Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule Related to the Options Regulatory Fee, 55801-55804 [2023-17533]

Download as PDF Federal Register / Vol. 88, No. 157 / Wednesday, August 16, 2023 / Notices does not believe its proposed fee change can impose any burden on intermarket competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective upon filing pursuant to section 19(b)(3)(A) 20 of the Act and paragraph (f) 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. 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: lotter on DSK11XQN23PROD with NOTICES1 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– NYSECHX–2023–15 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–NYSECHX–2023–15. 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–NYSECHX–2023–15 and should be submitted on or before September 6, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2023–17605 Filed 8–15–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98109; File No. SR– CboeBZX–2023–061] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule Related to the Options Regulatory Fee August 10, 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 August 8, 2023, Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II 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. 21 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 20 15 U.S.C. 78s(b)(3)(A). VerDate Sep<11>2014 19:39 Aug 15, 2023 Jkt 259001 PO 00000 Frm 00141 Fmt 4703 Sfmt 4703 55801 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) proposes to amend its Fee Schedule related to the Options Regulatory Fee. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ equities/regulation/rule_filings/bzx/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Options Fee Schedule, to harmonize the language and processes relating to the Options Regulatory Fee (‘‘ORF’’).3 By way of background, the ORF is designed to recover a material portion of the costs to the Exchange of the supervision and regulation of Member customer options business, including performing routine surveillances, investigations, examinations, financial monitoring, as well as policy, rulemaking, interpretive and enforcement activities. The revenue generated from the ORF, when combined with all of the Exchange’s other regulatory fees and fines, covers a material portion, but not all, of the Exchange’s regulatory costs. The Exchange monitors the amount of revenue collected from the ORF to ensure that it, in combination with its other regulatory fees and fines, does not exceed the Exchange’s total regulatory costs. The Exchange monitors its regulatory costs and revenues at a 3 The Exchange initially filed the proposed rule change on August 1, 2023 (SR–CboeBZX–2023– 057). On August 8, 2023, the Exchange withdrew that filing and submitted this proposal. E:\FR\FM\16AUN1.SGM 16AUN1 lotter on DSK11XQN23PROD with NOTICES1 55802 Federal Register / Vol. 88, No. 157 / Wednesday, August 16, 2023 / Notices minimum on a semi-annual basis. If the Exchange determines regulatory revenues exceed or are insufficient to cover a material portion of its regulatory costs, the Exchange will adjust the ORF by submitting a fee change filing to the Commission. The Exchange notifies Members of adjustments to the ORF via an exchange notice. The Exchange provides Members with such notice at least 30 calendar days prior to the effective date of the change. The Options Regulatory Fee section of the fees schedule sets forth the details and description of how and when the ORF is assessed. For example, the fee schedule explicitly specifies that the Exchange may only increase or decrease the ORF semi-annually, and any such fee change will be effective on the first business day of February or August. The fee schedule further states that the Exchange will notify participants of any change in the amount of the fee at least 30 calendar days prior to the effective date of the change. The Exchange proposes to update the fee schedule language relating to the timing of ORF changes. Particularly, the Exchange proposes to eliminate the strict requirement that the ORF may only be modified on the first business day of February or August, and also the explicit requirement that it must provide at least 30 calendar days prior to the effective date. The Exchange first proposes to eliminate the requirement that ORF may only be modified on the first business day of February or August to afford the Exchange increased flexibility in amending the ORF. As noted above, the ORF is based in part on options transactions volume, and as such the amount of ORF collected is variable. If options transactions reported to OCC in a given month increase, the ORF collected from Members may increase as well. Similarly, if options transactions reported to OCC in a given month decrease, the ORF collected from Members may decrease as well. Accordingly, the Exchange monitors the amount of ORF collected to ensure that it does not exceed the Exchange’s total regulatory costs. If the Exchange determines the amount of ORF collected exceeds costs over an extended period, the proposed rule change allows the Exchange to adjust the ORF by submitting a fee change filing to the Securities and Exchange