Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule, 38582-38586 [2023-12575]

Download as PDF 38582 Federal Register / Vol. 88, No. 113 / Tuesday, June 13, 2023 / Notices other options markets and will offer market participants with another choice of where to transact options. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. ddrumheller on DSK120RN23PROD with NOTICES1 Intra-Market Competition The proposed amendments do not impose an undue burden on intramarket competition. In terms of intramarket competition, the Exchange does not believe that its proposals will place any category of market participant at a competitive disadvantage. The proposed Floor Broker Incentive Program rebates should encourage Floor Brokers to send additional order flow to Phlx to obtain rebates and lower their costs. Any market participant may send an order to a Phlx Floor Broker for execution on Phlx’s trading floor. The Exchange believes that the additional liquidity will enhance the quality of the Exchange’s market and increase certain trading opportunities on the Exchange’s trading floor for floor members. The Exchange’s proposal to increase the Floor Transaction (Open Outcry) Floor Broker Incentive Program rebates that will be paid on qualifying volume at each threshold level ($0.03 to $0.05 per contract for 1–5,000,000; $0.06 to $0.08 per contract for 5,000,001 to 10,000,000; and $0.09 to $0.11 per contract for greater than 10,000,000) does not impose an undue burden on competition as the Exchange would uniformly calculate all qualifying volume and uniformly pay rebates associated with the Floor Transaction (Open Outcry) Floor Broker Incentive Program up to $1,000,000 in rebates a month. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. VerDate Sep<11>2014 18:45 Jun 12, 2023 Jkt 259001 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)(ii) of the Act.13 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: (i) necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule 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 Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 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–Phlx–2023–23 and should be submitted on or before July 5, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–12578 Filed 6–12–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97663; File No. SR–CBOE– 2023–030] • 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– Phlx–2023–23 on the subject line. Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Paper Comments Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 1, 2023, Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) 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. • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–Phlx–2023–23. 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, June 7, 2023. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) proposes to amend its Fees Schedule. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://www.cboe.com/ AboutCBOE/ 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 13 15 PO 00000 U.S.C. 78s(b)(3)(A)(ii). Frm 00105 Fmt 4703 Sfmt 4703 E:\FR\FM\13JNN1.SGM 13JNN1 Federal Register / Vol. 88, No. 113 / Tuesday, June 13, 2023 / Notices CBOELegalRegulatoryHome.aspx), 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 ddrumheller on DSK120RN23PROD with NOTICES1 1. Purpose The Exchange proposes to amend its Fees Schedule, effective June 1, 2023. 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 options venues to which market participants may direct their order flow. Based on publicly available information, no single options exchange has more than 15% of the market share.3 Thus, in such a low-concentrated and highly competitive market, no single options exchange possesses significant pricing power in the execution of option order flow. The Exchange believes that the ever-shifting market share among the exchanges from month to month demonstrates that market participants can shift order flow or discontinue to reduce use of certain categories of products in response to fee changes. Accordingly, competitive forces constrain the Exchange’s transaction fees, and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. In response to competitive pricing, the Exchange, like other options exchanges, offers rebates and assesses fees for certain order types 3 See Cboe Global Markets U.S. Options Monthly Market Volume Summary (May 26, 2023), available at https://markets.cboe.com/us/options/market_ statistics/. VerDate Sep<11>2014 18:45 Jun 12, 2023 Jkt 259001 executed on or routed through the Exchange. Also, in response to the competitive environment, the Exchange offers various tiered incentive programs which provide Trading Permit Holders (‘‘TPHs’’) opportunities to qualify for higher rebates or reduced rates where certain volume criteria and thresholds are met. Tiered pricing provides an incremental incentive for TPHs to strive for higher tier levels, which provides increasingly higher benefits or discounts for satisfying increasingly more stringent criteria. For example, the Exchange currently offers, among other tiered volume programs, a Floor Broker Sliding Scale Rebate Program, which offers four tiers that provide rebates on a sliding scale 4 for qualifying orders where a TPH meets certain liquidity thresholds. The Program applies to all products except for Underlying Symbol List A,5 Sector Indexes,6 DJX, MRUT, MXEA, MXEF, NANOS, XSP, and FLEX Micros (‘‘multiply-listed options’’). The Program offers two categories of rebates that correspond to each of the proposed tiers; one that applies to Firm Facilitated orders (i.e., orders that yield fee code FF) 7 and another that applies to all other non-Firm Facilitated orders (i.e., orders that do not yield fee code FF). The current Floor Broker Sliding Scale Rebate Program tiers and corresponding rebates are as follows: • Tier 1 provides a rebate of $0.01 per contract for all qualifying (i.e., NonCustomer, Non-Strategy, Floor Broker orders in all products except Underlying Symbol List A, Sector Indexes, DJX, 4 The rebate offered under each tier is only applied to the qualifying volume within that tier. In addition, the Exchange calculates the average rebate for each type of rebate (Firm Facilitated and Non-Firm Facilitated) based on the TPH’s total qualifying volume across all four tiers plus its qualifying baseline volume (which corresponds to a rebate of $0.00). Each respective average rebate is applied to the percentage of qualifying volume that corresponds specifically to the type of order (Firm Facilitated or Non-Firm Facilitated) volume and added together, which results in a final average rebate. The final average rebate is then applied to the TPH’s total qualifying executions. This is consistent with the manner in which the Exchange calculates rebates for other sliding scale programs offered under the Fees Schedule. 