Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule, 50266-50274 [2023-16245]
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50266
Federal Register / Vol. 88, No. 146 / Tuesday, August 1, 2023 / Notices
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
[FR Doc. 2023–16242 Filed 7–31–23; 8:45 am]
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeBZX–2023–051 on the subject line.
Paper Comments
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• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–CboeBZX–2023–051. 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–CboeBZX–2023–051 and should be
submitted on or before August 22, 2023.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.47
Sherry R. Haywood,
Assistant Secretary.
BILLING CODE 8011–01–P
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
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; Cboe
C2 Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fees
Schedule
The Exchange proposes to amend the
Market Data section of its Fees
Schedule.3 Particularly, the Exchange
proposes to (i) adopt a New External
Credit applicable to C2 Options Top, (ii)
adopt a credit towards the monthly
Distribution fees for C2 Options Top,
(iii) modify the C2 Options Top
Enterprise Fee; and (iv) establish fees for
Cboe One Options Feed.
July 26, 2023.
C2 Top Data
[Release No. 34–97995; File No. SR–C2–
2023–015)
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 14,
2023, Cboe C2 Exchange, Inc.
(‘‘Exchange’’ or ‘‘C2’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) proposes to update
its Fees Schedule. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/ctwo/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
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
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47 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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By way of background, the Exchange
offers the C2 Options Top Data feed,
which is an uncompressed data feed
that offers top-of-book quotations and
last sale information based on options
orders entered into the Exchange’s
System. The C2 Options Top Data feed
benefits investors by facilitating their
prompt access to real-time top-of-book
information contained in C2 Options
Top Data. The Exchange’s affiliated
options exchanges (i.e., Cboe Exchange,
Inc. (‘‘Cboe Options’’), Cboe BZX
Exchange, Inc. (‘‘BZX Options’’), and
Cboe EDGX Exchange, Inc. (‘‘EDGX
Options’’) (collectively, ‘‘Affiliates’’ and
together with the Exchange, ‘‘Cboe
Options Exchanges’’) also offer similar
top-of-book data feeds.4 Particularly,
each of the Exchange’s Affiliates offer
top-of-book quotation and last sale
information based on their own
quotation and trading activity that is
substantially similar to the information
provided by the Exchange through the
C2 Options Top. The Exchange proposes
to make the following fee changes
relating to C2 Options Top.
New External Distributor Credit
The Exchange first proposes to adopt
a New External Distributor Credit which
will provide that new External
Distributors of the C2 Options Top feed
will not be charged an External
Distributor Fee for their first three (3)
months in order to incentivize External
3 The Exchange initially filed the proposed fee
changes on March 1, 2023 (SR–C2–2023–008). On
March 3, 2023, the Exchange withdrew that filing
and submitted SR–C2–2023–009. On March 16,
2023, the Exchange withdrew that filing and
submitted SR–C2–2023–010. On May 15, 2023, the
Exchange withdrew that filing and submitted SR–
C2–2023–013. On July 14, 2023, the Exchange
withdrew that filing and submitted this proposal.
4 See Cboe Options Fees Schedule, EDGX Rule
21.15, and BZX Rule 21.15.
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Distributors to enlist new users to
receive C2 Options Top feed.5 The
Exchange notes that other exchanges,
including the Exchange’s affiliated
equities exchanges, offer similar credits
for similar market data products. For
example, Cboe’s equities exchanges
currently offer a one (1) month New
External Distributor Credit applicable to
External Distributors of their top-ofbook data feeds.6 They also offer a three
(3) month new External Credit
applicable to External Distributors of
summary depth-of-book feeds.7
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Distributor Fee Credit
The Exchange also proposes to
provide that each External Distributor
will receive a credit against its monthly
Distributor Fee for the C2 Options Top
equal to the amount of its monthly User
Fees up to a maximum of the Distributor
Fee for the C2 Options Top feed.8 The
proposed Enterprise Fees discussed
below would also be counted towards
the Distributor Fee credit, equal to the
amount of an External Distributor’s
monthly C2 Options Top External
Distribution fee. For example, an
External Distributor will be subject to a
$2,500 monthly Distributor Fee where
they elect to receive the C2 Options
Top. If that External Distributor reports
User quantities totaling $2,500 or more
of monthly usage of the C2 Options Top,
it will pay no net Distributor Fee,
whereas if that same External
Distributor were to report User
quantities totaling $1,500 of monthly
usage, it will pay a net of $1,000 for the
Distributor Fee. External Distributors
will remain subject to the per User fees
applicable to C2 Options Top. External
5 Any applicable User fees or Enterprise fee will
continue to apply during this three-month period.
The New External Distributor Credit will not apply
during an External Distributor’s trial usage period
for C2 Options Top. External Distributors who
receive C2 Options Top on a trial basis are still
eligible for the New Distributor Credit and such free
trial basis will not count towards the three (3)
months. For example, if an External Distributor has
a trial usage period from June 1 through June 30,
the New External Distributor Credit will apply for
July, August and September. The New External
Distribution Credit also applies to External
Distributors who also distribute internally (i.e., no
additional distribution fee will apply during the
time the New External Distributor Credit is
applied).
6 See e.g., EDGX Equities Exchange Fees
Schedule, Market Data Fees.
7 See e.g., EDGX Equities Exchange Fees
Schedule, Market Data Fees, Id.
8 The Distributor Fee Credit does not apply
during any such time that an External Distributor
is receiving the New External Distributor Credit or
during a trial usage period for C2 Options Top. The
Exchange also proposes to update the Trial Usage
section in the Fees Schedule to make clear that first
time Users and Distributors of Exchange Market
Data Products will not receive any applicable
credits during their trial usage period.
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Distributors who choose to purchase an
Enterprise license as an alternative to
paying User Fees will get a credit in the
amount of the External Distribution Fee,
which is currently $2,500, since the
proposed Enterprise Fees are in excess
of the External Distribution fee. In every
case the Exchange will receive at least
$2,500 in connection with the
distribution of the C2 Options Top
(through a combination of the External
Distribution Fee and per User Fees or
Enterprise Fees, as applicable). The
Exchange notes that its affiliated
equities exchanges offer a similar credit
for a similar market data product.9
Enterprise Fee Tiers
The Exchange currently offers
Distributors the ability to purchase a
monthly (and optional) Enterprise
license to receive the C2 Options Top
Feed for distribution to an unlimited
number of Professional 10 and NonProfessional 11 Users. The Enterprise
Fee is an alternative to Professional and
Non-Professional User fees and permits
a Distributor to pay a flat fee for an
unlimited number of Professional and
Non-Professional Users and is in
addition to the Distribution fees. The
Exchange currently assesses a flat
monthly Enterprise fee of $10,000. The
Exchange proposes to modify the
current Enterprise Fee and adopt a
tiered structure based on the number of
Users a Distributor has. The Exchange
proposes to adopt the following
monthly Enterprise Fees: $10,000 for up
to 1,500,000 Users (Tier 1), $20,000 for
1,500,001 to 2,500,000 Users (Tier 2)
and $30,000 for 2,500,001 or greater
Users (Tier 3). The proposed fees are
non-progressive (e.g., if a Distributor has
9 See e.g., EDGX Equities Exchange Fees
Schedule, Id.
10 A Professional User of an Exchange Market
Data product is any User other than a NonProfessional User.
11 A ‘‘Non-Professional User’’ of an Exchange
Market Data product is a natural person or
qualifying trust that uses Data only for personal
purposes and not for any commercial purpose and,
for a natural person who works in the United States,
is not: (i) registered or qualified in any capacity
with the Securities and Exchange Commission, the
Commodities Futures Trading Commission, any
state securities agency, any securities exchange or
association, or any commodities or futures contract
market or association; (ii) engaged as an
‘‘investment adviser’’ as that term is defined in
section 202(a)(11) of the Investment Advisors Act
of 1940 (whether or not registered or qualified
under that Act); or (iii) employed by a bank or other
organization exempt from registration under federal
or state securities laws to perform functions that
would require registration or qualification if such
functions were performed for an organization not so
exempt; or, for a natural person who works outside
of the United States, does not perform the same
functions as would disqualify such person as a
Non-Professional User if he or she worked in the
United States.
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50267
2,000,000 Users, it will be subject to
$20,000 for Tier 2). The Enterprise Fee
may provide an opportunity to reduce
fees. For example, if a Distributor has 1
million Non-Professional Users who
each receive C2 Options Top at $0.10
per month, then that Distributor will
pay $100,000 per month in NonProfessional Users fees. If the
Distributor instead were to purchase the
proposed Enterprise license (tier 1), it
would alternatively pay a flat fee of
$10,000 for up to 1.5 million
Professional and Non-Professional
Users. A Distributor that pays the Tier
1 or Tier 2 Enterprise Fee will have to
report its number of such Users on a
monthly basis. A Distributor that pays
the Tier 3 Enterprise Fee will only have
to report the number of its Users every
six months.12 The Exchange notes that
if the reported number of Users exceed
the Enterprise Tier a Distributor has
purchased, the higher Tier will apply
(e.g., if a Distributor purchases Tier 1,
but reports 1,600,000 Users for a month,
the Distributor will be assessed the Tier
2 fee).
The Exchange also proposes to allow
Distributors to purchase the Enterprise
Fee on a monthly or annual basis.
Annual licenses will receive a 5%
discount off the applicable Enterprise
Tier fee.13 The Exchange notes that the
purchase of an Enterprise license is
voluntary, and a firm may elect to
instead use the per User structure and
benefit from the proposed per User Fees
described above. For example, a firm
that does not have a sufficient number
of Users to benefit from purchase of a
license need not do so.
Cboe One Options Feed
By way of background, the Exchange
recently adopted a new market data
product called Cboe One Options Feed,
which launched March 1, 2023.14 Cboe
One Options Feed will provide top-ofbook quotation and last sale information
based on the quotation and trading
activity on the Exchange and each of its
Affiliates, which the Exchange believes
offers a comprehensive and highly
12 See Cboe Global Markets North American Data
Policies, which provides that Distributors that have
obtained an Enterprise license are required to report
quantities monthly unless they reach the highest
Enterprise Tier available (i.e., Tier 3), in which case
they are required to report user quantities only
every six months).
13 The discount will be taken off the applicable
fee assessed for the applicable Enterprise Tier each
month.. For example, if a Distributor elects to
purchase an annual license and is in Tier 1 for any
9 months of the year and Tier 2 for any 3 months
of the year, the total amount of fees paid for one
year will be $142,500 ($10,000¥5% × 9 months +
$20,000¥5% × 3 months) as compared to $150,000
($10,000 × 9 months + $20,000 × 3 months).
14 See SR–C2–2023–006.
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representative view of US options
pricing to market participants. More
specifically, Cboe One Options Feed
will contain the aggregate best bid and
offer (‘‘BBO’’) of all displayed orders for
options traded on the Exchange and its
Affiliates, as well as individual last sale
information and volume, which
includes the price, time of execution
and individual Cboe options exchange
on which the trade was executed.
The Cboe One Options Feed will also
consist of Symbol Summary,15 Market
Status,16 Trading Status,17 and Trade
Break 18 messages for the Exchange and
each of its Affiliates.
The Exchange will use the following
data feeds to create the Cboe One
Options Feed, each of which is available
to other vendors and/or distributors:
Cboe Options Top Data, C2 Options Top
Data, EDGX Options Top and BZX
Options Top. A vendor and/or
distributor that wishes to create a
product like the Cboe One Options Feed
could instead subscribe to each of the
aforementioned data feeds. Any entity
that receives, or elects to receive, the
individual data feeds or the feeds that
may be used to create a product like the
Cboe One Options Feed would be able
to, if it so chooses, to create a data feed
with the same information included in
the Cboe One Options Feed and sell and
distribute it to its clients so that it could
be received by those clients as quickly
as the Cboe One Options Feed would be
received by those same clients.
The Exchange proposes to amend its
fee schedule to incorporate fees related
to the Cboe One Options Feed. The
Exchange has taken into consideration
its affiliated relationship with its
15 The Symbol Summary message will include the
total executed volume across all Cboe Options
Exchanges.
16 The Market Status message is disseminated to
reflect a change in the status of one of the Cboe
Options Exchanges. For example, the Market Status
message will indicate whether one of the Cboe
Options Exchanges is experiencing a systems issue
or disruption and quotation or trade information
from that market is not currently being
disseminated via the Cboe One Options Feed as part
of the aggregated BBO. The Market Status message
will also indicate when a Cboe Options Exchange
is no longer experiencing a systems issue or
disruption to properly reflect the status of the
aggregated BBO.
17 The Trade Break message will indicate when an
execution on a Cboe Options Exchange is broken in
accordance with the individual Cboe Options
Exchange’s rules (e.g., Cboe Options Rule 6.5, C2
Option Rule 6.5, BZX Options Rule 20.6, EDGX
Options Rule 20.6).
