Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fees Schedule To Adopt a Temporary Options Regulatory Fee, 68899-68902 [2023-22036]

Download as PDF Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices B. Self-Regulatory Organization’s Statement on Burden on Competition lotter on DSK11XQN23PROD with NOTICES1 The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because options on broad-based indexes with Tuesday and Thursday expirations will be available to all market participants. By listing options on all available broad-based indexes that expire on Tuesdays and Thursdays, the proposed rule change will provide all investors that participate in the markets for options on all broad-based indexes available for trading on the Exchange with greater trading and hedging opportunities and flexibility to meet their investment and hedging needs, which are already available for SPX and XSP options. Additionally, Tuesday and Thursday expiring broad-based index options will trade in the same manner as Weekly Expirations currently trade, including Tuesday and Thursday expiring SPX and XSP options. The Exchange does not believe that the proposal to list options on all broadbased indexes with Tuesday and Thursday expirations will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because these options are proprietary Exchange products. Other exchanges offer nonstandard expiration programs for index options as well as short-term options programs for certain equity options (including options on certain exchange-traded funds that track broadbased indexes) that expire on Tuesdays and Thursdays 12 and are welcome to similarly propose to list Tuesday and Thursday options on those index or equity products. To the extent that the addition of options on additional broadbased indexes that expire on Tuesdays and Thursdays being available for trading on the Exchange makes the Exchange a more attractive marketplace to market participants at other exchanges, such market participants are free to elect to become market participants on the Exchange. 12 See, e.g., Nasdaq PHLX, LLC Options 4A, Section 12 (permitting nonstandard expirations, including expirations on Tuesdays and Thursdays, for Nasdaq-100 index options and Nasdaq 100Micro index options); and Nasdaq ISE, LLC Options 4, Section 5, Supplementary Material .03 (permitting short-term options series with daily expirations for SPY and QQQ options). VerDate Sep<11>2014 20:21 Oct 03, 2023 Jkt 262001 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: A. by order approve or disapprove such proposed rule change, or B. institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments 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– CBOE–2023–054 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–CBOE–2023–054. 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 Frm 00341 Fmt 4703 Sfmt 4703 provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR–CBOE–2023–054 and should be submitted on or before October 25, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–21953 Filed 10–3–23; 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: PO 00000 68899 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98660; File No. SR–CBOE– 2023–058] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fees Schedule To Adopt a Temporary Options Regulatory Fee September 29, 2023. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 28, 2023, Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) proposes to amend its Fees Schedule relating to the Options 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\04OCN1.SGM 04OCN1 68900 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 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://www.cboe.com/ AboutCBOE/ CBOELegalRegulatoryHome.aspx), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change lotter on DSK11XQN23PROD with NOTICES1 1. Purpose The Exchange proposes to amend the Fee Schedule to revise the ORF charged solely for the dates of September 28 and 29, 2023. Background By way of background, the ORF is assessed by Cboe Options to each Trading Permit Holder (‘‘TPH’’) for options transactions cleared by the TPH that are cleared by the Options Clearing Corporation (‘‘OCC’’) in the customer range, regardless of the exchange on which the transaction occurs.3 In other words, the Exchange imposes the ORF on all customer-range transactions cleared by a TPH, even if the transactions do not take place on the Exchange. The ORF is collected by OCC on behalf of the Exchange from the Clearing Trading Permit Holder (‘‘CTPH’’) or non-CTPH that ultimately clears the transaction. With respect to linkage transactions, Cboe Options reimburses its routing broker providing Routing Services pursuant to Cboe Options Rule 5.36 for options regulatory fees it incurs in connection with the Routing Services it provides. Revenue generated from ORF, when combined with all of the Exchange’s other regulatory fees and fines, is 3 The Exchange notes ORF also applies to customer-range transactions executed during Global Trading Hours. VerDate Sep<11>2014 20:21 Oct 03, 2023 Jkt 262001 designed to recover a material portion of the regulatory costs to the Exchange of the