Commission (the ‘‘Commission’’) in a month other than just February or August. Although the Exchange proposes to eliminate the explicit language in the fee schedule that provides the Exchange will adjust the ORF only semi-annually, and only on the first business day of February or VerDate Sep<11>2014 19:39 Aug 15, 2023 Jkt 259001 August, it would continue to monitor its regulatory costs and revenues at a minimum on a semi-annual basis and submit a proposed rule change for each modification of the ORF as needed. The Exchange also proposes to eliminate the explicit language in the fee schedule that it will notify participants of any change in the amount of the fee at least 30 calendar days prior to the effective date of the change. Although the Exchange proposes to eliminate this language from the fee schedule, it notes that it will endeavor to notify Members of any planned change to the ORF by Exchange Notice at least 30 calendar days prior to the effective date of such change. The Exchange believes this proposed change also provides the Exchange additional flexibility. For example, the Exchange often provides fee change notices on the first business day of the month. It may be the case that such date is less than 30 days from the effective date of proposed change (e.g., if the Exchange wished to amend the ORF, effective, August 1, 2023, the Exchange would not have met the 30-day notice requirement if it had announced on the first business day of July, as it has been historic practice, since the first business day falls on July 3, 2023). As such, the proposed rule changes provides added flexibility while still committing to provide notice on the timing of any changes to the ORF and ensuring that Members are prepared to configure their systems to properly account for the ORF. The Exchange notes that the proposed changes result in ORF processes and fee schedule language that aligns with those of its affiliated exchanges, Cboe Exchange, Inc. (‘‘Cboe Options’’) and Cboe C2 Exchange, Inc. (‘‘C2 Options).4 Particularly, although typically the practice, neither Cboe Options nor C2 Options are limited to only adjusting ORF to only the first business day of August or February. Moreover, other options exchanges recently amended their fees to allow for flexibility to adjust ORF during months other than February or August.5 The Exchange notes that neither Cboe Options nor C2 Options explicitly provide in their fees schedules that it will provide notice at least 30 calendar days in advance of any ORF change. They have both represented in various ORF fee filings that they endeavor to notify Members of 4 See Cboe Options Fees Schedule and Cboe C2 Options Fees Schedule. The Exchange intends to submit an identical proposal for its affiliate, Cboe EDGX Exchange, Inc. (‘‘EDGX Options’’). 5 See e.g., Securities Exchange Act Release No. 96066 (October 13, 2022), 87 FR 63565 (October 19, 2022) (SR–NYSEAMER–2022–45). PO 00000 Frm 00142 Fmt 4703 Sfmt 4703 any planned change to the ORF by Exchange Notice at least 30 calendar days prior to the effective date of such change, just as the Exchange represents here.6 The Exchange believes the proposed change provides uniformity across is affiliated options exchanges and reduces potential confusion. It also provides the Exchange added flexibility as to when modifications to the ORF may occur. 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.7 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 8 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) 9 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange also believes the proposed rule change is consistent with Section 6(b)(4) of the Act,10 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 believes the proposed changes to the Fees Schedule with respect to how ORF is assessed and collected are appropriate as it provides the Exchange more flexibility in its assessment of ORF based on its periodic monitoring of ORF rates. The Exchange also represents that it will continue to monitor its regulatory costs and revenues at a minimum on a semi6 See e.g., Securities Exchange Act Release No. 92597 (August 6, 2021), 86 FR 44451 (August 12, 2021 (SR–CBOE–2021–044). See also Securities Exchange Act Release No. 92596 (August 6, 2021), 86 FR 44461 (August 12, 2021 (SR–C2–2021–012). 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(5). 9 Id. 10 15 U.S.C. 78f(b)(4). E:\FR\FM\16AUN1.SGM 16AUN1 lotter on DSK11XQN23PROD with NOTICES1 Federal Register / Vol. 88, No. 157 / Wednesday, August 16, 2023 / Notices annual basis, just as it, and its affiliated options exchanges (including Cboe Options and C2 Options) do today. The Exchange believes that the proposed elimination of language specifying that the Exchange may only increase or decrease the ORF on the first business day February or August is reasonable because it is designed to afford the Exchange increased flexibility in making necessary adjustments to the ORF, as the Exchange is required to monitor the amount collected from the ORF to ensure that it, in combination with its other regulatory fees and fines, does not exceed total regulatory costs. The Exchange also represents that it will endeavor to provide notice of any