18 The Trading Status message will indicate the
current trading status of an option contract on each
individual Cboe Options Exchange. A Trading
Status message will also be sent whenever a
security’s trading status changes. For example, a
Trading Status message will be sent when a symbol
is open for trading or when a symbol is subject to
a trading halt or when it resumes trading.
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Affiliates in its design of the Cboe One
Options Feed to assure that vendors 19
would be able to offer a similar product
on the same terms as the Exchange from
a cost perspective. Although Cboe
Options Exchanges are the exclusive
distributors of the individual data feeds
from which certain data elements would
be taken to create the Cboe One Options
Feed, the Exchange would not be the
exclusive distributor of the aggregated
and consolidated information that
compose the proposed Cboe One
Options Feed. Distributors and/or
vendors would be able, if they chose, to
create a data feed with the same
information as the Cboe One Options
Feed and distribute it to their clients on
a level-playing field with respect to
latency and cost as compared to the
Exchange’s proposed Cboe One Options
Feed. The pricing the Exchange
proposes to charge for the Cboe One
Options Feed, as described more fully
below, is not lower than the cost to a
distributor or vendor to obtain the
underlying data feeds. In fact, the
Distribution and User (Professional and
Non-Professional) fees, as well as the
optional Enterprise Fees, that the
Exchange proposes to adopt for the Cboe
One Options Feed are equal to the
respective combined fees for subscribing
to each individual data feed. The
Exchange also proposes to adopt a ‘‘Data
Consolidation Fee,’’ which would
reflect the value of the aggregation and
consolidation function the Exchange
performs in creating the Cboe One
Options Feed. Therefore, Distributors
would be enabled to create a competing
product based on the individual data
feeds and charge their clients a fee that
they believe reflects the value of the
aggregation and consolidation function
that is competitive with Cboe One
Options Feed pricing. For these reasons,
the Exchange believes that Distributors,
including vendors, could readily offer a
product similar to the Cboe One Options
19 For purposes of this filing, a ‘‘vendor’’, which
is a type of distributor, will refer to any entity that
receives an exchange market data product directly
from the exchange or indirectly from another entity
(for example, from an extranet) and then resell that
data to a third-party customer (e.g., a data provider
that resells exchange market data to a retail
brokerage firm). The term ‘‘distributor’’ herein, will
refer to any entity that receives an exchange market
data product, directly from the exchange or
indirectly from another entity (e.g., from a data
vendor) and then distributes to individual internal
or external end-users (e.g., a retail brokerage firm
who distributes exchange data to its individual
employees and/or customers). An example of a
vendor’s ‘‘third-party customer’’ or ‘‘customer’’ is
an institutional broker dealer or a retail broker
dealer, who then may in turn distribute the data to
their customers who are individual internal or
external end-users.
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Feed on a competitive basis at a similar
cost.
The proposed Cboe One Options Feed
fees include the following, each of
which are described in further detail
below: (i) Distributor Fees; (ii) User Fees
for both Professional and NonProfessional Users; (iii) Enterprise Fees;
and (iv) a Data Consolidation Fee. The
Exchange also proposes to adopt a New
External Distributor credit and a credit
against the monthly External
Distribution Fee equal to the amount of
monthly User Fees or Enterprise Fees up
to a maximum of the External
Distributor Fee. To ensure consistency
across the Cboe Options Exchanges,
Cboe Options, EDGX Options, and BZX
Options will be filing companion
proposals to reflect this proposal in
their respective fee schedules.
Distributor Fees
As proposed, each Internal Distributor
that receives the Cboe One Options Feed
shall pay a fee of $15,000 per month.
The proposed Internal Distribution Fee
equals the combined monthly Internal
Distribution fees for the underlying
individual data feeds of the Cboe
Options Exchanges (i.e., the monthly
Internal Distribution fees are $3,000 for
BZX Options Top, $500 for EDGX
Options Top, $2,500 for C2 Options Top
and $9,000 for Cboe Options Top). The
Exchange also proposes to assess
External Distributors a monthly fee of
$10,000. The proposed External
Distribution fee equals the combined
monthly External Distribution fees for
the underlying individual data feeds of
the Cboe Options Exchanges (i.e., the
monthly External Distribution fees are
$5,000 per month for the Cboe Options
Top, $2,500 per month for C2 Options
Top, $2,000 per month for BZX Options
Top, and $500 for EDGX Options Top).
As noted above, the Exchange is
proposing to charge Internal Distributors
an Internal Distribution Fee, and
External Distributors an External
Distribution Fee, that equals the
combined respective Distribution fees of
each individual Top feed to ensure the
combined cost of subscribing to Cboe
Options, C2 Options, BZX Options and
EDGX Options Top feeds are no greater
than the amount that would be charged
to subscribe to the Cboe One Options
feed, thereby ensuring that vendors
could compete with the Exchange by
creating the same product as the Cboe
One Options Feed to sell to their clients.
User Fees
In addition to Internal and External
Distributor Fees, the Exchange proposes
to assess Professional User and NonProfessional User Fees. The proposed
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monthly Professional User fee for the
Cboe Options Exchanges is $30.50 per
Professional User, which equals the
combined monthly Professional User
fees of the underlying individual Cboe
Options Exchanges Top feeds (i.e.,
$15.50 per Professional User for the
Cboe Options Top, $5 per Professional
User for C2 Options Top, $5 per
Professional User for BZX Options Top,
and $5 per Professional User for EDGX
Options Top). The Exchange also
proposes to adopt a monthly NonProfessional User fee of $0.60 per NonProfessional User, which similarly
represents the combined total NonProfessional User fee for the individual
data feeds of the Cboe Options (i.e.,
$0.30 per Non-Professional User for
Cboe Options Top, $0.10 per NonProfessional User for C2 Options Top,
$0.10 per Non-Professional User for
BZX Options Top, and $0.10 per NonProfessional User for EDGX Options
Top). Similar to the individual
underlying feeds, Distributors that
receive Cboe One Options Feed will be
required to count Professional and NonProfessional Users to which they
provide the data feed. The Exchange is
proposing to charge Professional and
Non-Professional User fees that equal
the combined respective Professional
and Non-Professional User fees of each
individual Top feed to ensure the
combined cost of subscribing to Cboe
Options, C2 Options, BZX Options and
EDGX Options Top feeds are no greater
than the amount that would be charged
to subscribe to the Cboe One Options
feed, thereby ensuring that vendors
could compete with the Exchange by
creating the same product as the Cboe
One Options Feed to sell to their clients.
Enterprise Fees
The Exchange also proposes to
establish Enterprise Fees that will
permit a Distributor to purchase a
monthly (and optional) Enterprise
license to receive the Cboe One Options
Feed for distribution to a specified
number of Professional and NonProfessional Users. The Enterprise Fee
will be an alternative to Professional
and Non-Professional User fees and will
permit a Distributor to pay a flat fee to
receive the data for a specified number
of Professional and Non-Professional
Users, which the Exchange proposes to
make clear in the Fee Schedule. Like
User fees, the Enterprise Fee would be
assessed in addition to the Distribution
Fees. The Exchange proposes to adopt
the following monthly Enterprise Fees:
$350,000 for up to 1,500,000 Users (Tier
1), $550,000 for 1,500,001 to 2,500,000
Users (Tier 2) and $750,000 for
2,500,001 or greater Users (Tier 3). The
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proposed fee amounts for each Tier
equals the combined Enterprise Fees for
the respective tiers for the underlying
individual Cboe Options Exchanges Top
feeds (i.e., $300,000, $450,000 and
$600,000 for Tiers 1, 2 and 3
respectively for the Cboe Options Top;
$10,000, $20,000 and $30,000 for Tiers
1, 2 and 3 respectively for C2 Options
Top; $20,000, $40,000 and $60,000 for
Tiers 1, 2 and 3 respectively for BZX
Options Top; and $20,000, $40,000 and
$60,000 for Tiers 1, 2 and 3 respectively
for EDGX Options Top). The proposed
fees are non-progressive (e.g., if a
Distributor has 2,000,000 Users, it will
be subject to $550,000 for Tier 2). The
Enterprise Fee may provide an
opportunity to reduce fees. For example,
if a Distributor has 1 million NonProfessional Users who each receive
Cboe One Options Feed at $0.60 per
month (as proposed), then that
Distributor will pay $600,000 per month
in Non-Professional Users fees. If the
Distributor instead were to purchase the
proposed Enterprise license (Tier 1), it
would alternatively pay a flat fee of
$350,000 for up to 1.5 million
Professional and Non-Professional
Users. A Distributor must pay a separate
Enterprise Fee for each entity that
controls the display of Cboe One
Options Feed if it wishes for such Users
to be covered by an Enterprise Fee
rather than by per User fees.20 A
Distributor that pays the Tier 1 or Tier
2 Enterprise Fee will have to report its
number of such Users on a monthly
basis. A Distributor that pays the Tier 3
Enterprise Fee will only have to report
the number of its Users every six
months.21 The Exchange notes that if
the reported number of Users exceed the
Enterprise Tier a Distributor has
purchased, the higher Tier will apply
(e.g., if a Distributor purchases Tier 1,
but reports 1,600,000 Users for a month,
the Distributor will be assessed the Tier
2 fee).
The Exchange also proposes to allow
Distributors to purchase the Enterprise
Fee on a monthly or annual basis.
Annual licenses will receive a 5%
discount off the applicable Enterprise
20 For example, if a Distributor that distributes C2
Options Top to Retail Brokerage Firm A and Retail
Brokerage Firm B and wishes to have the Users
under each firm covered by an Enterprise license,
the Distributor would be subject to two Enterprise
Fees.
21 See Cboe Global Markets North American Data
Policies which provides that Distributors that have
obtained an Enterprise license are required to report
quantities monthly unless they reach the highest
Enterprise Tier available (i.e., Tier 3), in which case
they are required to report user quantities only
every six months).
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50269
Fee tier.22 The Exchange notes that the
purchase of an Enterprise license is
voluntary, and a firm may elect to
instead use the per User structure and
benefit from the proposed per User Fees
described above. For example, a firm
that does not have a sufficient number
of Users to benefit from purchase of a
license need not do so. The Exchange is
proposing to charge Enterprise Fees that
equal the combined respective
Enterprise Fees of each individual Top
feed and is also is proposing to adopt a
5% discount for those that purchase an
Annual license for Cboe Options Top
(with a corresponding change will also
be proposed by the Exchange’s
Affiliates) to ensure the combined cost
of subscribing to Cboe Options, C2
Options, BZX Options and EDGX
Options Top feeds will be the same as
those that would be charged to
subscribe to the Cboe One Options feed,
thereby ensuring that vendors could
compete with the Exchange by creating
the same product as the Cboe One
Options Feed to sell to their clients.
New External Distributor Credit
The Exchange proposes to adopt a
New External Distributor Credit which
would provide that new External
Distributors of the Cboe One Options
Feed will not be charged an External
Distributor Fee for their first three (3)
months in order to incentivize them to
enlist new Users to receive the Cboe
One Options Feed.23 The Exchange
notes that other exchanges, including
the Exchange’s affiliated equities
exchanges offer similar credits for
similar market data products. For
example, Cboe’s equities exchanges
currently offer a one (1) month New
External Distributor Credit applicable to
the Cboe One Summary Feed and a
three (3) month New External
Distributor Credit applicable to the
distribution of the Cboe One Premium
22 The discount will be taken off the applicable
fee assessed for the applicable Enterprise Tier each
month.. For example, if a Distributor elects to
purchase an annual license and is in Tier 1 for any
9 months of the year and Tier 2 for any 3 months
of the year, the total amount of fees paid for one
year will be $4,560,00 ($350,000¥5% × 9 months
+ $550,000¥5% × 3 months) as compared to
$4,800,000 ($350,000 × 9 months + $550,000 × 3
months). 3150000 [sic]
23 Any applicable User fees will continue to apply
during this three-month period. The New External
Distributor Credit will not apply during an External
Distributor’s trial usage period for Cboe One
Options and such free trial basis will not count
towards the three (3) months. For example, if an
External Distributor has a trial usage period from
June 1 through June 30, the New External
Distributor Credit will apply for July, August and
September.
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Feed.24 To alleviate any competitive
issues that may arise with a vendor
seeking to offer a product similar to the
Cboe One Options Feed based on the
underlying data feeds, the Exchange is
proposing, as discussed above, to also
adopt a three-month New External
Distributor Credit for the underlying
top-of-book data feeds for the Cboe
Options Exchanges. The respective
proposals to adopt a three-month credit
ensures the proposed New External
Distributor Credit for Cboe One Options
will not cause the combined cost of
subscribing to Cboe Options, C2
Options, BZX Options and EDGX
Options Top feeds for new External
Distributors to be greater than those that
would be charged to subscribe to the
Cboe One Options feed, thereby
ensuring that vendors could compete
with the Exchange by creating the same
product as the Cboe One Options Feed
to sell to their clients.
distribution of the Cboe One Options
Feed (through a combination of the
External Distribution Fee and per User
Fees or the Enterprise Fees, as
applicable). The Exchange notes that its
affiliated equities exchanges offer a
similar credit for a similar market data
product.26 The proposal to adopt a
Distributor Fee Credit for Cboe One
Options Feed ensures the proposed
credit for Cboe One Options will not
cause the combined cost of subscribing
to Cboe Options, C2 Options, BZX
Options and EDGX Options Top feeds
for External Distributors to be greater
than the amount that would be charged
to subscribe to the Cboe One Options
feed, thereby ensuring that vendors
could compete with the Exchange by
creating the same product as the Cboe
One Options Feed to sell to their
clients..
