Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 72541-72545 [2023-23141]

Download as PDF ddrumheller on DSK120RN23PROD with NOTICES1 Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Notices and beneficiaries, to search for missing participants and beneficiaries, to determine the persons entitled to benefits that the plans transfer to PBGC and the forms and amounts of benefits payable, and to refer claimants of benefits being held elsewhere to the institutions holding the benefits. PBGC intends to make the following modifications to the information collection in this renewal: • PBGC is proposing a requirement for plans that are filing information about more than five missing individuals (participants or beneficiaries) to provide that information in a spreadsheet file. PBGC provides a user-friendly template that may be used for this purpose. • PBGC is adding a question to the DB plan forms (MP–100, 300, and 400) asking if the plan has a default beneficiary provision, and, if yes, requiring an attachment of it. (This question is already on the DC plan form (MP–200)). • PBGC is updating references on the DB plan forms and instructions that relate to de minimis benefit amounts of $5,000 or less to reflect the change under section 304 of the SECURE 2.0 Act increasing that amount to $7,000 as of January 1, 2024.1 • PBGC is adding a box to the DC plan form for the person certifying the form to check whether they are the plan’s plan administrator or the plan’s qualified termination administrator. Finally, PBGC intends to make other clarifying and editorial changes to the forms and instructions, including listing common filing errors. PBGC estimates that it will receive over the next 3 years an annual average of 345 filings from plans under this collection of information. PBGC further estimates that the average annual burden of this collection of information is 70 hours and $498,000. The actual hour burden and cost burden per plan will vary depending on plan size and other factors. The existing collection of information was approved under OMB control number 1212–0069 (expires January 31, 2024). On July 3, 2023, PBGC published in the Federal Register a notice at 88 FR 42758 informing the public of its intent to request an extension of this collection of information and solicited public comment. No comments were received. PBGC intends to request that OMB extend its approval of this collection of information for three years. An agency may not conduct or sponsor, and a 1 SECURE 2.0 Act of 2022, Division T of the Consolidated Appropriations Act, 2023, Public Law 117–328 (Dec. 29, 2022). VerDate Sep<11>2014 18:20 Oct 19, 2023 Jkt 262001 person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Issued in Washington, DC. Stephanie Cibinic, Deputy Assistant General Counsel for Regulatory Affairs, Pension Benefit Guaranty Corporation. [FR Doc. 2023–23248 Filed 10–19–23; 8:45 am] BILLING CODE 7709–02–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98761; File No. SR– CboeBZX–2023–081] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule October 16, 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 October 4, 2023, Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 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. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ options/regulation/rule_filings/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 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00123 Fmt 4703 Sfmt 4703 72541 proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Fee Schedule.3 The Exchange first notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. More specifically, the Exchange is only one of 17 options venues to which market participants may direct their order flow. Based on publicly available information, no single options exchange has more than 19% of the market share and currently the Exchange represents only approximately 4% of the market share.4 Thus, in such a low-concentrated and highly competitive market, no single options exchange, including the Exchange, possesses significant pricing power in the execution of option order flow. The Exchange believes that the ever-shifting market share among the exchanges from month to month demonstrates that market participants can shift order flow or discontinue to reduce use of certain categories of products, in response to fee changes. Accordingly, competitive forces constrain the Exchange’s transaction fees, and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. The Exchange’s Fee Schedule sets forth standard rebates and rates applied per contract. For example, the Exchange assesses a standard transaction fee of $0.48 per contract for Customer orders in Penny Securities, excluding SPY and IWM, that remove liquidity, yielding fee code ‘‘PC’’. The Exchange assesses a standard transaction fee of $0.45 per contract for Customer SPY and IWM orders that remove liquidity, yielding fee code ‘‘PR’’. The Fee Codes and Associated Fees section of the Fees 3 The Exchange initially filed the proposed fee changes on September 29, 2023 (SR–CBOE–2023– 076) [sic]. On October 4, 2023, the Exchange withdrew that filing and submitted this proposal. 4 See Cboe Global Markets U.S. Options Market Monthly Volume Summary (September 25, 2023), available at https://markets.cboe.com/us/options/ market_statistics/. E:\FR\FM\20OCN1.SGM 20OCN1 72542 Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 Schedule also provides for certain fee codes associated with certain order types and market participants that provide for various other fees or rebates. In response to the competitive environment, the Exchange also offers tiered pricing, which provides Members with opportunities to qualify for higher rebates or reduced fees where certain volume criteria and thresholds are met. Tiered pricing provides an incremental incentive for Members to strive for higher tier levels, which provides increasingly higher benefits or discounts for satisfying increasingly more stringent criteria. The Exchange proposes to amend the standard transaction fee applicable to fee code PC from $0.48 per contract to $0.45 per contract (same as current fee code PR), and to amend the definition of fee code PC so that such fee code (and corresponding transaction fee) applies to all Customer orders in Penny Securities that remove liquidity (including SPY and IWM). The Exchange also proposes to eliminate fee code ‘‘PR’’. Additionally, the Exchange proposes to delete the Customer, Firm, Broker Dealer and Joint Back Office Penny Take Volume Tiers, set forth in Footnote 14 of the Fee Schedule and applicable to orders yielding fee code PD.5 Currently, the Exchange provides a rebate of $0.85 per contract for Customer orders in Non-Penny Securities that add liquidity, yielding fee code ‘‘NY’’. The Exchange now proposes to increase the rebate provided for Customer orders in Non-Penny Securities that add liquidity and yield fee code NY, to $1.05. The Exchange also proposes to delete the Customer Non-Penny Add Volume Tiers, set forth in Footnote 12 to the Fee Schedule and applicable to orders yielding fee code NY, since under the proposed rule change the Exchange is now providing a rebate for orders yielding fee code NY equal to the highest tier of the program.6 The Exchange currently assesses a standard transaction fee of $1.10 for Non-Customer orders in Non-Penny Securities that remove liquidity, yielding fee code ‘‘NP’’. The Exchange proposes to increase the standard transaction fee for Non-Customer orders in Non-Penny Securities that remove 5 Orders yielding fee code PD are Firm, Broker Dealer and Joint Back Office orders that remove liquidity in Penny Program Securities and are charged a standard transaction fee of $0.48. The Exchange proposes to make corresponding changes to the Standard Rates table included in the Exchange’s Fee Schedule. 