changes at least 30 days in advance of the effective date of such change, thereby providing Members with adequate time to make any necessary adjustments to accommodate any proposed changes. Taking out the strict requirements from the fee schedule, however, will provide the Exchange flexibility in modifying ORF and being able to adjust ORF even if it doesn’t meet the strict 30-day deadline in event extenuating circumstances prevent the Exchange from meeting this deadline or in the event such notice is a day or two less than 30 days due to when the first business days of the month fall. For example, as noted above, the Exchange often provides fee change notices on the first business day of the month. It may be the case that such date is less than 30 days from the effective date of proposed change (e.g., if the Exchange wished to amend the ORF, effective, August 1, 2023, the Exchange would not have met the 30-day notice requirement if it had announced on the first business day of July, as it has been historic practice, since the first business day falls on July 3, 2023). The Exchange believes the proposed rule changes are reasonable, equitable and not unfairly discriminatory because they conform to the process and fee schedule language used by two of its affiliated options exchanges, thereby providing consistency across the Cboe family options exchanges and reducing potential confusion. The proposed changes also apply uniformly to all Members subject to ORF. As noted above, other options exchanges are also not confined to making ORF changes on the first business day of February or August.11 11 See e.g., Securities Exchange Act Release No. 96066 (October 13, 2022), 87 FR 63565 (October 19, 2022) (SR–NYSEAMER–2022–45). VerDate Sep<11>2014 19:39 Aug 15, 2023 Jkt 259001 B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. This proposal does not create an unnecessary or inappropriate intra-market burden on competition because the proposed change will apply to all Members subject to ORF uniformly. Further, the proposed change is not designed to address any competitive issues. Indeed, this proposal does not create an unnecessary or inappropriate intermarket burden on competition because it merely amends the fees schedule and timing relating to the modification of the ORF and conforms to the timing and fee schedule language of the Exchange’s affiliated options exchanges, Cboe Options and C2 Options. Further, ORF is a regulatory fee that supports regulation in furtherance of the purposes of the Act. The Exchange is obligated to ensure that the amount of regulatory revenue collected from the ORF, in combination with its other regulatory fees and fines, does not exceed regulatory costs and the proposed rule change does not seek to change that. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, it has become effective pursuant to Section 19(b)(3)(A) of the Act 12 and Rule 19b–4(f)(6) 13 thereunder. 12 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 13 17 PO 00000 Frm 00143 Fmt 4703 Sfmt 4703 55803 A proposed rule change filed under Rule 19b–4(f)(6) 14 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),15 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposed rule change may become operative upon filing. The Exchange originally filed this proposal under Rule 19b–4(f)(2) on August 1, 2023.16 Because the proposed rule change does not raise any novel legal or regulatory issues, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.17 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 shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • 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–2023–061 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. 14 17 CFR 240.19b–4(f)(6). CFR 240.19b–4(f)(6)(iii). 16 See supra, note 3. 17 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 15 17 E:\FR\FM\16AUN1.SGM 16AUN1 55804 Federal Register / Vol. 88, No. 157 / Wednesday, August 16, 2023 / Notices All submissions should refer to file number SR–CboeBZX–2023–061. 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–2023–061 and should be submitted on or before September 6, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–17533 Filed 8–15–23; 8:45 am] lotter on DSK11XQN23PROD with NOTICES1 BILLING CODE 8011–01–P 18 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:39 Aug 15, 2023 Jkt 259001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98107; File No. SR–OCC– 2023–005] Self-Regulatory Organizations; the Options Clearing Corporation; Notice of Filing of Partial Amendment No. 1 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Partial Amendment No. 1, by the Options Clearing Corporation Concerning Amendment of Its Recovery and Orderly Wind-Down Plan August 10, 2023. I. Introduction On June 7, 2023, the Options Clearing Corporation (‘‘OCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change SR–OCC–2023–005 pursuant to Section 19(b) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) 1 and Rule 19b–4 2 thereunder. The proposed rule change would amend OCC’s Recovery and Orderly Wind-Down Plan (‘‘RWD Plan’’) by: (i) removing certain supporting information; (ii) incorporating references to certain documents and materials; (iii) implementing updates and amendments to all six chapters of the proposed Plan; and (iv) updating and revising the hypothetical stress scenarios set forth in Appendix A of the proposed RWD Plan. The proposed rule change was published for public comment in the Federal Register on June 27, 2023.3 The Commission has received comments regarding the proposed rule change.4 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Securities Exchange Act Release No. 97785 (June 21, 2023), 88 FR 41695 (June 27, 2023) (File No. SR–OCC–2023–005) (‘‘Notice of Filing’’). 