Distributor Fee Credit
The Exchange also proposes to
provide that each External Distributor
will receive a credit against its monthly
External Distributor Fee for the Cboe
One Options Feed equal to the amount
of its monthly User Fees up to a
maximum of the External Distributor
Fee for the Cboe One Options Feed.25
The proposed Enterprise Fees discussed
above would also be counted towards
the Distributor Fee credit, equal to the
amount of its monthly Cboe One
Options External Distribution fee. For
example, an External Distributor will be
subject to a $10,000 monthly Distributor
Fee where they elect to receive the Cboe
One Options Feed. If that External
Distributor reports User quantities
totaling $10,000 or more of monthly
User fees of the Cboe Options One Feed,
it will pay no net Distributor Fee,
whereas if that same External
Distributor were to report User
quantities totaling $9,000 of monthly
usage, it will pay a net of $1,000 for the
Distributor Fee. External Distributors
will remain subject to the per User fees
discussed above. External Distributors
who choose to purchase an Enterprise
license as an alternative to paying User
Fees will get a credit in the amount of
the External Distribution Fee, which is
currently $10,000, since the proposed
Enterprise Fees are in excess of the
External Distribution fee. In every case
the Exchange will receive at least
$10,000 in connection with the
The Exchange also proposes to charge
Distributors of the Cboe One Options
Feed a separate Data Consolidation Fee,
which reflects the value of the
aggregation and consolidation function
the Exchange performs in creating the
Cboe One Options Feed.27 As stated
above, the Exchange creates the Cboe
One Options Feed from data derived
from the Cboe Options Top, C2 Options
Top, BZX Options Top, and EDGX
Options Top Feeds. Distributors
(including vendors) could similarly
create a competing product to the Cboe
One Options Feed based on these
individual data feeds offered by the
Exchanges, and could charge its clients
a fee that it believes reflects the value
of the aggregation and consolidation
function. Accordingly, the Exchange
believes that vendors could readily offer
a product similar to the Cboe One
Options Feed on a competitive basis at
a similar cost.
24 See e.g., EDGX Equities Exchange Fees
Schedule, Market Data Fees.
25 The Distributor Fee Credit does not apply
during any such time that an External Distributor
is receiving the New External Distributor Credit or
during a trial usage period for Cboe One Options.
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Data Consolidation Fee
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.28 Specifically,
the Exchange believes the proposed rule
change is consistent with the section
26 See e.g., EDGX Equities Exchange Fees
Schedule, Market Data Fees.
27 If a vendor distributes the Cboe One Options
Feed to another firm, who then re-distributes the
Cboe One Options Feed, both entities would be
subject to the Data Consolidation Fee. A vendor will
only be assessed a single Data Consolidated Fee,
even if it distributes Cboe One Options Feed to
more than one entity.
28 15 U.S.C. 78f(b).
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6(b)(5) 29 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the section 6(b)(5) requirement that the
rules of an exchange not be designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange also believes this
proposal is consistent with section
6(b)(8) of the Act, which requires that
the rules of an exchange not impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.30 In addition,
the Exchange believes that the proposed
rule change is consistent with section
11(A) of the Act as it supports (i) fair
competition among brokers and dealers,
among exchange markets, and between
exchange markets and markets other
than exchange markets, and (ii) the
availability to brokers, dealers, and
investors of information with respect to
quotations for and transactions in
securities.31 The Exchange also believes
the proposed rule change is consistent
with section 6(b)(4) of the Act,32 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.
The Exchange first notes that it
operates in a highly competitive
environment. Indeed, there are currently
16 registered options exchanges that
trade options. Based on publicly
available information, no single options
exchange has more than 18% of the
market share.33 The Exchange believes
top-of-book quotation and transaction
data is highly competitive as national
securities exchanges compete vigorously
with each other to provide efficient,
reliable, and low-cost data to a wide
range of investors and market
participants. Indeed, there are several
competing products offered by other
29 15
U.S.C. 78f(b)(5).
U.S.C. 78f(b)(8).
31 15 U.S.C. 78k–1.
32 15 U.S.C. 78f(b)(4).
33 See Cboe Global Markets U.S. Options Market
Month-to-Date Volume Summary (April 24, 2023),
available at https://markets.cboe.com/us/options/
market_statistics/.
30 15
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national securities exchanges today, not
counting products offered by the
Exchange’s affiliates, and each of the
Exchange’s affiliated U.S. options
exchanges also offers similar top-ofbook data.34 Each of those exchanges
offer top-of-book quotation and last sale
information based on their own
quotation and trading activity that is
substantially similar to the information
provided by the Exchange through the
C2 Options Top Data Feed. Further, the
quote and last sale data contained in the
C2 Data Feed is identical to the data
sent to OPRA for redistribution to the
public.35 Accordingly, Exchange top-ofbook data is widely available today from
a number of different sources.
Moreover, the C2 Options Top Data
Feed and Cboe One Options Feeds are
distributed and purchased on a
voluntary basis, in that neither the
Exchange nor market data distributors
are required by any rule or regulation to
make these data products available.
Accordingly, Distributors (including
vendors) and Users can discontinue use
at any time and for any reason,
including due to an assessment of the
reasonableness of fees charged. Further,
the Exchange is not required to make
any proprietary data products available
or to offer any specific pricing
alternatives to any customers. Moreover,
persons (including broker-dealers) who
subscribe to any exchange proprietary
data feed must also have equivalent
access to consolidated Options
Information 36 from OPRA for the same
classes or series of options that are
included in the proprietary data feed,
and proprietary data feeds cannot be
used to meet that particular
34 See e.g., NYSE Arca Options Proprietary
Market Data Fees Schedule, MIAX Options
Exchange, Fee Schedule, Section 6 (Market Data
Fees), Nasdaq PHLX Options 7 Pricing Schedule,
Section 10 (Proprietary Data Feed Fees) and Cboe
Data Services, LLC Fees Schedule.
35 The Exchange makes available the top-of-book
data and last sale data that is included in the C2
Options Top Data Feed no earlier than the time at
which the Exchange sends that data to OPRA.
36 ‘‘Consolidated Options Information’’ means
consolidated Last Sale Reports combined with
either consolidated Quotation Information or the
BBO furnished by OPRA. Access to consolidated
Options Information is deemed ‘‘equivalent’’ if both
kinds of information are equally accessible on the
same terminal or work station. See Limited Liability
Company Agreement of Options Price Reporting
Authority, LLC (‘‘OPRA Plan’’), Section 5.2(c)(iii).
The Exchange notes that this requirement under the
OPRA Plan is also reiterated under the Cboe Global
Markets Global Data Agreement and Cboe Global
Markets North American Data Policies, which
subscribers to any exchange proprietary product
must sign and are subject to, respectively.
Additionally, the Exchange’s Data Order Form
(used for requesting the Exchange’s market data
products) requires confirmation that the requesting
market participant receives data from OPRA.
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requirement.37 As such, all proprietary
data feeds are optional.
The Commission has repeatedly
expressed its preference for competition
over regulatory intervention in
determining prices, products, and
services in the securities markets.
Particularly, in Regulation NMS, the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues and, also, recognized
that current regulation of the market
system ‘‘has been remarkably successful
in promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 38
Making similar data products available
to market participants fosters
competition in the marketplace, and
constrains the ability of exchanges to
charge supracompetitive fees. In the
event that a market participant views
one exchange’s data product as more or
less attractive than the competition they
can and do switch between similar
products. The proposed fees are a result
of the competitive environment, as the
Exchange seeks to adopt fees to attract
purchasers of C2 Options Top Data and
Cboe One Options Feed.
The Exchange has also taken into
consideration its affiliated relationship
with its Affiliates in its design of the
Cboe One Options Feed to ensure that
vendors would be able to offer a similar
product on the same terms as the
Exchange from a cost perspective. While
the Cboe Options Exchanges are the
exclusive distributors of the individual
data feeds from which certain data
elements may be taken to create the
Cboe One Options Feed, they are not the
exclusive distributors of the aggregated
and consolidated information that
comprises the Cboe One Options Feed.
Any entity that receives, or elects to
receive, the individual data feeds would
be able to, if it so chooses, to create a
data feed with the same information
included in the Cboe One Options Feed
and sell and distribute it to its clients so
that it could be received by those clients
as quickly as the Cboe One Options
Feed would be received by those same
clients with no greater cost than the
Exchange.
In addition, vendors and Distributors
that do not wish to purchase the Cboe
One Options Feed may separately
purchase the individual underlying
products, and if they so choose, perform
a similar aggregation and consolidation
function that the Exchange performs in
creating the Cboe One Options Feed. To
37 Id.
38 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
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50271
enable such competition, the Exchange
is offering the Cboe One Options Feed
on terms that a vendor of those
underlying feeds could offer a
competing product if it so chooses.
In addition, the fees that are the
subject of this rule filing are constrained
by competition. Particularly, the
Exchange competes with other
exchanges (and their affiliates) that may
choose to offer similar market data
products. If another exchange (or its
affiliate) were to charge less to
consolidate and distribute a similar
product than the Exchange charges to
consolidate and distribute the Cboe One
Options Feed, prospective Users likely
could choose to not subscribe to, or
would cease subscribing to, the Cboe
One Options Feed. In addition, the
Exchange would compete with
unaffiliated market data vendors who
would be in a position to consolidate
and distribute the same data that
comprises the Cboe One Options Feed
into the vendor’s own comparable
market data product. If the third-party
vendor is able to provide the exact same
data for a lower cost, prospective Users
would avail themselves of that lower
cost and elect not to take the Cboe One
Options Feed.
For these reasons, the Exchange
believes that the proposed fees are
reasonable, equitable, and not unfairly
discriminatory.
User Fees. The Exchange believes that
the proposed Professional and NonProfessional User fees for the Cboe One
Options Feed are reasonable because
they represent the combined monthly
fees for Professional and NonProfessional User fees, respectively for
the underlying individual data feeds,
which have previously been filed with
the Commission. The Exchange believes
that the proposed fees are equitable and
not unfairly discriminatory because they
will be charged uniformly to
Distributors. Combining the Professional
and Non-Professional User fees, of each
individual Top feed, respectively,
further ensures vendors can compete
with the Exchange by creating the same
product as the Cboe One Options Feed
to sell to their clients. Moreover, the
proposed fee structure of differentiated
Professional and Non-Professional fees
that are paid by both Internal and
External Distributors has long been used
by other exchanges, including the
Exchange, for their proprietary data
products, and by the OPRA plan in
order to reduce the price of data to retail
investors and make it more broadly
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available.39 The Exchange also believes
offering Cboe One Options Feed to NonProfessional Users at a lower cost than
Professional Users results in greater
equity among data recipients, as
Professional Users are categorized as
such based on their employment and
participation in financial markets, and
thus, are compensated to participate in
the markets. Although Non-Professional
Users too can receive significant
financial benefits through their
participation in the markets, the
Exchange believes it is reasonable to
charge more to those Users who are
more directly engaged in the markets.
Enterprise Fee. The Exchange believes
the proposed Enterprise Fees for the
Cboe One Options Feed and proposed
changes to the Enterprise Fee for the C2
Options Top feed are reasonable as the
fees proposed could result in a fee
reduction for Distributors of the
respective products with a large number
of Professional and Non-Professional
Users. If a Distributor has a smaller
number of Professional or NonProfessional Users of the Cboe One
Options Feed or C2 Options Top Feed,
then it may continue using the per User
structure and benefit from the per User
Fee reductions for each respective
product. By reducing prices for
Distributors with a large number of
Professional and Non-Professional
Users, the Exchange believes that more
firms may choose to receive and to
distribute the Cboe One Options or C2
Options Top feeds, thereby expanding
the distribution of this market data for
the benefit of investors. The Exchange
believes it is reasonable, equitable and
not unfairly discriminatory to assess
incrementally higher fees for higher
tiers, because such tier covers a higher
number of users (and indeed for those
in Tier 3, an unlimited number of
users). The Exchange believes it’s
reasonable to require monthly reporting
only for proposed Tiers 1 and 2 because
such tiers cover a defined number of
Users that need to be accounted for
billing purposes, as compared to Tier 3
which covers unlimited Users. Also as
described above, the Enterprise Fees are
entirely optional. A firm that does not
have a sufficient number of Users to
39 See, e.g., Securities Exchange Act Release No.
59544 (March 9, 2009), 74 FR 11162 (March 16,
2009) (SR–NYSE–2008–131) (establishing the $15
Non-Professional User Fee (Per User) for NYSE
OpenBook); See, e.g., Securities Exchange Act
Release No. 67589 (August 2, 2012), 77 FR 47459
(August 8, 2012) (revising OPRA’s definition of the
term ‘‘Nonprofessional’’); and See Securities
Exchange Act Release No. 70683 (October 15, 2013),
78 FR 62798 (October 22, 2013) (SR–CBOE–2013–
087) (establishing Professional and NonProfessional User fees for Cboe Options COB Data
Feed).
