Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 87012-87017 [2023-27528]

Download as PDF 87012 Federal Register / Vol. 88, No. 240 / Friday, December 15, 2023 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 subscribe. The proposed fees would apply to all co-location customers on a non-discriminatory basis, and therefore are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange also believes that the proposed changes to include specific installation fees promote just and equitable principles of trade and remove impediments to and perfect the mechanism of a free and open market and a national market system because the proposed rule changes will provide greater clarity to Members and the public regarding the Exchange’s fees. It is in the public interest for rules to be accurate and transparent so as to eliminate the potential for confusion. If the Exchange is incorrect in its determination that the proposed fees reflect the value of the GPS antenna, customers will not purchase the product or will seek other options at their disposal, such as purchasing time synchronization services from thirdparty vendors. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In terms of inter-market competition (the competition among self-regulatory organizations), the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. Approval of the proposal does not impose any burden on the ability of other exchanges to compete. As noted above, time synchronization services are offered by other vendors and any exchange has the ability to offer such services if it so chooses. Nothing in the proposal burdens intra-market competition (the competition among consumers of exchange data) because the GPS antenna is available to any co-location customer under the same fees as any other colocation customer, and any co-location customer that wishes to purchase a GPS VerDate Sep<11>2014 17:57 Dec 14, 2023 Jkt 262001 antenna can do so on a nondiscriminatory basis. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. 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)(ii) of the Act.19 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: (i) necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@sec.gov. Please include file number SR–MRX–2023–24 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–MRX–2023–24. 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–MRX–2023–24 and should be submitted on or before January 5, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–27526 Filed 12–14–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–99132; File No. SR– CboeEDGX–2023–078] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule December 11, 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 December 8, 2023, Cboe EDGX Exchange, Inc. (‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 20 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 19 15 PO 00000 U.S.C. 78s(b)(3)(A)(ii). Frm 00140 Fmt 4703 Sfmt 4703 E:\FR\FM\15DEN1.SGM 15DEN1 Federal Register / Vol. 88, No. 240 / Friday, December 15, 2023 / Notices I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) 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 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/edgx/), 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. ddrumheller on DSK120RN23PROD with NOTICES1 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 applicable to its equities trading platform (‘‘EDGX Equities’’) as follows: (1) by introducing Add Volume Tier 7; (2) by modifying the Market Quality Tier; (3) by introducing a new Non-Displayed Add Volume Tier; (4) by modifying Remove Volume Tier 3; and (5) by introducing a new Retail Volume Tier. The Exchange proposes to implement these changes effective December 1, 2023.3 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 16 registered equities exchanges, as well as a number of alternative trading systems and other off-exchange venues 3 The Exchange initially filed the proposed fee change on December 1, 2023 (SR–CboeEDGX–2023– 074). On December 8, 2023, the Exchange withdrew that filing and submitted SR–CboeEDGX–2023–077. On December 8, 2023, the Exchange withdrew that filing and submitted this proposal. VerDate Sep<11>2014 17:57 Dec 14, 2023 Jkt 262001 that do not have similar self-regulatory responsibilities under the Securities Exchange Act of 1934 (the ‘‘Act’’), to which market participants may direct their order flow. Based on publicly available information,4 no single registered equities exchange has more than 14% of the market share. Thus, in such a low-concentrated and highly competitive market, no single equities exchange possesses significant pricing power in the execution of order flow. The Exchange in particular operates a ‘‘Maker-Taker’’ model whereby it pays rebates to members that add liquidity and assesses fees to those that remove liquidity. The Exchange’s Fee Schedule sets forth the standard rebates and rates applied per share for orders that provide and