supervision and regulation of TPH customer options business including performing routine surveillances, investigations, examinations, financial monitoring, and policy, rulemaking, interpretive, and enforcement activities. Regulatory costs include direct regulatory expenses and certain indirect expenses for work allocated in support of the regulatory function. The direct expenses include in-house and thirdparty service provider costs to support the day-to-day regulatory work such as surveillances, investigations and examinations. The indirect expenses include support from such areas as human resources, legal, compliance, information technology, facilities and accounting. These indirect expenses are estimated to be approximately 30% of Cboe Options’ total regulatory costs for 2023. Thus, direct expenses are estimated to be approximately 70% of total regulatory costs for 2023. In addition, it is Cboe Options’ practice that revenue generated from ORF not exceed more than 75% of total annual regulatory costs. These expectations are estimated, preliminary and may change. There can be no assurance that our final costs for 2023 will not differ materially from these expectations and prior practice; however, the Exchange believes that revenue generated from the ORF, when combined with all of the Exchange’s other regulatory fees and fines, will cover a material portion, but not all, of the Exchange’s regulatory costs. The Exchange monitors its regulatory costs and revenues at a 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 in a given year, the Exchange will adjust the ORF by submitting a fee change filing to the Commission. The Exchange also notifies TPHs of adjustments to the ORF via an Exchange Notice, including for the change being proposed herein.4 Based on the Exchange’s most recent semiannual review, the Exchange proposed to increase the amount of ORF collected by the Exchange from $0.0017 per contract side to $0.0030 per contract side, effective August 1, 2023.5 The proposed increase was based on the Exchange’s estimated projections for its regulatory costs, which have increased, coupled with a projected decrease in the 4 See Exchange Notice, C2023071301 ‘‘Cboe Options Exchanges Regulatory Fee Update Effective August 1, 2023.’’ 5 See Securities Exchange Act Release No. 98106 (August 10, 2023), 88 FR 55796 (August 16, 2023) (SR–CBOE–2023–038). PO 00000 Frm 00342 Fmt 4703 Sfmt 4703 Exchange’s other non-ORF regulatory fees.6 Particularly, based on the Exchange’s estimated projections for its regulatory costs, the revenue being generated by ORF using the then-current rate, would result in projected revenue that is insufficient to cover a material portion of its regulatory costs (i.e., less than 75% of total annual regulatory costs). Further, when combined with the Exchange’s projected other non-ORF regulatory fees and fines, the revenue being generated by ORF using the thencurrent rate results was projected to result in combined revenue that is less than 100% of the Exchange’s estimated regulatory costs for the year. OIP and Current Proposal As noted above, on August 1, 2023 the Exchange filed to increase ORF to $0.0030 (from $0.0017) per contract side (the ‘‘August ORF Filing’’). However, on September 28, 2023, the Commission issued the Suspension of and Order Instituting Proceedings to Determine whether to Approve or Disapprove a Proposed Rule Change to Modify the Options Regulatory Fee (‘‘the ‘‘OIP’’).7 As a result of the OIP, on September 28, 2023, the ORF reverted back to the rate in place prior to August 1, 2023 (i.e., $0.0017 per contract side). To ensure consistency of ORF assessments for the full month of September 2023, the Exchange proposes to modify the Fee Schedule to specify that the amount of ORF that will be collected by the Exchange through September 29, 2023 (i.e., the last trading day of the month of September), will be $0.0030 per contract side (the ‘‘September ORF Rate’’) and that effective October 2, 2023, the ORF will be $0.0017 per contract side.8 The Exchange believes that revenue generated from the ORF, including based on the September ORF Rate, will continue to cover a material portion, but not all, of the Exchange’s regulatory costs. As noted above, the Exchange endeavors to notify TPHs of any change in the amount of the fee at least 30 calendar days prior to the effective date of the change via Exchange Notice; however, the Exchange notes that as a 6 The Exchange notes that in connection with the August 1, 2023 ORF rate change, it provided the Commission confidential details regarding the Exchange’s projected regulatory revenue, including projected revenue from ORF, along with a breakout of its projected regulatory expenses, including both direct and indirect allocations. 7 See Securities Exchange Act Release No. 98596 (September 28, 2023) (SR–CBOE–2023–038). 8 This proposal is not intended to be responsive to any issues that may be raised in the OIP, but to instead address the immediate issue of billing for September 28 and 29th. E:\FR\FM\04OCN1.SGM 04OCN1 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices result of the OIP, such notice in this instance could not be given 30 days in advance. For avoidance of doubt, the Exchange notes that the September ORF Rate applies only through September 29, 2023 and that the ORF, effective October 2, 2023, will be assessed at a rate of $0.0017 per contract (i.e., the rate in place prior to the August ORF Filing). 