5 See Cboe Options Fees Schedule, Footnote 34, which provides that Underlying Symbol List A includes OEX, XEO, RUT, RLG, RLV, RUI, UKXM, SPX (includes SPXW), SPESG and VIX. 6 See Cboe Options Fees Schedule, Footnote 47, which provides that Sector Index underlying symbols include IXB, SIXC, IXE, IXI, IXM, IXR, IXRE, IXT, IXU, IXV AND IXY, and corresponding option symbols include SIXB, SIXC, SIXE, SIXI, SIXM, SIXR, SIXRE, SIXT, SIXU, SIXV AND SIXY. 7 Orders that yield fee code FF are not assessed a charge. See Cboe U.S. Options Fee Schedules, Fees and Associated Fee Codes, available at: https:// markets.cboe.com/us/options/membership/fee_ schedule/cboe/. PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 38583 MRUT, MXEA, MXEF, NANOS, XSP, and FLEX Micros) Firm Facilitated orders, and a rebate of $0.03 per contract for all qualifying non-Firm Facilitated orders, where a TPH has a Step-Up Volume in Non-Customer, NonStrategy, Floor Broker Volume (in applicable products) from April 2021 that is greater than zero contracts; • Tier 2 provides a rebate of $0.01 per contract for all qualifying Firm Facilitated orders, and a rebate of $0.04 per contract for all qualifying non-Firm Facilitated orders, where a TPH has a Step-Up Volume in Non-Customer, NonStrategy, Floor Broker Volume (in applicable products) from April 2021 that is greater than or equal to 100,000 contracts; • Tier 3 provides a rebate of $0.01 per contract for all qualifying Firm Facilitated orders, and a rebate of $0.05 per contract for all qualifying non-Firm Facilitated orders, where a TPH has a Step-Up Volume in Non-Customer, NonStrategy, Floor Broker Volume (in applicable products) from April 2021 that is greater than or equal to 250,000 contracts; and • Tier 4 provides a rebate of $0.015 per contract for all qualifying Firm Facilitated orders, and a rebate of $0.06 per contract for all qualifying non-Firm Facilitated orders, where a TPH has a Step-Up Volume in Non-Customer, NonStrategy, Floor Broker Volume (in applicable products) from April 2021 that is greater than or equal to 500,000 contracts. The Exchange now proposes to update the Floor Broker Sliding Scale Rebate Program. Specifically, the Exchange proposes to amend tier rebates for Tiers 1, 3, and 4, and to amend tier criteria for all Tiers 1 through 4. The proposed changes are as follows. • Tier 1, as amended, provides a rebate of $0.005 per contract for all qualifying (i.e., Non-Customer, NonStrategy, Floor Broker orders in all products except Underlying Symbol List A, Sector Indexes, DJX, MRUT, MXEA, MXEF, NANOS, XSP, and FLEX Micros) Firm Facilitated orders, and a rebate of $0.020 per contract for all qualifying non-Firm Facilitated orders, where a TPH has Volume in Non-Customer, Non-Strategy, Floor Broker (in applicable products) that is greater than zero contracts; • Tier 2, as amended, provides a rebate of $0.01 per contract for all qualifying Firm Facilitated orders, and a rebate of $0.04 per contract for all qualifying non-Firm Facilitated orders, where a TPH has Volume in NonCustomer, Non-Strategy, Floor Broker (in applicable products) that is greater than or equal to 250,000 contracts; E:\FR\FM\13JNN1.SGM 13JNN1 38584 Federal Register / Vol. 88, No. 113 / Tuesday, June 13, 2023 / Notices • Tier 3, as amended, provides a rebate of $0.02 per contract for all qualifying Firm Facilitated orders, and a rebate of $0.07 per contract for all qualifying non-Firm Facilitated orders, where a TPH has Volume in NonCustomer, Non-Strategy, Floor Broker (in applicable products) that is greater than or equal to 500,000 contracts; and • Tier 4, as amended, provides a rebate of $0.025 per contract for all qualifying Firm Facilitated orders, and a rebate of $0.1 per contract for all qualifying non-Firm Facilitated orders, where a TPH has Volume in NonCustomer, Non-Strategy, Floor Broker (in applicable products) that is greater than or equal to 1,000,000 contracts.8 Additionally, the Exchange proposes certain clean-up changes to its Fees Schedule to eliminate PULSe Workstation fees and references in the Routing, Network Access Port, and Logical Connectivity sections and Footnotes 27 and 45, as PULSe was decommissioned in January 2021, and thus, such fees and references are obsolete. The Exchange also proposes to eliminate reference to Cboe ‘‘Command’’ system in Footnotes 27, 36, and 45 of the Fees Schedule, as it no longer uses that naming convention with respect to its system. ddrumheller on DSK120RN23PROD with NOTICES1 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ‘‘Act’’) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.9 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 10 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 8 The proposed change also amends language in the Fees Schedule regarding the Floor Broker Sliding Scale Rebate Program to note that the Exchange will aggregate a TPH’s volume with the volume of its affiliates (‘‘affiliate’’ defined as having at least 75% common ownership between the two entities as reflected on each entity’s Form BD, Schedule A) for the purposes of calculating Volume each month (rather than Step-Up Volume). 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 18:45 Jun 12, 2023 Jkt 259001 proposed rule change is consistent with the Section 6(b)(5) 11 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange also believes the proposed rule change is consistent with Section 6(b)(4) of the Act,12 which requires that Exchange rules provide for the equitable allocation of reasonable dues, fees, and other charges among its Trading Permit Holders and other persons using its facilities. As stated 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 proposed changes reflect a competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange’s trading floor, which the Exchange believes would enhance market quality to the benefit of all TPHs. The Exchange notes that the proposed volume-based incentives and discounts, as amended, are reasonable, equitable and non-discriminatory because they are open to all TPHs 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. Additionally, as noted above, the Exchange operates in a highly competitive market. The Exchange is only one of several options venues to which market participants may direct their order flow, and it represents a small percentage of the overall market. Competing options exchanges offer similar tiered pricing structures to that of the Exchange, including incentive programs that offer rebates or rates that apply based upon TPHs achieving certain volume thresholds. The Exchange believes that reducing the rebates offered under Tier 1 is reasonable because TPHs are still eligible to receive a rebate for meeting the corresponding criteria, albeit at a lower amount than before. The Exchange believes that increasing the rebates offered under Tiers 3 and 4 is reasonable because TPHs will be receiving higher rebates for meeting the corresponding criteria. The Exchange believes the proposed changes to the rebate amounts offered under these tiers are commensurate with the corresponding criteria under the respective tiers, even as amended. 