remove liquidity, respectively. Currently, for orders in securities priced at or above $1.00, the Exchange provides a standard rebate of $0.00160 per share for orders that add liquidity and assesses a fee of $0.0030 per share for orders that remove liquidity.5 For orders in securities priced below $1.00, the Exchange provides a standard rebate of $0.00009 per share for orders that add liquidity and assesses a fee of 0.30% of the total dollar value for orders that remove liquidity.6 Additionally, in response to the competitive environment, the Exchange also offers tiered pricing which provides Members 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. Add Volume & Market Quality Tiers Under footnote 1 of the Fee Schedule, the Exchange currently offers various Add/Remove Volume Tiers. In particular, the Exchange offers six Add Volume Tiers that each provide an enhanced rebate for Members’ qualifying orders yielding fee codes B,7 4 See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date (November 28, 2023), available at https://www.cboe.com/us/ equities/market_statistics/. 5 See EDGX Equities Fee Schedule, Standard Rates. 6 Id. 7 Fee code B is appended to orders adding liquidity to EDGX in Tape B securities. PO 00000 Frm 00141 Fmt 4703 Sfmt 4703 87013 V,8 Y,9 3,10 and 4,11 where a Member reaches certain add volume-based criteria.12 First, the Exchange is proposing to introduce a new Add Volume Tier 7 to provide Members an additional manner in which they could receive an enhanced rebate if certain criteria is met. The proposed criteria for proposed Add Volume Tier 7 is as follows: • Add Volume Tier 7 provides a rebate of $0.0034 per share for securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee B, V, Y, 3, or 4) where: (1) Member has a total remove ADV 13 ≥0.40% of the TCV 14 or Member has a total remove ADV ≥40,000,000; and (2) Member has a Hidden, Primary Peg ADV 15 ≥1,000,000; and (3) Member has a Hidden Midpoint ADV (i.e., yielding fee codes DM 16 or MM 17) ≥5,000,000. Second, the Exchange proposes to modify the criteria of the existing Market Quality Tier. Currently, the criteria for the Market Quality Tier is as follows: • The Market Quality Tier provides a rebate of $0.0028 per share for securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee B, V, Y, 3, or 4) where: (1) Member adds an ADV ≥0.25% of the TCV; and (2) Member adds an ADV ≥0.10% of the TCV as 8 Fee code V is appended to orders adding liquidity to EDGX in Tape A securities. 9 Fee code Y is appended to orders adding liquidity to EDGX in Tape C securities. 10 Fee code 3 is appended to orders adding liquidity to EDGX in the pre and post market in Tapes A or C securities. 11 Fee code 4 is appended to orders adding liquidity to EDGX in the pre and post market in Tape B securities. 12 The Exchange notes that unless otherwise noted on the fee schedule, enhanced rebates or reduced fees offered under footnote 1 are only available to securities priced at or above $1.00. 13 ‘‘ADV’’ means average daily volume calculated as the number of shares added to, removed from, or routed by, the Exchange, or any combination or subset thereof, per day. ADV is calculated on a monthly basis. 14 ‘‘TCV’’ means total consolidated volume calculated as the volume reported by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the month for which the fees apply. 15 The Exchange notes that it also proposes to add a definition for Hidden, Primary Peg ADV to the Definitions section of the fee schedule, ‘‘Hidden, Primary Peg ADV’’ means ADV in non-displayed orders that include a Primary Peg instruction as defined in EDGX Equities Rule 11.6(j)(2). 16 Fee code DM is appended to orders adding liquidity to EDGX using MidPoint Discretionary order within discretionary range. 17 Fee code MM is appended to non-displayed orders adding liquidity to EDGX using Mid-Point Peg. E:\FR\FM\15DEN1.SGM 15DEN1 87014 Federal Register / Vol. 88, No. 240 / Friday, December 15, 2023 / Notices Non-Displayed orders that yield fee codes DM, HA,18 HI,19 MM or RP.20 Now, the Exchange proposes to amend the second prong of criteria in the Market Quality Tier. The proposed criteria is as follows: • The Market Quality Tier provides a rebate of $0.0028 per share for securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee B, V, Y, 3, or 4) where: (1) Member adds an ADV ≥0.25% of the TCV; and (2) Members adds an ADV ≥0.12% of the TCV as Non-Displayed orders that yield fee codes DM, HA, HI, MM or RP. Non-Displayed Add Volume Tiers In addition to the Add/Remove Volume Tiers offered under footnote 1, the Exchange also offers three NonDisplayed Add Volume Tiers that each provide an enhanced rebate for Members’ qualifying orders yielding fee codes DM, HA, MM, and RP, where a Member reaches certain volume-based criteria offered in each tier. The Exchange now proposes to introduce Non-Displayed Add Volume Tier 4. The proposed criteria for Non-Displayed Add Volume Tier 4 is as follows: • Non-Displayed Add Volume Tier 4 provides a rebate of $0.0025 per share for securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee DM, HA, MM, or RP) where: (1) Member has a total remove ADV ≥0.40% of the TCV or Member has a total remove ADV ≥40,000,000; and (2) Member has a Hidden, Primary Peg ADV ≥1,000,000; and (3) Member has a Hidden Midpoint ADV (i.e., yielding fee codes DM or MM) ≥5,000,000. The Exchange also proposes to make minor grammatical changes to the introductory text associated with the Non-Displayed Add Volume Tiers. These changes are non-substantive in nature. Remove Volume Tiers ddrumheller on DSK120RN23PROD with NOTICES1 In addition to the Add/Remove Volume Tiers and Non-Displayed Add Volume Tiers offered under footnote 1, the Exchange also offers three Remove Volume Tiers that each assess a reduced fee for Members’ qualifying orders 18 Fee code HA is appended to non-displayed orders adding liquidity to EDGX. 19 Fee code HI is appended to non-displayed orders adding liquidity to EDGX that receive price improvement. 20 Fee code RP is appended to non-displayed orders adding liquidity to EDGX using Supplemental Peg. VerDate Sep<11>2014 17:57 Dec 14, 2023 Jkt 262001 yielding fee codes BB,21 N,22 and W 23 where a Member reaches certain add volume-based criteria. The Exchange now proposes to amend Remove Volume Tier 3. Currently, the criteria for Remove Volume Tier 3 is as follows: • Remove Volume Tier 3 provides a reduced fee of $0.00275 per share for securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee codes BB, N, or W) and a reduced fee of 0.28% of total dollar value for securities priced below $1.00 where: (1) Member has an ADAV ≥0.30% of the TCV; and (2) Member has a total remove ADV ≥0.40% of the TCV; and (3) Member adds Retail Pre Market Order ADV (i.e., yielding fee code ZO) ≥3,000,000. Now, the Exchange proposes to amend the second prong of criteria in Remove Volume Tier 3. The proposed criteria is as follows: • Proposed Remove Volume Tier 3 provides a reduced fee of $0.00275 per share for securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee codes BB, N, or W) and a reduced fee of 0.28% of total dollar value for securities priced below $1.00 where: (1) Member has an ADAV ≥0.30% of the TCV; and (2) Member has a total remove ADV ≥0.40% of the TCV or Member has a total remove ADV ≥40,000,000; and (3) Member adds Retail Pre Market Order ADV (i.e., yielding fee code ZO) ≥3,000,000. Retail Volume Tiers Pursuant to footnote 2 of the Fee Schedule, the Exchange offers Retail Volume Tiers which provide Retail Member Organizations (‘‘RMOs’’) 24 an opportunity to receive an enhanced rebate from the standard rebate for Retail Orders 25 that add liquidity (i.e., yielding fee code ZA or ZO). Currently, the Retail Volume Tiers offer two Retail Volume Tiers where a Member is eligible for an enhanced rebate for qualifying orders (i.e., yielding fee code ZA or ZO) meeting certain add volume21 Fee code BB is appended to orders that remove liquidity from EDGX in Tape B securities. 22 Fee code N is appended to orders that remove liquidity from EDGX in Tape C securities. 23 Fee code W is appended to orders that remove liquidity from EDGX in Tape A securities. 24 See EDGX Rule 11.21(a)(1). A ‘‘Retail Member Organization’’ or ‘‘RMO’’ is a Member (or a division thereof) that has been approved by the Exchange under this Rule to submit Retail Orders. 25 See EDGX Rule 11.21(a)(2). A ‘‘Retail Order’’ is an agency or riskless principal order that meets the criteria of FINRA Rule 5320.03 that originates from a natural person and is submitted to the Exchange by a Retail Member Organization, provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any other computerized methodology. PO 00000 Frm 00142 Fmt 4703 Sfmt 4703 based criteria. The Exchange now proposes to introduce Retail Volume Tier 3. The proposed criteria for Retail Volume Tier 3 is as follows: • Proposed Retail Volume Tier 3 provides an enhanced rebate of $0.0037 per share for securities priced above $1.00 to qualifying orders (i.e., orders yielding fee ZA or ZO) where: (1) Member has a total remove ADV ≥0.40% of the TCV or Member has a total remove ADV ≥40,000,000; and (2) Member has a Hidden, Primary Peg ADV ≥1,000,000; and (3) Member has a Hidden Midpoint ADV (i.e., yielding fee codes DM or MM) ≥5,000,000. Together, the proposed addition of Retail Volume Tier 3, proposed addition of Add Volume Tier 7, proposed amendment to the Market Quality Tier, proposed addition of Non-Displayed Add Volume Tier 4, and proposed amendment to Remove Volume Tier 3 are each intended to provide Members an alternative opportunity to earn an enhanced rebate or a reduced fee by increasing their order flow to the Exchange, which further contributes to a deeper, more liquid market and provides even more execution opportunities for active market participants. Incentivizing an increase in liquidity adding or removing volume, through enhanced rebate or reduced fee opportunities, encourages liquidity adding Members on the Exchange to contribute to a deeper, more liquid market, and liquidity executing Members on the Exchange to increase transactions and take execution opportunities provided by such increased liquidity, together providing for overall enhanced price discovery and price improvement opportunities on the Exchange. As such, increased overall order flow benefits all Members by contributing towards a robust and well-balanced market ecosystem. The Exchange also proposes to make minor grammatical changes to the introductory text associated with the Retail Volume Tiers. These changes are non-substantive in nature. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.26 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 27 requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and 26 15 27 15 E:\FR\FM\15DEN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(5). 15DEN1 Federal Register / Vol. 88, No. 240 / Friday, December 15, 2023 / Notices 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) 28 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers as well as Section 6(b)(4) 29 as 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. 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 Exchange believes that its proposal to: (1) introduce new Add Volume Tier 7; (2) modify the Market Quality Tier; (3) introduce new Non-Displayed Add Volume Tier 4; (4) modify Remove Volume Tier 3; and (5) introduce new Retail Volume Tier 3 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. Specifically, the Exchange’s proposal to introduce slightly more difficult criteria to its Market Quality Tier and Remove Volume Tier is not a significant departure from existing criteria, is reasonably correlated to the enhanced rebate or reduced fee offered by the Exchange and other competing exchanges,30 and will continue to incentivize Members to submit order flow to the Exchange. Additionally, the Exchange notes that relative volumebased incentives and discounts have been widely adopted by exchanges,31 ddrumheller on DSK120RN23PROD with NOTICES1 28 Id. 29 15 U.S.C. 78f(b)(4). MIAX Pearl Equities Exchange Fee Schedule, Remove Volume Tier, available at https:// www.miaxglobal.com/sites/default/files/fee_ schedule-files/MIAX_Pearl_Equities_Fee_Schedule_ 12012023.pdf See also MEMX Equities Fee Schedule, Liquidity Removal Tier, available at https://info.memxtrading.com/equities-tradingresources/us-equities-fee-schedule/. 31 See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove Volume Tiers. 30 See VerDate Sep<11>2014 17:57 Dec 14, 2023 Jkt 262001 including the Exchange,32 and are reasonable, equitable and nondiscriminatory because they are open to all Members on an equal basis and provide additional benefits or discounts that are reasonably related to (i) the value to an exchange’s market quality and (ii) associated higher levels of market activity, such as higher levels of liquidity provision and/or growth patterns. Competing equity exchanges offer similar tiered pricing structures, including schedules of rebates and fees that apply based upon 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. Further, the Exchange believes that its proposal to incentivize Hidden, Primary Peg ADV 33 and Hidden Midpoint ADV 34 will encourage Members to submit additional non-displayed orders to the Exchange using pegged order types. The Exchange believes that non-displayed, Primary Peg 35 orders will reduce the number of cancel/replace messages submitted by Members to the Exchange and non-displayed MidPoint Peg 36 orders will encourage greater liquidity with the potential for price improvement on the Exchange. In particular, the Exchange believes its proposal to: (1) introduce new Add Volume Tier 7; (2) modify the Market Quality Tier; (3) introduce new NonDisplayed Add Volume Tier 4; (4) modify Remove Volume Tier 3; and (5) introduce new Retail Volume Tier 3 is reasonable because the revised tiers will be available to all Members and provide all Members with an additional opportunity to receive an enhanced rebate or a reduced fee. The Exchange further believes the proposed modifications to its Add Volume Tier, Non-Displayed Add Volume Tier, and Retail Volume Tier will provide a reasonable means to encourage liquidity adding displayed orders and liquidity adding non-displayed orders, respectively, in Members’ order flow to the Exchange and to incentivize Members to continue to provide liquidity adding volume to the 32 See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/Remove Volume Tiers. 33 Supra note 15. 34 Supra notes 16–17. 35 See EDGX Equities Rule 11.6(j)(2). A ‘‘Primary Peg’’ order is an order with instructions to peg to the NBB, for a buy order, or the NBO, for a sell order. 