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b) 9 of the Act, in general, and Section 6(b)(4) and (5) 10 of the Act, in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers, or dealers. The Proposal Is Reasonable The Exchange believes the proposed September ORF Rate is reasonable because it would help maintain fair and orderly markets and benefit investors and the public interest because it would ensure transparency and consistency of ORF for the entire month of September 2023. Specifically, the proposal would ensure that the amount of ORF collected by the Exchange for the trading days of September 28 and 29, 2023 will be the same rate collected on every other trading day in September (i.e., $0.0030 per contract side). The Exchange believes this will avoid disruption to its TPHs that are subject to the ORF. As noted above, the Exchange may only use regulatory funds such as ORF ‘‘to fund the legal, regulatory, and surveillance operations’’ of the Exchange. lotter on DSK11XQN23PROD with NOTICES1 The Proposal Is an Equitable Allocation of Fees The Exchange believes its proposal is an equitable allocation of fees among its market participants. The Exchange believes that the proposed September ORF Rate would not place certain market participants at an unfair disadvantage because all options transactions must clear via a clearing firm. Such clearing firms can then choose to pass through all, a portion, or none of the cost of the ORF to its customers, i.e., the entering firms. Because the ORF is collected from TPH clearing firms by the OCC on behalf of the Exchange, the Exchange believes that using options transactions in the Customer range serves as a proxy for 9 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 10 15 VerDate Sep<11>2014 20:21 Oct 03, 2023 Jkt 262001 68901 how to apportion regulatory costs among such TPHs. In addition, the Exchange notes that the regulatory costs relating to monitoring TPHs with respect to Customer trading activity are generally higher than the regulatory costs associated with TPHs that do not engage in Customer trading activity, which tends to be more automated and less labor-intensive. By contrast, regulating TPHs that engage in Customer trading activity is generally more labor intensive and requires a greater expenditure of human and technical resources as the Exchange needs to review not only the trading activity on behalf of Customers, but also the TPH’s relationship with its Customers via more labor-intensive exam-based programs. As a result, the costs associated with administering the customer component of the Exchange’s overall regulatory program are materially higher than the costs associated with administering the noncustomer component (e.g., TPH proprietary transactions) of its regulatory program. Thus, the Exchange believes the September ORF Rate (like the rate assessed for every other trading day in September 2023) would be equitably allocated in that it is charged to all TPHs on all their transactions that clear in the Customer range at the OCC. needs to review not only the trading activity on behalf of Customers, but also the TPH’s relationship with its Customers via more labor-intensive exam-based programs. As a result, the costs associated with administering the customer component of the Exchange’s overall regulatory program are materially higher than the costs associated with administering the noncustomer component (e.g., TPH proprietary transactions) of its regulatory program. Thus, the Exchange believes the September ORF Rate (like the rate assessed for every other trading day in September 2023), is not unfairly discriminatory because it is charged to all TPHs on all their transactions that clear in the Customer range at the OCC. The Proposed Fee is not Unfairly Discriminatory Intramarket Competition. The Exchange believes the proposed fee change would not impose an undue burden on competition as it is charged to all TPHs on all their transactions that clear in the Customer range at the OCC; thus, the amount of ORF imposed is based on the amount of Customer volume transacted. The Exchange believes that the proposed ORF would not place certain market participants at an unfair disadvantage because all options transactions must clear via a clearing firm. Such clearing firms can then choose to pass through all, a portion, or none of the cost of the ORF to its customers, i.e., the entering firms. In addition, because the ORF is collected from TPH clearing firms by the OCC on behalf of the Exchange, the Exchange believes that using options transactions in the Customer range serves as a proxy for how to apportion regulatory costs among such TPHs. The Exchange believes that the proposal is not unfairly discriminatory. The Exchange believes that the proposed September ORF Rate would not place certain market participants at an unfair disadvantage because all options transactions must clear via a clearing firm. Such