Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Related to Physical Port Fees, 47196-47199 [2023-15480]

Download as PDF 47196 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Notices added to the distribution, please contact the Nuclear Regulatory Commission, Office of the Secretary, Washington, DC 20555, at 301–415–1969, or by email at Wendy.Moore@nrc.gov. MATTERS TO BE CONSIDERED: Week of July 24, 2023 There are no meetings scheduled for the week of July 24, 2023. Week of July 31, 2023—Tentative There are no meetings scheduled for the week of July 31, 2023. Week of August 7, 2023—Tentative There are no meetings scheduled for the week of August 7, 2023. Week of August 14, 2023—Tentative There are no meetings scheduled for the week of August 14, 2023. Week of August 21, 2023—Tentative There are no meetings scheduled for the week of August 21, 2023. Week of August 28, 2023—Tentative There are no meetings scheduled for the week of August 28, 2023. CONTACT PERSON FOR MORE INFORMATION: For more information or to verify the status of meetings, contact Wesley Held at 301–287–3591 or via email at Wesley.Held@nrc.gov. The NRC is holding the meetings under the authority of the Government in the Sunshine Act, 5 U.S.C. 552b. Dated: July 19, 2023. For the Nuclear Regulatory Commission. Monika G. Coflin, Technical Coordinator, Office of the Secretary. [FR Doc. 2023–15647 Filed 7–19–23; 4:15 pm] BILLING CODE 7590–01–P PENSION BENEFIT GUARANTY CORPORATION Submission of Information Collection for OMB Review; Comment Request; Liability for Termination of SingleEmployer Plans Pension Benefit Guaranty Corporation. ACTION: Notice of request for extension of OMB approval of collection of information. ddrumheller on DSK120RN23PROD with NOTICES1 AGENCY: The Pension Benefit Guaranty Corporation (PBGC) is requesting that the Office of Management and Budget (OMB) extend approval, under the Paperwork Reduction Act, of a collection of information contained in its regulation on Liability for Termination of Single-Employer Plans SUMMARY: VerDate Sep<11>2014 19:06 Jul 20, 2023 Jkt 259001 (OMB control number 1212–0017; expires August 31, 2023). This notice informs the public of PBGC’s request and solicits public comment on the collection of information. DATES: Comments must be received on or before August 21, 2023 to be assured of consideration. ADDRESSES: Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to www.reginfo.gov/public/do/ PRAMain. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. All comments received will be posted without change to PBGC’s website, https://www.pbgc.gov, including any personal information provided. Do not submit comments that include any personally identifiable information or confidential business information. Copies of the collection of information may be obtained by writing to Disclosure Division (disclosure@ pbgc.gov), Office of the General Counsel, Pension Benefit Guaranty Corporation, 445 12th Street SW, Washington, DC 20024–2101, or calling 202–229–4040 during normal business hours. If you are deaf or hard of hearing, or have a speech disability, please dial 7–1–1 to access telecommunications relay services. FOR FURTHER INFORMATION CONTACT: Melissa Rifkin (rifkin.melissa@ pbgc.gov), Attorney, Regulatory Affairs Division, Office of the General Counsel, Pension Benefit Guaranty Corporation, 445 12th Street SW, Washington, DC 20024–2101; 202–229–6563. If you are deaf or hard of hearing, or have a speech disability, please dial 7–1–1 to access telecommunications relay services. SUPPLEMENTARY INFORMATION: Section 4062 of the Employee Retirement Income Security Act of 1974, as amended, provides that the contributing sponsor of a single-employer pension plan and members of the sponsor’s controlled group (‘‘the employer’’) incur liability (‘‘employer liability’’) if the plan terminates with assets insufficient to pay benefit liabilities under the plan. PBGC’s statutory lien for employer liability and the payment terms for employer liability are affected by whether and to what extent employer liability exceeds 30 percent of the employer’s net worth. Section 4062.6 of PBGC’s employer liability regulation (29 CFR part 4062) requires a contributing sponsor or member of the contributing sponsor’s controlled group that believes employer liability upon plan termination exceeds 30 percent of the employer’s net worth to so notify PBGC PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 and submit net worth information to PBGC. This information is necessary to enable PBGC to determine whether and to what extent employer liability exceeds 30 percent of the employer’s net worth. The collection of information under the regulation has been approved by OMB under control number 1212–0017 (expires August 31, 2023). On May 16, 2023, PBGC published in the Federal Register a notice (at 88 FR 31289) informing the public of its intent to request an extension of this collection of information and solicited public comment. No comments were received. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. PBGC estimates that an average of 21 contributing sponsors or controlled group members per year will respond to this collection of information. PBGC further estimates that the average annual burden of this collection of information will be 12 hours and $5,400 per respondent, with an average total annual burden of 252 hours and $113,400. Issued in Washington, DC. Hilary Duke, Assistant General Counsel for Regulatory Affairs, Pension Benefit Guaranty Corporation. [FR Doc. 2023–15509 Filed 7–20–23; 8:45 am] BILLING CODE 7709–02–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97927; File No. SR–C2– 2023–014] Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Related to Physical Port Fees July 17, 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 July 3, 2023, Cboe C2 Exchange, Inc. (the ‘‘Exchange’’ or ‘‘C2’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to 1 15 2 17 E:\FR\FM\21JYN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 21JYN1 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Notices solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe C2 Exchange, Inc. (the ‘‘Exchange’’ or ‘‘C2 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://markets.cboe.com/us/ options/regulation/rule_filings/ctwo/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change ddrumheller on DSK120RN23PROD with NOTICES1 1. Purpose The Exchange proposes to amend its fee schedule relating to physical connectivity fees, effective July 3, 2023. By way of background, a physical port is utilized by a Member or non-Member to connect to the Exchange at the data centers where the Exchange’s servers are located. The Exchange currently assesses the following physical connectivity fees for Trading Permit Holders (‘‘TPHs’’) and non-TPHs on a monthly basis: $2,500 per physical port for a 1 gigabit (‘‘Gbps’’) circuit and $7,500 per physical port for a 10 Gbps circuit. The Exchange proposes to increase the monthly fee for 10 Gbps physical ports from $7,500 to $8,500 per port. The Exchange notes the proposed fee change better enables it to continue to maintain and improve its market technology and services and also notes that the proposed fee amount, even as amended, continues to be in line with, or even lower than, amounts assessed by other exchanges for similar VerDate Sep<11>2014 19:06 Jul 20, 2023 Jkt 259001 connections.3 The physical ports may also be used to access the Systems for the following affiliate exchanges and only one monthly fee currently (and will continue) to apply per port: Cboe BZX Exchange, Inc. (options and equities platforms), Cboe EDGX Exchange, Inc. (options and equities platforms), Cboe BYX Exchange, Inc., and Cboe EDGA Exchange, Inc., (‘‘Affiliate Exchanges’’).4 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.5 Specifically, the Exchange believes the proposed rule change is consistent with the section 6(b)(5) 6 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) 7 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) 8 of the Act, which requires that Exchange rules provide for the equitable allocation of reasonable dues, fees, and other charges among its TPHs and other persons using its facilities. The Exchange believes the proposed fee change is reasonable as it reflects a 3 See e.g., The Nasdaq Stock Market LLC (‘‘Nasdaq’’), General 8, Connectivity to the Exchange. Nasdaq and its affiliated exchanges charge a monthly fee of $15,000 for each 10Gbps Ultra fiber connection to the respective exchange, which is analogous to the Exchange’s 10 Gbps physical port. See also New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE Chicago Inc., NYSE National, Inc. Connectivity Fee Schedule, which provides that 10 Gbps LX LCN Circuits (which are analogous to the Exchange’s 10 Gbps physical port) are assessed $22,000 per month, per port. 4 The Affiliate Exchanges are also submitting contemporaneous identical rule filings. 5 15 U.S.C. 78f(b). 6 15 U.S.C. 78f(b)(5). 7 Id. 8 15 U.S.C. 78f(b)(4). PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 47197 moderate increase in physical connectivity fees for 10Gbps physical ports. Further, the current 10 Gbps physical port fee has remained unchanged since June 2018.9 Since its last increase 5 years ago however, there has been notable inflation. Particularly, the dollar has had an average inflation rate of 3.9% per year between 2018 and today, producing a cumulative price increase of approximately 21.1% inflation since the fee for the 10 Gbps physical port was last modified.10 Accordingly, the Exchange believes the proposed fee is reasonable as it represents only an approximate 13% increase from the rates adopted five years ago, notwithstanding the cumulative rate of 21.1%. The Exchange also believes the proposed fee is reasonable as it is still in line with, or even lower than, amounts assessed by other exchanges for similar connections.11 As noted above, the proposed fee is also the same as is concurrently being proposed for its Affiliate Exchanges. Further, TPHs are able to utilize a single port to connect to any of the Affiliate Exchanges with no additional fee assessed for that same physical port. Particularly, the Exchange believes the proposed monthly per port fee is reasonable, equitable and not unfairly discriminatory as it is assessed only once, even if it connects with another affiliate exchange since only one port is being used and the Exchange does not wish to charge multiple fees for the same port. The Exchange also believes that the proposed fee change is not unfairly discriminatory because it would be assessed uniformly across all market participants that purchase the physical ports. Further, TPHs and non-TPHs will continue to choose the method of connectivity based on their specific needs and no broker-dealer is required to become a TPH of, let alone connect directly to, the Exchange. There is also no regulatory requirement that any market participant connect to any one particular exchange. Moreover, direct 9 See Securities and Exchange Release No. 83455 (June 15, 2018), 83 FR 28892 (June 21, 2018) (SR– C2–2018–014). 