6 The Exchange proposes to make corresponding changes to the Standard Rates table included in the Exchange’s Fee Schedule. VerDate Sep<11>2014 18:20 Oct 19, 2023 Jkt 262001 liquidity and yield fee code NP, to $1.15. The Exchange also proposes to eliminate the Non-Customer Non-Penny Take Volume Tiers program set forth in Footnote 13 to the Fee Schedule, applicable to orders yielding fee code NP.7 Finally, the Exchange currently offers five Market Maker Penny Add Volume Tiers under Footnote 6 of the Fee Schedule, including on Market Maker Cross-Asset Add Tier, which provide additional rebates between $0.31 and $0.43 per contract for qualifying Market Maker orders (i.e., that yield fee code PM) 8 where a Member meets certain liquidity thresholds. For example, current Tier 2 offers an enhanced rebate of $0.38 per contract for qualifying orders where a Member has an ADAV 9 in Market Maker orders greater than or equal to 0.25% of average OCV; 10 Tier 3 offers an enhanced rebate of $0.39 per contract for qualifying orders where a Member has an ADAV in Market Maker orders greater than or equal to 0.40% of average OCV: and Tier 4 offers an enhanced rebate of $0.43 per contract for qualifying orders where a Member has an ADAV in Market Maker orders greater than or equal to 0.60% of average OCV. The Exchange now proposes to amend the Market Maker Penny Add Volume Tiers by updating the criteria for Tiers 2, 3, and 4. Specifically, the proposed rule change amends the criteria in Tier 2 so that a Member must have an ADAV in Market Maker orders greater than or equal to 0.35% of average OCV; amends the criteria in Tier 3 so that a Member must have an ADAV in Market Maker orders greater than or equal to 0.35% of average OCV; and amends the criteria in Tier 4 so that a Member must have an ADAV in Market Maker orders greater than or equal to 0.65% of average OCV. The proposed rule change does not alter the enhanced rebates offered under each tier. The proposed changes to the criteria in Tiers 2, 3, and 4 are designed to continue to provide an incremental incentive for Members to strive for the 7 The Exchange proposes to make corresponding changes to the Standard Rates table included in the Exchange’s Fee Schedule. 8 Orders yielding fee code PM are Market Maker orders that add liquidity in Penny Program Securities and are offered a rebate of $0.29. 9 ‘‘ADAV’’ means average daily added volume calculated as the number of contracts added, per day. 10 ‘‘OCC Customer Volume’’ or ‘‘OCV’’ means the total equity and ETF options volume that clears in the Customer range at the Options Clearing Corporation (‘‘OCC’’) for the month for which the fees apply, excluding volume on any day that the Exchange experiences an Exchange System Disruption and on any day with a scheduled early market close. PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 highest tier levels, which provide increasingly higher rebates for such transactions. 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.11 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 12 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) 13 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,14 which requires that Exchange rules provide for the equitable allocation of reasonable dues, fees, and other charges among its Trading Permit Holders and other persons using its facilities. As described above, the Exchange operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. The proposed rule change reflects a competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange, which the Exchange believes would enhance market quality to the benefit of all Members. Additionally, competing exchanges offer similar tiered pricing structures, including schedules of rebates and fees that apply based upon similarly situated members achieving certain volume and/or growth thresholds, as well as assess similar fees or rebates for similar types of orders, to that of the Exchange. 11 15 12 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 13 Id. 14 15 E:\FR\FM\20OCN1.SGM U.S.C. 78f(b)(4). 20OCN1 ddrumheller on DSK120RN23PROD with NOTICES1 Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Notices In particular, the Exchange believes that proposed changes to fee code PC to reduce the standard transaction fee and make the fee code applicable to all customer orders in Penny Securities that remove liquidity (including SPY and IWM), is reasonable, equitable and not unfairly discriminatory. The current fee code PC already applies to customer orders in Penny Securities that remove liquidity, except for SPY and IWM (which yield fee code PR), and will apply in the same manner to liquidity removing IWM and SPY Customer orders. As amended, fee code PC assesses the same rate, $0.45, as fee code PR, which is eliminated under the proposed rule change. Thus, the Exchange believes the proposed change is reasonable as Members will continue to pay the same fee for liquidity removing IWM and SPY Customer orders. Further, the Exchange believes that the proposed rule change is equitable and not unfairly discriminatory as fee code PC applies automatically and uniformly to all Customer orders in Penny Securities that remove liquidity. The Exchange also believes that it is equitable and not unfairly discriminatory to assess a lower fee for Customer orders in Penny Securities that add liquidity, as compared to other market participants, because customer order flow enhances liquidity on the Exchange for the benefit of all market participants. Specifically, customer liquidity benefits all market participants by providing more trading opportunities, which attracts MarketMakers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. Moreover, the options industry has a long history of providing preferential pricing to customers, and the Exchange’s current Fee Schedule currently does so in many places, as do the fees structures of multiple other exchanges.15 The Exchange believes the proposed rule change to increase the rebate provided for Customer orders that add liquidity in Non-Penny Securities is reasonably designed to further incentivize Members to submit Customer orders that add liquidity in Non-Penny Securities, thereby providing liquid and active markets, which facilitates tighter