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benefit from purchase of a license, or
purchase of a specific tier level, need
not do so. The Exchange believes the
proposed discount for an Annual
license is also reasonable, equitable and
not unfairly discriminatory as it
provides Distributors an opportunity to
be assessed lower fees and is available
to any Distributor who chooses to make
a one-year commitment via the Annual
license. The Exchange believes the
proposed 5% discount will attract
Distributors to purchase and make
available C2 Options Top Data and Cboe
One Options Feed for at least one year,
thereby fostering and expanding the
distribution of these market data
products for the benefit of investors, and
particularly retail investors. The
Exchange lastly notes that the proposed
Enterprise Fees for Cboe One Options
and the proposed 5% discount for an
Annual license equal the combined
respective Enterprise Fees and discount,
respectively, of each individual Top
feed, thereby ensuring that vendors can
compete with the Exchange by creating
the same product as the Cboe One
Options Feed to sell to their clients.
Distributor Fees. The Exchange
believes that the proposed Distributor
fees for the Cboe One Options Feed are
reasonable because they represent the
combined monthly fees for Internal and
External Distributor fees, respectively
for the underlying individual data feeds,
which have previously been filed with
the Commission. The Exchange believes
that the proposed fees are equitable and
not unfairly discriminatory because they
will be charged uniformly to Internal
and External Distributors. The Exchange
believes that it is also fair and equitable,
and not unfairly discriminatory to
charge different fees for internal and
external distribution of the Cboe One
Options Feed. Although the proposed
distribution fee charged to External
Distributors will be lower than the
distribution fee charged to Internal
Distributors, External Distributors are
subject to Non-Professional user fees to
which Internal Distributors are not
subject, in addition to Professional User
fees (or alternatively the proposed
Enterprise Fee). The Exchange also
notes that Cboe One Options Feed, like
the underlying top-of-book feeds, are
more likely to be distributed externally
as such data is expected to be used more
frequently by Non-Professional Users
who, by definition, do not receive the
data for commercial purposes (e.g.,
retail investors) and are therefore not
internal. The Exchange therefore
believes that the proposed reduced fee
for External Distributors is reasonable
because it may encourage more
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distributors to choose to offer the Cboe
One Options, thereby expanding the
distribution of this market data for the
benefit of investors, and particularly
retail investors.
The proposed Distributor Fees for the
Cboe One Options Feed are also
designed to ensure that vendors could
compete with the Exchange by creating
a similar product as the Cboe One
Options Feed. The Exchange believes
that the proposed Distributor Fees are
equitable and reasonable as they equal
the combined fee of subscribing to each
individual data feed of the Cboe Options
Exchanges, which have been previously
published by the Commission.
New External Distributor Credit
In addition, the Exchange believes it
is reasonable to not charge External
Distributors of C2 Options Top and
Cboe One Options Feed a Distribution
Fee during their first three (3) months
because such Distributors will not be
subject to any External Distribution fee
for those months.40 The Exchange
believes it’s also reasonable for the New
External Distribution Credit for C2
Options Top to apply to External
Distributors of C2 Options Top who also
distribute such product internally
because the current Distribution Fee is
already meant to cover both internal and
distribution of C2 Options Top.
Therefore, the Exchange believes it’s
reasonable to apply the New External
Distributor Credit to both External
Distributors who distribute exclusively
externally and those that distribute
externally and internally. The
Exchange’s that its affiliated equities
exchanges offer a similar New External
Distributor Credit for a similar market
data product.41 The proposed credit is
also intended to incentivize new
External Distributors to enlist Users to
subscribe to the C2 Options Top or Cboe
One Options feeds in an effort to
broaden the products’ distribution.
While this incentive is not available to
Internal Distributors (i.e., Distributors
who exclusively distributed internally)
of these products, the Exchange believes
it is appropriate as Internal Distributors
have no Users outside of their own firm.
Furthermore, External Distributors are
subject to higher risks of launch as the
data is provided outside their own firm.
For these reasons, the Exchange believes
it is appropriate to provide this
incentive so that External Distributors
have sufficient time to test the data
40 As noted above, Distributors are additionally
not assessed any Distribution fee during any trial
usage period, under the existing Trial Usage period
offered by the Exchange.
41 See e.g., EDGX Equities Exchange Fees
Schedule, Market Data Fees.
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within their own systems prior to going
live externally. The Exchange also does
not believe this would inhibit a vendor
from creating a competing product and
offer a similar free period as the
Exchange. Specifically, a vendor seeking
to create the Cboe One Options Feed
could do so by subscribing to the
underlying individual data feeds, all of
which will also include a New External
Distributor Credit identical to that
proposed for the Cboe One Options
Feed. As a result, a competing vendor
would incur similar costs as the
Exchange in offering such free period
for a competing product and may do so
on the same terms as the Exchange.
Distributor Fee Credit
The Exchange believes the proposal to
provide External Distributors a credit
against their monthly Distribution Fee
equal to the amount of its monthly
Usage Fee or Enterprise Fees, is
reasonable as it could result in the
External Distributor paying a
discounted, or no, Distribution fee.42
The Exchange believes it’s also
reasonable for the Distributor Fee Credit
for C2 Options Top to apply to External
Distributors of C2 Options Top who also
distribute such product internally
because the current Distribution Fee is
already meant to cover both internal and
[sic] distribution of C2 Options Top.
Therefore, the Exchange believes it’s
reasonable to apply the Distributor Fee
Credit to both External Distributors who
distribute exclusively externally and to
those that distribute externally and
internally. The Exchange notes that its
affiliated equities exchanges offer a
similar credit for a similar market data
product.43 Further, in every case the
Exchange will receive at least the
amount of the External Distribution fee
for C2 Options Top or Cboe One
Options, as applicable, in connection
with the distribution of each respective
feed (through a combination of the
External Distribution Fee and per User
Fees or Enterprise Fees, as applicable).
The Exchange believes it is also
equitable and not unfairly
discriminatory to apply the credit to
External Distributors only because, like
the free three-month credit described
above, it is also intended to incentivize
new External Distributors to enlist
Users, including Non-Profession Users
such as retail investors, to subscribe to
the C2 Options Top or Cboe One
42 A Distributor that does not qualify to receive
the New External Distributor Credit, does not need
to wait three months to be eligible to receive the
Distributor Fee Credit (i.e., the Distributor would be
eligible to receive the credit immediately).
43 See e.g.,, EDGX Equities Exchange Fees
Schedule, Market Data Fees.
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Options Feed in an effort to broaden the
products’ distribution. While this
incentive is not available to Internal
Distributors (i.e., Distributors who
exclusively distributed internally) of
these products, the Exchange believes it
is appropriate as Internal Distributors
have no Users outside of their own firm.
Furthermore, External Distributors are
subject to higher risks of launch as the
data is provided outside their own firm.
For these reasons, the Exchange believes
it is appropriate to provide this
incentive to only External Distributors.
The proposal to adopt a Distributor Fee
Credit for Cboe One Options Feed in
particular also ensures the proposed
credit for Cboe One Options will not
cause the combined cost of subscribing
to Cboe Options, C2 Options, BZX
Options and EDGX Options Top feeds
for External Distributors to be greater
than the amount that would be charged
to subscribe to the Cboe One Options
feed, thereby ensuring that vendors can
compete with the Exchange by creating
the same product as the Cboe One
Options Feed (i.e., purchasing the
underlying data feeds and aggregating
the feeds themselves) to sell to their
clients.
The Exchange also believes updating
the Trial Usage section of the Fees
Schedule avoids potential confusion as
to whether new Users or Distributors
would be entitled to any credits,
including the proposed Distributor Fee
Credit (and New External Distributor
Credit), during the trial usage period.
The Exchange believes its reasonable
not to provide such credits as such new
users are not paying assessed any fees
during their trial period.
Data Consolidation Fee. The
Exchange believes that the proposed
$500 per month Data Consolidation Fee
charged to Distributors (including
vendors) who receive the Cboe One
Options Feed is reasonable because it
represents the value of the data
aggregation and consolidation function
that the Exchange performs. The
Exchange further believes the proposed
Data Consolidation Fee is not designed
to permit unfair discrimination because
all Distributors who obtain the Cboe
One Options Feed will be charged the
same fee. Accordingly, the Exchange
believes that Distributors could readily
offer a product similar to the Cboe One
Options Feed on a competitive basis at
a similar cost. Therefore, the Exchange
believes the proposed application of the
Data Consolidation Fee is reasonable
and would not permit unfair
discrimination.
PO 00000
Frm 00175
Fmt 4703
Sfmt 4703
50273
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would result
in any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange operates in a highly
competitive environment, and its ability
to price top-of-book data is constrained
by competition among exchanges that
offer similar data products to their
customers. Top-of-book data is broadly
disseminated by competing U.S. options
exchanges. In this competitive
environment potential Distributors are
free to choose which competing product
to purchase to satisfy their respective
needs for market information. Often, the
choice comes down to price, as market
data participants look to purchase
cheaper data products, and quality, as
market participants seek to purchase
data that represents significant market
liquidity.
The Exchange believes that the
proposed fees do not impose a burden
on competition or on other SROs that is
not necessary or appropriate in
furtherance of the purposes of the Act.
In particular, market participants are not
forced to subscribe to C2 Options Top,
Cboe One Options Feed or any of the
Exchange’s data feeds, as described
above. As noted, the quote and last sale
data contained in the Exchange’s C2
Options Top feed is identical to the data
sent to OPRA for redistribution to the
public. Accordingly, Exchange top-ofbook data is widely available today from
a number of different sources.
The Exchange believes that the
proposed fees do not put any market
participants at a relative disadvantage
compared to other market participants.
As discussed, the proposed waiver,
credits and Enterprise Fees would apply
to all similarly situated Distributors of
C2 Options Top on an equal and nondiscriminatory basis. Because market
data customers can find suitable
substitute feeds, an exchange that
overprices its market data products
stands a high risk that users may
substitute another product. These
competitive pressures ensure that no
one exchange’s market data fees can
impose an undue burden on
competition, and the Exchange’s
proposed fees do not do so here.
Additionally, the Cboe One Options
Feed will enhance competition because
it provides investors with an alternative
option for receiving market data.
Although the Cboe Options Exchanges
are the exclusive distributors of the
individual data feeds from which
certain data elements would be taken to
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lotter on DSK11XQN23PROD with NOTICES1
50274
Federal Register / Vol. 88, No. 146 / Tuesday, August 1, 2023 / Notices
create the Cboe One Options Feed, the
Exchange would not be the exclusive
distributor of the aggregated and
consolidated information that would
compose the proposed Cboe One
Options Feed. Any entity that receives,
or elects to receive, the underlying data
feeds would be able to, if it so chooses,
to create a data feed with the same
information included in the Cboe One
Options Feed and sell and distribute it
to its clients so that it could be received
by those clients as quickly as the Cboe
One Options Feed would be received by
those same clients and at a similar cost.
The proposed pricing the Exchange
would charge for the Cboe One Options
Feed compared to the cost of the
individual data feeds from the Cboe
Options Exchanges would enable a
vendor to receive the underlying
individual data feeds and offer a similar
product on a competitive basis and with
no greater cost than the Exchange. The
pricing the Exchange proposes to charge
for the Cboe One Options Feed is not
lower than the cost to a vendor of
receiving the underlying data feeds.
Indeed, the proposed pricing equals the
combined costs of the respective fees,
and the proposed waivers are also being
proposed for the underlying individual
feeds as well, thereby enabling a vendor
to receive the underlying data feeds and
offer a similar product on a competitive
basis and with no greater cost than the
Exchange.
The Exchange further believes that its
proposed monthly Data Consolidation
Fee would be pro-competitive because a
vendor could create a competing
product, perform a similar aggregating
and consolidating function, and
similarly charge for such service. The
Exchange notes that a competing vendor
might engage in a different analysis of
assessing the cost of a competing
product. For these reasons, the
Exchange believes the proposed pricing,
fee waiver and credit, would enable a
vendor to create a competing product
based on the individual data feeds and
charge its clients a fee that it believes
reflects the value of the aggregation and
consolidation function that is
competitive with Cboe One Options
Feed pricing.
In establishing the proposed fees, the
Exchange considered the
competitiveness of the market for
proprietary data and all of the
implications of that competition. The
Exchange believes that it has considered
all relevant factors and has not
considered irrelevant factors in order to
establish fair, reasonable, and not
unreasonably discriminatory fees and an
equitable allocation of fees among all
users.
