Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 34550-34556 [2023-11356]
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Federal Register / Vol. 88, No. 103 / Tuesday, May 30, 2023 / Notices
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[FR Doc. 2023–11364 Filed 5–26–23; 8:45 am]
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ddrumheller on DSK120RN23PROD with NOTICES1
SUMMARY:
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www.prc.gov, Docket Nos. MC2023–164,
CP2023–168.
the most significant aspects of such
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Sean Robinson,
Attorney, Corporate and Postal Business Law.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2023–11410 Filed 5–26–23; 8:45 am]
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SECURITIES AND EXCHANGE
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[Release No. 34–97547; File No. SR–
CboeEDGX–2023–036]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
May 23, 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 10,
2023, Cboe EDGX Exchange, Inc.
(‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) 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/
options/regulation/rule_filings/edgx/),
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
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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The Exchange proposes to amend its
Fee Schedule applicable to its equities
trading platform (‘‘EDGX Equities’’) as
follows: (1) by modifying and
introducing certain Add/Remove
Volume Tiers; (2) by eliminating certain
Growth Tiers; (3) by modifying the
criteria of the Non-Displayed Add
Volume Tiers; (4) by eliminating certain
Non-Displayed Step-Up Tiers; (5) by
eliminating certain Retail Growth Tiers;
and (6) by introducing new fee code DX
and modifying the description and fee
associated with fee code DQ. 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
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
3 The Exchange initially filed the proposed fee
changes on May 1, 2023 (SR–CboeEDGX–2023–
034). On May 10, 2023, the Exchange withdrew that
filing and submitted this proposal.
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/.
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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 three
Add Volume Tiers that each provide an
enhanced rebate for Members’
qualifying orders yielding fee codes B,7
V,8 Y,9 3,10 and 4,11 where a Member
reaches certain add volume-based
criteria. First, the Exchange is proposing
to introduce a new Add Volume Tier 2
and a new Add Volume Tier 5 to
provide Members an additional manner
in which they could receive an
enhanced rebate if certain criteria is
met. The proposed criteria for proposed
Add Volume Tier 2 is as follows:
• Add Volume Tier 2 provides a
rebate of $0.0025 per share for securities
priced above $1.00 to qualifying orders
(i.e., orders yielding fee B, V, Y, 3, or 4)
where Member adds an ADV 12
(excluding fee codes ZA 13 or ZO 14)
≥0.18% of the TCV 15 or Members adds
5 See EDGX Equities Fee Schedule, Standard
Rates.
6 Id.
7 Fee code B is appended to orders adding
liquidity to EDGX in Tape B securities.
8 Fee code V is appended to orders adding
liquidity to EDGX in Tape A securities.
9 Fee code Y is appended to orders adding
liquidity to EDGX in Tape C securities.
10 Fee code 3 is appended to orders adding
liquidity to EDGX in the pre and post market in
Tapes A or C securities.
11 Fee code 4 is appended to orders adding
liquidity to EDGX in the pre and post market in
Tape B securities.
12 ‘‘ADV’’ means average daily volume calculated
as the number of shares added to, removed from,
or routed by, the Exchange, or any combination or
subset thereof, per day. ADV is calculated on a
monthly basis.
13 Fee code ZA is appended to Retail Orders that
add liquidity.
14 Fee code ZO is appended to Retail orders that
adds liquidity during the pre- and post-market.
15 ‘‘TCV’’ means total consolidated volume
calculated as the volume reported by all exchanges
and trade reporting facilities to a consolidated
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17:16 May 26, 2023
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an ADV (excluding fee codes ZA or ZO)
≥20,000,000.
The criteria for proposed Add Volume
Tier 5 is as follows:
• Add Volume Tier 5 provides a
rebate of $0.0029 per share for securities
priced above $1.00 to qualifying orders
(i.e., orders yielding fee codes B, V, Y,
3, or 4) where Member adds a Retail
Order ADV (i.e., yielding fee codes ZA
or ZO) ≥0.45% of the TCV.
The Exchange believes proposed Add
Volume Tier 2 and proposed Add
Volume Tier 5 provide rebates
commensurate with the difficulty of
meeting the criteria associated with the
proposed tiers.
Second, the Exchange proposes to
modify the criteria of existing Add
Volume Tier 1. Currently, the criteria for
Add Volume Tier 1 is as follows:
• Add Volume Tier 1 provides a
rebate of $0.0020 per share for securities
priced above $1.00 to qualifying orders
(i.e., orders yielding fee B, V, Y, 3, or 4)
where Member adds an ADV ≥0.20% of
the TCV.
Now, the Exchange proposes to
exclude retail orders from the
calculation of ADV, lower the TCV
threshold, and add an additional prong
of criteria that Members may satisfy to
achieve the enhanced rebate. The
proposed criteria is as follows:
• Add Volume Tier 1 provides a
rebate of $0.0020 per share for securities
priced above $1.00 to qualifying orders
(i.e., orders yielding fee B, V, Y, 3, or 4)
where Member adds an ADV (excluding
fee codes ZA and ZO) ≥0.15% of the
TCV or Member adds an ADV
(excluding fee codes ZA and ZO)
≥16,000,000.
Third, the Exchange proposes to
renumber current Add Volume Tiers 2
and 3 and modify the criteria of
proposed Add Volume Tiers 3 and 4
(current Add Volume Tiers 2 and 3).
Currently, Add Volume Tiers 2 and 3
(proposed Add Volume Tiers 3 and 4)
read as follows:
• Add Volume Tier 2 provides a
rebate of $0.0027 per share to qualifying
orders (i.e., orders yielding fee codes B,
V, Y, 3, or 4) where (1) Member adds an
ADV ≥0.22% of the TCV; or (2) Member
adds an ADV ≥25,000,000.
• Add Volume Tier 3 provides a
rebate of $0.0029 per share to qualifying
orders (i.e., orders yielding fee codes B,
V, Y, 3, or 4) where Member adds an
ADV ≥0.65% of the TCV.
Now, the Exchange proposes to
exclude retail orders from the
calculation of ADV. The proposed
criteria for current Add Volume Tiers 2
transaction reporting plan for the month for which
the fees apply.
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34551
and 3 (proposed Add Volume Tiers 3
and 4) is as follows:
• Proposed Add Volume Tier 3
provides a rebate of $0.0027 per share
to qualifying orders (i.e., orders yielding
fee codes B, V, Y, 3, or 4) where (1)
Member adds an ADV (excluding fee
codes ZA and ZO) ≥0.22% of the TCV;
or (2) Member adds an ADV (excluding
fee codes ZA and ZO) ≥25,000,000.
• Proposed Add Volume Tier 4
provides a rebate of $0.0029 per share
to qualifying orders (i.e., orders yielding
fee codes B, V, Y, 3, or 4) where Member
adds an ADV (excluding fee codes ZA
and ZO) ≥0.65% of the TCV.