spreads, increased trading opportunities, and overall enhanced market quality to the 15 See BZX Options Fee Schedule, Fee Codes and Associated Fees. See also Cboe C2 Options Exchange Fees Schedule, Transaction Fees. VerDate Sep<11>2014 18:20 Oct 19, 2023 Jkt 262001 benefit of all market participants. Further, the Exchange believes that the proposed rule change is equitable and not unfairly discriminatory as all Members that submit Customer orders that add liquidity in Non-Penny Securities and yield fee code NY will receive the rebate. The Exchange believes eliminating the Customer Non-Penny Add Volume Tiers under Footnote 12 is reasonable because the Exchange is not required to maintain this program. While the Exchange is not required to provide Members an opportunity to receive reduced fees or enhanced rebates, Members may still have other opportunities to obtain enhanced rebates for orders in Non-Penny Securities, such as via the Non-Penny Add Volume Tiers (via Footnotes 7, 8, and 11 of the Fee Schedule). Further, the Exchange believes the Customer Non-Penny Add Volume Tiers may no longer incentivize Members, as the rebate offered under amended fee code NY is equal to the highest rebate available under the Customer NonPenny Add Volume Tiers. The Exchange believes that eliminating the Customer Non-Penny Add Volume Tiers is equitable and not unfairly discriminatory because it applies uniformly to all Members. Further, the Exchange notes that the proposed changes will not adversely impact any Member’s ability to otherwise qualify for reduced fees or enhanced rebates offered under other programs in the Fee Schedule. The Exchange believes the proposed rule change to increase the standard fee for Non-Customer orders that remove liquidity in Non-Penny Securities is reasonable because it is a modest increase in this transaction rate for these orders. Additionally, the increased fee is in line with fees assessed for similar transactions at other exchanges.16 The Exchange believes the proposed change is equitable and not unfairly discriminatory because it applies uniformly to all Members. The Exchange believes eliminating the Non-Customer Non-Penny Take Volume Tiers under Footnote 13 and Customer, Firm, Broker Dealer and Joint Back Office Penny Take Volume Tiers under Footnote 14 is reasonable because the Exchange is not required to maintain 16 See, e.g., NYSE Arca Fee Schedule, Transaction Fee for Electronic Executions—Per Contract, which provides that Firms and Broker Dealers that remove liquidity are assessed $1.10 per contract in NonPenny Issues. See also MIAX Pearl Options Exchange Fee Schedule, which provides NonPriority Customer, Firm, BD, and Non-MIAX Pearl Market Makers that remove liquidity are assessed between $1.09 and $1.10 per contract for NonPenny classes, depending on volume. PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 72543 these programs or provide Members an opportunity to receive reduced fees or enhanced rebates. The Exchange believes that eliminating the Customer, Firm, Broker Dealer and Joint Back Office Penny Take Volume Tiers and Non-Customer Non-Penny Take Volume Tiers is equitable and not unfairly discriminatory because it applies uniformly to all Members, in that, such programs will not be available for any Member. Further, the Exchange notes that the proposed changes will not adversely impact any Member’s ability to otherwise qualify for reduced fees or enhanced rebates offered under other programs in the Fee Schedule. Finally, the Exchange believes updating the criteria for Tiers 2, 3, and 4 of the Market Maker Penny Add Volume Tiers is reasonable as it is designed to encourage Market Makers to increase their order flow to the Exchange to achieve each tiers’ criteria, as amended. More specifically, the Exchange believes that updating the criteria for Tiers 2, 3, and 4 may encourage Members to increase their ADAV in Market Makers orders, over a modestly higher percentage of average OCV, and encourage Members to strive to achieve higher tiers (and corresponding higher rebates) by submitting the requisite add volume order flow. An increase in Market Maker add volume, particularly, facilitates tighter spreads and an increase in overall liquidity provider activity, both of which signal additional corresponding increase in order flow from other market participants, contributing towards a robust, wellbalanced market ecosystem. Indeed, increased overall order flow benefits investors by continuing to deepen the Exchange’s liquidity pool, potentially providing even greater execution incentives and opportunities, offering additional flexibility for all investors to enjoy cost savings, supporting the quality of price discovery, promoting market transparency and improving investor protection. The Exchange also believes that the proposed criteria in Tiers 2, 3, and 4 continues to reasonably reflect the incremental difficulty in achieving the Market Maker Penny Add Volume Tiers. The Exchange believes the proposed change is also equitable and not unfairly discriminatory because it applies uniformly to all Members, who will have the opportunity to meet the tiers’ new criteria and receive the corresponding rebate for the tier if such criteria is met. Without having a view of activity on other markets and offexchange venues, the Exchange has no way of knowing whether this proposed E:\FR\FM\20OCN1.SGM 20OCN1 72544 Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 rule change would definitively result in any changes to particular Market Makers qualifying for the proposed tiers, the Exchange believes that that at least two Market Makers will reasonably be able to achieve the proposed criteria in Tier 2, one Market Maker may be able to achieve the proposed criteria in Tier 3, and one Market Maker may be able to achieve the proposed criteria in Tier 4; however, the proposed tiers are open to any Market-Maker that satisfies the tier’s criteria. Additionally, all Members are able to increase their Market Maker order flow to attempt to achieve the new tiers’ criteria. Should a Member not meet the proposed new criteria, the Member will merely not receive that corresponding enhanced rebate. 