10 See https://www.officialdata.org/us/inflation/ 2010?amount=1. 11 See e.g., The Nasdaq Stock Market LLC (‘‘Nasdaq’’), General 8, Connectivity to the Exchange. Nasdaq and its affiliated exchanges charge a monthly fee of $15,000 for each 10Gbps Ultra fiber connection to the respective exchange, which is analogous to the Exchange’s 10Gbps physical port. See also New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE Chicago Inc., NYSE National, Inc. Connectivity Fee Schedule, which provides that 10 Gbps LX LCN Circuits (which are analogous to the Exchange’s 10 Gbps physical port) are assessed $22,000 per month, per port. E:\FR\FM\21JYN1.SGM 21JYN1 47198 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 connectivity is not a requirement to participate on the Exchange. The Exchange also believes substitutable products and services are available to market participants, including, among other things, other options exchanges that a market participant may connect to in lieu of the Exchange, indirect connectivity to the Exchange via a thirdparty reseller of connectivity, and/or trading of any options product, such as within the Over-the-Counter (OTC) markets. Indeed, there are currently 16 registered options exchanges that trade options, some of which have similar or lower connectivity fees.12 Based on publicly available information, no single options exchange has more than approximately 19% of the market share.13 Further, low barriers to entry mean that new exchanges may rapidly enter the market and offer additional substitute platforms to further compete with the Exchange and the products it offers. For example, there are 3 exchanges that have been added in the U.S. options markets in the last 5 years (i.e., Nasdaq MRX, LLC, MIAX Pearl, LLC, and MIAX Emerald LLC) and one additional options exchange that is expected to launch in 2023 (i.e., MEMX LLC). As noted above, there is no regulatory requirement that any market participant connect to any one options exchange, nor that any market participant connect at a particular connection speed or act in a particular capacity on the Exchange, or trade any particular product offered on an exchange. Moreover, membership is not a requirement to participate on the Exchange. A market participant may submit orders to the Exchange via a Member broker or a third-party reseller of connectivity. Indeed, the Exchange is unaware of any one options exchange whose membership includes every registered broker-dealer. By way of example, while the Exchange currently has 52 TPHs, Cboe BZX has 61 members that trade options, and Cboe EDGX has 51 members that trade options. There is also no firm that is a Member of C2 Options only. Further, based on publicly available information regarding a sample of the Exchange’s competitors, NYSE American Options has 71 members,14 and NYSE Arca Options has 69 members,15 MIAX Options has 46 12 Id. 13 See Cboe Global Markets U.S. Options Market Volume Summary (June 27, 2023), available at https://markets.cboe.com/us/options/market_ statistics/. 14 See https://www.nyse.com/markets/americanoptions/membership#directory. 15 See https://www.nyse.com/markets/arcaoptions/membership#directory. VerDate Sep<11>2014 19:06 Jul 20, 2023 Jkt 259001 members 16 and MIAX Pearl Options has 40 members.17 Additionally, the Exchange notes that non-TPHs such as Service Bureaus and Extranets resell exchange connectivity. This indirect connectivity is another viable alternative for market participants to trade on the Exchange without connecting directly to the Exchange (and thus not pay the Exchange’s connectivity fees), which alternative is already being used by nonTPHs and further constrains the price that the Exchange is able to charge for connectivity to its Exchange. The Exchange notes that it could, but chooses not to, preclude market participants from reselling its connectivity. The Exchange also chooses not to adopt fees that would be assessed to third-party resellers on a per customer basis (i.e., fee based on number of TPHs that connect to the Exchange indirectly via the third-party). Indeed, the Exchange does not receive any connectivity revenue when connectivity is resold by a third-party, which often is resold to multiple customers, some of whom are agency broker-dealers that have numerous customers of their own. Accordingly, the vigorous competition among national securities exchanges provides many alternatives for firms to voluntarily decide whether direct connectivity to the Exchange is appropriate and worthwhile, and as noted above, no broker-dealer is required to become a Member of the Exchange, let alone connect directly to it. In the event that a market participant views the Exchange’s proposed fee change as more or less attractive than the competition, that market participant can choose to connect to the Exchange indirectly or may choose not to connect to that exchange and connect instead to one or more of the other 15 options markets. Notwithstanding the foregoing, the Exchange still believes that the proposed fee increase is reasonable, equitably allocated and not unfairly discriminatory, even for market participants that determine to connect directly to the Exchange for business purposes, as those business reasons should presumably result in revenue capable of covering the proposed fee. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose 16 See https://www.miaxglobal.com/sites/default/ files/page-files/MIAX_Options_Exchange_ Members_April_2023_04282023.pdf. 17 See https://www.miaxglobal.com/sites/default/ files/page-files/MIAX_Pearl_Exchange_Members_ 01172023_0.pdf. PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed fee change will not impact intramarket competition because it will apply to all similarly situated TPHs equally (i.e., all market participants that choose to purchase the 10 Gbps physical port). The Exchange’s proposed fee is still lower than some fees for similar connectivity on other exchanges and therefore may stimulate intermarket competition by attracting additional firms to connect to the Exchange or at least should not deter interested participants from connecting directly to the Exchange. Further, if the changes proposed herein are unattractive to market participants, the Exchange can, and likely will, see a decline in connectivity via 10 Gbps physical ports as a result. The Exchange operates in a highly competitive market in which market participants can determine whether or not to connect directly to the Exchange based on the value received compared to the cost of doing so. 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 18 and paragraph (f) of Rule 19b–4 19 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 15 19 17 E:\FR\FM\21JYN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 21JYN1 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Notices Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– C2–2023–014 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. ddrumheller on DSK120RN23PROD with NOTICES1 All submissions should refer to file number SR–C2–2023–014. 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–C2–2023–014 and should be submitted on or before August 11, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2023–15480 Filed 7–20–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–97925; File No. SR– CboeEDGA–2023–011] Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Related to Physical Port Fees July 17, 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 July 3, 2023, Cboe EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA Equities’’) 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://markets.cboe.com/us/ equities/regulation/rule_filings/edga/), 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. 1 15 20 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:06 Jul 20, 2023 2 17 Jkt 259001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00101 Fmt 4703 Sfmt 4703 47199 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 relating to physical connectivity fees, effective July 3, 2023. By way of background, a physical port is utilized by a Member or non-Member to connect to the Exchange at the data centers where the Exchange’s servers are located. The Exchange currently assesses the following physical connectivity fees for Members and nonMembers on a monthly basis: $2,500 per physical port for a 1 gigabit (‘‘Gb’’) circuit and $7,500 per physical port for a 10 Gb circuit. The Exchange proposes to increase the monthly fee for 10 Gb physical ports from $7,500 to $8,500 per port. The Exchange notes the proposed fee change better enables it to continue to maintain and improve its market technology and services and also notes that the proposed fee amount, even as amended, continues to be in line with, or even lower than, amounts assessed by other exchanges for similar connections.3 The physical ports may also be used to access the Systems for the following affiliate exchanges and only one monthly fee currently (and will continue) to apply per port: the Cboe BZX Exchange, Inc. (options and equities), Cboe EDGX Exchange, Inc. (options and equities platforms), Cboe BYX Exchange, Inc., and Cboe C2 Exchange, Inc., (‘‘Affiliate Exchanges’’).4 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.5 Specifically, the Exchange believes the proposed rule change is consistent with the section 6(b)(5) 6 requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and 3 See e.g., The Nasdaq Stock Market LLC (‘‘Nasdaq’’), General 8, Connectivity to the Exchange. Nasdaq and its affiliated exchanges charge a monthly fee of $15,000 for each 10Gb Ultra fiber connection to the respective exchange, which is analogous to the Exchange’s 10Gb physical port. See also New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE Chicago Inc., NYSE National, Inc. Connectivity Fee Schedule, which provides that 10 Gb LX LCN Circuits (which are analogous to the Exchange’s 10 Gb physical port) are assessed $22,000 per month, per port. 4 The Affiliate Exchanges are also submitting contemporaneous identical rule filings. 5 15 U.S.C. 78f(b). 6 15 U.S.C. 78f(b)(5). E:\FR\FM\21JYN1.SGM 21JYN1