11 Id. 12 15 PO 00000 U.S.C. 78f(b)(4). Frm 00107 Fmt 4703 Sfmt 4703 The Exchange also believes that the proposed changes to the Floor Broker Sliding Scale Rebate Program are reasonable and equitable because they are designed to incentivize increased order flow in multiply-listed options to the Exchange’s trading floor. The Exchange believes the changes are reasonably designed to encourage market participants to submit NonCustomer, Non-Strategy order flow, which provides liquidity to the Exchange’s trading floor, facilitates tighter spreads and may attract an additional corresponding increase in order flow from other market participants. Increased overall order flow benefits all investors by deepening the Exchange’s liquidity pool, potentially providing even greater execution incentives and opportunities, as well as improved price opportunities for all market participants. Moreover, the Exchange believes that the proposed changes to the criteria and rebates of the Floor Broker Sliding Scale Rebate Program are reasonable as they are comparable to the tier criteria and rebates or reduced rates offered under similar volume-based incentive programs offered at other options exchanges.13 The Exchange also believes that it is reasonable to continue to offer higher rebates for Non-Firm Facilitated order flow than for Firm Facilitated order flow (i.e., where the same executing broker and clearing firm are on both sides of the transaction) because it wishes to further incentivize order flow that attracts contra-side interest from a wider variety of market participants, which may further contribute towards a robust, wellbalance market ecosystem. The Exchange believes that the proposed changes to the Floor Broker Sliding Scale Rebate Program represent an equitable allocation of fees and are not unfairly discriminatory because the program, as amended, applies uniformly to all qualifying TPHs, in that all TPHs that submit the requisite order flow (i.e., 13 See BOX Options Fee Schedule, Section V(C), Qualified Open Outcry (‘‘QOO’’) Order Rebate, which offers a rebate for floor broker orders of $0.075 or $0.05 per contract (depending on the capacity) and does not apply to Strategy QOO Orders. See also NYSE American Options Fee Schedule, E.1, Floor Broker Fixed Cost Prepayment Incentive Program (the ‘‘FB Prepay Program’’), which offers participating floor brokers annual rebates for achieving growth in manual volume by a certain percentage as measured against certain benchmarks, and does not apply to volume executed as part of Strategy Execution Fee Cap (that is, strategy orders); and NYSE Arca Options Fee Schedule, Floor Broker Fixed Cost Prepayment Incentive Program (the ‘‘FB Prepay Program), which provides a rebate for floor broker orders on manual billable volume of $0.08 to $0.10 per billable side (based on billable sides), and excludes strategy executions from the program. E:\FR\FM\13JNN1.SGM 13JNN1 Federal Register / Vol. 88, No. 113 / Tuesday, June 13, 2023 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 Non-Customer, Non-Strategy, Floor Broker Volume in multiply-listed options) have the opportunity to compete for and achieve the tiers, as amended. The proposed rebates will apply automatically and uniformly to all TPHs that achieve the proposed corresponding criteria. Without having a view of activity on other markets and off-exchange venues, the Exchange has no way of knowing whether these proposed changes would definitely result in any TPHs qualifying for Tiers 1–4. While the Exchange has no way of predicting with certainty how the proposed changes will impact TPH activity, based on trading activity from the prior months, the Exchange anticipates that at least 2 TPHs will achieve Tier 2, 2 TPH will achieve Tier 3 and 1 TPH will achieve Tier 4. Finally, the Exchange believes eliminating PULSe fees and references as discussed above is reasonable as such PULSe has been decommissioned, rendering such fees and references obsolete. The proposed change to eliminate references to Cboe ‘‘Command’’ is also reasonable as the Exchange no longer refers to its system as ‘‘Cboe Command’’. The proposed deletions reduce potential confusion and maintain clarity in the Fees Schedule. 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. As discussed above, the Exchange believes that the proposed changes encourage the submission of additional liquidity to the floor of a public exchange, thereby promoting market depth, price discovery and transparency and enhancing order execution and price improvement opportunities for all TPHs. The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the Floor Broker Sliding Scale Rebate Program, as amended, will apply equally to all similarly situated TPHs that submit the requisite order flow. That is, the proposed criteria and rebates will apply equally to all NonCustomer, Non-Strategy, Floor Broker orders in multiply-listed options. The Exchange does not believe that the continued application of Floor Broker Sliding Scale Rebate Program to NonCustomer orders will impose any significant burden on intramarket VerDate Sep<11>2014 18:45 Jun 12, 2023 Jkt 259001 competition that is not necessary or appropriate in furtherance of the purposes of the Act because the Exchange recognizes that Non-Customer participation in the markets is essential to a robust hybrid market ecosystem as each contributes unique and important liquidity to the Exchange’s trading floor, as described above. Such Non-Customer order flow may result in overall tighter spreads, attracting order flow from other market participants, more execution opportunities at improved prices, and/ or deeper levels of liquidity, which may ultimately improve price transparency, provide continuous trading