The proposed modifications to
current Add Volume Tier 1 and
proposed Add Volume Tiers 3 and 4
removes retail orders from the
calculation of ADV. By removing retail
orders from the calculation of ADV, the
Exchange is limiting the amount of
orders that qualify for ADV. However, in
Add Volume Tier 1 the Exchange has
also proposed to lower the TCV
percentage and provided additional
criteria by which Members may receive
an enhanced rebate. The Exchange has
also proposed to introduce a new Add
Volume Tier 2, which offers a slightly
higher rebate for achieving criteria that
is slightly more difficult than Add
Volume Tier 1. The Exchange believes
that by introducing proposed Add
Volume Tier 2, decreasing the difficulty
of the criteria under Add Volume Tier
1, and removing retail orders from the
calculation of ADV in proposed Add
Volume Tiers 3 and 4, Members are still
incentivized to add 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.
Growth Tiers
In addition to the Add/Remove
Volume Tiers offered under footnote 1,
the Exchange also offers Growth Tiers
that each provide an enhanced rebate
for Members’ qualifying orders yielding
fee codes B, V, Y, 3, and 4, where a
Member reaches certain add volumebased criteria, including ‘‘growing’’ its
volume over a certain baseline month.
The Exchange now proposes to
discontinue Growth Tiers 1–3, 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 tiers.16 More
16 On April 28, 2023, the Commission issued
Securities Exchange Act Release No. 97406 (the
‘‘Notice’’), which temporarily suspended File
Number SR–CboeEDGX–2023–016 (the ‘‘March
Filing’’). As a result of the Notice, the Exchange’s
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Federal Register / Vol. 88, No. 103 / Tuesday, May 30, 2023 / Notices
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. The Exchange notes that it
proposed a new Growth Tier 1 in its
April 2023 fee filing (the ‘‘April
Filing’’) 17 and the tier proposed in the
April Filing shall remain in effect
following the suspension of its March
2023 proposed fees. As a result of the
Notice, existing Growth Tiers 1 and 2,
which were proposed in the Exchange’s
March Filing, shall revert back to
Growth Tiers 4 and 5 as they originally
appeared in February 2023, prior to the
Exchange’s March Filing.18
ddrumheller on DSK120RN23PROD with NOTICES1
Non-Displayed Add Volume Tiers
In addition to the Add/Remove
Volume Tiers and Growth Tiers offered
under footnote 1, the Exchange also
offers Non-Displayed Add Volume Tiers
that each provide an enhanced rebate
for Members’ qualifying orders yielding
fee codes DM,19 HA,20 MM,21 and RP,22
where a Member reaches certain
volume-based criteria offered in each
tier. The Exchange now proposes to
amend the criteria of current NonDisplayed Add Volume Tiers 1–3.
Currently, the criteria for Non-Displayed
Add Volume Tiers 1–3 is as follows:
• Non-Displayed Add Volume Tier 1
provides a rebate of $0.0015 per share
to qualifying orders (i.e., orders yielding
fee code DM, HA, MM, or RP) where (1)
Member has an ADAV 23 ≥0.05% of TCV
for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV ≥4,000,000 for
proposed changes to its fee schedule as detailed in
SR–CboeEDGX–2023–016 have been temporarily
suspended, and all proposed changes to the Growth
Tiers mentioned in this paragraph refer to the
Growth Tiers as they appeared on the Exchange’s
fee schedule on February 28, 2023.
17 See Securities Exchange Act Release No. 97393
(April 27, 2023); SR–CboeEDGX–2023–030 (April
17, 2023) (‘‘Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to Amend
its Fee Schedule’’).
18 Id.
19 Fee code DM is appended to orders that add
liquidity using MidPoint Discretionary Order
within discretionary range.
20 Fee code HA is appended to non-displayed
orders that add liquidity.
21 Fee code MM is appended to non-displayed
orders that add liquidity using Mid-Point Peg.
22 Fee code RP is appended to non-displayed
orders that add liquidity using Supplemental Peg.
23 ‘‘ADAV’’ means average daily added volume
calculated as the number of shares added per day.
ADAV is calculated on a monthly basis.
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17:16 May 26, 2023
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Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
• Non-Displayed Add Volume Tier 2
provides a rebate of $0.0020 per share
to qualifying orders (i.e., orders yielding
fee code DM, HA, MM, or RP) where (1)
Member has an ADAV ≥0.08% of TCV
for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV ≥7,000,000 for
Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
• Non-Displayed Add Volume Tier 3
provides a rebate of $0.0025 per share
to qualifying orders (i.e., orders yielding
fee code DM, HA, MM, or RP) where (1)
Member has an ADAV ≥0.10% of TCV
for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV ≥9,000,000 for
Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
Now, the Exchange proposes to revise
the second prong of criteria in NonDisplayed Add Volume Tiers 1–3. The
proposed criteria for Non-Displayed
Add Volume Tiers 1–3 is as follows:
• Non-Displayed Add Volume Tier 1
provides a rebate of $0.0015 per share
to qualifying orders (i.e., orders yielding
fee code DM, HA, MM, or RP) where (1)
Member has an ADAV 24 ≥0.05% of TCV
for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV ≥5,000,000 for
Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
• Non-Displayed Add Volume Tier 2
provides a rebate of $0.0020 per share
to qualifying orders (i.e., orders yielding
fee code DM, HA, MM, or RP) where (1)
Member has an ADAV ≥0.08% of TCV
for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV ≥8,000,000 for
Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
• Non-Displayed Add Volume Tier 3
provides a rebate of $0.0025 per share
to qualifying orders (i.e., orders yielding
fee code DM, HA, MM, or RP) where (1)
Member has an ADAV ≥0.10% of TCV
for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV ≥10,000,000 for
Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
The proposed modifications to NonDisplayed Add Volume Tiers 1–3 is
intended to incentivize Members to add
24 ‘‘ADAV’’ means average daily added volume
calculated as the number of shares added per day.
ADAV is calculated on a monthly basis.
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non-displayed retail volume on the
Exchange by slightly increasing the
difficulty of the criteria that must be
achieved in order to receive an
enhanced rebate. By increasing the
difficulty of a criteria while keeping the
enhanced rebate the same, the proposed
criteria slightly increases the difficulty
required for Members to meet the
applicable tier threshold while
continuing to encourage Members to
add non-displayed liquidity to the
Exchange, thereby contributing to a
deeper and more liquid market, which
benefits all market participants and
provides greater execution opportunities
on the Exchange.
Non-Displayed Step-Up Tiers
In addition to the Add/Remove
Volume Tiers, Growth Tiers, and the
Non-Displayed Add Volume Tiers under
footnote 1, the Exchange also offers
Non-Displayed Step-Up Volume Tiers
that each provide an enhanced rebate
for Members’ qualifying orders yielding
fee codes DM, HA, MM, and RP, where
a Member reaches certain volume-based
criteria, including ‘‘growing’’ its volume
over a certain baseline month. The
Exchange now proposes to discontinue
Non-Displayed Step-Up Tiers 1 and 2,
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 tiers.25
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. As a result of the Notice,
existing Non-Displayed Step-Up
Volume Tier 1, which was proposed in
the Exchange’s March Filing, shall
revert back to Non-Displayed Step-Up
Volume Tier 3 as it originally appeared
in February 2023, prior to the
Exchange’s March Filing.26
25 Pursuant to the Notice issued by the
Commission on April 28, 2023 (supra note 16), the
Exchange’s proposed changes to its fee schedule as
detailed in SR–CboeEDGX–2023–016 have been
temporarily suspended, and all proposed changes to
the Non-Displayed Step-Up Tiers mentioned in this
paragraph refer to the Non-Displayed Step-Up Tiers
as they appeared on the Exchange’s fee schedule on
February 28, 2023. The Exchange notes that current
Non-Displayed Step-Up Tier 1 (as of April 1, 2023)
will be renumbered back to Non-Displayed Step-Up
Tier 3 as the Notice stays the implementation of the
fees as described in SR–CboeEDGX–2023–016.