Agencies

[Federal Register Volume 88, Number 139 (Friday, July 21, 2023)]
[Notices]
[Pages 47196-47199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15480]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97927; File No. SR-C2-2023-014]


Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fees Schedule Related to Physical Port Fees

July 17, 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 July 3, 2023, Cboe C2 Exchange, Inc. (the ``Exchange'' or ``C2'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to

[[Page 47197]]

solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe C2 Exchange, Inc. (the ``Exchange'' or ``C2 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://markets.cboe.com/us/options/regulation/rule_filings/ctwo/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its fee schedule relating to 
physical connectivity fees, effective July 3, 2023.
    By way of background, a physical port is utilized by a Member or 
non-Member to connect to the Exchange at the data centers where the 
Exchange's servers are located. The Exchange currently assesses the 
following physical connectivity fees for Trading Permit Holders 
(``TPHs'') and non-TPHs on a monthly basis: $2,500 per physical port 
for a 1 gigabit (``Gbps'') circuit and $7,500 per physical port for a 
10 Gbps circuit. The Exchange proposes to increase the monthly fee for 
10 Gbps physical ports from $7,500 to $8,500 per port. The Exchange 
notes the proposed fee change better enables it to continue to maintain 
and improve its market technology and services and also notes that the 
proposed fee amount, even as amended, continues to be in line with, or 
even lower than, amounts assessed by other exchanges for similar 
connections.\3\ The physical ports may also be used to access the 
Systems for the following affiliate exchanges and only one monthly fee 
currently (and will continue) to apply per port: Cboe BZX Exchange, 
Inc. (options and equities platforms), Cboe EDGX Exchange, Inc. 
(options and equities platforms), Cboe BYX Exchange, Inc., and Cboe 
EDGA Exchange, Inc., (``Affiliate Exchanges'').\4\
---------------------------------------------------------------------------

    \3\ See e.g., The Nasdaq Stock Market LLC (``Nasdaq''), General 
8, Connectivity to the Exchange. Nasdaq and its affiliated exchanges 
charge a monthly fee of $15,000 for each 10Gbps Ultra fiber 
connection to the respective exchange, which is analogous to the 
Exchange's 10 Gbps physical port. See also New York Stock Exchange 
LLC, NYSE American LLC, NYSE Arca, Inc., NYSE Chicago Inc., NYSE 
National, Inc. Connectivity Fee Schedule, which provides that 10 
Gbps LX LCN Circuits (which are analogous to the Exchange's 10 Gbps 
physical port) are assessed $22,000 per month, per port.
    \4\ The Affiliate Exchanges are also submitting contemporaneous 
identical rule filings.
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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.\5\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \6\ 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) \7\ 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) \8\ of the Act, which 
requires that Exchange rules provide for the equitable allocation of 
reasonable dues, fees, and other charges among its TPHs and other 
persons using its facilities.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ Id.
    \8\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed fee change is reasonable as it 
reflects a moderate increase in physical connectivity fees for 10Gbps 
physical ports. Further, the current 10 Gbps physical port fee has 
remained unchanged since June 2018.\9\ Since its last increase 5 years 
ago however, there has been notable inflation. Particularly, the dollar 
has had an average inflation rate of 3.9% per year between 2018 and 
today, producing a cumulative price increase of approximately 21.1% 
inflation since the fee for the 10 Gbps physical port was last 
modified.\10\ Accordingly, the Exchange believes the proposed fee is 
reasonable as it represents only an approximate 13% increase from the 
rates adopted five years ago, notwithstanding the cumulative rate of 
21.1%.
---------------------------------------------------------------------------