opportunities and enhance market quality on the Exchange, to the benefit of all market participants. The Exchange also does not believe that the proposed changes will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the Act because, as noted above, competing options exchanges have similar incentive programs and discount opportunities in place in connection with floor broker order flow.14 Additionally, and as previously discussed, the Exchange operates in a highly competitive market. TPHs have numerous alternative venues that they may participate on and direct their order flow, including 15 other options exchanges, many of which offer substantially similar volume-based incentive programs.15 Based on publicly available information, no single options exchange has more than 15% of the market share.16 Therefore, no exchange possesses significant pricing power in the execution of option order flow. Indeed, participants can readily choose to send their orders to other exchange, and, additionally 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.’’ 17 The fact that this market is competitive has also long been recognized by the courts. 14 See supra note 13. 15 See supra note 13. 16 See supra note 3. 17 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 38585 In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit stated as follows: ‘‘[n]o one disputes that competition for order flow is ‘fierce.’ . . . As the SEC explained, ‘[i]n the U.S. national market system, buyers and sellers of securities, and the brokerdealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution’; [and] ‘no exchange can afford to take its market share percentages for granted’ because ‘no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers’ . . . . ’’.18 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 19 and paragraph (f) of Rule 19b–4 20 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: 18 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)). 19 15 U.S.C. 78s(b)(3)(A). 20 17 CFR 240.19b–4(f). E:\FR\FM\13JNN1.SGM 13JNN1 38586 Federal Register / Vol. 88, No. 113 / Tuesday, June 13, 2023 / Notices Electronic Comments DEPARTMENT OF STATE ACTION: • 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– CBOE–2023–030 on the subject line. [Public Notice: 12096] SUMMARY: Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. ddrumheller on DSK120RN23PROD with NOTICES1 All submissions should refer to file number SR–CBOE–2023–030. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 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–CBOE–2023–030 and should be submitted on or before July 5, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–12575 Filed 6–12–23; 8:45 am] Notice of Determinations; Culturally Significant Objects Being Imported for Exhibition—Determinations: ‘‘Emerging Ecologies: Architecture and the Rise of Environmentalism’’ Exhibition Notice is hereby given of the following determinations: I hereby determine that certain objects being imported from abroad pursuant to agreements with their foreign owners or custodians for temporary display in the exhibition ‘‘Emerging Ecologies: Architecture and the Rise of Environmentalism’’ at The Museum of Modern Art, New York, New York, and at possible additional exhibitions or venues yet to be determined, are of cultural significance, and, further, that their temporary exhibition or display within the United States as aforementioned is in the national interest. I have ordered that Public Notice of these determinations be published in the Federal Register. FOR FURTHER INFORMATION CONTACT: Reed Liriano, Program Coordinator, Office of the Legal Adviser, U.S. Department of State (telephone: 202– 632–6471; email: section2459@ state.gov). The mailing address is U.S. Department of State, L/PD, 2200 C Street NW (SA–5), Suite 5H03, Washington, DC 20522–0505. SUPPLEMENTARY INFORMATION: The foregoing determinations were made pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), E.O. 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, et seq.; 22 U.S.C. 6501 note, et seq.), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236–3 of August 28, 2000, and Delegation of Authority No. 523 of December 22, 2021. SUMMARY: Nicole L. Elkon, Deputy Assistant Secretary for Professional and Cultural Exchanges, Bureau of Educational and Cultural Affairs, Department of State. [FR Doc. 2023–12587 Filed 6–12–23; 8:45 am] BILLING CODE 4710–05–P SUSQUEHANNA RIVER BASIN COMMISSION Projects Approved for Minor Modifications BILLING CODE 8011–01–P Susquehanna River Basin Commission. AGENCY: 21 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 18:45 Jun 12, 2023 Jkt 259001 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 Notice. This notice lists the minor modifications approved for a previously approved project by the Susquehanna River Basin Commission during the period set forth in DATES. DATES: May 1–31, 2023. ADDRESSES: Susquehanna River Basin Commission, 4423 North Front Street, Harrisburg, PA 17110–1788. FOR FURTHER INFORMATION CONTACT: Jason E. Oyler, General Counsel and Secretary to the Commission, telephone: (717) 238–0423, ext. 1312; fax (717) 238–2436; email: joyler@srbc.net. Regular mail inquiries may be sent to the above address. SUPPLEMENTARY INFORMATION: This notice lists previously approved projects, receiving approval of minor modifications, described below, pursuant to 18 CFR 806.18 or to Commission Resolution Nos. 2013–11 and 2015–06 for the time period specified above. 1. Nature’s Way Purewater Systems, Inc.—USHydrations—Dupont Bottling Plant, Docket No. 20230319, Dupont Borough, Luzerne County, Pa.; modification to rescind approval to withdraw groundwater from Covington Springs Borehole 1 and remove from approved consumptive use sources; Approval Date: May 10, 2023. Authority: Public Law 91–575, 84 Stat. 1509 et seq., 18 CFR parts 806 and 808. Dated: June 7, 2023. Jason E. Oyler, General Counsel and Secretary to the Commission. [FR Doc. 2023–12545 Filed 6–12–23; 8:45 am] BILLING CODE 7040–01–P SUSQUEHANNA RIVER BASIN COMMISSION Projects Approved for Consumptive Uses of Water Susquehanna River Basin Commission. ACTION: Notice. AGENCY: This notice lists Approvals by Rule for projects by the Susquehanna River Basin Commission during the period set forth in DATES. DATES: May 1–31, 2023. ADDRESSES: Susquehanna River Basin Commission, 4423 North Front Street, Harrisburg, PA 17110–1788. FOR FURTHER INFORMATION CONTACT: Jason E. Oyler, General Counsel and Secretary to the Commission, telephone: (717) 238–0423, ext. 1312; fax: (717) SUMMARY: E:\FR\FM\13JNN1.SGM 13JNN1