26 Supra note 16.
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Federal Register / Vol. 88, No. 103 / Tuesday, May 30, 2023 / Notices
Retail Growth Tiers
Pursuant to footnote 2 of the Fee
Schedule, the Exchange offers Retail
Volume Tiers which provide Retail
Member Organizations (‘‘RMOs’’) 27 an
opportunity to receive an enhanced
rebate from the standard rebate for
Retail Orders 28 that add liquidity (i.e.,
yielding fee code ZA or ZO). Currently,
the Retail Volume Tiers offer three
Retail Growth Tiers, where a Member is
eligible for an enhanced rebate for
qualifying orders (i.e., yielding fee code
ZA or ZO) meeting certain add volumebased criteria, including ‘‘growing’’ its
volume over a certain baseline month.
The Exchange now proposes to
eliminate Retail Growth Tiers 1 and 2,
as Members have not consistently
satisfied the criteria of these tiers over
the past six months and the Exchange
no longer wishes to, nor is required to,
maintain such tiers. 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.
ddrumheller on DSK120RN23PROD with NOTICES1
Fee Codes DQ and DX
In the Exchange’s March Filing, the
Exchange proposed an amendment to
fee code DQ, which is appended to
Midpoint Discretionary Orders
(‘‘MDOs’’) 29 entered with a Quote
Depletion Protection (‘‘QDP’’) 30 order
instruction. QDP is designed to provide
enhanced protections to MDOs by
tracking significant executions that
constitute the best bid or offer on the
EDGX Book 31 and enabling Users to
avoid potentially unfavorable
executions by preventing MDOs entered
with the optional QDP instruction from
exercising discretion to trade at more
aggressive prices when QDP has been
triggered.32 The Exchange proposed
amending fee code DQ to be appended
27 See EDGX Rule 11.21(a)(1). A ‘‘Retail Member
Organization’’ or ‘‘RMO’’ is a Member (or a division
thereof) that has been approved by the Exchange
under this Rule to submit Retail Orders.
28 See EDGX Rule 11.21(a)(2). A ‘‘Retail Order’’ is
an agency or riskless principal order that meets the
criteria of FINRA Rule 5320.03 that originates from
a natural person and is submitted to the Exchange
by a Retail Member Organization, provided that no
change is made to the terms of the order with
respect to price or side of market and the order does
not originate from a trading algorithm or any other
computerized methodology.
29 See Exchange Rule 11.8(g).
30 See Exchange Rule 11.8(g)(10).
31 See Exchange Rule 1.5(d).
32 See Securities Exchange Act Release No. 89007
(June 4, 2020), 85 FR 35454 (June 10, 2020) (SR–
CboeEDGX–2020–010) (‘‘Notice of Filing of
Amendment No. 1 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified
by Amendment No. 1, to Amend the Rule Relating
to MidPoint Discretionary Orders to Allow Optional
Offset or Quote Depletion Protection Instructions’’).
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17:16 May 26, 2023
Jkt 259001
to MDOs entered with a QDP instruction
that added liquidity to the Exchange.
There was no proposed change to the
fee associated with fee code DQ. At the
time of the March Filing, MDOs entered
with the QDP instruction were
appended fee code DQ and assessed a
flat fee of $0.00040 per share in
securities at or above $1.00 and 0.30%
of dollar value for securities priced
below $1.00. Also in its March Filing,
the Exchange proposed to introduce fee
code DX, which would be appended to
MDOs with a QDP instruction that
remove liquidity from the Exchange.
Orders appended with fee code DX
would be assessed a fee of $0.00100 per
share in securities at or above $1.00 and
0.30% of dollar value for securities
priced below $1.00. As a result of the
Notice issued by the Commission on
April 28, 2023, the Exchange’s March
Filing was temporarily suspended and
all proposed changes to fee codes DX
and DQ mentioned in this paragraph
refer to the fee codes as they appeared
on the Exchange’s fee schedule on
February 28, 2023.33
As a result of the reversion back to the
February 28, 2023, fee schedule, the
Exchange now proposes to amend fee
code DQ to be appended to MDOs
entered with a QDP instruction that add
liquidity to the Exchange. There would
be no change to the fee associated with
fee code DQ. Also as a result of the
reversion back to the February 28, 2023,
fee schedule, the Exchange also now
proposes to introduce fee code DX,
which would be appended to MDOs
with a QDP instruction that remove
liquidity from the Exchange. Orders
appended with fee code DX would be
assessed a fee of $0.0010 per share in
securities at or above $1.00 and 0.30%
of dollar value for securities priced
below $1.00.34 While the Exchange
notes the difference between the fees
assessed for fee codes DX and DQ, the
Exchange believes that charging a lower
fee for MDOs entered with a QDP
instruction that add liquidity to the
Exchange under fee code DQ will
incentivize Users to submit liquidityadding MDOs containing a QDP
instruction, thereby contributing to a
deeper and more liquid market, which
benefits all market participants and
33 Supra
note 16.
Exchange notes that its April Filing
proposed an amendment of the rate associated with
fee code DX from $0.00060 to $0.0010. The rate of
$0.0010 proposed above is in-line with the rate of
$0.0010 proposed in the April Filing and the
Exchange is merely re-introducing the proposed
rate of $0.0010 as a result of the Notice and
subsequent suspension of the proposed changes
contained within its March Filing.
34 The
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34553
provides greater execution opportunities
on the Exchange.
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.35 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 36 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) 37 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) 38 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
Exchange believes that its proposal to:
(1) introduce new Add Volume Tiers 2
and 5 and modify current Add Volume
Tiers 1, 2, and 3; and (2) modify NonDisplayed Add Volume Tiers 1–3
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,39 including the Exchange,40
and are reasonable, equitable and nondiscriminatory because they are open to
35 15
36 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
37 Id.
38 15
U.S.C. 78f(b)(4).
e.g., BZX Equities Fee Schedule, Footnote
1, Add/Remove Volume Tiers.
40 See e.g., EDGX Equities Fee Schedule, Footnote
1, Add/Remove Volume Tiers.
39 See
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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: (1) introduce new Add
Volume Tiers 2 and 5 and modify
current Add Volume Tiers 1, 2, and 3;
and (2) modify Non-Displayed Add
Volume Tiers 1–3 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
modifications to its Add/Remove
Volume Tiers and Non-Displayed Add
Volume Tiers 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 Growth Tiers 1–
3,41 Non-Displayed Step-Up Volume
Tiers 1 and 2,42 and Retail Growth Tiers
1 and 2 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 Members have not
consistently satisfied the criteria over
the past six months. 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
41 Supra
42 Supra
note 16.
note 25.
