provide an enhanced rebate for Members'
qualifying orders yielding fee codes B, V, and Y, where a Member
reaches certain add volume-based criteria, including ``growing'' its
volume over a certain baseline month. The Exchange is proposing to
discontinue Step-Up Tiers 1 and 4, as no Members have satisfied the
criteria within the past six months and the Exchange no longer wishes
to, nor is required to, maintain such tier. More specifically, the
proposed change removes these tiers as the Exchange would rather
redirect future resources and funding into other programs and tiers
intended to incentivize increased order flow.
Also under footnote 2 of the Fee Schedule, the Exchange currently
offers a Non-Displayed Step Up tier that provides an enhanced rebate
for Members' qualifying orders yielding fee codes HB, HV, and HY, where
a Member reaches certain non-displayed add volume-based criteria,
including ``growing'' its volume over a certain baseline month. The
Exchange is proposing to discontinue the Non-Displayed Step Up Tier, as
no Members have satisfied the criteria since its introduction and the
Exchange no longer wishes to, nor is required to, maintain such tier.
More specifically, the proposed change removes this tier as the
Exchange would rather redirect future resources and funding into other
programs and tiers intended to incentivize increased order flow.
Fee Codes and Associated Fees
Currently, fee codes HB, HV, and HY are appended to non-displayed
orders that add liquidity and receive an enhanced rebate of $0.00100
per share. The Exchange now proposes to reduce the amount of the
enhanced rebate from $0.00100 per share to $0.00080 per share for
orders appended with fee codes HB, HV, or HY. The purpose of lowering
the rebate associated with orders appended with fee codes HB, HV, or HY
is for business and competitive reasons, as the Exchange believes that
reducing such rebate as proposed would decrease the Exchange's
expenditures with respect to transaction pricing in a manner that is
still consistent with the Exchange's overall pricing philosophy of
encouraging added liquidity. The Exchange notes that despite the modest
decrease of the rebate associated with fee codes HB, HV, and HY, the
lower rebate remains competitive and is in-line with the enhanced
rebate paid to
[[Page 32811]]
non-displayed orders adding liquidity on other exchanges, including the
Exchange's affiliate exchange.\17\
---------------------------------------------------------------------------
\17\ See e.g., EDGX Equities Fee Schedule, Fee Codes and
Associated Fees.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of section 6(b) of the
Act.\18\ Specifically, the Exchange believes the proposed rule change
is consistent with the section 6(b)(5) \19\ 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) \20\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers as well as section 6(b)(4) \21\
as it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its Members and other persons using
its facilities.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(5).
\20\ Id.
\21\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
As described above, the Exchange operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. The proposal to adopt Add
Volume Tier 7 and Non-Displayed Add Volume Tier 6 reflects a
competitive pricing structure designed to incentivize market
participants to direct their order flow to the Exchange, which the
Exchange believes would enhance market quality to the benefit of all
Members. Additionally, the Exchange notes that relative volume-based
incentives and discounts have been widely adopted by exchanges,\22\
including the Exchange,\23\ and are reasonable, equitable and non-
discriminatory because they are open to all Members on an equal basis
and provide additional benefits or discounts that are reasonably
related to (i) the value to an exchange's market quality and (ii)
associated higher levels of market activity, such as higher levels of
liquidity provision and/or growth patterns. Competing equity exchanges
offer similar tiered pricing structures, including schedules of rebates
and fees that apply based upon members achieving certain volume and/or
growth thresholds, as well as assess similar fees or rebates for
similar types of orders, to that of the Exchange.
---------------------------------------------------------------------------
\22\ See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
\23\ See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove
Volume Tiers.
---------------------------------------------------------------------------
In particular, the Exchange believes its proposal to adopt Add
Volume Tier 7 and Non-Displayed Add Volume Tier 6 is reasonable because
the revised tiers will be available to all Members and provide all
Members with an additional opportunity to receive an enhanced rebate or
a reduced fee. The Exchange further believes the proposed Add Volume
Tier 7 and Non-Displayed Add Volume Tier 6 will provide a reasonable
means to encourage liquidity adding displayed orders and liquidity
adding non-displayed orders, respectively, in Members' order flow to
the Exchange and to incentivize Members to continue to provide
liquidity adding volume to the Exchange by offering them an additional
opportunity to receive an enhanced rebate or reduced fee on qualifying
orders. An overall increase in activity would deepen the Exchange's
liquidity pool, offers additional cost savings, support the quality of
price discovery, promote market transparency and improve market
quality, for all investors.
The Exchange believes that its proposal to eliminate Step-Up Tiers
1 and 4 and the Non-Displayed Step Up Tier is reasonable because the
Exchange is not required to maintain these tiers or provide Members an
opportunity to receive enhanced rebates. The Exchange believes the
proposal to eliminate these tiers is also equitable and not unfairly
discriminatory because it applies to all Members (i.e., the tiers will
not be available for any Member). The Exchange notes that no Members
have satisfied the criteria of Step-Up Volume Tier 4 in any of the past
six months. While certain Members have recently satisfied the criteria
of Step-Up Volume Tier 1 and the Non-Displayed Step Up Tier, the
Exchange believes these Members will have the opportunity to receive
enhanced rebates under other tiers offered by the Exchange. The
Exchange also notes that the proposed rule change to remove these tiers
merely results in Members not receiving an enhanced rebate, which, as
noted above, the Exchange is not required to offer or maintain.