Agencies

[Federal Register Volume 88, Number 113 (Tuesday, June 13, 2023)]
[Notices]
[Pages 38582-38586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12575]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97663; File No. SR-CBOE-2023-030]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fees Schedule

June 7, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on June 1, 2023, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe 
Options'') 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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its Fees Schedule. The text of the proposed rule change is 
provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (https://www.cboe.com/AboutCBOE/

[[Page 38583]]

CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fees Schedule, effective June 1, 
2023.
    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 options venues to which market participants 
may direct their order flow. Based on publicly available information, 
no single options exchange has more than 15% of the market share.\3\ 
Thus, in such a low-concentrated and highly competitive market, no 
single options exchange possesses significant pricing power in the 
execution of option order flow. The Exchange believes that the ever-
shifting market share among the exchanges from month to month 
demonstrates that market participants can shift order flow or 
discontinue to reduce use of certain categories of products in response 
to fee changes. Accordingly, competitive forces constrain the 
Exchange's transaction fees, and market participants can readily trade 
on competing venues if they deem pricing levels at those other venues 
to be more favorable. In response to competitive pricing, the Exchange, 
like other options exchanges, offers rebates and assesses fees for 
certain order types executed on or routed through the Exchange.
---------------------------------------------------------------------------

    \3\ See Cboe Global Markets U.S. Options Monthly Market Volume 
Summary (May 26, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
---------------------------------------------------------------------------

    Also, in response to the competitive environment, the Exchange 
offers various tiered incentive programs which provide Trading Permit 
Holders (``TPHs'') opportunities to qualify for higher rebates or 
reduced rates where certain volume criteria and thresholds are met. 
Tiered pricing provides an incremental incentive for TPHs to strive for 
higher tier levels, which provides increasingly higher benefits or 
discounts for satisfying increasingly more stringent criteria. For 
example, the Exchange currently offers, among other tiered volume 
programs, a Floor Broker Sliding Scale Rebate Program, which offers 
four tiers that provide rebates on a sliding scale \4\ for qualifying 
orders where a TPH meets certain liquidity thresholds. The Program 
applies to all products except for Underlying Symbol List A,\5\ Sector 
Indexes,\6\ DJX, MRUT, MXEA, MXEF, NANOS, XSP, and FLEX Micros 
(``multiply-listed options''). The Program offers two categories of 
rebates that correspond to each of the proposed tiers; one that applies 
to Firm Facilitated orders (i.e., orders that yield fee code FF) \7\ 
and another that applies to all other non-Firm Facilitated orders 
(i.e., orders that do not yield fee code FF).
---------------------------------------------------------------------------