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 believes the proposed rule change does not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes the proposed change to apply fee code PC to all Customer orders that remove liquidity in all Penny Securities, including IWM and SPY, will not impose any burden on intramarket competition because it will apply uniformly to all Members. Further, the Exchange believes the proposal to reduce the standard fee for Customer orders that remove liquidity in Penny Securities will not impose any burden on intramarket competition because it will apply uniformly to all Members, in that all Members that submit orders yielding fee codes PC will pay the same transaction fee. As discussed above, the Exchange believes the proposed change to reduce the transaction fee would attract additional Customer orders that remove liquidity, thereby promoting market depth, price discovery and transparency and enhancing order execution opportunities for all Members. As a result, the Exchange believes that the proposed change furthers the Securities and Exchange Commission’s (the ‘‘Commission’s’’) goal in adopting Regulation NMS of fostering competition among orders, which promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ Additionally, the Exchange believes the proposal to increase the rebate offered for Customer orders in NonPenny Securities that add liquidity and VerDate Sep<11>2014 18:20 Oct 19, 2023 Jkt 262001 to increase the standard transaction fee for Non-Customer orders in Non-Penny Securities that remove liquidity will not impose any burden on intramarket competition, as the changes will apply uniformly to all Members. Further, the Exchange believes the proposal to eliminate the Customer, Firm, Broker Dealer and Joint Back Office Penny Take Volume Tiers, Non-Customer NonPenny Take Volume Tiers, and Customer Non-Penny Add Volume Tiers will not impose any burden on intramarket competition because they will no longer be available to any Members. The Exchange believes the proposals to amend the criteria for Tiers 2, 3, and 4 of the Market Maker Penny Add Volume Tiers will also not impose any burden on intramarket competition, as they will also apply to all Members. All Members will continue to have an opportunity to receive rebates under various tiers. Market Maker Volume Add Tiers are generally designed to increase the competitiveness of BZX and incentivize participants to increase their order flow on the Exchange, providing for additional execution opportunities for market participants and improved price transparency. An overall increase in add activity may provide for deeper, more liquid markets and execution opportunities at improved prices. The Exchange does not believe that the proposed changes represent a significant departure from pricing currently offered by the Exchange or pricing offered by other options exchanges. Members may opt to disfavor the Exchange’s pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange also believes the proposed rule change does not impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. As previously discussed, the Exchange operates in a highly competitive market. Members have numerous alternative venues they may participate on and direct their order flow, including 17 other options exchanges. Additionally, the Exchange represents a small percentage of the overall market. Based on publicly available information, no single options exchange has more than 19% of the market share. Therefore, no exchange possesses significant pricing power in the execution of order flow. Indeed, participants can readily choose PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 to send their orders to other exchanges if they deem fee levels at those other venues to be more favorable. Moreover, the Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ The fact that this market is competitive has also long been recognized by the courts. In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit stated as follows: ‘‘[n]o one disputes that competition for order flow is ‘fierce.’ . . . As the SEC explained, ‘[i]n the U.S. national market system, buyers and sellers of securities, and the brokerdealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution’; [and] ‘no exchange can afford to take its market share percentages for granted’ because ‘no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers’. . . .’’. Accordingly, the Exchange does not believe its proposed fee change imposes any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 17 and paragraph (f) of Rule 19b–4 18 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings 17 15 18 17 E:\FR\FM\20OCN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 20OCN1 Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Notices to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– CboeBZX–2023–081 on the subject line. Paper Comments ddrumheller on DSK120RN23PROD with NOTICES1 • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–CboeBZX–2023–081. 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–2023–081 and should be submitted on or before November 13, 2023. VerDate Sep<11>2014 18:20 Oct 19, 2023 Jkt 262001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–23141 Filed 10–19–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–563, OMB Control No. 3235–0625] Submission for OMB Review; Comment Request; Extension: Rule 17g–1 and Form NRSRO Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for approval of extension of the previously approved collection of information provided for in Rule 17g–1, Form NRSRO and Instructions to Form NRSRO under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).1 Rule 17g–1, Form NRSRO and the Instructions to Form NRSRO contain certain recordkeeping and disclosure requirements for NRSROs. Currently, there are 10 credit rating agencies registered as NRSROs with the Commission. Based on staff experience, the Commission estimates that the revised ongoing annual burden for respondents to comply with Rule 17g– 1 and Form NRSRO is 2,750 hours.2 In addition, the Commission estimates an industry-wide annual external cost to NRSROs of $4,000 to comply with the requirements. Written comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission’s estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information on respondents; and (d) ways to minimize the burden of the collection of information on CFR 200.30–3(a)(12). 17 CFR 240.17g–1 and 17 CFR 249b.300. 2 10 currently registered NRSROs × 275 hours = 2,750 hours respondents, including through the use of automated collection techniques or other forms of information technology. The Commission may not conduct or sponsor a collection of information unless it displays a currently valid control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid Office of Management and Budget (OMB) control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice by November 20, 2023 to (i) MBX.OMB.OIRA.SEC_desk_officer@ omb.eop.gov and (ii) Dave Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/ o John Pezzullo, 100 F St NE, Washington, DC 20549 or send an email to: PRA_Mailbox@sec.gov. Dated: October 16, 2023. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–23136 Filed 10–19–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98765; File No. SR– NYSEARCA–2023–71] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To List and Trade Shares of the John Hancock Fundamental All Cap Core ETF Under Rule 8.601–E, Active Proxy Portfolio Shares October 17, 2023. Pursuant to section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on October 13, 2023, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) 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 self-regulatory organization. The Commission is publishing this notice to 19 17 1 See PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 72545 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 E:\FR\FM\20OCN1.SGM 20OCN1