VerDate Sep<11>2014
18:34 Jul 31, 2023
Jkt 259001
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any written
comments from members or other
interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to section 19(b)(3)(A)
of the Act 44 and paragraph (f) of Rule
19b–4 45 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
C2–2023–015 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–C2–2023–015. 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
PO 00000
44 15
45 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
Frm 00176
Fmt 4703
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–C2–2023–015 and should be
submitted on or before August 22, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.46
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–16245 Filed 7–31–23; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice: 12135]
Board of Visitors of the Foreign
Service Institute
Notice of intent to establish an
advisory committee.
ACTION:
The Secretary of State announces an
intent to establish the Board of Visitors
of the Foreign Service Institute (‘‘the
Board’’), pursuant to section 9205(e) of
the National Defense Authorization Act
for FY 2023 (NDAA), and consistent
with the Federal Advisory Committee
Act (5 U.S.C. 1001 et seq).
Nature and Purpose: The Board’s
duties include providing the Secretary
with independent advice and
recommendations regarding
organizational management, strategic
planning, resource management,
curriculum development, and other
matters of interest to the Foreign Service
Institute, including regular observations
about how well the Department is
integrating training and professional
development into the work of the
46 17
Sfmt 4703
E:\FR\FM\01AUN1.SGM
CFR 200.30–3(a)(12).
01AUN1
]]>Agencies
[Federal Register Volume 88, Number 146 (Tuesday, August 1, 2023)]
[Notices]
[Pages 50266-50274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-16245]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97995; File No. SR-C2-2023-015)
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule
July 26, 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 14, 2023, Cboe C2 Exchange, Inc. (``Exchange'' or ``C2'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe C2 Exchange, Inc. (the ``Exchange'' or ``C2'') proposes to
update its Fees Schedule. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/ctwo/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Market Data section of its Fees
Schedule.\3\ Particularly, the Exchange proposes to (i) adopt a New
External Credit applicable to C2 Options Top, (ii) adopt a credit
towards the monthly Distribution fees for C2 Options Top, (iii) modify
the C2 Options Top Enterprise Fee; and (iv) establish fees for Cboe One
Options Feed.
---------------------------------------------------------------------------
\3\ The Exchange initially filed the proposed fee changes on
March 1, 2023 (SR-C2-2023-008). On March 3, 2023, the Exchange
withdrew that filing and submitted SR-C2-2023-009. On March 16,
2023, the Exchange withdrew that filing and submitted SR-C2-2023-
010. On May 15, 2023, the Exchange withdrew that filing and
submitted SR-C2-2023-013. On July 14, 2023, the Exchange withdrew
that filing and submitted this proposal.
---------------------------------------------------------------------------
C2 Top Data
By way of background, the Exchange offers the C2 Options Top Data
feed, which is an uncompressed data feed that offers top-of-book
quotations and last sale information based on options orders entered
into the Exchange's System. The C2 Options Top Data feed benefits
investors by facilitating their prompt access to real-time top-of-book
information contained in C2 Options Top Data. The Exchange's affiliated
options exchanges (i.e., Cboe Exchange, Inc. (``Cboe Options''), Cboe
BZX Exchange, Inc. (``BZX Options''), and Cboe EDGX Exchange, Inc.
(``EDGX Options'') (collectively, ``Affiliates'' and together with the
Exchange, ``Cboe Options Exchanges'') also offer similar top-of-book
data feeds.\4\ Particularly, each of the Exchange's Affiliates offer
top-of-book quotation and last sale information based on their own
quotation and trading activity that is substantially similar to the
information provided by the Exchange through the C2 Options Top. The
Exchange proposes to make the following fee changes relating to C2
Options Top.
---------------------------------------------------------------------------
\4\ See Cboe Options Fees Schedule, EDGX Rule 21.15, and BZX
Rule 21.15.
---------------------------------------------------------------------------
New External Distributor Credit
The Exchange first proposes to adopt a New External Distributor
Credit which will provide that new External Distributors of the C2
Options Top feed will not be charged an External Distributor Fee for
their first three (3) months in order to incentivize External
[[Page 50267]]
Distributors to enlist new users to receive C2 Options Top feed.\5\ The
Exchange notes that other exchanges, including the Exchange's
affiliated equities exchanges, offer similar credits for similar market
data products. For example, Cboe's equities exchanges currently offer a
one (1) month New External Distributor Credit applicable to External
Distributors of their top-of-book data feeds.\6\ They also offer a
three (3) month new External Credit applicable to External Distributors
of summary depth-of-book feeds.\7\
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\5\ Any applicable User fees or Enterprise fee will continue to
apply during this three-month period. The New External Distributor
Credit will not apply during an External Distributor's trial usage
period for C2 Options Top. External Distributors who receive C2
Options Top on a trial basis are still eligible for the New
Distributor Credit and such free trial basis will not count towards
the three (3) months. For example, if an External Distributor has a
trial usage period from June 1 through June 30, the New External
Distributor Credit will apply for July, August and September. The
New External Distribution Credit also applies to External
Distributors who also distribute internally (i.e., no additional
distribution fee will apply during the time the New External
Distributor Credit is applied).
\6\ See e.g., EDGX Equities Exchange Fees Schedule, Market Data
Fees.
\7\ See e.g., EDGX Equities Exchange Fees Schedule, Market Data
Fees, Id.
---------------------------------------------------------------------------
Distributor Fee Credit
The Exchange also proposes to provide that each External
Distributor will receive a credit against its monthly Distributor Fee
for the C2 Options Top equal to the amount of its monthly User Fees up
to a maximum of the Distributor Fee for the C2 Options Top feed.\8\ The
proposed Enterprise Fees discussed below would also be counted towards
the Distributor Fee credit, equal to the amount of an External
Distributor's monthly C2 Options Top External Distribution fee. For
example, an External Distributor will be subject to a $2,500 monthly
Distributor Fee where they elect to receive the C2 Options Top. If that
External Distributor reports User quantities totaling $2,500 or more of
monthly usage of the C2 Options Top, it will pay no net Distributor
Fee, whereas if that same External Distributor were to report User
quantities totaling $1,500 of monthly usage, it will pay a net of
$1,000 for the Distributor Fee. External Distributors will remain
subject to the per User fees applicable to C2 Options Top. External
Distributors who choose to purchase an Enterprise license as an
alternative to paying User Fees will get a credit in the amount of the
External Distribution Fee, which is currently $2,500, since the
proposed Enterprise Fees are in excess of the External Distribution
fee. In every case the Exchange will receive at least $2,500 in
connection with the distribution of the C2 Options Top (through a
combination of the External Distribution Fee and per User Fees or
Enterprise Fees, as applicable). The Exchange notes that its affiliated
equities exchanges offer a similar credit for a similar market data
product.\9\
---------------------------------------------------------------------------
\8\ The Distributor Fee Credit does not apply during any such
time that an External Distributor is receiving the New External
Distributor Credit or during a trial usage period for C2 Options
Top. The Exchange also proposes to update the Trial Usage section in
the Fees Schedule to make clear that first time Users and
Distributors of Exchange Market Data Products will not receive any
applicable credits during their trial usage period.
\9\ See e.g., EDGX Equities Exchange Fees Schedule, Id.
---------------------------------------------------------------------------
Enterprise Fee Tiers
The Exchange currently offers Distributors the ability to purchase
a monthly (and optional) Enterprise license to receive the C2 Options
Top Feed for distribution to an unlimited number of Professional \10\
and Non-Professional \11\ Users. The Enterprise Fee is an alternative
to Professional and Non-Professional User fees and permits a
Distributor to pay a flat fee for an unlimited number of Professional
and Non-Professional Users and is in addition to the Distribution fees.
The Exchange currently assesses a flat monthly Enterprise fee of
$10,000. The Exchange proposes to modify the current Enterprise Fee and
adopt a tiered structure based on the number of Users a Distributor
has. The Exchange proposes to adopt the following monthly Enterprise
Fees: $10,000 for up to 1,500,000 Users (Tier 1), $20,000 for 1,500,001
to 2,500,000 Users (Tier 2) and $30,000 for 2,500,001 or greater Users
(Tier 3). The proposed fees are non-progressive (e.g., if a Distributor
has 2,000,000 Users, it will be subject to $20,000 for Tier 2). The
Enterprise Fee may provide an opportunity to reduce fees. For example,
if a Distributor has 1 million Non-Professional Users who each receive
C2 Options Top at $0.10 per month, then that Distributor will pay
$100,000 per month in Non-Professional Users fees. If the Distributor
instead were to purchase the proposed Enterprise license (tier 1), it
would alternatively pay a flat fee of $10,000 for up to 1.5 million
Professional and Non-Professional Users. A Distributor that pays the
Tier 1 or Tier 2 Enterprise Fee will have to report its number of such
Users on a monthly basis. A Distributor that pays the Tier 3 Enterprise
Fee will only have to report the number of its Users every six
months.\12\ The Exchange notes that if the reported number of Users
exceed the Enterprise Tier a Distributor has purchased, the higher Tier
will apply (e.g., if a Distributor purchases Tier 1, but reports
1,600,000 Users for a month, the Distributor will be assessed the Tier
2 fee).
---------------------------------------------------------------------------
\10\ A Professional User of an Exchange Market Data product is
any User other than a Non-Professional User.
\11\ A ``Non-Professional User'' of an Exchange Market Data
product is a natural person or qualifying trust that uses Data only
for personal purposes and not for any commercial purpose and, for a
natural person who works in the United States, is not: (i)
registered or qualified in any capacity with the Securities and
Exchange Commission, the Commodities Futures Trading Commission, any
state securities agency, any securities exchange or association, or
any commodities or futures contract market or association; (ii)
engaged as an ``investment adviser'' as that term is defined in
section 202(a)(11) of the Investment Advisors Act of 1940 (whether
or not registered or qualified under that Act); or (iii) employed by
a bank or other organization exempt from registration under federal
or state securities laws to perform functions that would require
registration or qualification if such functions were performed for
an organization not so exempt; or, for a natural person who works
outside of the United States, does not perform the same functions as
would disqualify such person as a Non-Professional User if he or she
worked in the United States.
\12\ See Cboe Global Markets North American Data Policies, which
provides that Distributors that have obtained an Enterprise license
are required to report quantities monthly unless they reach the
highest Enterprise Tier available (i.e., Tier 3), in which case they
are required to report user quantities only every six months).
---------------------------------------------------------------------------
The Exchange also proposes to allow Distributors to purchase the
Enterprise Fee on a monthly or annual basis. Annual licenses will
receive a 5% discount off the applicable Enterprise Tier fee.\13\ The
Exchange notes that the purchase of an Enterprise license is voluntary,
and a firm may elect to instead use the per User structure and benefit
from the proposed per User Fees described above. For example, a firm
that does not have a sufficient number of Users to benefit from
purchase of a license need not do so.
---------------------------------------------------------------------------
\13\ The discount will be taken off the applicable fee assessed
for the applicable Enterprise Tier each month.. For example, if a
Distributor elects to purchase an annual license and is in Tier 1
for any 9 months of the year and Tier 2 for any 3 months of the
year, the total amount of fees paid for one year will be $142,500
($10,000-5% x 9 months + $20,000-5% x 3 months) as compared to
$150,000 ($10,000 x 9 months + $20,000 x 3 months).
---------------------------------------------------------------------------
Cboe One Options Feed
By way of background, the Exchange recently adopted a new market
data product called Cboe One Options Feed, which launched March 1,
2023.\14\ Cboe One Options Feed will provide top-of-book quotation and
last sale information based on the quotation and trading activity on
the Exchange and each of its Affiliates, which the Exchange believes
offers a comprehensive and highly
[[Page 50268]]
representative view of US options pricing to market participants. More
specifically, Cboe One Options Feed will contain the aggregate best bid
and offer (``BBO'') of all displayed orders for options traded on the
Exchange and its Affiliates, as well as individual last sale
information and volume, which includes the price, time of execution and
individual Cboe options exchange on which the trade was executed.
---------------------------------------------------------------------------
\14\ See SR-C2-2023-006.
---------------------------------------------------------------------------
The Cboe One Options Feed will also consist of Symbol Summary,\15\
Market Status,\16\ Trading Status,\17\ and Trade Break \18\ messages
for the Exchange and each of its Affiliates.
---------------------------------------------------------------------------
\15\ The Symbol Summary message will include the total executed
volume across all Cboe Options Exchanges.
\16\ The Market Status message is disseminated to reflect a
change in the status of one of the Cboe Options Exchanges. For
example, the Market Status message will indicate whether one of the
Cboe Options Exchanges is experiencing a systems issue or disruption
and quotation or trade information from that market is not currently
being disseminated via the Cboe One Options Feed as part of the
aggregated BBO. The Market Status message will also indicate when a
Cboe Options Exchange is no longer experiencing a systems issue or
disruption to properly reflect the status of the aggregated BBO.