4 Comments on the Proposed Rule Change are available at https://www.sec.gov/comments/sr-occ2023-005/srocc2023005.htm. The commenters raised a concern regarding the confidentiality of certain exhibits. Id. OCC asserted that the exhibits to the filing were entitled to confidential treatment because they contained commercial and financial information that is not customarily released to the public and is treated as the private information of OCC. Under Section 23(a)(3) of the Exchange Act, the Commission is not required to make public statements filed with the Commission in connection with a proposed rule change of a self-regulatory organization if the Commission could withhold the statements from the public in accordance with the Freedom of Information Act (‘‘FOIA’’), 5 U.S.C. 552. 15 U.S.C. 78w(a)(3). The Commission has reviewed the documents for which OCC requests confidential treatment and concludes that they could be withheld from the public under the FOIA. FOIA Exemption 4 protects confidential commercial or financial information. 5 U.S.C. 552(b)(4). Under Exemption 4, information is confidential if it ‘‘is both customarily and actually treated as private by its owner and provided to government under an assurance of privacy.’’ Food Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356, 2366 (2019). On July 28, 2023, OCC amended SR– OCC–2023–005 to correct an error in the narrative summary of proposed rule changes (‘‘Partial Amendment No. 1’’). Specifically, the narrative, as filed on June 7, 2023, stated that OCC proposed to remove a section of the RWD Plan describing OCC’s Risk Management Framework. However, the relevant text was already removed from the RWD Plan as part of a recent filing.5 The amendment did not change the purpose or basis of the proposed rule change. The Commission is publishing this notice to solicit comments on Partial Amendment No. 1 from interested persons, and, for the reasons discussed below, is approving the proposed rule change, as modified by Partial Amendment No. 1 (hereinafter, the ‘‘proposed rule change’’), on an accelerated basis. II. Background OCC is a central counterparty (‘‘CCP’’), which means it interposes itself as the buyer to every seller and seller to every buyer for financial transactions. As the CCP for the listed options markets in the U.S., as well as for certain futures, OCC is exposed to certain risks arising from its relationships with its members as well as general business risk. OCC maintains various tools for managing such risks.6 OCC also maintains tools to manage the risk of liquidity shortfalls and credit losses that exceed its routine risk management tools.7 OCC describes such tools and the governance related to them in its RWD Plan.8 Over the years, OCC has made substantive and non-substantive 1 15 2 17 PO 00000 Frm 00144 Fmt 4703 Sfmt 4703 In its requests for confidential treatment, OCC stated that it has not disclosed the confidential exhibits to the public, and the information is the type that would not customarily be disclosed to the public. In addition, by requesting confidential treatment, OCC had an assurance of privacy because the Commission generally protects information that can be withheld under Exemption 4. Thus, the Commission has determined to accord confidential treatment to the confidential exhibits. 5 Securities Exchange Act Release No. 96566 (Dec. 22, 2022), 87 FR 80207 (Dec. 29, 2022) (File No. SR– OCC–2022–010). 6 See e.g., Securities Exchange Act Release No. 96566 (Dec. 22, 2022), 87 FR 80207 (Dec. 29, 2022) (File No. SR–OCC–2022–010); Securities Exchange Act Release No. 87718 (Dec. 11, 2019), 84 FR 68992 (Dec. 17, 2019) (File No. SR–OCC–2019–010); and Securities Exchange Act Release No. 88029 (Jan. 24, 2020), 85 FR 5500 (Jan. 30, 2020) (File No. SR– OCC–2019–007). 7 See Securities Exchange Act Release No. 82351 (Dec. 19, 2017), 82 FR 61107 (Dec. 26, 2017) (File No. SR–OCC–2017–020). Capitalized terms used but not defined herein have the meanings specified in OCC’s Rules and By-Laws, available at https:// www.theocc.com/about/publications/bylaws.jsp. 8 See Securities Exchange Act Release No. 83918 (Aug. 23, 2018), 83 FR 44091 (Aug. 29, 2018) (File No. SR–OCC–2017–021) (Order approving the adoption of OCC’s RWD Plan). E:\FR\FM\16AUN1.SGM 16AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 88, Number 157 (Wednesday, August 16, 2023)]
[Notices]
[Pages 55801-55804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17533]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98109; File No. SR-CboeBZX-2023-061]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fee Schedule Related to the Options Regulatory Fee