    \4\ The rebate offered under each tier is only applied to the 
qualifying volume within that tier. In addition, the Exchange 
calculates the average rebate for each type of rebate (Firm 
Facilitated and Non-Firm Facilitated) based on the TPH's total 
qualifying volume across all four tiers plus its qualifying baseline 
volume (which corresponds to a rebate of $0.00). Each respective 
average rebate is applied to the percentage of qualifying volume 
that corresponds specifically to the type of order (Firm Facilitated 
or Non-Firm Facilitated) volume and added together, which results in 
a final average rebate. The final average rebate is then applied to 
the TPH's total qualifying executions. This is consistent with the 
manner in which the Exchange calculates rebates for other sliding 
scale programs offered under the Fees Schedule.
    \5\ See Cboe Options Fees Schedule, Footnote 34, which provides 
that Underlying Symbol List A includes OEX, XEO, RUT, RLG, RLV, RUI, 
UKXM, SPX (includes SPXW), SPESG and VIX.
    \6\ See Cboe Options Fees Schedule, Footnote 47, which provides 
that Sector Index underlying symbols include IXB, SIXC, IXE, IXI, 
IXM, IXR, IXRE, IXT, IXU, IXV AND IXY, and corresponding option 
symbols include SIXB, SIXC, SIXE, SIXI, SIXM, SIXR, SIXRE, SIXT, 
SIXU, SIXV AND SIXY.
    \7\ Orders that yield fee code FF are not assessed a charge. See 
Cboe U.S. Options Fee Schedules, Fees and Associated Fee Codes, 
available at: https://markets.cboe.com/us/options/membership/fee_schedule/cboe/.
---------------------------------------------------------------------------

    The current Floor Broker Sliding Scale Rebate Program tiers and 
corresponding rebates are as follows:
     Tier 1 provides a rebate of $0.01 per contract for all 
qualifying (i.e., Non-Customer, Non-Strategy, Floor Broker orders in 
all products except Underlying Symbol List A, Sector Indexes, DJX, 
MRUT, MXEA, MXEF, NANOS, XSP, and FLEX Micros) Firm Facilitated orders, 
and a rebate of $0.03 per contract for all qualifying non-Firm 
Facilitated orders, where a TPH has a Step-Up Volume in Non-Customer, 
Non-Strategy, Floor Broker Volume (in applicable products) from April 
2021 that is greater than zero contracts;
     Tier 2 provides a rebate of $0.01 per contract for all 
qualifying Firm Facilitated orders, and a rebate of $0.04 per contract 
for all qualifying non-Firm Facilitated orders, where a TPH has a Step-
Up Volume in Non-Customer, Non-Strategy, Floor Broker Volume (in 
applicable products) from April 2021 that is greater than or equal to 
100,000 contracts;
     Tier 3 provides a rebate of $0.01 per contract for all 
qualifying Firm Facilitated orders, and a rebate of $0.05 per contract 
for all qualifying non-Firm Facilitated orders, where a TPH has a Step-
Up Volume in Non-Customer, Non-Strategy, Floor Broker Volume (in 
applicable products) from April 2021 that is greater than or equal to 
250,000 contracts; and
     Tier 4 provides a rebate of $0.015 per contract for all 
qualifying Firm Facilitated orders, and a rebate of $0.06 per contract 
for all qualifying non-Firm Facilitated orders, where a TPH has a Step-
Up Volume in Non-Customer, Non-Strategy, Floor Broker Volume (in 
applicable products) from April 2021 that is greater than or equal to 
500,000 contracts.
    The Exchange now proposes to update the Floor Broker Sliding Scale 
Rebate Program. Specifically, the Exchange proposes to amend tier 
rebates for Tiers 1, 3, and 4, and to amend tier criteria for all Tiers 
1 through 4. The proposed changes are as follows.
     Tier 1, as amended, provides a rebate of $0.005 per 
contract for all qualifying (i.e., Non-Customer, Non-Strategy, Floor 
Broker orders in all products except Underlying Symbol List A, Sector 
Indexes, DJX, MRUT, MXEA, MXEF, NANOS, XSP, and FLEX Micros) Firm 
Facilitated orders, and a rebate of $0.020 per contract for all 
qualifying non-Firm Facilitated orders, where a TPH has Volume in Non-
Customer, Non-Strategy, Floor Broker (in applicable products) that is 
greater than zero contracts;
     Tier 2, as amended, provides a rebate of $0.01 per 
contract for all qualifying Firm Facilitated orders, and a rebate of 
$0.04 per contract for all qualifying non-Firm Facilitated orders, 
where a TPH has Volume in Non-Customer, Non-Strategy, Floor Broker (in 
applicable products) that is greater than or equal to 250,000 
contracts;