\17\ The Trade Break message will indicate when an execution on
a Cboe Options Exchange is broken in accordance with the individual
Cboe Options Exchange's rules (e.g., Cboe Options Rule 6.5, C2
Option Rule 6.5, BZX Options Rule 20.6, EDGX Options Rule 20.6).
\18\ The Trading Status message will indicate the current
trading status of an option contract on each individual Cboe Options
Exchange. A Trading Status message will also be sent whenever a
security's trading status changes. For example, a Trading Status
message will be sent when a symbol is open for trading or when a
symbol is subject to a trading halt or when it resumes trading.
---------------------------------------------------------------------------
The Exchange will use the following data feeds to create the Cboe
One Options Feed, each of which is available to other vendors and/or
distributors: Cboe Options Top Data, C2 Options Top Data, EDGX Options
Top and BZX Options Top. A vendor and/or distributor that wishes to
create a product like the Cboe One Options Feed could instead subscribe
to each of the aforementioned data feeds. Any entity that receives, or
elects to receive, the individual data feeds or the feeds that may be
used to create a product like the Cboe One Options Feed would be able
to, if it so chooses, to create a data feed with the same information
included in the Cboe One Options Feed and sell and distribute it to its
clients so that it could be received by those clients as quickly as the
Cboe One Options Feed would be received by those same clients.
The Exchange proposes to amend its fee schedule to incorporate fees
related to the Cboe One Options Feed. The Exchange has taken into
consideration its affiliated relationship with its Affiliates in its
design of the Cboe One Options Feed to assure that vendors \19\ would
be able to offer a similar product on the same terms as the Exchange
from a cost perspective. Although Cboe Options Exchanges are the
exclusive distributors of the individual data feeds from which certain
data elements would be taken to create the Cboe One Options Feed, the
Exchange would not be the exclusive distributor of the aggregated and
consolidated information that compose the proposed Cboe One Options
Feed. Distributors and/or vendors would be able, if they chose, to
create a data feed with the same information as the Cboe One Options
Feed and distribute it to their clients on a level-playing field with
respect to latency and cost as compared to the Exchange's proposed Cboe
One Options Feed. The pricing the Exchange proposes to charge for the
Cboe One Options Feed, as described more fully below, is not lower than
the cost to a distributor or vendor to obtain the underlying data
feeds. In fact, the Distribution and User (Professional and Non-
Professional) fees, as well as the optional Enterprise Fees, that the
Exchange proposes to adopt for the Cboe One Options Feed are equal to
the respective combined fees for subscribing to each individual data
feed. The Exchange also proposes to adopt a ``Data Consolidation Fee,''
which would reflect the value of the aggregation and consolidation
function the Exchange performs in creating the Cboe One Options Feed.
Therefore, Distributors would be enabled to create a competing product
based on the individual data feeds and charge their clients a fee that
they believe reflects the value of the aggregation and consolidation
function that is competitive with Cboe One Options Feed pricing. For
these reasons, the Exchange believes that Distributors, including
vendors, could readily offer a product similar to the Cboe One Options
Feed on a competitive basis at a similar cost.
---------------------------------------------------------------------------
\19\ For purposes of this filing, a ``vendor'', which is a type
of distributor, will refer to any entity that receives an exchange
market data product directly from the exchange or indirectly from
another entity (for example, from an extranet) and then resell that
data to a third-party customer (e.g., a data provider that resells
exchange market data to a retail brokerage firm). The term
``distributor'' herein, will refer to any entity that receives an
exchange market data product, directly from the exchange or
indirectly from another entity (e.g., from a data vendor) and then
distributes to individual internal or external end-users (e.g., a
retail brokerage firm who distributes exchange data to its
individual employees and/or customers). An example of a vendor's
``third-party customer'' or ``customer'' is an institutional broker
dealer or a retail broker dealer, who then may in turn distribute
the data to their customers who are individual internal or external
end-users.
---------------------------------------------------------------------------
The proposed Cboe One Options Feed fees include the following, each
of which are described in further detail below: (i) Distributor Fees;
(ii) User Fees for both Professional and Non-Professional Users; (iii)
Enterprise Fees; and (iv) a Data Consolidation Fee. The Exchange also
proposes to adopt a New External Distributor credit and a credit
against the monthly External Distribution Fee equal to the amount of
monthly User Fees or Enterprise Fees up to a maximum of the External
Distributor Fee. To ensure consistency across the Cboe Options
Exchanges, Cboe Options, EDGX Options, and BZX Options will be filing
companion proposals to reflect this proposal in their respective fee
schedules.
Distributor Fees
As proposed, each Internal Distributor that receives the Cboe One
Options Feed shall pay a fee of $15,000 per month. The proposed
Internal Distribution Fee equals the combined monthly Internal
Distribution fees for the underlying individual data feeds of the Cboe
Options Exchanges (i.e., the monthly Internal Distribution fees are
$3,000 for BZX Options Top, $500 for EDGX Options Top, $2,500 for C2
Options Top and $9,000 for Cboe Options Top). The Exchange also
proposes to assess External Distributors a monthly fee of $10,000. The
proposed External Distribution fee equals the combined monthly External
Distribution fees for the underlying individual data feeds of the Cboe
Options Exchanges (i.e., the monthly External Distribution fees are
$5,000 per month for the Cboe Options Top, $2,500 per month for C2
Options Top, $2,000 per month for BZX Options Top, and $500 for EDGX
Options Top). As noted above, the Exchange is proposing to charge
Internal Distributors an Internal Distribution Fee, and External
Distributors an External Distribution Fee, that equals the combined
respective Distribution fees of each individual Top feed to ensure the
combined cost of subscribing to Cboe Options, C2 Options, BZX Options
and EDGX Options Top feeds are no greater than the amount that would be
charged to subscribe to the Cboe One Options feed, thereby ensuring
that vendors could compete with the Exchange by creating the same
product as the Cboe One Options Feed to sell to their clients.
User Fees
In addition to Internal and External Distributor Fees, the Exchange
proposes to assess Professional User and Non-Professional User Fees.
The proposed
[[Page 50269]]
monthly Professional User fee for the Cboe Options Exchanges is $30.50
per Professional User, which equals the combined monthly Professional
User fees of the underlying individual Cboe Options Exchanges Top feeds
(i.e., $15.50 per Professional User for the Cboe Options Top, $5 per
Professional User for C2 Options Top, $5 per Professional User for BZX
Options Top, and $5 per Professional User for EDGX Options Top). The
Exchange also proposes to adopt a monthly Non-Professional User fee of
$0.60 per Non-Professional User, which similarly represents the
combined total Non-Professional User fee for the individual data feeds
of the Cboe Options (i.e., $0.30 per Non-Professional User for Cboe
Options Top, $0.10 per Non-Professional User for C2 Options Top, $0.10
per Non-Professional User for BZX Options Top, and $0.10 per Non-
Professional User for EDGX Options Top). Similar to the individual
underlying feeds, Distributors that receive Cboe One Options Feed will
be required to count Professional and Non-Professional Users to which
they provide the data feed. The Exchange is proposing to charge
Professional and Non-Professional User fees that equal the combined
respective Professional and Non-Professional User fees of each
individual Top feed to ensure the combined cost of subscribing to Cboe
Options, C2 Options, BZX Options and EDGX Options Top feeds are no
greater than the amount that would be charged to subscribe to the Cboe
One Options feed, thereby ensuring that vendors could compete with the
Exchange by creating the same product as the Cboe One Options Feed to
sell to their clients.
Enterprise Fees
The Exchange also proposes to establish Enterprise Fees that will
permit a Distributor to purchase a monthly (and optional) Enterprise
license to receive the Cboe One Options Feed for distribution to a
specified number of Professional and Non-Professional Users. The
Enterprise Fee will be an alternative to Professional and Non-
Professional User fees and will permit a Distributor to pay a flat fee
to receive the data for a specified number of Professional and Non-
Professional Users, which the Exchange proposes to make clear in the
Fee Schedule. Like User fees, the Enterprise Fee would be assessed in
addition to the Distribution Fees. The Exchange proposes to adopt the
following monthly Enterprise Fees: $350,000 for up to 1,500,000 Users
(Tier 1), $550,000 for 1,500,001 to 2,500,000 Users (Tier 2) and
$750,000 for 2,500,001 or greater Users (Tier 3). The proposed fee
amounts for each Tier equals the combined Enterprise Fees for the
respective tiers for the underlying individual Cboe Options Exchanges
Top feeds (i.e., $300,000, $450,000 and $600,000 for Tiers 1, 2 and 3
respectively for the Cboe Options Top; $10,000, $20,000 and $30,000 for
Tiers 1, 2 and 3 respectively for C2 Options Top; $20,000, $40,000 and
$60,000 for Tiers 1, 2 and 3 respectively for BZX Options Top; and
$20,000, $40,000 and $60,000 for Tiers 1, 2 and 3 respectively for EDGX
Options Top). The proposed fees are non-progressive (e.g., if a
Distributor has 2,000,000 Users, it will be subject to $550,000 for
Tier 2). The Enterprise Fee may provide an opportunity to reduce fees.
For example, if a Distributor has 1 million Non-Professional Users who
each receive Cboe One Options Feed at $0.60 per month (as proposed),
then that Distributor will pay $600,000 per month in Non-Professional
Users fees. If the Distributor instead were to purchase the proposed
Enterprise license (Tier 1), it would alternatively pay a flat fee of
$350,000 for up to 1.5 million Professional and Non-Professional Users.
A Distributor must pay a separate Enterprise Fee for each entity that
controls the display of Cboe One Options Feed if it wishes for such
Users to be covered by an Enterprise Fee rather than by per User
fees.\20\ A Distributor that pays the Tier 1 or Tier 2 Enterprise Fee
will have to report its number of such Users on a monthly basis. A
Distributor that pays the Tier 3 Enterprise Fee will only have to
report the number of its Users every six months.\21\ The Exchange notes
that if the reported number of Users exceed the Enterprise Tier a
Distributor has purchased, the higher Tier will apply (e.g., if a
Distributor purchases Tier 1, but reports 1,600,000 Users for a month,
the Distributor will be assessed the Tier 2 fee).
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\20\ For example, if a Distributor that distributes C2 Options
Top to Retail Brokerage Firm A and Retail Brokerage Firm B and
wishes to have the Users under each firm covered by an Enterprise
license, the Distributor would be subject to two Enterprise Fees.
\21\ See Cboe Global Markets North American Data Policies which
provides that Distributors that have obtained an Enterprise license
are required to report quantities monthly unless they reach the
highest Enterprise Tier available (i.e., Tier 3), in which case they
are required to report user quantities only every six months).
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The Exchange also proposes to allow Distributors to purchase the
Enterprise Fee on a monthly or annual basis. Annual licenses will
receive a 5% discount off the applicable Enterprise Fee tier.\22\ The
Exchange notes that the purchase of an Enterprise license is voluntary,
and a firm may elect to instead use the per User structure and benefit
from the proposed per User Fees described above. For example, a firm
that does not have a sufficient number of Users to benefit from
purchase of a license need not do so. The Exchange is proposing to
charge Enterprise Fees that equal the combined respective Enterprise
Fees of each individual Top feed and is also is proposing to adopt a 5%
discount for those that purchase an Annual license for Cboe Options Top
(with a corresponding change will also be proposed by the Exchange's
Affiliates) to ensure the combined cost of subscribing to Cboe Options,
C2 Options, BZX Options and EDGX Options Top feeds will be the same as
those that would be charged to subscribe to the Cboe One Options feed,
thereby ensuring that vendors could compete with the Exchange by
creating the same product as the Cboe One Options Feed to sell to their
clients.
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\22\ The discount will be taken off the applicable fee assessed
for the applicable Enterprise Tier each month.. For example, if a
Distributor elects to purchase an annual license and is in Tier 1
for any 9 months of the year and Tier 2 for any 3 months of the
year, the total amount of fees paid for one year will be $4,560,00
($350,000-5% x 9 months + $550,000-5% x 3 months) as compared to
$4,800,000 ($350,000 x 9 months + $550,000 x 3 months). 3150000
[sic]
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New External Distributor Credit
The Exchange proposes to adopt a New External Distributor Credit
which would provide that new External Distributors of the Cboe One
Options Feed will not be charged an External Distributor Fee for their
first three (3) months in order to incentivize them to enlist new Users
to receive the Cboe One Options Feed.\23\ The Exchange notes that other
exchanges, including the Exchange's affiliated equities exchanges offer
similar credits for similar market data products. For example, Cboe's
equities exchanges currently offer a one (1) month New External
Distributor Credit applicable to the Cboe One Summary Feed and a three
(3) month New External Distributor Credit applicable to the
distribution of the Cboe One Premium
[[Page 50270]]
Feed.\24\ To alleviate any competitive issues that may arise with a
vendor seeking to offer a product similar to the Cboe One Options Feed
based on the underlying data feeds, the Exchange is proposing, as
discussed above, to also adopt a three-month New External Distributor
Credit for the underlying top-of-book data feeds for the Cboe Options
Exchanges. The respective proposals to adopt a three-month credit
ensures the proposed New External Distributor Credit for Cboe One
Options will not cause the combined cost of subscribing to Cboe
Options, C2 Options, BZX Options and EDGX Options Top feeds for new
External Distributors to be greater than those that would be charged to
subscribe to the Cboe One Options feed, thereby ensuring that vendors
could compete with the Exchange by creating the same product as the
Cboe One Options Feed to sell to their clients.