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Exchange is not required to offer or
maintain. Furthermore, the proposed
rule change to eliminate Growth Tiers
1–3, Non-Displayed Step-Up Volume
Tiers 1 and 2, and Retail Growth Tiers
1 and 2 enables the Exchange to redirect
resources and funding into other
programs and tiers intended to
incentivize increased order flow.
The Exchange believes the proposed
addition of fee code DX and the revised
applicability of fee code DQ are
reasonable as the Exchange offers many
other fee codes that are specifically
designed for orders that add liquidity to
the Exchange or remove liquidity from
the Exchange.43 While the fee assessed
for orders appended with fee code DX
will be slightly higher than the fee
assessed for orders appended with fee
code DQ, the Exchange believes that
promoting liquidity-adding MDOs
containing a QDP instruction represents
an equitable allocation of fees and
rebates and is not unfairly
discriminatory because the fees will
apply to all Members who add or
remove liquidity utilizing an MDO with
a QDP instruction, equally.
Furthermore, the Exchange believes that
assessing a lower fee under fee code DQ
will promote a reasonable means to
encourage liquidity adding volume to
the Exchange for MDOs utilizing a QDP
instruction. While Members are
assessed a small fee to utilize MDOs
with a QDP instruction, the Exchange
believes that promoting liquidity adding
activity would help deepen the
Exchange’s liquidity pool, support the
quality of price discovery, and improve
market quality, for all investors.
The Exchange believes that the
proposed changes to its Add/Remove
Volume Tiers and Non-Displayed Add
Volume Tiers 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
43 See e.g., EDGX Equities Fee Schedule, Fee
Codes 3 and 6.
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activity, based on the prior months
volume, the Exchange anticipates that at
least one Member will be able to satisfy
proposed Add Volume Tier 1, at least
two Members will be able to satisfy
proposed Add Volume Tier 2, at least
two Members will be able to satisfy
proposed Add Volume Tier 3, at least
one Member will be able to satisfy
proposed Add Volume Tier 4, at least 1
Member will be able to satisfy proposed
Add Volume Tier 5, at least two
Members will be able to satisfy
proposed Non-Displayed Add Volume
Tier 1, at least two Members will be able
to satisfy proposed Non-Displayed Add
Volume Tier 2, and at least one Member
will be able to satisfy proposed NonDisplayed Add Volume Tier 3. 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 Growth Tiers 1–3,
Non-Displayed Step-Up Volume Tiers 1
and 2, and Retail Growth Tiers 1 and 2
enables the Exchange to redirect
resources and funding into other
programs and tiers intended to
incentivize increased order flow.
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 changes to the Exchange’s
Add/Remove Volume Tiers and NonDisplayed Add Volume Tiers will apply
to all Members equally in that all
Members are eligible for each of the
Tiers, have a reasonable opportunity to
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meet the Tiers’ criteria and will receive
the enhanced rebate on their qualifying
orders if such criteria is met. In
addition, the Exchange proposal to
eliminate Growth Tiers 1–3, NonDisplayed Step-Up Volume Tiers 1 and
2, and Retail Growth Tiers 1 and 2 will
not impose any burden on intramarket
competition because it applies to all
Members uniformly, as in, the tiers will
no longer be available to any Member.
The Exchange does not believe the
proposed changes burden competition,
but rather, enhances competition as it is
intended to increase the
competitiveness of EDGX by amending
an existing pricing incentive and
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.
The Exchange believes the proposal to
introduce the DX fee code does not
impose a burden on intramarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. The proposed fees
associated with fee code DX would
apply to all Members equally in that all
Members would be subject to the same
flat fee for the execution of an MDO
with a QDP instruction that removes
liquidity from the Exchange. Although
MDOs entered with the QDP instruction
would be subject to the pricing
described in this proposed rule change,
the Exchange does not believe that
pricing would impose any significant
burden on intramarket competition as
this fee would be applied in the same
manner to the execution of any MDO
entered with a QDP instruction that
removes liquidity from the Exchange.
Both MDO and the associated QDP
instruction are available to all Members
on an equal and non-discriminatory
basis. As a result, any Member can
decide to use (or not use) the QDP
instruction based on the benefits
provided by that instruction in
potentially avoiding unfavorable
executions, and the associated charge
that the Exchange proposes to
introduce. As discussed, any firm that
chooses to use the QDP instruction with
an MDO that removes liquidity would
be charged the same flat fee for the
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17:16 May 26, 2023
Jkt 259001
execution of orders that are entered with
this instruction. The proposal to modify
fee code DQ to apply only to MDO
orders using the QDP instruction that
add liquidity to the Exchange similarly
does not impose a burden on
intramarket competition in that the
applicability of the fee code will apply
equally to all Members in that all
Members would be subject to the same
flat fee for the execution of an MDO
with a QDP instruction that adds
liquidity to the Exchange and the
Exchange does not propose a change to
the existing fee.
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.44
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.’’ 45 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
44 Supra
note 3.
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
45 See
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34555
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’. . . .’’ 46 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 47 and paragraph (f) of Rule
19b–4 48 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–
CboeEDGX–2023–036 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
46 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)).
47 15 U.S.C. 78s(b)(3)(A).
48 17 CFR 240.19b–4(f).
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Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeEDGX–2023–036. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–CboeEDGX–2023–
036, and should be submitted on or
before June 20, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.49
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–11356 Filed 5–26–23; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
ddrumheller on DSK120RN23PROD with NOTICES1
[Docket No. FAA–2023–1076]
Agency Information Collection
Activities: Requests for Comments;
Clearance of a Renewed Approval of
Information Collection: Aging Aircraft
Program (Widespread Fatigue
Damage)
Federal Aviation
Administration (FAA), DOT.
AGENCY:
49 17
CFR 200.30–3(a)(12).
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17:16 May 26, 2023
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Notice and request for
comments.
ACTION:
In accordance with the
Paperwork Reduction Act of 1995, FAA
invites public comments about our
intention to request the Office of
Management and Budget (OMB)
approval to renew an information
collection. The collection involves
submittal of limits of validity of
engineering data that supports the
structural maintenance program
(hereafter referred to as LOV) for certain
airplane models. The information to be
collected will be used to demonstrate
compliance with FAA regulations
requiring establishment and
incorporation of LOV into the airplane’s
structural maintenance program.
DATES: Written comments should be
submitted by July 31, 2023.
ADDRESSES: Please send written
comments:
By Electronic Docket:
www.regulations.gov (Enter docket
number into search field).
By mail: Kamruz Zaman, Federal
Aviation Administration, Policy and
Standards Division, 1600 Stewart Ave.,
Suite 410, Westbury, NY 11590.
By fax: 516–794–5531.
FOR FURTHER INFORMATION CONTACT:
Kamruz Zaman by email at:
Kamruz.Zaman@faa.gov; phone: 516–
228–7355.
SUPPLEMENTARY INFORMATION:
Public Comments Invited: You are
asked to comment on any aspect of this
information collection, including (a)
Whether the proposed collection of
information is necessary for FAA’s
performance; (b) the accuracy of the
estimated burden; (c) ways for FAA to
enhance the quality, utility and clarity
of the information collection; and (d)
ways that the burden could be
minimized without reducing the quality
of the collected information. The agency
will summarize and/or include your
comments in the request for OMB’s
clearance of this information collection.
OMB Control Number: 2120–0743.