36 See EDGX Equities Rule 11.8(d). A MidPoint Peg Order is a non-displayed Market Order or Limit Order with an instruction to execute at the midpoint of the NBBO, or, alternatively, pegged to the less aggressive of the midpoint of the NBBO or one minimum price variation inside the same side of the NBBO as the order. PO 00000 Frm 00143 Fmt 4703 Sfmt 4703 87015 Exchange by offering them an additional opportunity to receive an enhanced rebate or reduced fee on qualifying orders. Further, the Exchange wishes to encourage the use of the Primary Peg and MidPoint Peg order types by introducing criteria specific to Hidden, Primary Peg ADV and Hidden Midpoint ADV. While the proposed criteria in the Market Quality Tier and Remove Volume Tier 3 are slightly more difficult than the current criteria found in those tiers, the proposed criteria is not a significant departure from existing criteria, is reasonably correlated to the enhanced rebate or reduced fee offered by the Exchange, and will continue to incentivize Members to submit order flow to the Exchange. An overall increase in activity would deepen the Exchange’s liquidity pool, offers additional cost savings, support the quality of price discovery, promote market transparency and improve market quality, for all investors. The Exchange believes that the proposed changes to its Add/Remove Volume Tiers, Market Quality Tier, Non-Displayed Add Volume Tier, and Retail Volume Tier are reasonable as they do not represent a significant departure from the criteria currently offered in the Fee Schedule. The Exchange also believes that the proposal represents an equitable allocation of fees and rebates and is not unfairly discriminatory because all Members will be eligible for the proposed new tiers and have the opportunity to meet the tiers’ criteria and receive the corresponding enhanced rebate 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 rule change would definitely result in any Members qualifying the new proposed tiers. While the Exchange has no way of predicting with certainty how the proposed changes will impact Member activity, based on the prior months volume, the Exchange anticipates that at least one Member will be able to satisfy proposed Add Volume Tier 7, at least two Members will be able to satisfy the proposed Market Quality Tier, at least one Member will be able to satisfy proposed Non-Displayed Add Volume Tier 4, at least one Member will be able to satisfy proposed Remove Volume Tier 3, and at least 1 Member will be able to satisfy proposed Retail Volume Tier 3. The Exchange also notes that proposed changes will not adversely impact any Member’s ability to qualify for enhanced rebates offered under other tiers. Should a Member not meet the proposed new criteria, the E:\FR\FM\15DEN1.SGM 15DEN1 87016 Federal Register / Vol. 88, No. 240 / Friday, December 15, 2023 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 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. Rather, as discussed above, the Exchange believes that the proposed changes would encourage the submission of additional order flow to a public exchange, thereby promoting market depth, execution incentives and enhanced execution opportunities, as well as price discovery and transparency for all Members. As a result, the Exchange believes that the proposed changes further 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.’’ The Exchange believes the proposed rule changes do not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Particularly, the proposed changes to the Exchange’s Add/Remove Volume Tiers, Market Quality Tier, Non-Displayed Add Volume Tier, and Retail Volume Tier will apply to all Members equally in that all Members are eligible for each of the Tiers, have a reasonable opportunity to meet the Tiers’ criteria and will receive the enhanced rebate on their qualifying orders if such criteria is met. The Exchange does not believe the proposed changes burden competition, but rather, enhances competition as it is intended to increase the competitiveness of EDGX by amending an existing pricing incentive and adopting pricing incentives in order to attract order flow and incentivize participants to increase their participation on the Exchange, providing for additional execution opportunities for market participants and improved price transparency. Greater overall order flow, trading opportunities, and pricing transparency benefits all market participants on the Exchange by enhancing market quality and continuing to encourage Members to send orders, thereby contributing towards a robust and well-balanced market ecosystem. Next, the Exchange believes the proposed rule changes 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. VerDate Sep<11>2014 17:57 Dec 14, 2023 Jkt 262001 Members have numerous alternative venues that they may participate on and direct their order flow, including other equities exchanges, off-exchange venues, and alternative trading systems. Additionally, the Exchange represents a small percentage of the overall market. Based on publicly available information, no single equities exchange has more than 14% of the market share.37 Therefore, no exchange possesses significant pricing power in the execution of order flow. Indeed, participants can readily choose to send their orders to other exchange and offexchange venues 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.’’ 