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\23\ Any applicable User fees will continue to apply during this
three-month period. The New External Distributor Credit will not
apply during an External Distributor's trial usage period for Cboe
One Options and such free trial basis will not count towards the
three (3) months. For example, if an External Distributor has a
trial usage period from June 1 through June 30, the New External
Distributor Credit will apply for July, August and September.
\24\ See e.g., EDGX Equities Exchange Fees Schedule, Market Data
Fees.
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Distributor Fee Credit
The Exchange also proposes to provide that each External
Distributor will receive a credit against its monthly External
Distributor Fee for the Cboe One Options Feed equal to the amount of
its monthly User Fees up to a maximum of the External Distributor Fee
for the Cboe One Options Feed.\25\ The proposed Enterprise Fees
discussed above would also be counted towards the Distributor Fee
credit, equal to the amount of its monthly Cboe One Options External
Distribution fee. For example, an External Distributor will be subject
to a $10,000 monthly Distributor Fee where they elect to receive the
Cboe One Options Feed. If that External Distributor reports User
quantities totaling $10,000 or more of monthly User fees of the Cboe
Options One Feed, it will pay no net Distributor Fee, whereas if that
same External Distributor were to report User quantities totaling
$9,000 of monthly usage, it will pay a net of $1,000 for the
Distributor Fee. External Distributors will remain subject to the per
User fees discussed above. External Distributors who choose to purchase
an Enterprise license as an alternative to paying User Fees will get a
credit in the amount of the External Distribution Fee, which is
currently $10,000, since the proposed Enterprise Fees are in excess of
the External Distribution fee. In every case the Exchange will receive
at least $10,000 in connection with the distribution of the Cboe One
Options Feed (through a combination of the External Distribution Fee
and per User Fees or the Enterprise Fees, as applicable). The Exchange
notes that its affiliated equities exchanges offer a similar credit for
a similar market data product.\26\ The proposal to adopt a Distributor
Fee Credit for Cboe One Options Feed ensures the proposed credit for
Cboe One Options will not cause the combined cost of subscribing to
Cboe Options, C2 Options, BZX Options and EDGX Options Top feeds for
External Distributors to be greater than the amount that would be
charged to subscribe to the Cboe One Options feed, thereby ensuring
that vendors could compete with the Exchange by creating the same
product as the Cboe One Options Feed to sell to their clients..
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\25\ The Distributor Fee Credit does not apply during any such
time that an External Distributor is receiving the New External
Distributor Credit or during a trial usage period for Cboe One
Options.
\26\ See e.g., EDGX Equities Exchange Fees Schedule, Market Data
Fees.
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Data Consolidation Fee
The Exchange also proposes to charge Distributors of the Cboe One
Options Feed a separate Data Consolidation Fee, which reflects the
value of the aggregation and consolidation function the Exchange
performs in creating the Cboe One Options Feed.\27\ As stated above,
the Exchange creates the Cboe One Options Feed from data derived from
the Cboe Options Top, C2 Options Top, BZX Options Top, and EDGX Options
Top Feeds. Distributors (including vendors) could similarly create a
competing product to the Cboe One Options Feed based on these
individual data feeds offered by the Exchanges, and could charge its
clients a fee that it believes reflects the value of the aggregation
and consolidation function. Accordingly, the Exchange believes that
vendors could readily offer a product similar to the Cboe One Options
Feed on a competitive basis at a similar cost.
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\27\ If a vendor distributes the Cboe One Options Feed to
another firm, who then re-distributes the Cboe One Options Feed,
both entities would be subject to the Data Consolidation Fee. A
vendor will only be assessed a single Data Consolidated Fee, even if
it distributes Cboe One Options Feed to more than one entity.
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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.\28\ Specifically, the
Exchange believes the proposed rule change is consistent with the
section 6(b)(5) \29\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
section 6(b)(5) requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange also believes this proposal is
consistent with section 6(b)(8) of the Act, which requires that the
rules of an exchange not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.\30\
In addition, the Exchange believes that the proposed rule change is
consistent with section 11(A) of the Act as it supports (i) fair
competition among brokers and dealers, among exchange markets, and
between exchange markets and markets other than exchange markets, and
(ii) the availability to brokers, dealers, and investors of information
with respect to quotations for and transactions in securities.\31\ The
Exchange also believes the proposed rule change is consistent with
section 6(b)(4) of the Act,\32\ 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.
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\28\ 15 U.S.C. 78f(b).
\29\ 15 U.S.C. 78f(b)(5).
\30\ 15 U.S.C. 78f(b)(8).
\31\ 15 U.S.C. 78k-1.
\32\ 15 U.S.C. 78f(b)(4).
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The Exchange first notes that it operates in a highly competitive
environment. Indeed, there are currently 16 registered options
exchanges that trade options. Based on publicly available information,
no single options exchange has more than 18% of the market share.\33\
The Exchange believes top-of-book quotation and transaction data is
highly competitive as national securities exchanges compete vigorously
with each other to provide efficient, reliable, and low-cost data to a
wide range of investors and market participants. Indeed, there are
several competing products offered by other
[[Page 50271]]
national securities exchanges today, not counting products offered by
the Exchange's affiliates, and each of the Exchange's affiliated U.S.
options exchanges also offers similar top-of-book data.\34\ Each of
those exchanges offer top-of-book quotation and last sale information
based on their own quotation and trading activity that is substantially
similar to the information provided by the Exchange through the C2
Options Top Data Feed. Further, the quote and last sale data contained
in the C2 Data Feed is identical to the data sent to OPRA for
redistribution to the public.\35\ Accordingly, Exchange top-of-book
data is widely available today from a number of different sources.
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\33\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (April 24, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
\34\ See e.g., NYSE Arca Options Proprietary Market Data Fees
Schedule, MIAX Options Exchange, Fee Schedule, Section 6 (Market
Data Fees), Nasdaq PHLX Options 7 Pricing Schedule, Section 10
(Proprietary Data Feed Fees) and Cboe Data Services, LLC Fees
Schedule.
\35\ The Exchange makes available the top-of-book data and last
sale data that is included in the C2 Options Top Data Feed no
earlier than the time at which the Exchange sends that data to OPRA.
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Moreover, the C2 Options Top Data Feed and Cboe One Options Feeds
are distributed and purchased on a voluntary basis, in that neither the
Exchange nor market data distributors are required by any rule or
regulation to make these data products available. Accordingly,
Distributors (including vendors) and Users can discontinue use at any
time and for any reason, including due to an assessment of the
reasonableness of fees charged. Further, the Exchange is not required
to make any proprietary data products available or to offer any
specific pricing alternatives to any customers. Moreover, persons
(including broker-dealers) who subscribe to any exchange proprietary
data feed must also have equivalent access to consolidated Options
Information \36\ from OPRA for the same classes or series of options
that are included in the proprietary data feed, and proprietary data
feeds cannot be used to meet that particular requirement.\37\ As such,
all proprietary data feeds are optional.
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\36\ ``Consolidated Options Information'' means consolidated
Last Sale Reports combined with either consolidated Quotation
Information or the BBO furnished by OPRA. Access to consolidated
Options Information is deemed ``equivalent'' if both kinds of
information are equally accessible on the same terminal or work
station. See Limited Liability Company Agreement of Options Price
Reporting Authority, LLC (``OPRA Plan''), Section 5.2(c)(iii). The
Exchange notes that this requirement under the OPRA Plan is also
reiterated under the Cboe Global Markets Global Data Agreement and
Cboe Global Markets North American Data Policies, which subscribers
to any exchange proprietary product must sign and are subject to,
respectively. Additionally, the Exchange's Data Order Form (used for
requesting the Exchange's market data products) requires
confirmation that the requesting market participant receives data
from OPRA.
\37\ Id.
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The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. Particularly, in
Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \38\ Making
similar data products available to market participants fosters
competition in the marketplace, and constrains the ability of exchanges
to charge supracompetitive fees. In the event that a market participant
views one exchange's data product as more or less attractive than the
competition they can and do switch between similar products. The
proposed fees are a result of the competitive environment, as the
Exchange seeks to adopt fees to attract purchasers of C2 Options Top
Data and Cboe One Options Feed.
---------------------------------------------------------------------------
\38\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
The Exchange has also taken into consideration its affiliated
relationship with its Affiliates in its design of the Cboe One Options
Feed to ensure that vendors would be able to offer a similar product on
the same terms as the Exchange from a cost perspective. While the Cboe
Options Exchanges are the exclusive distributors of the individual data
feeds from which certain data elements may be taken to create the Cboe
One Options Feed, they are not the exclusive distributors of the
aggregated and consolidated information that comprises the Cboe One
Options Feed. Any entity that receives, or elects to receive, the
individual data feeds would be able to, if it so chooses, to create a
data feed with the same information included in the Cboe One Options
Feed and sell and distribute it to its clients so that it could be
received by those clients as quickly as the Cboe One Options Feed would
be received by those same clients with no greater cost than the
Exchange.
In addition, vendors and Distributors that do not wish to purchase
the Cboe One Options Feed may separately purchase the individual
underlying products, and if they so choose, perform a similar
aggregation and consolidation function that the Exchange performs in
creating the Cboe One Options Feed. To enable such competition, the
Exchange is offering the Cboe One Options Feed on terms that a vendor
of those underlying feeds could offer a competing product if it so
chooses.
In addition, the fees that are the subject of this rule filing are
constrained by competition. Particularly, the Exchange competes with
other exchanges (and their affiliates) that may choose to offer similar
market data products. If another exchange (or its affiliate) were to
charge less to consolidate and distribute a similar product than the
Exchange charges to consolidate and distribute the Cboe One Options
Feed, prospective Users likely could choose to not subscribe to, or
would cease subscribing to, the Cboe One Options Feed. In addition, the
Exchange would compete with unaffiliated market data vendors who would
be in a position to consolidate and distribute the same data that
comprises the Cboe One Options Feed into the vendor's own comparable
market data product. If the third-party vendor is able to provide the
exact same data for a lower cost, prospective Users would avail
themselves of that lower cost and elect not to take the Cboe One
Options Feed.
For these reasons, the Exchange believes that the proposed fees are
reasonable, equitable, and not unfairly discriminatory.
User Fees. The Exchange believes that the proposed Professional and
Non-Professional User fees for the Cboe One Options Feed are reasonable
because they represent the combined monthly fees for Professional and
Non-Professional User fees, respectively for the underlying individual
data feeds, which have previously been filed with the Commission. The
Exchange believes that the proposed fees are equitable and not unfairly
discriminatory because they will be charged uniformly to Distributors.
Combining the Professional and Non-Professional User fees, of each
individual Top feed, respectively, further ensures vendors can compete
with the Exchange by creating the same product as the Cboe One Options
Feed to sell to their clients. Moreover, the proposed fee structure of
differentiated Professional and Non-Professional fees that are paid by
both Internal and External Distributors has long been used by other
exchanges, including the Exchange, for their proprietary data products,
and by the OPRA plan in order to reduce the price of data to retail
investors and make it more broadly
[[Page 50272]]
available.\39\ The Exchange also believes offering Cboe One Options
Feed to Non-Professional Users at a lower cost than Professional Users
results in greater equity among data recipients, as Professional Users
are categorized as such based on their employment and participation in
financial markets, and thus, are compensated to participate in the
markets. Although Non-Professional Users too can receive significant
financial benefits through their participation in the markets, the
Exchange believes it is reasonable to charge more to those Users who
are more directly engaged in the markets.
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\39\ See, e.g., Securities Exchange Act Release No. 59544 (March
9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131)
(establishing the $15 Non-Professional User Fee (Per User) for NYSE
OpenBook); See, e.g., Securities Exchange Act Release No. 67589
(August 2, 2012), 77 FR 47459 (August 8, 2012) (revising OPRA's
definition of the term ``Nonprofessional''); and See Securities
Exchange Act Release No. 70683 (October 15, 2013), 78 FR 62798
(October 22, 2013) (SR-CBOE-2013-087) (establishing Professional and
Non-Professional User fees for Cboe Options COB Data Feed).