The Exchange believes that the proposed introduction of Add Volume
Tier 7 and Non-Displayed Add Volume Tier 6 are reasonable as they do
not represent a significant departure from the criteria currently
offered in the Fee Schedule. The Exchange also believes that the
proposal represents an equitable allocation of fees and rebates and is
not unfairly discriminatory because all Members will be eligible for
the proposed new tiers and have the opportunity to meet the tiers'
criteria and receive the corresponding enhanced rebate if such criteria
is met. Without having a view of activity on other markets and off-
exchange venues, the Exchange has no way of knowing whether this
proposed rule change would definitely result in any Members qualifying
the new proposed tiers. While the Exchange has no way of predicting
with certainty how the proposed changes will impact Member activity,
based on the prior months volume, the Exchange anticipates that at
least one Member will be able to satisfy proposed Add Volume Tier 7 and
at least two Members will be able to satisfy proposed Non-Displayed Add
Volume Tier 6. The Exchange also notes that proposed changes will not
adversely impact any Member's ability to qualify for enhanced rebates
offered under other tiers. Should a Member not meet the proposed new
criteria, the Member will merely not receive that corresponding
enhanced rebate. Furthermore, the proposed rule change to eliminate
Step-Up Tier 4 enables the Exchange to redirect resources and funding
into other programs and tiers intended to incentivize increased order
flow.
In addition, the Exchange believes that its proposal to reduce the
enhanced rebate associated with fee codes HB, HV, and HY is reasonable,
equitable, and consistent with the Act because such change is designed
to decrease the Exchange's expenditures with respect to transaction
pricing in order to offset some of the costs associated with the
Exchange's current pricing structure, which provides various rebates
for liquidity-adding orders, and the Exchange's operations generally,
in a manner that is consistent with the Exchange's overall pricing
philosophy of encouraging adding liquidity. The proposed lower enhanced
rebate ($0.00080 per share) is reasonable and appropriate because it
represents only a modest decrease from the current enhanced rebate
($0.00100 per share) and remains competitive with rebates offered by
other exchanges, including
[[Page 32812]]
the Exchange's affiliate exchange.\24\ The Exchange further believes
that the proposed reduction of the enhanced rebate associated with fee
codes HB, HV, and HY is not unfairly discriminatory because it applies
to all Members equally, in that all Members will receive the lower
rebate if their orders are appended with fee code HB, HV, or HY.
---------------------------------------------------------------------------
\24\ Supra note 16.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Rather, as discussed above,
the Exchange believes that the proposed changes would encourage the
submission of additional order flow to a public exchange, thereby
promoting market depth, execution incentives and enhanced execution
opportunities, as well as price discovery and transparency for all
Members. As a result, the Exchange believes that the proposed changes
further the Commission's goal in adopting Regulation NMS of fostering
competition among orders, which promotes ``more efficient pricing of
individual stocks for all types of orders, large and small.''
The Exchange believes the proposed rule changes do not impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Particularly, the proposed
introduction of Add Volume Tier 7 and Non-Displayed Add Volume Tier 6
will apply to all Members equally in that all Members are eligible for
each of the Tiers, have a reasonable opportunity to meet the Tiers'
criteria and will receive the enhanced rebate on their qualifying
orders if such criteria are met. In addition, the proposed change to
eliminate Step-Up Tiers 1 and 4 and the Non-Displayed Step Up Tier and
the proposed reduction of the enhanced rebate associated with fee codes
HB, HV, and HY will not impose any burden on intramarket competition
because the changes apply to all Members uniformly, as in, the tiers
will no longer be available to any Member and all Members will be
subject to the lower enhanced rebate for orders appended with fee code
HB, HV, or HY. The Exchange does not believe the proposed changes
burden competition, but rather, enhances competition as it is intended
to increase the competitiveness of BZX by adopting pricing incentives
in order to attract order flow and incentivize participants to increase
their participation on the Exchange, providing for additional execution
opportunities for market participants and improved price transparency.
Greater overall order flow, trading opportunities, and pricing
transparency benefits all market participants on the Exchange by
enhancing market quality and continuing to encourage Members to send
orders, thereby contributing towards a robust and well-balanced market
ecosystem.
Next, the Exchange believes the proposed rule changes does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the
Exchange represents a small percentage of the overall market. Based on
publicly available information, no single equities exchange has more
than 16% of the market share.\25\ Therefore, no exchange possesses
significant pricing power in the execution of order flow. Indeed,
participants can readily choose to send their orders to other exchange
and off-exchange venues if they deem fee levels at those other venues
to be more favorable. Moreover, the Commission has repeatedly expressed
its preference for competition over regulatory intervention in
determining prices, products, and services in the securities markets.
Specifically, in Regulation NMS, the Commission highlighted the
importance of market forces in determining prices and SRO revenues and,
also, recognized that current regulation of the market system ``has
been remarkably successful in promoting market competition in its
broader forms that are most important to investors and listed
companies.'' \26\ The fact that this market is competitive has also
long been recognized by the courts. In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers' . . . .''.\27\ Accordingly, the Exchange does not believe its
proposed fee change imposes any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
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\25\ Supra note 3.
\26\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\27\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to section
19(b)(3)(A) of the Act \28\ and paragraph (f) of Rule 19b-4 \29\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\28\ 15 U.S.C. 78s(b)(3)(A).
\29\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeBZX-2023-033 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
[[Page 32813]]
All submissions should refer to File Number SR-CboeBZX-2023-033. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to File Number SR-CboeBZX-2023-033, and should be
submitted on or before June 12, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10813 Filed 5-19-23; 8:45 am]
BILLING CODE 8011-01-P