38 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’ . . . .’’.39 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. 37 Supra note 3. Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 39 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782– 83 (December 9, 2008) (SR–NYSEArca–2006–21)). 38 See PO 00000 Frm 00144 Fmt 4703 Sfmt 4703 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 40 and paragraph (f) of Rule 19b–4 41 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– CboeEDGX–2023–078 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–CboeEDGX–2023–078. 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 40 15 41 17 E:\FR\FM\15DEN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). 15DEN1 Federal Register / Vol. 88, No. 240 / Friday, December 15, 2023 / Notices 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–CboeEDGX–2023–078 and should be submitted on or before January 5, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.42 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–27528 Filed 12–14–23; 8:45 am] I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange’s GPS antenna fees at General 8, Section 1, as described further below. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/gemx/rules, at the principal office of the Exchange, 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 BILLING CODE 8011–01–P 1. Purpose 3 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–99129; File No. SR–GEMX– 2023–17] Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its GPS Antenna Fees at General 8, Section 1 ddrumheller on DSK120RN23PROD with NOTICES1 December 11, 2023. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 29, 2023, Nasdaq GEMX, LLC (‘‘GEMX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘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. 42 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 17:57 Dec 14, 2023 Jkt 262001 The Exchange offers a GPS antenna, which allows co-location customers 4 to synchronize their time recording systems to the U.S. Government’s Global Positioning System (‘‘GPS’’) network time (the ‘‘Service’’). The Exchange proposes to modify its monthly fees for the Service at General 8, Section 1(d). GPS network time is the atomic time scale implemented by the atomic clocks in the GPS ground control stations and GPS satellites. Each GPS satellite contains multiple atomic clocks that contribute precise time data to the GPS signals. GPS receivers decode these signals, synchronizing the receivers to the atomic clocks. A GPS antenna serves as a time signal receiver and feeds a primary clock device the GPS network time using precise time data. Firms can use the precise time data provided by 3 The Exchange initially filed the proposed pricing changes on September 29, 2023 with an effective date of October 1, 2023 (SR–GEMX–2023– 12). On November 15, 2023, the Exchange withdrew SR–GEMX–2023–12 and replaced with SR–GEMX– 2023–15. The instant filing replaces SR–GEMX– 2023–15, which was withdrawn on November 29, 2023. 4 The Exchange offers customers the opportunity to co-locate their servers and equipment within the Exchange’s primary data center, located in Carteret, New Jersey. PO 00000 Frm 00145 Fmt 4703 Sfmt 4703 87017 the GPS antenna to time-stamp transactional information. Time synchronization services are well established in the U.S. and utilized in many areas of the U.S. economy and infrastructure. The Service is not novel to the securities markets, or to the Exchange. The Exchange offers connectivity to a GPS antenna via two options, over shared infrastructure or a dedicated antenna. If a firm wishes to connect via a dedicated connection, it must supply the antenna hardware. The Exchange currently charges a monthly fee of $200 for the Service, which applies to both the shared infrastructure option and the dedicated antenna option. The Exchange proposes to increase the monthly fee to $600 for the Service, which would apply to both the shared infrastructure option and the dedicated antenna option. As such, the Exchange proposes to amend its fee schedule at General 8, Section 1(d) to reflect the increased monthly fee for the GPS antenna. The Exchange has not raised such price since the monthly fee of $200 was adopted.5 In addition, the Exchange charges a higher monthly fee of $350 for cross-connections to approved telecommunication carriers in the data center and for inter-cabinet connections to other co-location customers in the data center, despite the fact that the Service not only provides connectivity (like the crossconnections), but also provides data (i.e., the network time) to co-location customers. In addition, the Exchange’s fee schedule at General 