Agencies

[Federal Register Volume 88, Number 202 (Friday, October 20, 2023)]
[Notices]
[Pages 72541-72545]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-23141]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98761; File No. SR-CboeBZX-2023-081]


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

October 16, 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 October 4, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \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. The text of the proposed rule change is 
provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/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 Fee Schedule.\3\
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    \3\ The Exchange initially filed the proposed fee changes on 
September 29, 2023 (SR-CBOE-2023-076) [sic]. On October 4, 2023, the 
Exchange withdrew that filing and submitted this proposal.
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    The Exchange first notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of 17 options venues to which market participants 
may direct their order flow. Based on publicly available information, 
no single options exchange has more than 19% of the market share and 
currently the Exchange represents only approximately 4% of the market 
share.\4\ Thus, in such a low-concentrated and highly competitive 
market, no single options exchange, including the Exchange, possesses 
significant pricing power in the execution of option order flow. The 
Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow or discontinue to reduce use of certain categories of 
products, in response to fee changes. Accordingly, competitive forces 
constrain the Exchange's transaction fees, and market participants can 
readily trade on competing venues if they deem pricing levels at those 
other venues to be more favorable.
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    \4\ See Cboe Global Markets U.S. Options Market Monthly Volume 
Summary (September 25, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
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    The Exchange's Fee Schedule sets forth standard rebates and rates 
applied per contract. For example, the Exchange assesses a standard 
transaction fee of $0.48 per contract for Customer orders in Penny 
Securities, excluding SPY and IWM, that remove liquidity, yielding fee 
code ``PC''. The Exchange assesses a standard transaction fee of $0.45 
per contract for Customer SPY and IWM orders that remove liquidity, 
yielding fee code ``PR''. The Fee Codes and Associated Fees section of 
the Fees

[[Page 72542]]