clearing firms can then choose to pass through all, a portion, or none of the cost of the ORF to its customers, i.e., the entering firms. Because the ORF is collected from TPH clearing firms by the OCC on behalf of the Exchange, the Exchange believes that using options transactions in the Customer range serves as a proxy for how to apportion regulatory costs among such TPHs. In addition, the Exchange notes that the regulatory costs relating to monitoring TPH with respect to Customer trading activity are generally higher than the regulatory costs associated with TPHs that do not engage in Customer trading activity, which tends to be more automated and less labor-intensive. By contrast, regulating TPHs that engage in Customer trading activity is generally more labor intensive and requires a greater expenditure of human and technical resources as the Exchange PO 00000 Frm 00343 Fmt 4703 Sfmt 4703 B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Intermarket Competition. The proposed fee change is not designed to address any competitive issues. Rather, the proposed change is designed to help the Exchange adequately fund its regulatory activities while seeking to ensure that total regulatory revenues do not exceed total regulatory costs. E:\FR\FM\04OCN1.SGM 04OCN1 68902 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) 11 of the Act and subparagraph (f)(2) of Rule 19b–4 12 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such 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 under Section 19(b)(2)(B) 13 of the Act 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: 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– CBOE–2023–058 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–CBOE–2023–058. 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/ 11 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 13 15 U.S.C. 78s(b)(2)(B). rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR–CBOE–2023–058 and should be submitted on or before October 25, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–22036 Filed 10–3–23; 8:45 am] BILLING CODE 8011–01–P [Investment Company Act Release No. 35027; File No. 812–15404] Alti Private Equity Access and Commitments Fund and ALTI, LLC Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’). ACTION: Notice. AGENCY: Notice of an application under section 6(c) of the Investment Company Act of 1940 (the ‘‘Act’’) for an exemption from sections 18(a)(2), 18(c) and 18(i) of the Act and for an order pursuant to section 17(d) of the Act and rule 17d–1 under the Act. SUMMARY OF APPLICATION: Applicants request an order to permit certain registered closed-end management investment companies to issue multiple classes of shares of beneficial interest with varying sales loads and to impose 12 17 VerDate Sep<11>2014 20:21 Oct 03, 2023 Jkt 262001 PO 00000 CFR 200.30–3(a)(12). Frm 00344 Fmt 4703 Alti Private Equity Access and Commitments Fund and ALTI, LLC. APPLICANTS: The application was filed on November 7, 2022, and amended on March 28, 2023, June 27, 2023, July 26. 2023, August 18, 2023, and September 15, 2023. FILING DATES: HEARING OR NOTIFICATION OF HEARING: An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing on any application by emailing the Commission’s Secretary at Secretarys-Office@sec.gov and serving the relevant Applicant with a copy of the request by email, if an email address is listed for the relevant Applicant below, or personally or by mail, if a physical address is listed for the relevant Applicant below. Hearing requests should be received by the Commission by 5:30 p.m. on October 23, 2023, and should be accompanied by proof of service on Applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0– 5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by emailing the Commission’s Secretary at Secretarys-Office@sec.gov. The Commission: Secretarys-Office@sec.gov. Applicants: Joseph Bonvouloir, joseph@ altifinancial.com; Anna T. Pinedo, Esq., apinedo@mayerbrown.com; Brian D. Hirshberg, Esq., bhrishberg@ mayerbrown.com. ADDRESSES: SECURITIES AND EXCHANGE COMMISSION 14 17 early withdrawal charges and assetbased distribution and/or service fees. Sfmt 4703 FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, or Kyle R. Ahlgren, Branch Chief, at (202) 551– 6825 (Division of Investment Management, Chief Counsel’s Office). For Applicants’ representations, legal analysis, and condition, please refer to Applicants’ fifth amended and restated application, dated September 15, 2023, which may be obtained via the Commission’s website by searching for the file number at the top of this document, or for an Applicant using the Company name search field, on the SEC’s EDGAR system. The SEC’s EDGAR system may be searched at, at https://www.sec.gov/edgar/searchedgar/ legacy/companysearch.html. You may also call the SEC’s Public Reference Room at (202) 551–8090. SUPPLEMENTARY INFORMATION: E:\FR\FM\04OCN1.SGM 04OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 88, Number 191 (Wednesday, October 4, 2023)]
[Notices]
[Pages 68899-68902]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22036]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98660; File No. SR-CBOE-2023-058]