Title: Aging Aircraft Program
(Widespread Fatigue Damage).
Form Numbers: There are no FAA
forms associated with this collection.
Type of Review: Renewal of an
information collection.
Background: The ‘‘Aging Aircraft
Program (Widespread Fatigue Damage)’’
final rule amended FAA regulations
pertaining to certification and operation
of transport category airplanes to
preclude widespread fatigue damage in
those airplanes. This collection requires
that design approval holders submit
LOV to the responsible Aircraft
SUMMARY:
PO 00000
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Certification Service office for approval
to demonstrate compliance with § 26.21
or § 26.23, as applicable. This collection
also requires that operators submit the
LOV to their Principal Maintenance
Inspectors to demonstrate compliance
with § 121.1115 or § 129.115, as
applicable.
Respondents: Approximately 27
design approval holders and operators.
Frequency: Information is collected
on occasion.
Estimated Average Burden per
Response: 2.72 hours.
Estimated Total Annual Burden: 408
hours.
Issued in Washington, DC, on May 24,
2023.
Monica Caldwell,
Directives & Forms Management Officer
(DMO/FMO), Aircraft Certification Service.
[FR Doc. 2023–11372 Filed 5–26–23; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
Notice of OFAC Sanctions Actions
Office of Foreign Assets
Control, Treasury.
ACTION: Notice.
AGENCY:
The U.S. Department of the
Treasury’s Office of Foreign Assets
Control (OFAC) is publishing the names
of one or more persons that have been
placed on OFAC’s Specially Designated
Nationals and Blocked Persons List
(SDN List) based on OFAC’s
determination that one or more
applicable legal criteria were satisfied.
All property and interests in property
subject to U.S. jurisdiction of these
persons are blocked, and U.S. persons
are generally prohibited from engaging
in transactions with them.
DATES: See SUPPLEMENTARY INFORMATION
section for effective date(s).
FOR FURTHER INFORMATION CONTACT:
OFAC: Andrea Gacki, Director, tel.:
202–622–2490; Associate Director for
Global Targeting, tel.: 202–622–2420;
Assistant Director for Licensing, tel.:
202–622–2480; Assistant Director for
Regulatory Affairs, tel.: 202–622–4855;
or Assistant Director for Sanctions
Compliance & Evaluation, tel.: 202–622–
2490.
SUPPLEMENTARY INFORMATION:
SUMMARY:
Electronic Availability
The SDN List and additional
information concerning OFAC sanctions
programs are available on OFAC’s
website (https://www.treasury.gov/ofac).
E:\FR\FM\30MYN1.SGM
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]]>Agencies
[Federal Register Volume 88, Number 103 (Tuesday, May 30, 2023)]
[Notices]
[Pages 34550-34556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11356]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97547; File No. SR-CboeEDGX-2023-036]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule
May 23, 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 10, 2023, Cboe EDGX Exchange, Inc. (``Exchange'' or ``EDGX'')
filed with the Securities and Exchange Commission (the ``Commission'')
the proposed rule change as described in Items I, II, and III below,
which Items have been prepared by the Exchange. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') 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/options/regulation/rule_filings/edgx/), 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 (``EDGX Equities'') as follows: (1) by
modifying and introducing certain Add/Remove Volume Tiers; (2) by
eliminating certain Growth Tiers; (3) by modifying the criteria of the
Non-Displayed Add Volume Tiers; (4) by eliminating certain Non-
Displayed Step-Up Tiers; (5) by eliminating certain Retail Growth
Tiers; and (6) by introducing new fee code DX and modifying the
description and fee associated with fee code DQ. 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-CboeEDGX-2023-034). On May 10, 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 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
[[Page 34551]]
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 EDGX 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
three Add Volume Tiers that each provide an enhanced rebate for
Members' qualifying orders yielding fee codes B,\7\ V,\8\ Y,\9\ 3,\10\
and 4,\11\ where a Member reaches certain add volume-based criteria.
First, the Exchange is proposing to introduce a new Add Volume Tier 2
and a new Add Volume Tier 5 to provide Members an additional manner in
which they could receive an enhanced rebate if certain criteria is met.
The proposed criteria for proposed Add Volume Tier 2 is as follows:
---------------------------------------------------------------------------
\7\ Fee code B is appended to orders adding liquidity to EDGX in
Tape B securities.
\8\ Fee code V is appended to orders adding liquidity to EDGX in
Tape A securities.
\9\ Fee code Y is appended to orders adding liquidity to EDGX in
Tape C securities.
\10\ Fee code 3 is appended to orders adding liquidity to EDGX
in the pre and post market in Tapes A or C securities.
\11\ Fee code 4 is appended to orders adding liquidity to EDGX
in the pre and post market in Tape B securities.
---------------------------------------------------------------------------
Add Volume Tier 2 provides a rebate of $0.0025 per share
for securities priced above $1.00 to qualifying orders (i.e., orders
yielding fee B, V, Y, 3, or 4) where Member adds an ADV \12\ (excluding
fee codes ZA \13\ or ZO \14\) >=0.18% of the TCV \15\ or Members adds
an ADV (excluding fee codes ZA or ZO) >=20,000,000.
---------------------------------------------------------------------------
\12\ ``ADV'' means average daily volume calculated as the number
of shares added to, removed from, or routed by, the Exchange, or any
combination or subset thereof, per day. ADV is calculated on a
monthly basis.
\13\ Fee code ZA is appended to Retail Orders that add
liquidity.
\14\ Fee code ZO is appended to Retail orders that adds
liquidity during the pre- and post-market.
\15\ ``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.
---------------------------------------------------------------------------
The criteria for proposed Add Volume Tier 5 is as follows:
Add Volume Tier 5 provides a rebate of $0.0029 per share
for securities priced above $1.00 to qualifying orders (i.e., orders
yielding fee codes B, V, Y, 3, or 4) where Member adds a Retail Order
ADV (i.e., yielding fee codes ZA or ZO) >=0.45% of the TCV.
The Exchange believes proposed Add Volume Tier 2 and proposed Add
Volume Tier 5 provide rebates commensurate with the difficulty of
meeting the criteria associated with the proposed tiers.
Second, the Exchange proposes to modify the criteria of existing
Add Volume Tier 1. Currently, the criteria for Add Volume Tier 1 is as
follows:
Add Volume Tier 1 provides a rebate of $0.0020 per share
for securities priced above $1.00 to qualifying orders (i.e., orders
yielding fee B, V, Y, 3, or 4) where Member adds an ADV >=0.20% of the
TCV.
Now, the Exchange proposes to exclude retail orders from the
calculation of ADV, lower the TCV threshold, and add an additional
prong of criteria that Members may satisfy to achieve the enhanced
rebate. The proposed criteria is as follows:
Add Volume Tier 1 provides a rebate of $0.0020 per share
for securities priced above $1.00 to qualifying orders (i.e., orders
yielding fee B, V, Y, 3, or 4) where Member adds an ADV (excluding fee
codes ZA and ZO) >=0.15% of the TCV or Member adds an ADV (excluding
fee codes ZA and ZO) >=16,000,000.