August 10, 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 August 8, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to 
amend its Fee Schedule related to the Options Regulatory Fee. The text 
of the proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its Options Fee Schedule, to 
harmonize the language and processes relating to the Options Regulatory 
Fee (``ORF'').\3\ By way of background, the ORF is designed to recover 
a material portion of the costs to the Exchange of the supervision and 
regulation of Member customer options business, including performing 
routine surveillances, investigations, examinations, financial 
monitoring, as well as policy, rulemaking, interpretive and enforcement 
activities. The revenue generated from the ORF, when combined with all 
of the Exchange's other regulatory fees and fines, covers a material 
portion, but not all, of the Exchange's regulatory costs.
---------------------------------------------------------------------------

    \3\ The Exchange initially filed the proposed rule change on 
August 1, 2023 (SR-CboeBZX-2023-057). On August 8, 2023, the 
Exchange withdrew that filing and submitted this proposal.
---------------------------------------------------------------------------

    The Exchange monitors the amount of revenue collected from the ORF 
to ensure that it, in combination with its other regulatory fees and 
fines, does not exceed the Exchange's total regulatory costs. The 
Exchange monitors its regulatory costs and revenues at a

[[Page 55802]]

minimum on a semi-annual basis. If the Exchange determines regulatory 
revenues exceed or are insufficient to cover a material portion of its 
regulatory costs, the Exchange will adjust the ORF by submitting a fee 
change filing to the Commission. The Exchange notifies Members of 
adjustments to the ORF via an exchange notice. The Exchange provides 
Members with such notice at least 30 calendar days prior to the 
effective date of the change.
    The Options Regulatory Fee section of the fees schedule sets forth 
the details and description of how and when the ORF is assessed. For 
example, the fee schedule explicitly specifies that the Exchange may 
only increase or decrease the ORF semi-annually, and any such fee 
change will be effective on the first business day of February or 
August. The fee schedule further states that the Exchange will notify 
participants of any change in the amount of the fee at least 30 
calendar days prior to the effective date of the change.
    The Exchange proposes to update the fee schedule language relating 
to the timing of ORF changes. Particularly, the Exchange proposes to 
eliminate the strict requirement that the ORF may only be modified on 
the first business day of February or August, and also the explicit 
requirement that it must provide at least 30 calendar days prior to the 
effective date.
    The Exchange first proposes to eliminate the requirement that ORF 
may only be modified on the first business day of February or August to 
afford the Exchange increased flexibility in amending the ORF. As noted 
above, the ORF is based in part on options transactions volume, and as 
such the amount of ORF collected is variable. If options transactions 
reported to OCC in a given month increase, the ORF collected from 
Members may increase as well. Similarly, if options transactions 
reported to OCC in a given month decrease, the ORF collected from 
Members may decrease as well. Accordingly, the Exchange monitors the 
amount of ORF collected to ensure that it does not exceed the 
Exchange's total regulatory costs. If the Exchange determines the 
amount of ORF collected exceeds costs over an extended period, the 
proposed rule change allows the Exchange to adjust the ORF by 
submitting a fee change filing to the Securities and Exchange 
Commission (the ``Commission'') in a month other than just February or 
August. Although the Exchange proposes to eliminate the explicit 
language in the fee schedule that provides the Exchange will adjust the 
ORF only semi-annually, and only on the first business day of February 