    \9\ See Securities and Exchange Release No. 83455 (June 15, 
2018), 83 FR 28892 (June 21, 2018) (SR-C2-2018-014).
    \10\ See https://www.officialdata.org/us/inflation/2010?amount=1.
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    The Exchange also believes the proposed fee is reasonable as it is 
still in line with, or even lower than, amounts assessed by other 
exchanges for similar connections.\11\ As noted above, the proposed fee 
is also the same as is concurrently being proposed for its Affiliate 
Exchanges. Further, TPHs are able to utilize a single port to connect 
to any of the Affiliate Exchanges with no additional fee assessed for 
that same physical port. Particularly, the Exchange believes the 
proposed monthly per port fee is reasonable, equitable and not unfairly 
discriminatory as it is assessed only once, even if it connects with 
another affiliate exchange since only one port is being used and the 
Exchange does not wish to charge multiple fees for the same port.
---------------------------------------------------------------------------

    \11\ See e.g., The Nasdaq Stock Market LLC (``Nasdaq''), General 
8, Connectivity to the Exchange. Nasdaq and its affiliated exchanges 
charge a monthly fee of $15,000 for each 10Gbps Ultra fiber 
connection to the respective exchange, which is analogous to the 
Exchange's 10Gbps physical port. See also New York Stock Exchange 
LLC, NYSE American LLC, NYSE Arca, Inc., NYSE Chicago Inc., NYSE 
National, Inc. Connectivity Fee Schedule, which provides that 10 
Gbps LX LCN Circuits (which are analogous to the Exchange's 10 Gbps 
physical port) are assessed $22,000 per month, per port.
---------------------------------------------------------------------------

    The Exchange also believes that the proposed fee change is not 
unfairly discriminatory because it would be assessed uniformly across 
all market participants that purchase the physical ports. Further, TPHs 
and non-TPHs will continue to choose the method of connectivity based 
on their specific needs and no broker-dealer is required to become a 
TPH of, let alone connect directly to, the Exchange. There is also no 
regulatory requirement that any market participant connect to any one 
particular exchange. Moreover, direct

[[Page 47198]]

connectivity is not a requirement to participate on the Exchange. The 
Exchange also believes substitutable products and services are 
available to market participants, including, among other things, other 
options exchanges that a market participant may connect to in lieu of 
the Exchange, indirect connectivity to the Exchange via a third-party 
reseller of connectivity, and/or trading of any options product, such 
as within the Over-the-Counter (OTC) markets. Indeed, there are 
currently 16 registered options exchanges that trade options, some of 
which have similar or lower connectivity fees.\12\ Based on publicly 
available information, no single options exchange has more than 
approximately 19% of the market share.\13\ Further, low barriers to 
entry mean that new exchanges may rapidly enter the market and offer 
additional substitute platforms to further compete with the Exchange 
and the products it offers. For example, there are 3 exchanges that 
have been added in the U.S. options markets in the last 5 years (i.e., 
Nasdaq MRX, LLC, MIAX Pearl, LLC, and MIAX Emerald LLC) and one 
additional options exchange that is expected to launch in 2023 (i.e., 
MEMX LLC).
---------------------------------------------------------------------------

    \12\ Id.
    \13\ See Cboe Global Markets U.S. Options Market Volume Summary 
(June 27, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
---------------------------------------------------------------------------