Third, the Exchange proposes to renumber current Add Volume Tiers 2
and 3 and modify the criteria of proposed Add Volume Tiers 3 and 4
(current Add Volume Tiers 2 and 3). Currently, Add Volume Tiers 2 and 3
(proposed Add Volume Tiers 3 and 4) read as follows:
Add Volume Tier 2 provides a rebate of $0.0027 per share
to qualifying orders (i.e., orders yielding fee codes B, V, Y, 3, or 4)
where (1) Member adds an ADV >=0.22% of the TCV; or (2) Member adds an
ADV >=25,000,000.
Add Volume Tier 3 provides a rebate of $0.0029 per share
to qualifying orders (i.e., orders yielding fee codes B, V, Y, 3, or 4)
where Member adds an ADV >=0.65% of the TCV.
Now, the Exchange proposes to exclude retail orders from the
calculation of ADV. The proposed criteria for current Add Volume Tiers
2 and 3 (proposed Add Volume Tiers 3 and 4) is as follows:
Proposed Add Volume Tier 3 provides a rebate of $0.0027
per share to qualifying orders (i.e., orders yielding fee codes B, V,
Y, 3, or 4) where (1) Member adds an ADV (excluding fee codes ZA and
ZO) >=0.22% of the TCV; or (2) Member adds an ADV (excluding fee codes
ZA and ZO) >=25,000,000.
Proposed Add Volume Tier 4 provides a rebate of $0.0029
per share to qualifying orders (i.e., orders yielding fee codes B, V,
Y, 3, or 4) where Member adds an ADV (excluding fee codes ZA and ZO)
>=0.65% of the TCV.
The proposed modifications to current Add Volume Tier 1 and
proposed Add Volume Tiers 3 and 4 removes retail orders from the
calculation of ADV. By removing retail orders from the calculation of
ADV, the Exchange is limiting the amount of orders that qualify for
ADV. However, in Add Volume Tier 1 the Exchange has also proposed to
lower the TCV percentage and provided additional criteria by which
Members may receive an enhanced rebate. The Exchange has also proposed
to introduce a new Add Volume Tier 2, which offers a slightly higher
rebate for achieving criteria that is slightly more difficult than Add
Volume Tier 1. The Exchange believes that by introducing proposed Add
Volume Tier 2, decreasing the difficulty of the criteria under Add
Volume Tier 1, and removing retail orders from the calculation of ADV
in proposed Add Volume Tiers 3 and 4, Members are still incentivized to
add 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.
Growth Tiers
In addition to the Add/Remove Volume Tiers offered under footnote
1, the Exchange also offers Growth Tiers that each provide an enhanced
rebate for Members' qualifying orders yielding fee codes B, V, Y, 3,
and 4, where a Member reaches certain add volume-based criteria,
including ``growing'' its volume over a certain baseline month. The
Exchange now proposes to discontinue Growth Tiers 1-3, 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 tiers.\16\ More
[[Page 34552]]
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. The Exchange
notes that it proposed a new Growth Tier 1 in its April 2023 fee filing
(the ``April Filing'') \17\ and the tier proposed in the April Filing
shall remain in effect following the suspension of its March 2023
proposed fees. As a result of the Notice, existing Growth Tiers 1 and
2, which were proposed in the Exchange's March Filing, shall revert
back to Growth Tiers 4 and 5 as they originally appeared in February
2023, prior to the Exchange's March Filing.\18\
---------------------------------------------------------------------------
\16\ On April 28, 2023, the Commission issued Securities
Exchange Act Release No. 97406 (the ``Notice''), which temporarily
suspended File Number SR-CboeEDGX-2023-016 (the ``March Filing'').
As a result of the Notice, the Exchange's proposed changes to its
fee schedule as detailed in SR-CboeEDGX-2023-016 have been
temporarily suspended, and all proposed changes to the Growth Tiers
mentioned in this paragraph refer to the Growth Tiers as they
appeared on the Exchange's fee schedule on February 28, 2023.
\17\ See Securities Exchange Act Release No. 97393 (April 27,
2023); SR-CboeEDGX-2023-030 (April 17, 2023) (``Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change to Amend its Fee
Schedule'').
\18\ Id.
---------------------------------------------------------------------------
Non-Displayed Add Volume Tiers
In addition to the Add/Remove Volume Tiers and Growth Tiers offered
under footnote 1, the Exchange also offers Non-Displayed Add Volume
Tiers that each provide an enhanced rebate for Members' qualifying
orders yielding fee codes DM,\19\ HA,\20\ MM,\21\ and RP,\22\ where a
Member reaches certain volume-based criteria offered in each tier. The
Exchange now proposes to amend the criteria of current Non-Displayed
Add Volume Tiers 1-3. Currently, the criteria for Non-Displayed Add
Volume Tiers 1-3 is as follows:
---------------------------------------------------------------------------
\19\ Fee code DM is appended to orders that add liquidity using
MidPoint Discretionary Order within discretionary range.
\20\ Fee code HA is appended to non-displayed orders that add
liquidity.
\21\ Fee code MM is appended to non-displayed orders that add
liquidity using Mid-Point Peg.
\22\ Fee code RP is appended to non-displayed orders that add
liquidity using Supplemental Peg.
---------------------------------------------------------------------------
Non-Displayed Add Volume Tier 1 provides a rebate of
$0.0015 per share to qualifying orders (i.e., orders yielding fee code
DM, HA, MM, or RP) where (1) Member has an ADAV \23\ >=0.05% of TCV for
Non-Displayed orders that yield fee codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV >=4,000,000 for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
---------------------------------------------------------------------------
\23\ ``ADAV'' means average daily added volume calculated as the
number of shares added per day. ADAV is calculated on a monthly
basis.
---------------------------------------------------------------------------
Non-Displayed Add Volume Tier 2 provides a rebate of
$0.0020 per share to qualifying orders (i.e., orders yielding fee code
DM, HA, MM, or RP) where (1) Member has an ADAV >=0.08% of TCV for Non-
Displayed orders that yield fee codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV >=7,000,000 for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
Non-Displayed Add Volume Tier 3 provides a rebate of
$0.0025 per share to qualifying orders (i.e., orders yielding fee code
DM, HA, MM, or RP) where (1) Member has an ADAV >=0.10% of TCV for Non-
Displayed orders that yield fee codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV >=9,000,000 for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
Now, the Exchange proposes to revise the second prong of criteria
in Non-Displayed Add Volume Tiers 1-3. The proposed criteria for Non-
Displayed Add Volume Tiers 1-3 is as follows:
Non-Displayed Add Volume Tier 1 provides a rebate of
$0.0015 per share to qualifying orders (i.e., orders yielding fee code
DM, HA, MM, or RP) where (1) Member has an ADAV \24\ >=0.05% of TCV for
Non-Displayed orders that yield fee codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV >=5,000,000 for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
---------------------------------------------------------------------------
\24\ ``ADAV'' means average daily added volume calculated as the
number of shares added per day. ADAV is calculated on a monthly
basis.