Schedule also provides for certain fee codes associated with certain 
order types and market participants that provide for various other fees 
or rebates. In response to the competitive environment, the Exchange 
also offers tiered pricing, which provides Members with opportunities 
to qualify for higher rebates or reduced fees where certain volume 
criteria and thresholds are met. Tiered pricing provides an incremental 
incentive for Members to strive for higher tier levels, which provides 
increasingly higher benefits or discounts for satisfying increasingly 
more stringent criteria.
    The Exchange proposes to amend the standard transaction fee 
applicable to fee code PC from $0.48 per contract to $0.45 per contract 
(same as current fee code PR), and to amend the definition of fee code 
PC so that such fee code (and corresponding transaction fee) applies to 
all Customer orders in Penny Securities that remove liquidity 
(including SPY and IWM). The Exchange also proposes to eliminate fee 
code ``PR''. Additionally, the Exchange proposes to delete the 
Customer, Firm, Broker Dealer and Joint Back Office Penny Take Volume 
Tiers, set forth in Footnote 14 of the Fee Schedule and applicable to 
orders yielding fee code PD.\5\
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    \5\ Orders yielding fee code PD are Firm, Broker Dealer and 
Joint Back Office orders that remove liquidity in Penny Program 
Securities and are charged a standard transaction fee of $0.48. The 
Exchange proposes to make corresponding changes to the Standard 
Rates table included in the Exchange's Fee Schedule.
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    Currently, the Exchange provides a rebate of $0.85 per contract for 
Customer orders in Non-Penny Securities that add liquidity, yielding 
fee code ``NY''. The Exchange now proposes to increase the rebate 
provided for Customer orders in Non-Penny Securities that add liquidity 
and yield fee code NY, to $1.05. The Exchange also proposes to delete 
the Customer Non-Penny Add Volume Tiers, set forth in Footnote 12 to 
the Fee Schedule and applicable to orders yielding fee code NY, since 
under the proposed rule change the Exchange is now providing a rebate 
for orders yielding fee code NY equal to the highest tier of the 
program.\6\
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    \6\ The Exchange proposes to make corresponding changes to the 
Standard Rates table included in the Exchange's Fee Schedule.
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    The Exchange currently assesses a standard transaction fee of $1.10 
for Non-Customer orders in Non-Penny Securities that remove liquidity, 
yielding fee code ``NP''. The Exchange proposes to increase the 
standard transaction fee for Non-Customer orders in Non-Penny 
Securities that remove liquidity and yield fee code NP, to $1.15. The 
Exchange also proposes to eliminate the Non-Customer Non-Penny Take 
Volume Tiers program set forth in Footnote 13 to the Fee Schedule, 
applicable to orders yielding fee code NP.\7\
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    \7\ The Exchange proposes to make corresponding changes to the 
Standard Rates table included in the Exchange's Fee Schedule.
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    Finally, the Exchange currently offers five Market Maker Penny Add 
Volume Tiers under Footnote 6 of the Fee Schedule, including on Market 
Maker Cross-Asset Add Tier, which provide additional rebates between 
$0.31 and $0.43 per contract for qualifying Market Maker orders (i.e., 
that yield fee code PM) \8\ where a Member meets certain liquidity 
thresholds. For example, current Tier 2 offers an enhanced rebate of 
$0.38 per contract for qualifying orders where a Member has an ADAV \9\ 
in Market Maker orders greater than or equal to 0.25% of average OCV; 
\10\ Tier 3 offers an enhanced rebate of $0.39 per contract for 
qualifying orders where a Member has an ADAV in Market Maker orders 
greater than or equal to 0.40% of average OCV: and Tier 4 offers an 
enhanced rebate of $0.43 per contract for qualifying orders where a 
Member has an ADAV in Market Maker orders greater than or equal to 
0.60% of average OCV. The Exchange now proposes to amend the Market 
Maker Penny Add Volume Tiers by updating the criteria for Tiers 2, 3, 
and 4.
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    \8\ Orders yielding fee code PM are Market Maker orders that add 
liquidity in Penny Program Securities and are offered a rebate of 
$0.29.
    \9\ ``ADAV'' means average daily added volume calculated as the 
number of contracts added, per day.
    \10\ ``OCC Customer Volume'' or ``OCV'' means the total equity 
and ETF options volume that clears in the Customer range at the 
Options Clearing Corporation (``OCC'') for the month for which the 
fees apply, excluding volume on any day that the Exchange 
experiences an Exchange System Disruption and on any day with a 
scheduled early market close.
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    Specifically, the proposed rule change amends the criteria in Tier 
2 so that a Member must have an ADAV in Market Maker orders greater 
than or equal to 0.35% of average OCV; amends the criteria in Tier 3 so 
that a Member must have an ADAV in Market Maker orders greater than or 
equal to 0.35% of average OCV; and amends the criteria in Tier 4 so 
that a Member must have an ADAV in Market Maker orders greater than or 
equal to 0.65% of average OCV. The proposed rule change does not alter 
the enhanced rebates offered under each tier.
    The proposed changes to the criteria in Tiers 2, 3, and 4 are 
designed to continue to provide an incremental incentive for Members to 
strive for the highest tier levels, which provide increasingly higher 
rebates for such transactions.
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.\11\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \12\ 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) \13\ 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,\14\ 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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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ Id.
    \14\ 15 U.S.C. 78f(b)(4).
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    As described above, the Exchange operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. The proposed rule change 
reflects a competitive pricing structure designed to incentivize market 
participants to direct their order flow to the Exchange, which the 
Exchange believes would enhance market quality to the benefit of all 
Members. Additionally, competing exchanges offer similar tiered pricing 
structures, including schedules of rebates and fees that apply based 
upon similarly situated members achieving certain volume and/or growth 
thresholds, as well as assess similar fees or rebates for similar types 
of orders, to that of the Exchange.

[[Page 72543]]