[[Page 38584]]

     Tier 3, as amended, provides a rebate of $0.02 per 
contract for all qualifying Firm Facilitated orders, and a rebate of 
$0.07 per contract for all qualifying non-Firm Facilitated orders, 
where a TPH has Volume in Non-Customer, Non-Strategy, Floor Broker (in 
applicable products) that is greater than or equal to 500,000 
contracts; and
     Tier 4, as amended, provides a rebate of $0.025 per 
contract for all qualifying Firm Facilitated orders, and a rebate of 
$0.1 per contract for all qualifying non-Firm Facilitated orders, where 
a TPH has Volume in Non-Customer, Non-Strategy, Floor Broker (in 
applicable products) that is greater than or equal to 1,000,000 
contracts.\8\
---------------------------------------------------------------------------

    \8\ The proposed change also amends language in the Fees 
Schedule regarding the Floor Broker Sliding Scale Rebate Program to 
note that the Exchange will aggregate a TPH's volume with the volume 
of its affiliates (``affiliate'' defined as having at least 75% 
common ownership between the two entities as reflected on each 
entity's Form BD, Schedule A) for the purposes of calculating Volume 
each month (rather than Step-Up Volume).
---------------------------------------------------------------------------

    Additionally, the Exchange proposes certain clean-up changes to its 
Fees Schedule to eliminate PULSe Workstation fees and references in the 
Routing, Network Access Port, and Logical Connectivity sections and 
Footnotes 27 and 45, as PULSe was decommissioned in January 2021, and 
thus, such fees and references are obsolete. The Exchange also proposes 
to eliminate reference to Cboe ``Command'' system in Footnotes 27, 36, 
and 45 of the Fees Schedule, as it no longer uses that naming 
convention with respect to its system.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\9\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \10\ 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) \11\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange also believes the proposed rule 
change is consistent with Section 6(b)(4) of the Act,\12\ which 
requires that Exchange rules provide for the equitable allocation of 
reasonable dues, fees, and other charges among its Trading Permit 
Holders and other persons using its facilities.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ Id.
    \12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    As stated 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 proposed changes 
reflect a competitive pricing structure designed to incentivize market 
participants to direct their order flow to the Exchange's trading 
floor, which the Exchange believes would enhance market quality to the 
benefit of all TPHs. The Exchange notes that the proposed volume-based 
incentives and discounts, as amended, are reasonable, equitable and 
non-discriminatory because they are open to all TPHs 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. Additionally, as noted 
above, the Exchange operates in a highly competitive market. The 
Exchange is only one of several options venues to which market 
participants may direct their order flow, and it represents a small 
percentage of the overall market. Competing options exchanges offer 
similar tiered pricing structures to that of the Exchange, including 
incentive programs that offer rebates or rates that apply based upon 
TPHs achieving certain volume thresholds.
    The Exchange believes that reducing the rebates offered under Tier 
1 is reasonable because TPHs are still eligible to receive a rebate for 
meeting the corresponding criteria, albeit at a lower amount than 
before. The Exchange believes that increasing the rebates offered under 
Tiers 3 and 4 is reasonable because TPHs will be receiving higher 
rebates for meeting the corresponding criteria. The Exchange believes 
the proposed changes to the rebate amounts offered under these tiers 
are commensurate with the corresponding criteria under the respective 
tiers, even as amended.
    The Exchange also believes that the proposed changes to the Floor 
Broker Sliding Scale Rebate Program are reasonable and equitable 
because they are designed to incentivize increased order flow in 
multiply-listed options to the Exchange's trading floor. The Exchange 
believes the changes are reasonably designed to encourage market 
participants to submit Non-Customer, Non-Strategy order flow, which 
provides liquidity to the Exchange's trading floor, facilitates tighter 
spreads and may attract an additional corresponding increase in order 
flow from other market participants. Increased overall order flow 
benefits all investors by deepening the Exchange's liquidity pool, 
potentially providing even greater execution incentives and 
opportunities, as well as improved price opportunities for all market 
participants.
    Moreover, the Exchange believes that the proposed changes to the 
criteria and rebates of the Floor Broker Sliding Scale Rebate Program 
are reasonable as they are comparable to the tier criteria and rebates 
or reduced rates offered under similar volume-based incentive programs 
offered at other options exchanges.\13\ The Exchange also believes that 
it is reasonable to continue to offer higher rebates for Non-Firm 
Facilitated order flow than for Firm Facilitated order flow (i.e., 
where the same executing broker and clearing firm are on both sides of 
the transaction) because it wishes to further incentivize order flow 
that attracts contra-side interest from a wider variety of market 
participants, which may further contribute towards a robust, well-
balance market ecosystem.
---------------------------------------------------------------------------