---------------------------------------------------------------------------
Non-Displayed Add Volume Tier 2 provides a rebate of
$0.0020 per share to qualifying orders (i.e., orders yielding fee code
DM, HA, MM, or RP) where (1) Member has an ADAV >=0.08% of TCV for Non-
Displayed orders that yield fee codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV >=8,000,000 for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
Non-Displayed Add Volume Tier 3 provides a rebate of
$0.0025 per share to qualifying orders (i.e., orders yielding fee code
DM, HA, MM, or RP) where (1) Member has an ADAV >=0.10% of TCV for Non-
Displayed orders that yield fee codes DM, HA, HI, MM or RP; or (2)
Member has an ADAV >=10,000,000 for Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
The proposed modifications to Non-Displayed Add Volume Tiers 1-3 is
intended to incentivize Members to add non-displayed retail volume on
the Exchange by slightly increasing the difficulty of the criteria that
must be achieved in order to receive an enhanced rebate. By increasing
the difficulty of a criteria while keeping the enhanced rebate the
same, the proposed criteria slightly increases the difficulty required
for Members to meet the applicable tier threshold while continuing to
encourage Members to add non-displayed liquidity to the Exchange,
thereby contributing to a deeper and more liquid market, which benefits
all market participants and provides greater execution opportunities on
the Exchange.
Non-Displayed Step-Up Tiers
In addition to the Add/Remove Volume Tiers, Growth Tiers, and the
Non-Displayed Add Volume Tiers under footnote 1, the Exchange also
offers Non-Displayed Step-Up Volume Tiers that each provide an enhanced
rebate for Members' qualifying orders yielding fee codes DM, HA, MM,
and RP, where a Member reaches certain volume-based criteria, including
``growing'' its volume over a certain baseline month. The Exchange now
proposes to discontinue Non-Displayed Step-Up Tiers 1 and 2, 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
tiers.\25\ 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.
As a result of the Notice, existing Non-Displayed Step-Up Volume Tier
1, which was proposed in the Exchange's March Filing, shall revert back
to Non-Displayed Step-Up Volume Tier 3 as it originally appeared in
February 2023, prior to the Exchange's March Filing.\26\
---------------------------------------------------------------------------
\25\ Pursuant to the Notice issued by the Commission on April
28, 2023 (supra note 16), the Exchange's proposed changes to its fee
schedule as detailed in SR-CboeEDGX-2023-016 have been temporarily
suspended, and all proposed changes to the Non-Displayed Step-Up
Tiers mentioned in this paragraph refer to the Non-Displayed Step-Up
Tiers as they appeared on the Exchange's fee schedule on February
28, 2023. The Exchange notes that current Non-Displayed Step-Up Tier
1 (as of April 1, 2023) will be renumbered back to Non-Displayed
Step-Up Tier 3 as the Notice stays the implementation of the fees as
described in SR-CboeEDGX-2023-016.
\26\ Supra note 16.
---------------------------------------------------------------------------
[[Page 34553]]
Retail Growth Tiers
Pursuant to footnote 2 of the Fee Schedule, the Exchange offers
Retail Volume Tiers which provide Retail Member Organizations
(``RMOs'') \27\ an opportunity to receive an enhanced rebate from the
standard rebate for Retail Orders \28\ that add liquidity (i.e.,
yielding fee code ZA or ZO). Currently, the Retail Volume Tiers offer
three Retail Growth Tiers, where a Member is eligible for an enhanced
rebate for qualifying orders (i.e., yielding fee code ZA or ZO) meeting
certain add volume-based criteria, including ``growing'' its volume
over a certain baseline month. The Exchange now proposes to eliminate
Retail Growth Tiers 1 and 2, as Members have not consistently satisfied
the criteria of these tiers over the past six months and the Exchange
no longer wishes to, nor is required to, maintain such tiers. 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.
---------------------------------------------------------------------------
\27\ See EDGX Rule 11.21(a)(1). A ``Retail Member Organization''
or ``RMO'' is a Member (or a division thereof) that has been
approved by the Exchange under this Rule to submit Retail Orders.
\28\ See EDGX Rule 11.21(a)(2). A ``Retail Order'' is an agency
or riskless principal order that meets the criteria of FINRA Rule
5320.03 that originates from a natural person and is submitted to
the Exchange by a Retail Member Organization, provided that no
change is made to the terms of the order with respect to price or
side of market and the order does not originate from a trading
algorithm or any other computerized methodology.
---------------------------------------------------------------------------
Fee Codes DQ and DX
In the Exchange's March Filing, the Exchange proposed an amendment
to fee code DQ, which is appended to Midpoint Discretionary Orders
(``MDOs'') \29\ entered with a Quote Depletion Protection (``QDP'')
\30\ order instruction. QDP is designed to provide enhanced protections
to MDOs by tracking significant executions that constitute the best bid
or offer on the EDGX Book \31\ and enabling Users to avoid potentially
unfavorable executions by preventing MDOs entered with the optional QDP
instruction from exercising discretion to trade at more aggressive
prices when QDP has been triggered.\32\ The Exchange proposed amending
fee code DQ to be appended to MDOs entered with a QDP instruction that
added liquidity to the Exchange. There was no proposed change to the
fee associated with fee code DQ. At the time of the March Filing, MDOs
entered with the QDP instruction were appended fee code DQ and assessed
a flat fee of $0.00040 per share in securities at or above $1.00 and
0.30% of dollar value for securities priced below $1.00. Also in its
March Filing, the Exchange proposed to introduce fee code DX, which
would be appended to MDOs with a QDP instruction that remove liquidity
from the Exchange. Orders appended with fee code DX would be assessed a
fee of $0.00100 per share in securities at or above $1.00 and 0.30% of
dollar value for securities priced below $1.00. As a result of the
Notice issued by the Commission on April 28, 2023, the Exchange's March
Filing was temporarily suspended and all proposed changes to fee codes
DX and DQ mentioned in this paragraph refer to the fee codes as they
appeared on the Exchange's fee schedule on February 28, 2023.\33\
---------------------------------------------------------------------------
\29\ See Exchange Rule 11.8(g).
\30\ See Exchange Rule 11.8(g)(10).
\31\ See Exchange Rule 1.5(d).
\32\ See Securities Exchange Act Release No. 89007 (June 4,
2020), 85 FR 35454 (June 10, 2020) (SR-CboeEDGX-2020-010) (``Notice
of Filing of Amendment No. 1 and Order Granting Accelerated Approval
of a Proposed Rule Change, as Modified by Amendment No. 1, to Amend
the Rule Relating to MidPoint Discretionary Orders to Allow Optional
Offset or Quote Depletion Protection Instructions'').
\33\ Supra note 16.
---------------------------------------------------------------------------
As a result of the reversion back to the February 28, 2023, fee
schedule, the Exchange now proposes to amend fee code DQ to be appended
to MDOs entered with a QDP instruction that add liquidity to the
Exchange. There would be no change to the fee associated with fee code
DQ. Also as a result of the reversion back to the February 28, 2023,
fee schedule, the Exchange also now proposes to introduce fee code DX,
which would be appended to MDOs with a QDP instruction that remove
liquidity from the Exchange. Orders appended with fee code DX would be
assessed a fee of $0.0010 per share in securities at or above $1.00 and
0.30% of dollar value for securities priced below $1.00.\34\ While the
Exchange notes the difference between the fees assessed for fee codes
DX and DQ, the Exchange believes that charging a lower fee for MDOs
entered with a QDP instruction that add liquidity to the Exchange under
fee code DQ will incentivize Users to submit liquidity-adding MDOs
containing a QDP instruction, thereby contributing to a deeper and more
liquid market, which benefits all market participants and provides
greater execution opportunities on the Exchange.