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

September 29, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 28, 2023, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its Fees Schedule relating to the Options

[[Page 68900]]

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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Fee Schedule to revise the ORF 
charged solely for the dates of September 28 and 29, 2023.
Background
    By way of background, the ORF is assessed by Cboe Options to each 
Trading Permit Holder (``TPH'') for options transactions cleared by the 
TPH that are cleared by the Options Clearing Corporation (``OCC'') in 
the customer range, regardless of the exchange on which the transaction 
occurs.\3\ In other words, the Exchange imposes the ORF on all 
customer-range transactions cleared by a TPH, even if the transactions 
do not take place on the Exchange. The ORF is collected by OCC on 
behalf of the Exchange from the Clearing Trading Permit Holder 
(``CTPH'') or non-CTPH that ultimately clears the transaction. With 
respect to linkage transactions, Cboe Options reimburses its routing 
broker providing Routing Services pursuant to Cboe Options Rule 5.36 
for options regulatory fees it incurs in connection with the Routing 
Services it provides.
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    \3\ The Exchange notes ORF also applies to customer-range 
transactions executed during Global Trading Hours.
---------------------------------------------------------------------------

    Revenue generated from ORF, when combined with all of the 
Exchange's other regulatory fees and fines, is designed to recover a 
material portion of the regulatory costs to the Exchange of the 
supervision and regulation of TPH customer options business including 
performing routine surveillances, investigations, examinations, 
financial monitoring, and policy, rulemaking, interpretive, and 
enforcement activities. Regulatory costs include direct regulatory 
expenses and certain indirect expenses for work allocated in support of 
the regulatory function. The direct expenses include in-house and 
third-party service provider costs to support the day-to-day regulatory 
work such as surveillances, investigations and examinations. The 
indirect expenses include support from such areas as human resources, 
legal, compliance, information technology, facilities and accounting. 
These indirect expenses are estimated to be approximately 30% of Cboe 
Options' total regulatory costs for 2023. Thus, direct expenses are 
estimated to be approximately 70% of total regulatory costs for 2023. 
In addition, it is Cboe Options' practice that revenue generated from 
ORF not exceed more than 75% of total annual regulatory costs. These 
expectations are estimated, preliminary and may change. There can be no 
assurance that our final costs for 2023 will not differ materially from 
these expectations and prior practice; however, the Exchange believes 
that revenue generated from the ORF, when combined with all of the 
Exchange's other regulatory fees and fines, will cover a material 
portion, but not all, of the Exchange's regulatory costs.
    The Exchange monitors its regulatory costs and revenues at a 
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 in a given year, the Exchange will adjust the ORF by 
submitting a fee change filing to the Commission. The Exchange also 
notifies TPHs of adjustments to the ORF via an Exchange Notice, 
including for the change being proposed herein.\4\ Based on the 
Exchange's most recent semi-annual review, the Exchange proposed to 