8, Section 1(d) currently states that the installation fee for the GPS antenna is installation specific. The Exchange proposes to add specific installation amounts for the Service within the fee schedule, providing greater transparency to market participants. Specifically, the Exchange proposes to charge an installation fee of $900 for connectivity to a GPS antenna over shared infrastructure and $1,500 for connectivity to a GPS antenna over a dedicated antenna.6 The difference in installation costs reflects the differing levels of complexity. For the dedicated antenna option, installation involves installing an antenna on the roof whereas the shared option involves 5 See Securities Exchange Act Release No. 81902 (October 19, 2017), 82 FR 49453 (October 25, 2017) (SR–GEMX–2017–48). 6 NYSE provides a similar service for a $3,000 initial charge plus a $400 monthly charge. See https://www.nyse.com/publicdocs/Wireless_ Connectivity_Fees_and_Charges.pdf. E:\FR\FM\15DEN1.SGM 15DEN1

Agencies

[Federal Register Volume 88, Number 240 (Friday, December 15, 2023)]
[Notices]
[Pages 87012-87017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27528]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99132; File No. SR-CboeEDGX-2023-078]


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

December 11, 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 December 8, 2023, Cboe EDGX Exchange, Inc. (``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 87013]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') 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 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/edgx/), 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 applicable to its 
equities trading platform (``EDGX Equities'') as follows: (1) by 
introducing Add Volume Tier 7; (2) by modifying the Market Quality 
Tier; (3) by introducing a new Non-Displayed Add Volume Tier; (4) by 
modifying Remove Volume Tier 3; and (5) by introducing a new Retail 
Volume Tier. The Exchange proposes to implement these changes effective 
December 1, 2023.\3\
---------------------------------------------------------------------------

    \3\ The Exchange initially filed the proposed fee change on 
December 1, 2023 (SR-CboeEDGX-2023-074). On December 8, 2023, the 
Exchange withdrew that filing and submitted SR-CboeEDGX-2023-077. On 
December 8, 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 16 registered equities exchanges, as well as a 
number of alternative trading systems and other off-exchange venues 
that do not have similar self-regulatory responsibilities under the 
Securities Exchange Act of 1934 (the ``Act''), to which market 
participants may direct their order flow. Based on publicly available 
information,\4\ no single registered equities exchange has more than 
14% of the market share. Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow. The Exchange in 
particular operates a ``Maker-Taker'' model whereby it pays rebates to 
members that add liquidity and assesses fees to those that remove 
liquidity. The Exchange's Fee Schedule sets forth the standard rebates 
and rates applied per share for orders that provide and remove 
liquidity, respectively. Currently, for orders in securities priced at 
or above $1.00, the Exchange provides a standard rebate of $0.00160 per 
share for orders that add liquidity and assesses a fee of $0.0030 per 
share for orders that remove liquidity.\5\ For orders in securities 
priced below $1.00, the Exchange provides a standard rebate of $0.00009 
per share for orders that add liquidity and assesses a fee of 0.30% of 
the total dollar value for orders that remove liquidity.\6\ 
Additionally, in response to the competitive environment, the Exchange 
also offers tiered pricing which provides Members 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.
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    \4\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (November 28, 2023), available at https://www.cboe.com/us/equities/market_statistics/.
    \5\ See EDGX Equities Fee Schedule, Standard Rates.
    \6\ Id.
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Add Volume & Market Quality Tiers
    Under footnote 1 of the Fee Schedule, the Exchange currently offers 
various Add/Remove Volume Tiers. In particular, the Exchange offers six 
Add Volume Tiers that each provide an enhanced rebate for Members' 
qualifying orders yielding fee codes B,\7\ V,\8\ Y,\9\ 3,\10\ and 
4,\11\ where a Member reaches certain add volume-based criteria.\12\ 
First, the Exchange is proposing to introduce a new Add Volume Tier 7 
to provide Members an additional manner in which they could receive an 
enhanced rebate if certain criteria is met. The proposed criteria for 
proposed Add Volume Tier 7 is as follows:
---------------------------------------------------------------------------

    \7\ Fee code B is appended to orders adding liquidity to EDGX in 
Tape B securities.