---------------------------------------------------------------------------
\34\ The Exchange notes that its April Filing proposed an
amendment of the rate associated with fee code DX from $0.00060 to
$0.0010. The rate of $0.0010 proposed above is in-line with the rate
of $0.0010 proposed in the April Filing and the Exchange is merely
re-introducing the proposed rate of $0.0010 as a result of the
Notice and subsequent suspension of the proposed changes contained
within its March Filing.
---------------------------------------------------------------------------
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.\35\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \36\ 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) \37\ 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) \38\
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.
---------------------------------------------------------------------------
\35\ 15 U.S.C. 78f(b).
\36\ 15 U.S.C. 78f(b)(5).
\37\ Id.
\38\ 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 Exchange believes that
its proposal to: (1) introduce new Add Volume Tiers 2 and 5 and modify
current Add Volume Tiers 1, 2, and 3; and (2) modify Non-Displayed Add
Volume Tiers 1-3 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,\39\ including the Exchange,\40\ and are reasonable,
equitable and non-discriminatory because they are open to
[[Page 34554]]
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.
---------------------------------------------------------------------------
\39\ See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove
Volume Tiers.
\40\ See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
---------------------------------------------------------------------------
In particular, the Exchange believes its proposal to: (1) introduce
new Add Volume Tiers 2 and 5 and modify current Add Volume Tiers 1, 2,
and 3; and (2) modify Non-Displayed Add Volume Tiers 1-3 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
modifications to its Add/Remove Volume Tiers and Non-Displayed Add
Volume Tiers 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 Growth Tiers
1-3,\41\ Non-Displayed Step-Up Volume Tiers 1 and 2,\42\ and Retail
Growth Tiers 1 and 2 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 Members have not consistently
satisfied the criteria over the past six months. 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. Furthermore,
the proposed rule change to eliminate Growth Tiers 1-3, Non-Displayed
Step-Up Volume Tiers 1 and 2, and Retail Growth Tiers 1 and 2 enables
the Exchange to redirect resources and funding into other programs and
tiers intended to incentivize increased order flow.
---------------------------------------------------------------------------
\41\ Supra note 16.
\42\ Supra note 25.
---------------------------------------------------------------------------
The Exchange believes the proposed addition of fee code DX and the
revised applicability of fee code DQ are reasonable as the Exchange
offers many other fee codes that are specifically designed for orders
that add liquidity to the Exchange or remove liquidity from the
Exchange.\43\ While the fee assessed for orders appended with fee code
DX will be slightly higher than the fee assessed for orders appended
with fee code DQ, the Exchange believes that promoting liquidity-adding
MDOs containing a QDP instruction represents an equitable allocation of
fees and rebates and is not unfairly discriminatory because the fees
will apply to all Members who add or remove liquidity utilizing an MDO
with a QDP instruction, equally. Furthermore, the Exchange believes
that assessing a lower fee under fee code DQ will promote a reasonable
means to encourage liquidity adding volume to the Exchange for MDOs
utilizing a QDP instruction. While Members are assessed a small fee to
utilize MDOs with a QDP instruction, the Exchange believes that
promoting liquidity adding activity would help deepen the Exchange's
liquidity pool, support the quality of price discovery, and improve
market quality, for all investors.
---------------------------------------------------------------------------
\43\ See e.g., EDGX Equities Fee Schedule, Fee Codes 3 and 6.
---------------------------------------------------------------------------
The Exchange believes that the proposed changes to its Add/Remove
Volume Tiers and Non-Displayed Add Volume Tiers 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 1, at
least two Members will be able to satisfy proposed Add Volume Tier 2,
at least two Members will be able to satisfy proposed Add Volume Tier
3, at least one Member will be able to satisfy proposed Add Volume Tier
4, at least 1 Member will be able to satisfy proposed Add Volume Tier
5, at least two Members will be able to satisfy proposed Non-Displayed
Add Volume Tier 1, at least two Members will be able to satisfy
proposed Non-Displayed Add Volume Tier 2, and at least one Member will
be able to satisfy proposed Non-Displayed Add Volume Tier 3. 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 Growth Tiers 1-3,
Non-Displayed Step-Up Volume Tiers 1 and 2, and Retail Growth Tiers 1
and 2 enables the Exchange to redirect resources and funding into other
programs and tiers intended to incentivize increased order flow.
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
changes to the Exchange's Add/Remove Volume Tiers and Non-Displayed Add
Volume Tiers will apply to all Members equally in that all Members are
eligible for each of the Tiers, have a reasonable opportunity to
[[Page 34555]]
meet the Tiers' criteria and will receive the enhanced rebate on their
qualifying orders if such criteria is met. In addition, the Exchange
proposal to eliminate Growth Tiers 1-3, Non-Displayed Step-Up Volume
Tiers 1 and 2, and Retail Growth Tiers 1 and 2 will not impose any
burden on intramarket competition because it applies to all Members
uniformly, as in, the tiers will no longer be available to any Member.
The Exchange does not believe the proposed changes burden competition,
but rather, enhances competition as it is intended to increase the
competitiveness of EDGX by amending an existing pricing incentive and
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.
The Exchange believes the proposal to introduce the DX fee code
does not impose a burden on intramarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act. The
proposed fees associated with fee code DX would apply to all Members
equally in that all Members would be subject to the same flat fee for
the execution of an MDO with a QDP instruction that removes liquidity
from the Exchange. Although MDOs entered with the QDP instruction would
be subject to the pricing described in this proposed rule change, the
Exchange does not believe that pricing would impose any significant
burden on intramarket competition as this fee would be applied in the
same manner to the execution of any MDO entered with a QDP instruction
that removes liquidity from the Exchange. Both MDO and the associated
QDP instruction are available to all Members on an equal and non-
discriminatory basis. As a result, any Member can decide to use (or not
use) the QDP instruction based on the benefits provided by that
instruction in potentially avoiding unfavorable executions, and the
associated charge that the Exchange proposes to introduce. As
discussed, any firm that chooses to use the QDP instruction with an MDO
that removes liquidity would be charged the same flat fee for the
execution of orders that are entered with this instruction. The
proposal to modify fee code DQ to apply only to MDO orders using the
QDP instruction that add liquidity to the Exchange similarly does not
impose a burden on intramarket competition in that the applicability of
the fee code will apply equally to all Members in that all Members
would be subject to the same flat fee for the execution of an MDO with
a QDP instruction that adds liquidity to the Exchange and the Exchange
does not propose a change to the existing fee.
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.\44\ 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.'' \45\ 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'. . . .'' \46\ 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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\44\ Supra note 3.
\45\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\46\ 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 \47\ and paragraph (f) of Rule 19b-4 \48\
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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\47\ 15 U.S.C. 78s(b)(3)(A).
\48\ 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-CboeEDGX-2023-036 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange
[[Page 34556]]
Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeEDGX-2023-036. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to File Number SR-CboeEDGX-2023-036, and should be
submitted on or before June 20, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\49\
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\49\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-11356 Filed 5-26-23; 8:45 am]
BILLING CODE 8011-01-P