    In particular, the Exchange believes that proposed changes to fee 
code PC to reduce the standard transaction fee and make the fee code 
applicable to all customer orders in Penny Securities that remove 
liquidity (including SPY and IWM), is reasonable, equitable and not 
unfairly discriminatory. The current fee code PC already applies to 
customer orders in Penny Securities that remove liquidity, except for 
SPY and IWM (which yield fee code PR), and will apply in the same 
manner to liquidity removing IWM and SPY Customer orders. As amended, 
fee code PC assesses the same rate, $0.45, as fee code PR, which is 
eliminated under the proposed rule change. Thus, the Exchange believes 
the proposed change is reasonable as Members will continue to pay the 
same fee for liquidity removing IWM and SPY Customer orders. Further, 
the Exchange believes that the proposed rule change is equitable and 
not unfairly discriminatory as fee code PC applies automatically and 
uniformly to all Customer orders in Penny Securities that remove 
liquidity.
    The Exchange also believes that it is equitable and not unfairly 
discriminatory to assess a lower fee for Customer orders in Penny 
Securities that add liquidity, as compared to other market 
participants, because customer order flow enhances liquidity on the 
Exchange for the benefit of all market participants. Specifically, 
customer liquidity benefits all market participants by providing more 
trading opportunities, which attracts Market-Makers. An increase in the 
activity of these market participants in turn facilitates tighter 
spreads, which may cause an additional corresponding increase in order 
flow from other market participants. Moreover, the options industry has 
a long history of providing preferential pricing to customers, and the 
Exchange's current Fee Schedule currently does so in many places, as do 
the fees structures of multiple other exchanges.\15\
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    \15\ See BZX Options Fee Schedule, Fee Codes and Associated 
Fees. See also Cboe C2 Options Exchange Fees Schedule, Transaction 
Fees.
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    The Exchange believes the proposed rule change to increase the 
rebate provided for Customer orders that add liquidity in Non-Penny 
Securities is reasonably designed to further incentivize Members to 
submit Customer orders that add liquidity in Non-Penny Securities, 
thereby providing liquid and active markets, which facilitates tighter 
spreads, increased trading opportunities, and overall enhanced market 
quality to the benefit of all market participants. Further, the 
Exchange believes that the proposed rule change is equitable and not 
unfairly discriminatory as all Members that submit Customer orders that 
add liquidity in Non-Penny Securities and yield fee code NY will 
receive the rebate.
    The Exchange believes eliminating the Customer Non-Penny Add Volume 
Tiers under Footnote 12 is reasonable because the Exchange is not 
required to maintain this program. While the Exchange is not required 
to provide Members an opportunity to receive reduced fees or enhanced 
rebates, Members may still have other opportunities to obtain enhanced 
rebates for orders in Non-Penny Securities, such as via the Non-Penny 
Add Volume Tiers (via Footnotes 7, 8, and 11 of the Fee Schedule). 
Further, the Exchange believes the Customer Non-Penny Add Volume Tiers 
may no longer incentivize Members, as the rebate offered under amended 
fee code NY is equal to the highest rebate available under the Customer 
Non-Penny Add Volume Tiers. The Exchange believes that eliminating the 
Customer Non-Penny Add Volume Tiers is equitable and not unfairly 
discriminatory because it applies uniformly to all Members. Further, 
the Exchange notes that the proposed changes will not adversely impact 
any Member's ability to otherwise qualify for reduced fees or enhanced 
rebates offered under other programs in the Fee Schedule.
    The Exchange believes the proposed rule change to increase the 
standard fee for Non-Customer orders that remove liquidity in Non-Penny 
Securities is reasonable because it is a modest increase in this 
transaction rate for these orders. Additionally, the increased fee is 
in line with fees assessed for similar transactions at other 
exchanges.\16\ The Exchange believes the proposed change is equitable 
and not unfairly discriminatory because it applies uniformly to all 
Members.
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    \16\ See, e.g., NYSE Arca Fee Schedule, Transaction Fee for 
Electronic Executions--Per Contract, which provides that Firms and 
Broker Dealers that remove liquidity are assessed $1.10 per contract 
in Non-Penny Issues. See also MIAX Pearl Options Exchange Fee 
Schedule, which provides Non-Priority Customer, Firm, BD, and Non-
MIAX Pearl Market Makers that remove liquidity are assessed between 
$1.09 and $1.10 per contract for Non-Penny classes, depending on 
volume.
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    The Exchange believes eliminating the Non-Customer Non-Penny Take 
Volume Tiers under Footnote 13 and Customer, Firm, Broker Dealer and 
Joint Back Office Penny Take Volume Tiers under Footnote 14 is 
reasonable because the Exchange is not required to maintain these 
programs or provide Members an opportunity to receive reduced fees or 
enhanced rebates. The Exchange believes that eliminating the Customer, 
Firm, Broker Dealer and Joint Back Office Penny Take Volume Tiers and 
Non-Customer Non-Penny Take Volume Tiers is equitable and not unfairly 
discriminatory because it applies uniformly to all Members, in that, 
such programs will not be available for any Member. Further, the 
Exchange notes that the proposed changes will not adversely impact any 
Member's ability to otherwise qualify for reduced fees or enhanced 
rebates offered under other programs in the Fee Schedule.
    Finally, the Exchange believes updating the criteria for Tiers 2, 
3, and 4 of the Market Maker Penny Add Volume Tiers is reasonable as it 
is designed to encourage Market Makers to increase their order flow to 
the Exchange to achieve each tiers' criteria, as amended. More 
specifically, the Exchange believes that updating the criteria for 
Tiers 2, 3, and 4 may encourage Members to increase their ADAV in 
Market Makers orders, over a modestly higher percentage of average OCV, 
and encourage Members to strive to achieve higher tiers (and 
corresponding higher rebates) by submitting the requisite add volume 
order flow. An increase in Market Maker add volume, particularly, 
facilitates tighter spreads and an increase in overall liquidity 
provider activity, both of which signal additional corresponding 
increase in order flow from other market participants, contributing 
towards a robust, well-balanced market ecosystem. Indeed, increased 
overall order flow benefits investors by continuing to deepen the 
Exchange's liquidity pool, potentially providing even greater execution 
incentives and opportunities, offering additional flexibility for all 
investors to enjoy cost savings, supporting the quality of price 
discovery, promoting market transparency and improving investor 
protection. The Exchange also believes that the proposed criteria in 
Tiers 2, 3, and 4 continues to reasonably reflect the incremental 
difficulty in achieving the Market Maker Penny Add Volume Tiers.
    The Exchange believes the proposed change is also equitable and not 
unfairly discriminatory because it applies uniformly to all Members, 
who will have the opportunity to meet the tiers' new criteria and 
receive the corresponding rebate for the tier if such criteria is met. 
Without having a view of activity on other markets and off-exchange 
venues, the Exchange has no way of knowing whether this proposed