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Enterprise Fee. The Exchange believes the proposed Enterprise Fees
for the Cboe One Options Feed and proposed changes to the Enterprise
Fee for the C2 Options Top feed are reasonable as the fees proposed
could result in a fee reduction for Distributors of the respective
products with a large number of Professional and Non-Professional
Users. If a Distributor has a smaller number of Professional or Non-
Professional Users of the Cboe One Options Feed or C2 Options Top Feed,
then it may continue using the per User structure and benefit from the
per User Fee reductions for each respective product. By reducing prices
for Distributors with a large number of Professional and Non-
Professional Users, the Exchange believes that more firms may choose to
receive and to distribute the Cboe One Options or C2 Options Top feeds,
thereby expanding the distribution of this market data for the benefit
of investors. The Exchange believes it is reasonable, equitable and not
unfairly discriminatory to assess incrementally higher fees for higher
tiers, because such tier covers a higher number of users (and indeed
for those in Tier 3, an unlimited number of users). The Exchange
believes it's reasonable to require monthly reporting only for proposed
Tiers 1 and 2 because such tiers cover a defined number of Users that
need to be accounted for billing purposes, as compared to Tier 3 which
covers unlimited Users. Also as described above, the Enterprise Fees
are entirely optional. A firm that does not have a sufficient number of
Users to benefit from purchase of a license, or purchase of a specific
tier level, need not do so. The Exchange believes the proposed discount
for an Annual license is also reasonable, equitable and not unfairly
discriminatory as it provides Distributors an opportunity to be
assessed lower fees and is available to any Distributor who chooses to
make a one-year commitment via the Annual license. The Exchange
believes the proposed 5% discount will attract Distributors to purchase
and make available C2 Options Top Data and Cboe One Options Feed for at
least one year, thereby fostering and expanding the distribution of
these market data products for the benefit of investors, and
particularly retail investors. The Exchange lastly notes that the
proposed Enterprise Fees for Cboe One Options and the proposed 5%
discount for an Annual license equal the combined respective Enterprise
Fees and discount, respectively, of each individual Top feed, thereby
ensuring that vendors can compete with the Exchange by creating the
same product as the Cboe One Options Feed to sell to their clients.
Distributor Fees. The Exchange believes that the proposed
Distributor fees for the Cboe One Options Feed are reasonable because
they represent the combined monthly fees for Internal and External
Distributor fees, respectively for the underlying individual data
feeds, which have previously been filed with the Commission. The
Exchange believes that the proposed fees are equitable and not unfairly
discriminatory because they will be charged uniformly to Internal and
External Distributors. The Exchange believes that it is also fair and
equitable, and not unfairly discriminatory to charge different fees for
internal and external distribution of the Cboe One Options Feed.
Although the proposed distribution fee charged to External Distributors
will be lower than the distribution fee charged to Internal
Distributors, External Distributors are subject to Non-Professional
user fees to which Internal Distributors are not subject, in addition
to Professional User fees (or alternatively the proposed Enterprise
Fee). The Exchange also notes that Cboe One Options Feed, like the
underlying top-of-book feeds, are more likely to be distributed
externally as such data is expected to be used more frequently by Non-
Professional Users who, by definition, do not receive the data for
commercial purposes (e.g., retail investors) and are therefore not
internal. The Exchange therefore believes that the proposed reduced fee
for External Distributors is reasonable because it may encourage more
distributors to choose to offer the Cboe One Options, thereby expanding
the distribution of this market data for the benefit of investors, and
particularly retail investors.
The proposed Distributor Fees for the Cboe One Options Feed are
also designed to ensure that vendors could compete with the Exchange by
creating a similar product as the Cboe One Options Feed. The Exchange
believes that the proposed Distributor Fees are equitable and
reasonable as they equal the combined fee of subscribing to each
individual data feed of the Cboe Options Exchanges, which have been
previously published by the Commission.
New External Distributor Credit
In addition, the Exchange believes it is reasonable to not charge
External Distributors of C2 Options Top and Cboe One Options Feed a
Distribution Fee during their first three (3) months because such
Distributors will not be subject to any External Distribution fee for
those months.\40\ The Exchange believes it's also reasonable for the
New External Distribution Credit for C2 Options Top to apply to
External Distributors of C2 Options Top who also distribute such
product internally because the current Distribution Fee is already
meant to cover both internal and distribution of C2 Options Top.
Therefore, the Exchange believes it's reasonable to apply the New
External Distributor Credit to both External Distributors who
distribute exclusively externally and those that distribute externally
and internally. The Exchange's that its affiliated equities exchanges
offer a similar New External Distributor Credit for a similar market
data product.\41\ The proposed credit is also intended to incentivize
new External Distributors to enlist Users to subscribe to the C2
Options Top or Cboe One Options feeds in an effort to broaden the
products' distribution. While this incentive is not available to
Internal Distributors (i.e., Distributors who exclusively distributed
internally) of these products, the Exchange believes it is appropriate
as Internal Distributors have no Users outside of their own firm.
Furthermore, External Distributors are subject to higher risks of
launch as the data is provided outside their own firm. For these
reasons, the Exchange believes it is appropriate to provide this
incentive so that External Distributors have sufficient time to test
the data
[[Page 50273]]
within their own systems prior to going live externally. The Exchange
also does not believe this would inhibit a vendor from creating a
competing product and offer a similar free period as the Exchange.
Specifically, a vendor seeking to create the Cboe One Options Feed
could do so by subscribing to the underlying individual data feeds, all
of which will also include a New External Distributor Credit identical
to that proposed for the Cboe One Options Feed. As a result, a
competing vendor would incur similar costs as the Exchange in offering
such free period for a competing product and may do so on the same
terms as the Exchange.
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\40\ As noted above, Distributors are additionally not assessed
any Distribution fee during any trial usage period, under the
existing Trial Usage period offered by the Exchange.
\41\ See e.g., EDGX Equities Exchange Fees Schedule, Market Data
Fees.
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Distributor Fee Credit
The Exchange believes the proposal to provide External Distributors
a credit against their monthly Distribution Fee equal to the amount of
its monthly Usage Fee or Enterprise Fees, is reasonable as it could
result in the External Distributor paying a discounted, or no,
Distribution fee.\42\ The Exchange believes it's also reasonable for
the Distributor Fee Credit for C2 Options Top to apply to External
Distributors of C2 Options Top who also distribute such product
internally because the current Distribution Fee is already meant to
cover both internal and [sic] distribution of C2 Options Top.
Therefore, the Exchange believes it's reasonable to apply the
Distributor Fee Credit to both External Distributors who distribute
exclusively externally and to those that distribute externally and
internally. The Exchange notes that its affiliated equities exchanges
offer a similar credit for a similar market data product.\43\ Further,
in every case the Exchange will receive at least the amount of the
External Distribution fee for C2 Options Top or Cboe One Options, as
applicable, in connection with the distribution of each respective feed
(through a combination of the External Distribution Fee and per User
Fees or Enterprise Fees, as applicable). The Exchange believes it is
also equitable and not unfairly discriminatory to apply the credit to
External Distributors only because, like the free three-month credit
described above, it is also intended to incentivize new External
Distributors to enlist Users, including Non-Profession Users such as
retail investors, to subscribe to the C2 Options Top or Cboe One
Options Feed in an effort to broaden the products' distribution. While
this incentive is not available to Internal Distributors (i.e.,
Distributors who exclusively distributed internally) of these products,
the Exchange believes it is appropriate as Internal Distributors have
no Users outside of their own firm. Furthermore, External Distributors
are subject to higher risks of launch as the data is provided outside
their own firm. For these reasons, the Exchange believes it is
appropriate to provide this incentive to only External Distributors.
The proposal to adopt a Distributor Fee Credit for Cboe One Options
Feed in particular also ensures the proposed credit for Cboe One
Options will not cause the combined cost of subscribing to Cboe
Options, C2 Options, BZX Options and EDGX Options Top feeds for
External Distributors to be greater than the amount that would be
charged to subscribe to the Cboe One Options feed, thereby ensuring
that vendors can compete with the Exchange by creating the same product
as the Cboe One Options Feed (i.e., purchasing the underlying data
feeds and aggregating the feeds themselves) to sell to their clients.
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\42\ A Distributor that does not qualify to receive the New
External Distributor Credit, does not need to wait three months to
be eligible to receive the Distributor Fee Credit (i.e., the
Distributor would be eligible to receive the credit immediately).
\43\ See e.g.,, EDGX Equities Exchange Fees Schedule, Market
Data Fees.
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The Exchange also believes updating the Trial Usage section of the
Fees Schedule avoids potential confusion as to whether new Users or
Distributors would be entitled to any credits, including the proposed
Distributor Fee Credit (and New External Distributor Credit), during
the trial usage period. The Exchange believes its reasonable not to
provide such credits as such new users are not paying assessed any fees
during their trial period.
Data Consolidation Fee. The Exchange believes that the proposed
$500 per month Data Consolidation Fee charged to Distributors
(including vendors) who receive the Cboe One Options Feed is reasonable
because it represents the value of the data aggregation and
consolidation function that the Exchange performs. The Exchange further
believes the proposed Data Consolidation Fee is not designed to permit
unfair discrimination because all Distributors who obtain the Cboe One
Options Feed will be charged the same fee. Accordingly, the Exchange
believes that Distributors could readily offer a product similar to the
Cboe One Options Feed on a competitive basis at a similar cost.
Therefore, the Exchange believes the proposed application of the Data
Consolidation Fee is reasonable and would not permit unfair
discrimination.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
operates in a highly competitive environment, and its ability to price
top-of-book data is constrained by competition among exchanges that
offer similar data products to their customers. Top-of-book data is
broadly disseminated by competing U.S. options exchanges. In this
competitive environment potential Distributors are free to choose which
competing product to purchase to satisfy their respective needs for
market information. Often, the choice comes down to price, as market
data participants look to purchase cheaper data products, and quality,
as market participants seek to purchase data that represents
significant market liquidity.
The Exchange believes that the proposed fees do not impose a burden
on competition or on other SROs that is not necessary or appropriate in
furtherance of the purposes of the Act. In particular, market
participants are not forced to subscribe to C2 Options Top, Cboe One
Options Feed or any of the Exchange's data feeds, as described above.
As noted, the quote and last sale data contained in the Exchange's C2
Options Top feed is identical to the data sent to OPRA for
redistribution to the public. Accordingly, Exchange top-of-book data is
widely available today from a number of different sources.
The Exchange believes that the proposed fees do not put any market
participants at a relative disadvantage compared to other market
participants. As discussed, the proposed waiver, credits and Enterprise
Fees would apply to all similarly situated Distributors of C2 Options
Top on an equal and non-discriminatory basis. Because market data
customers can find suitable substitute feeds, an exchange that
overprices its market data products stands a high risk that users may
substitute another product. These competitive pressures ensure that no
one exchange's market data fees can impose an undue burden on
competition, and the Exchange's proposed fees do not do so here.
Additionally, the Cboe One Options Feed will enhance competition
because it provides investors with an alternative option for receiving
market data. Although the Cboe Options Exchanges are the exclusive
distributors of the individual data feeds from which certain data
elements would be taken to
[[Page 50274]]
create the Cboe One Options Feed, the Exchange would not be the
exclusive distributor of the aggregated and consolidated information
that would compose the proposed Cboe One Options Feed. Any entity that
receives, or elects to receive, the underlying data feeds would be able
to, if it so chooses, to create a data feed with the same information
included in the Cboe One Options Feed and sell and distribute it to its
clients so that it could be received by those clients as quickly as the
Cboe One Options Feed would be received by those same clients and at a
similar cost.
The proposed pricing the Exchange would charge for the Cboe One
Options Feed compared to the cost of the individual data feeds from the
Cboe Options Exchanges would enable a vendor to receive the underlying
individual data feeds and offer a similar product on a competitive
basis and with no greater cost than the Exchange. The pricing the
Exchange proposes to charge for the Cboe One Options Feed is not lower
than the cost to a vendor of receiving the underlying data feeds.
Indeed, the proposed pricing equals the combined costs of the
respective fees, and the proposed waivers are also being proposed for
the underlying individual feeds as well, thereby enabling a vendor to
receive the underlying data feeds and offer a similar product on a
competitive basis and with no greater cost than the Exchange.
The Exchange further believes that its proposed monthly Data
Consolidation Fee would be pro-competitive because a vendor could
create a competing product, perform a similar aggregating and
consolidating function, and similarly charge for such service. The
Exchange notes that a competing vendor might engage in a different
analysis of assessing the cost of a competing product. For these
reasons, the Exchange believes the proposed pricing, fee waiver and
credit, would enable a vendor to create a competing product based on
the individual data feeds and charge its clients a fee that it believes
reflects the value of the aggregation and consolidation function that
is competitive with Cboe One Options Feed pricing.
In establishing the proposed fees, the Exchange considered the
competitiveness of the market for proprietary data and all of the
implications of that competition. The Exchange believes that it has
considered all relevant factors and has not considered irrelevant
factors in order to establish fair, reasonable, and not unreasonably
discriminatory fees and an equitable allocation of fees among all
users.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from members or other interested parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to section
19(b)(3)(A) of the Act \44\ and paragraph (f) of Rule 19b-4 \45\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\44\ 15 U.S.C. 78s(b)(3)(A).
\45\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-C2-2023-015 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-C2-2023-015. 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-C2-2023-015 and should be
submitted on or before August 22, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\46\
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\46\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-16245 Filed 7-31-23; 8:45 am]
BILLING CODE 8011-01-P