or August, it would continue to monitor its regulatory costs and 
revenues at a minimum on a semi-annual basis and submit a proposed rule 
change for each modification of the ORF as needed.
    The Exchange also proposes to eliminate the explicit language in 
the fee schedule that it will notify participants of any change in the 
amount of the fee at least 30 calendar days prior to the effective date 
of the change. Although the Exchange proposes to eliminate this 
language from the fee schedule, it notes that it will endeavor to 
notify Members of any planned change to the ORF by Exchange Notice at 
least 30 calendar days prior to the effective date of such change. The 
Exchange believes this proposed change also provides the Exchange 
additional flexibility. For example, the Exchange often provides fee 
change notices on the first business day of the month. It may be the 
case that such date is less than 30 days from the effective date of 
proposed change (e.g., if the Exchange wished to amend the ORF, 
effective, August 1, 2023, the Exchange would not have met the 30-day 
notice requirement if it had announced on the first business day of 
July, as it has been historic practice, since the first business day 
falls on July 3, 2023). As such, the proposed rule changes provides 
added flexibility while still committing to provide notice on the 
timing of any changes to the ORF and ensuring that Members are prepared 
to configure their systems to properly account for the ORF.
    The Exchange notes that the proposed changes result in ORF 
processes and fee schedule language that aligns with those of its 
affiliated exchanges, Cboe Exchange, Inc. (``Cboe Options'') and Cboe 
C2 Exchange, Inc. (``C2 Options).\4\ Particularly, although typically 
the practice, neither Cboe Options nor C2 Options are limited to only 
adjusting ORF to only the first business day of August or February. 
Moreover, other options exchanges recently amended their fees to allow 
for flexibility to adjust ORF during months other than February or 
August.\5\ The Exchange notes that neither Cboe Options nor C2 Options 
explicitly provide in their fees schedules that it will provide notice 
at least 30 calendar days in advance of any ORF change. They have both 
represented in various ORF fee filings that they endeavor to notify 
Members of any planned change to the ORF by Exchange Notice at least 30 
calendar days prior to the effective date of such change, just as the 
Exchange represents here.\6\ The Exchange believes the proposed change 
provides uniformity across is affiliated options exchanges and reduces 
potential confusion. It also provides the Exchange added flexibility as 
to when modifications to the ORF may occur.
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    \4\ See Cboe Options Fees Schedule and Cboe C2 Options Fees 
Schedule. The Exchange intends to submit an identical proposal for 
its affiliate, Cboe EDGX Exchange, Inc. (``EDGX Options'').
    \5\ See e.g., Securities Exchange Act Release No. 96066 (October 
13, 2022), 87 FR 63565 (October 19, 2022) (SR-NYSEAMER-2022-45).
    \6\ See e.g., Securities Exchange Act Release No. 92597 (August 
6, 2021), 86 FR 44451 (August 12, 2021 (SR-CBOE-2021-044). See also 
Securities Exchange Act Release No. 92596 (August 6, 2021), 86 FR 
44461 (August 12, 2021 (SR-C2-2021-012).
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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.\7\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \8\ 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) \9\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange also believes the proposed rule 
change is consistent with Section 6(b)(4) of the Act,\10\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Id.
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed changes to the Fees Schedule 
with respect to how ORF is assessed and collected are appropriate as it 
provides the Exchange more flexibility in its assessment of ORF based 
on its periodic monitoring of ORF rates. The Exchange also represents 
that it will continue to monitor its regulatory costs and revenues at a 
minimum on a semi-