increase the amount of ORF collected by the Exchange from $0.0017 per 
contract side to $0.0030 per contract side, effective August 1, 
2023.\5\ The proposed increase was based on the Exchange's estimated 
projections for its regulatory costs, which have increased, coupled 
with a projected decrease in the Exchange's other non-ORF regulatory 
fees.\6\ Particularly, based on the Exchange's estimated projections 
for its regulatory costs, the revenue being generated by ORF using the 
then-current rate, would result in projected revenue that is 
insufficient to cover a material portion of its regulatory costs (i.e., 
less than 75% of total annual regulatory costs). Further, when combined 
with the Exchange's projected other non-ORF regulatory fees and fines, 
the revenue being generated by ORF using the then-current rate results 
was projected to result in combined revenue that is less than 100% of 
the Exchange's estimated regulatory costs for the year.
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    \4\ See Exchange Notice, C2023071301 ``Cboe Options Exchanges 
Regulatory Fee Update Effective August 1, 2023.''
    \5\ See Securities Exchange Act Release No. 98106 (August 10, 
2023), 88 FR 55796 (August 16, 2023) (SR-CBOE-2023-038).
    \6\ The Exchange notes that in connection with the August 1, 
2023 ORF rate change, it provided the Commission confidential 
details regarding the Exchange's projected regulatory revenue, 
including projected revenue from ORF, along with a breakout of its 
projected regulatory expenses, including both direct and indirect 
allocations.
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OIP and Current Proposal
    As noted above, on August 1, 2023 the Exchange filed to increase 
ORF to $0.0030 (from $0.0017) per contract side (the ``August ORF 
Filing''). However, on September 28, 2023, the Commission issued the 
Suspension of and Order Instituting Proceedings to Determine whether to 
Approve or Disapprove a Proposed Rule Change to Modify the Options 
Regulatory Fee (``the ``OIP'').\7\ As a result of the OIP, on September 
28, 2023, the ORF reverted back to the rate in place prior to August 1, 
2023 (i.e., $0.0017 per contract side).
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    \7\ See Securities Exchange Act Release No. 98596 (September 28, 
2023) (SR-CBOE-2023-038).
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    To ensure consistency of ORF assessments for the full month of 
September 2023, the Exchange proposes to modify the Fee Schedule to 
specify that the amount of ORF that will be collected by the Exchange 
through September 29, 2023 (i.e., the last trading day of the month of 
September), will be $0.0030 per contract side (the ``September ORF 
Rate'') and that effective October 2, 2023, the ORF will be $0.0017 per 
contract side.\8\ The Exchange believes that revenue generated from the 
ORF, including based on the September ORF Rate, will continue to cover 
a material portion, but not all, of the Exchange's regulatory costs.
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    \8\ This proposal is not intended to be responsive to any issues 
that may be raised in the OIP, but to instead address the immediate 
issue of billing for September 28 and 29th.
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    As noted above, the Exchange endeavors to notify TPHs of any change 
in the amount of the fee at least 30 calendar days prior to the 
effective date of the change via Exchange Notice; however, the Exchange 
notes that as a

[[Page 68901]]