    As noted above, there is no regulatory requirement that any market 
participant connect to any one options exchange, nor that any market 
participant connect at a particular connection speed or act in a 
particular capacity on the Exchange, or trade any particular product 
offered on an exchange. Moreover, membership is not a requirement to 
participate on the Exchange. A market participant may submit orders to 
the Exchange via a Member broker or a third-party reseller of 
connectivity. Indeed, the Exchange is unaware of any one options 
exchange whose membership includes every registered broker-dealer. By 
way of example, while the Exchange currently has 52 TPHs, Cboe BZX has 
61 members that trade options, and Cboe EDGX has 51 members that trade 
options. There is also no firm that is a Member of C2 Options only. 
Further, based on publicly available information regarding a sample of 
the Exchange's competitors, NYSE American Options has 71 members,\14\ 
and NYSE Arca Options has 69 members,\15\ MIAX Options has 46 members 
\16\ and MIAX Pearl Options has 40 members.\17\
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    \14\ See https://www.nyse.com/markets/american-options/membership#directory.
    \15\ See https://www.nyse.com/markets/arca-options/membership#directory.
    \16\ See https://www.miaxglobal.com/sites/default/files/page-files/MIAX_Options_Exchange_Members_April_2023_04282023.pdf.
    \17\ See https://www.miaxglobal.com/sites/default/files/page-files/MIAX_Pearl_Exchange_Members_01172023_0.pdf.
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    Additionally, the Exchange notes that non-TPHs such as Service 
Bureaus and Extranets resell exchange connectivity. This indirect 
connectivity is another viable alternative for market participants to 
trade on the Exchange without connecting directly to the Exchange (and 
thus not pay the Exchange's connectivity fees), which alternative is 
already being used by non-TPHs and further constrains the price that 
the Exchange is able to charge for connectivity to its Exchange. The 
Exchange notes that it could, but chooses not to, preclude market 
participants from reselling its connectivity. The Exchange also chooses 
not to adopt fees that would be assessed to third-party resellers on a 
per customer basis (i.e., fee based on number of TPHs that connect to 
the Exchange indirectly via the third-party). Indeed, the Exchange does 
not receive any connectivity revenue when connectivity is resold by a 
third-party, which often is resold to multiple customers, some of whom 
are agency broker-dealers that have numerous customers of their own.
    Accordingly, the vigorous competition among national securities 
exchanges provides many alternatives for firms to voluntarily decide 
whether direct connectivity to the Exchange is appropriate and 
worthwhile, and as noted above, no broker-dealer is required to become 
a Member of the Exchange, let alone connect directly to it. In the 
event that a market participant views the Exchange's proposed fee 
change as more or less attractive than the competition, that market 
participant can choose to connect to the Exchange indirectly or may 
choose not to connect to that exchange and connect instead to one or 
more of the other 15 options markets. Notwithstanding the foregoing, 
the Exchange still believes that the proposed fee increase is 
reasonable, equitably allocated and not unfairly discriminatory, even 
for market participants that determine to connect directly to the 
Exchange for business purposes, as those business reasons should 
presumably result in revenue capable of covering the proposed fee.

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. The proposed fee change will 
not impact intramarket competition because it will apply to all 
similarly situated TPHs equally (i.e., all market participants that 
choose to purchase the 10 Gbps physical port).
    The Exchange's proposed fee is still lower than some fees for 
similar connectivity on other exchanges and therefore may stimulate 
intermarket competition by attracting additional firms to connect to 
the Exchange or at least should not deter interested participants from 
connecting directly to the Exchange. Further, if the changes proposed 
herein are unattractive to market participants, the Exchange can, and 
likely will, see a decline in connectivity via 10 Gbps physical ports 
as a result. The Exchange operates in a highly competitive market in 
which market participants can determine whether or not to connect 
directly to the Exchange based on the value received compared to the 
cost of doing so.

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 \18\ and paragraph (f) of Rule 19b-4 \19\ 
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.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 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 47199]]

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-C2-2023-014 on the subject line.

Paper Comments

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

All submissions should refer to file number SR-C2-2023-014. 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-C2-2023-014 and should be 
submitted on or before August 11, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-15480 Filed 7-20-23; 8:45 am]
BILLING CODE 8011-01-P
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