[[Page 55803]]

annual basis, just as it, and its affiliated options exchanges 
(including Cboe Options and C2 Options) do today. The Exchange believes 
that the proposed elimination of language specifying that the Exchange 
may only increase or decrease the ORF on the first business day 
February or August is reasonable because it is designed to afford the 
Exchange increased flexibility in making necessary adjustments to the 
ORF, as the Exchange is required to monitor the amount collected from 
the ORF to ensure that it, in combination with its other regulatory 
fees and fines, does not exceed total regulatory costs.
    The Exchange also represents that it will endeavor to provide 
notice of any changes at least 30 days in advance of the effective date 
of such change, thereby providing Members with adequate time to make 
any necessary adjustments to accommodate any proposed changes. Taking 
out the strict requirements from the fee schedule, however, will 
provide the Exchange flexibility in modifying ORF and being able to 
adjust ORF even if it doesn't meet the strict 30-day deadline in event 
extenuating circumstances prevent the Exchange from meeting this 
deadline or in the event such notice is a day or two less than 30 days 
due to when the first business days of the month fall. For example, as 
noted above, the Exchange often provides fee change notices on the 
first business day of the month. It may be the case that such date is 
less than 30 days from the effective date of proposed change (e.g., if 
the Exchange wished to amend the ORF, effective, August 1, 2023, the 
Exchange would not have met the 30-day notice requirement if it had 
announced on the first business day of July, as it has been historic 
practice, since the first business day falls on July 3, 2023).
    The Exchange believes the proposed rule changes are reasonable, 
equitable and not unfairly discriminatory because they conform to the 
process and fee schedule language used by two of its affiliated options 
exchanges, thereby providing consistency across the Cboe family options 
exchanges and reducing potential confusion. The proposed changes also 
apply uniformly to all Members subject to ORF. As noted above, other 
options exchanges are also not confined to making ORF changes on the 
first business day of February or August.\11\
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    \11\ See e.g., Securities Exchange Act Release No. 96066 
(October 13, 2022), 87 FR 63565 (October 19, 2022) (SR-NYSEAMER-
2022-45).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. This proposal does not create 
an unnecessary or inappropriate intra-market burden on competition 
because the proposed change will apply to all Members subject to ORF 
uniformly. Further, the proposed change is not designed to address any 
competitive issues. Indeed, this proposal does not create an 
unnecessary or inappropriate inter-market burden on competition because 
it merely amends the fees schedule and timing relating to the 
modification of the ORF and conforms to the timing and fee schedule 
language of the Exchange's affiliated options exchanges, Cboe Options 
and C2 Options. Further, ORF is a regulatory fee that supports 
regulation in furtherance of the purposes of the Act. The Exchange is 
obligated to ensure that the amount of regulatory revenue collected 
from the ORF, in combination with its other regulatory fees and fines, 
does not exceed regulatory costs and the proposed rule change does not 
seek to change that.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) \13\ thereunder.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative upon filing. The Exchange originally 
filed this proposal under Rule 19b-4(f)(2) on August 1, 2023.\16\ 
Because the proposed rule change does not raise any novel legal or 
regulatory issues, the Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Therefore, the Commission hereby waives the 30-day 
operative delay and designates the proposal operative upon filing.\17\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra, note 3.
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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 shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2023-061 on the subject line.

Paper Comments

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


[[Page 55804]]


All submissions should refer to file number SR-CboeBZX-2023-061. 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-2023-061 and should 
be submitted on or before September 6, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-17533 Filed 8-15-23; 8:45 am]
BILLING CODE 8011-01-P

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