result of the OIP, such notice in this instance could not be given 30 
days in advance.
    For avoidance of doubt, the Exchange notes that the September ORF 
Rate applies only through September 29, 2023 and that the ORF, 
effective October 2, 2023, will be assessed at a rate of $0.0017 per 
contract (i.e., the rate in place prior to the August ORF Filing).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b) \9\ of the Act, in general, and 
Section 6(b)(4) and (5) \10\ of the Act, in particular, in that it is 
designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among its members and other persons using its 
facilities and does not unfairly discriminate between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposal Is Reasonable
    The Exchange believes the proposed September ORF Rate is reasonable 
because it would help maintain fair and orderly markets and benefit 
investors and the public interest because it would ensure transparency 
and consistency of ORF for the entire month of September 2023. 
Specifically, the proposal would ensure that the amount of ORF 
collected by the Exchange for the trading days of September 28 and 29, 
2023 will be the same rate collected on every other trading day in 
September (i.e., $0.0030 per contract side). The Exchange believes this 
will avoid disruption to its TPHs that are subject to the ORF. As noted 
above, the Exchange may only use regulatory funds such as ORF ``to fund 
the legal, regulatory, and surveillance operations'' of the Exchange.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes its proposal is an equitable allocation of 
fees among its market participants. The Exchange believes that the 
proposed September ORF Rate would not place certain market participants 
at an unfair disadvantage because all options transactions must clear 
via a clearing firm. Such clearing firms can then choose to pass 
through all, a portion, or none of the cost of the ORF to its 
customers, i.e., the entering firms. Because the ORF is collected from 
TPH clearing firms by the OCC on behalf of the Exchange, the Exchange 
believes that using options transactions in the Customer range serves 
as a proxy for how to apportion regulatory costs among such TPHs. In 
addition, the Exchange notes that the regulatory costs relating to 
monitoring TPHs with respect to Customer trading activity are generally 
higher than the regulatory costs associated with TPHs that do not 
engage in Customer trading activity, which tends to be more automated 
and less labor-intensive. By contrast, regulating TPHs that engage in 
Customer trading activity is generally more labor intensive and 
requires a greater expenditure of human and technical resources as the 
Exchange needs to review not only the trading activity on behalf of 
Customers, but also the TPH's relationship with its Customers via more 
labor-intensive exam-based programs. As a result, the costs associated 
with administering the customer component of the Exchange's overall 
regulatory program are materially higher than the costs associated with 
administering the non-customer component (e.g., TPH proprietary 
transactions) of its regulatory program. Thus, the Exchange believes 
the September ORF Rate (like the rate assessed for every other trading 
day in September 2023) would be equitably allocated in that it is 
charged to all TPHs on all their transactions that clear in the 
Customer range at the OCC.
The Proposed Fee is not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. The Exchange believes that the proposed September ORF 
Rate would not place certain market participants at an unfair 
disadvantage because all options transactions must clear via a clearing 
firm. Such clearing firms can then choose to pass through all, a 
portion, or none of the cost of the ORF to its customers, i.e., the 
entering firms. Because the ORF is collected from TPH clearing firms by 
the OCC on behalf of the Exchange, the Exchange believes that using 
options transactions in the Customer range serves as a proxy for how to 
apportion regulatory costs among such TPHs. In addition, the Exchange 
notes that the regulatory costs relating to monitoring TPH with respect 
to Customer trading activity are generally higher than the regulatory 
costs associated with TPHs that do not engage in Customer trading 
activity, which tends to be more automated and less labor-intensive. By 
contrast, regulating TPHs that engage in Customer trading activity is 
generally more labor intensive and requires a greater expenditure of 
human and technical resources as the Exchange needs to review not only 
the trading activity on behalf of Customers, but also the TPH's 
relationship with its Customers via more labor-intensive exam-based 
programs. As a result, the costs associated with administering the 
customer component of the Exchange's overall regulatory program are 
materially higher than the costs associated with administering the non-
customer component (e.g., TPH proprietary transactions) of its 
regulatory program. Thus, the Exchange believes the September ORF Rate 
(like the rate assessed for every other trading day in September 2023), 
is not unfairly discriminatory because it is charged to all TPHs on all 
their transactions that clear in the Customer range at the OCC.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange does not 
believe that the proposed rule change will impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.
    Intramarket Competition. The Exchange believes the proposed fee 
change would not impose an undue burden on competition as it is charged 
to all TPHs on all their transactions that clear in the Customer range 
at the OCC; thus, the amount of ORF imposed is based on the amount of 
Customer volume transacted. The Exchange believes that the proposed ORF 
would not place certain market participants at an unfair disadvantage 
because all options transactions must clear via a clearing firm. Such 
clearing firms can then choose to pass through all, a portion, or none 
of the cost of the ORF to its customers, i.e., the entering firms. In 
addition, because the ORF is collected from TPH clearing firms by the 
OCC on behalf of the Exchange, the Exchange believes that using options 
transactions in the Customer range serves as a proxy for how to 
apportion regulatory costs among such TPHs.
    Intermarket Competition. The proposed fee change is not designed to 
address any competitive issues. Rather, the proposed change is designed 
to help the Exchange adequately fund its regulatory activities while 
seeking to ensure that total regulatory revenues do not exceed total 
regulatory costs.

[[Page 68902]]

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

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

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \11\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \12\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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 under 
Section 19(b)(2)(B) \13\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-CBOE-2023-058 on the subject line.

Paper Comments

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

All submissions should refer to file number SR-CBOE-2023-058. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CBOE-2023-058 and should be 
submitted on or before October 25, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-22036 Filed 10-3-23; 8:45 am]
BILLING CODE 8011-01-P

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