[[Page 72544]]

rule change would definitively result in any changes to particular 
Market Makers qualifying for the proposed tiers, the Exchange believes 
that that at least two Market Makers will reasonably be able to achieve 
the proposed criteria in Tier 2, one Market Maker may be able to 
achieve the proposed criteria in Tier 3, and one Market Maker may be 
able to achieve the proposed criteria in Tier 4; however, the proposed 
tiers are open to any Market-Maker that satisfies the tier's criteria. 
Additionally, all Members are able to increase their Market Maker order 
flow to attempt to achieve the new tiers' criteria. Should a Member not 
meet the proposed new criteria, the Member will merely not receive that 
corresponding enhanced rebate.

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 believes the 
proposed rule change does not impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.
    The Exchange believes the proposed change to apply fee code PC to 
all Customer orders that remove liquidity in all Penny Securities, 
including IWM and SPY, will not impose any burden on intramarket 
competition because it will apply uniformly to all Members. Further, 
the Exchange believes the proposal to reduce the standard fee for 
Customer orders that remove liquidity in Penny Securities will not 
impose any burden on intramarket competition because it will apply 
uniformly to all Members, in that all Members that submit orders 
yielding fee codes PC will pay the same transaction fee. As discussed 
above, the Exchange believes the proposed change to reduce the 
transaction fee would attract additional Customer orders that remove 
liquidity, thereby promoting market depth, price discovery and 
transparency and enhancing order execution opportunities for all 
Members. As a result, the Exchange believes that the proposed change 
furthers the Securities and Exchange Commission's (the 
``Commission's'') goal in adopting Regulation NMS of fostering 
competition among orders, which promotes ``more efficient pricing of 
individual stocks for all types of orders, large and small.''
    Additionally, the Exchange believes the proposal to increase the 
rebate offered for Customer orders in Non-Penny Securities that add 
liquidity and to increase the standard transaction fee for Non-Customer 
orders in Non-Penny Securities that remove liquidity will not impose 
any burden on intramarket competition, as the changes will apply 
uniformly to all Members. Further, the Exchange believes the proposal 
to eliminate the Customer, Firm, Broker Dealer and Joint Back Office 
Penny Take Volume Tiers, Non-Customer Non-Penny Take Volume Tiers, and 
Customer Non-Penny Add Volume Tiers will not impose any burden on 
intramarket competition because they will no longer be available to any 
Members.
    The Exchange believes the proposals to amend the criteria for Tiers 
2, 3, and 4 of the Market Maker Penny Add Volume Tiers will also not 
impose any burden on intramarket competition, as they will also apply 
to all Members. All Members will continue to have an opportunity to 
receive rebates under various tiers. Market Maker Volume Add Tiers are 
generally designed to increase the competitiveness of BZX and 
incentivize participants to increase their order flow on the Exchange, 
providing for additional execution opportunities for market 
participants and improved price transparency. An overall increase in 
add activity may provide for deeper, more liquid markets and execution 
opportunities at improved prices.
    The Exchange does not believe that the proposed changes represent a 
significant departure from pricing currently offered by the Exchange or 
pricing offered by other options exchanges. Members may opt to disfavor 
the Exchange's pricing if they believe that alternatives offer them 
better value. Accordingly, the Exchange does not believe that the 
proposed changes will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets.
    The Exchange also believes the proposed rule change does not impose 
any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. As previously 
discussed, the Exchange operates in a highly competitive market. 
Members have numerous alternative venues they may participate on and 
direct their order flow, including 17 other options exchanges. 
Additionally, the Exchange represents a small percentage of the overall 
market. Based on publicly available information, no single options 
exchange has more than 19% of the market share. Therefore, no exchange 
possesses significant pricing power in the execution of order flow. 
Indeed, participants can readily choose to send their orders to other 
exchanges if they deem fee levels at those other venues to be more 
favorable. Moreover, the Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' The fact that 
this market is competitive has also long been recognized by the courts. 
In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit 
stated as follows: ``[n]o one disputes that competition for order flow 
is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market 
system, buyers and sellers of securities, and the broker-dealers that 
act as their order-routing agents, have a wide range of choices of 
where to route orders for execution'; [and] `no exchange can afford to 
take its market share percentages for granted' because `no exchange 
possesses a monopoly, regulatory or otherwise, in the execution of 
order flow from broker dealers'. . . .''. Accordingly, the Exchange 
does not believe its proposed fee change imposes any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.

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

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

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \17\ and paragraph (f) of Rule 19b-4 \18\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings

[[Page 72545]]

to determine whether the proposed rule change should be approved or 
disapproved.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2023-081 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-CboeBZX-2023-081. 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-2023-081 and should 
be submitted on or before November 13, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-23141 Filed 10-19-23; 8:45 am]
BILLING CODE 8011-01-P
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