    \13\ See BOX Options Fee Schedule, Section V(C), Qualified Open 
Outcry (``QOO'') Order Rebate, which offers a rebate for floor 
broker orders of $0.075 or $0.05 per contract (depending on the 
capacity) and does not apply to Strategy QOO Orders. See also NYSE 
American Options Fee Schedule, E.1, Floor Broker Fixed Cost 
Prepayment Incentive Program (the ``FB Prepay Program''), which 
offers participating floor brokers annual rebates for achieving 
growth in manual volume by a certain percentage as measured against 
certain benchmarks, and does not apply to volume executed as part of 
Strategy Execution Fee Cap (that is, strategy orders); and NYSE Arca 
Options Fee Schedule, Floor Broker Fixed Cost Prepayment Incentive 
Program (the ``FB Prepay Program), which provides a rebate for floor 
broker orders on manual billable volume of $0.08 to $0.10 per 
billable side (based on billable sides), and excludes strategy 
executions from the program.
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes to the Floor Broker 
Sliding Scale Rebate Program represent an equitable allocation of fees 
and are not unfairly discriminatory because the program, as amended, 
applies uniformly to all qualifying TPHs, in that all TPHs that submit 
the requisite order flow (i.e.,

[[Page 38585]]

Non-Customer, Non-Strategy, Floor Broker Volume in multiply-listed 
options) have the opportunity to compete for and achieve the tiers, as 
amended. The proposed rebates will apply automatically and uniformly to 
all TPHs that achieve the proposed corresponding criteria. Without 
having a view of activity on other markets and off-exchange venues, the 
Exchange has no way of knowing whether these proposed changes would 
definitely result in any TPHs qualifying for Tiers 1-4. While the 
Exchange has no way of predicting with certainty how the proposed 
changes will impact TPH activity, based on trading activity from the 
prior months, the Exchange anticipates that at least 2 TPHs will 
achieve Tier 2, 2 TPH will achieve Tier 3 and 1 TPH will achieve Tier 
4.
    Finally, the Exchange believes eliminating PULSe fees and 
references as discussed above is reasonable as such PULSe has been 
decommissioned, rendering such fees and references obsolete. The 
proposed change to eliminate references to Cboe ``Command'' is also 
reasonable as the Exchange no longer refers to its system as ``Cboe 
Command''. The proposed deletions reduce potential confusion and 
maintain clarity in the Fees Schedule.

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. As discussed above, the 
Exchange believes that the proposed changes encourage the submission of 
additional liquidity to the floor of a public exchange, thereby 
promoting market depth, price discovery and transparency and enhancing 
order execution and price improvement opportunities for all TPHs.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the Floor 
Broker Sliding Scale Rebate Program, as amended, will apply equally to 
all similarly situated TPHs that submit the requisite order flow. That 
is, the proposed criteria and rebates will apply equally to all Non-
Customer, Non-Strategy, Floor Broker orders in multiply-listed options. 
The Exchange does not believe that the continued application of Floor 
Broker Sliding Scale Rebate Program to Non-Customer orders will impose 
any significant burden on intramarket competition that is not necessary 
or appropriate in furtherance of the purposes of the Act because the 
Exchange recognizes that Non-Customer participation in the markets is 
essential to a robust hybrid market ecosystem as each contributes 
unique and important liquidity to the Exchange's trading floor, as 
described above. Such Non-Customer order flow may result in overall 
tighter spreads, attracting order flow from other market participants, 
more execution opportunities at improved prices, and/or deeper levels 
of liquidity, which may ultimately improve price transparency, provide 
continuous trading opportunities and enhance market quality on the 
Exchange, to the benefit of all market participants.
    The Exchange also does not believe that the proposed changes will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the Act because, as noted above, 
competing options exchanges have similar incentive programs and 
discount opportunities in place in connection with floor broker order 
flow.\14\ Additionally, and as previously discussed, the Exchange 
operates in a highly competitive market. TPHs have numerous alternative 
venues that they may participate on and direct their order flow, 
including 15 other options exchanges, many of which offer substantially 
similar volume-based incentive programs.\15\ Based on publicly 
available information, no single options exchange has more than 15% of 
the market share.\16\ Therefore, no exchange possesses significant 
pricing power in the execution of option order flow. Indeed, 
participants can readily choose to send their orders to other exchange, 
and, additionally 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.'' \17\ 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' . . . . ''.\18\ 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.
---------------------------------------------------------------------------

    \14\ See supra note 13.
    \15\ See supra note 13.
    \16\ See supra note 3.
    \17\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \18\ 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)).
---------------------------------------------------------------------------

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 \19\ and paragraph (f) of Rule 19b-4 \20\ 
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.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

[[Page 38586]]

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-CBOE-2023-030 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

    All submissions should refer to file number SR-CBOE-2023-030. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 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-CBOE-2023-030 and should be 
submitted on or before July 5, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-12575 Filed 6-12-23; 8:45 am]
BILLING CODE 8011-01-P
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