    \8\ Fee code V is appended to orders adding liquidity to EDGX in 
Tape A securities.
    \9\ Fee code Y is appended to orders adding liquidity to EDGX in 
Tape C securities.
    \10\ Fee code 3 is appended to orders adding liquidity to EDGX 
in the pre and post market in Tapes A or C securities.
    \11\ Fee code 4 is appended to orders adding liquidity to EDGX 
in the pre and post market in Tape B securities.
    \12\ The Exchange notes that unless otherwise noted on the fee 
schedule, enhanced rebates or reduced fees offered under footnote 1 
are only available to securities priced at or above $1.00.
---------------------------------------------------------------------------

     Add Volume Tier 7 provides a rebate of $0.0034 per share 
for securities priced at or above $1.00 to qualifying orders (i.e., 
orders yielding fee B, V, Y, 3, or 4) where: (1) Member has a total 
remove ADV \13\ >=0.40% of the TCV \14\ or Member has a total remove 
ADV >=40,000,000; and (2) Member has a Hidden, Primary Peg ADV \15\ 
>=1,000,000; and (3) Member has a Hidden Midpoint ADV (i.e., yielding 
fee codes DM \16\ or MM \17\) >=5,000,000.
---------------------------------------------------------------------------

    \13\ ``ADV'' means average daily volume calculated as the number 
of shares added to, removed from, or routed by, the Exchange, or any 
combination or subset thereof, per day. ADV is calculated on a 
monthly basis.
    \14\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply.
    \15\ The Exchange notes that it also proposes to add a 
definition for Hidden, Primary Peg ADV to the Definitions section of 
the fee schedule, ``Hidden, Primary Peg ADV'' means ADV in non-
displayed orders that include a Primary Peg instruction as defined 
in EDGX Equities Rule 11.6(j)(2).
    \16\ Fee code DM is appended to orders adding liquidity to EDGX 
using MidPoint Discretionary order within discretionary range.
    \17\ Fee code MM is appended to non-displayed orders adding 
liquidity to EDGX using Mid-Point Peg.
---------------------------------------------------------------------------

    Second, the Exchange proposes to modify the criteria of the 
existing Market Quality Tier. Currently, the criteria for the Market 
Quality Tier is as follows:
     The Market Quality Tier provides a rebate of $0.0028 per 
share for securities priced at or above $1.00 to qualifying orders 
(i.e., orders yielding fee B, V, Y, 3, or 4) where: (1) Member adds an 
ADV >=0.25% of the TCV; and (2) Member adds an ADV >=0.10% of the TCV 
as

[[Page 87014]]

Non-Displayed orders that yield fee codes DM, HA,\18\ HI,\19\ MM or 
RP.\20\
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    \18\ Fee code HA is appended to non-displayed orders adding 
liquidity to EDGX.
    \19\ Fee code HI is appended to non-displayed orders adding 
liquidity to EDGX that receive price improvement.
    \20\ Fee code RP is appended to non-displayed orders adding 
liquidity to EDGX using Supplemental Peg.
---------------------------------------------------------------------------

    Now, the Exchange proposes to amend the second prong of criteria in 
the Market Quality Tier. The proposed criteria is as follows:
     The Market Quality Tier provides a rebate of $0.0028 per 
share for securities priced at or above $1.00 to qualifying orders 
(i.e., orders yielding fee B, V, Y, 3, or 4) where: (1) Member adds an 
ADV >=0.25% of the TCV; and (2) Members adds an ADV >=0.12% of the TCV 
as Non-Displayed orders that yield fee codes DM, HA, HI, MM or RP.
Non-Displayed Add Volume Tiers
    In addition to the Add/Remove Volume Tiers offered under footnote 
1, the Exchange also offers three Non-Displayed Add Volume Tiers that 
each provide an enhanced rebate for Members' qualifying orders yielding 
fee codes DM, HA, MM, and RP, where a Member reaches certain volume-
based criteria offered in each tier. The Exchange now proposes to 
introduce Non-Displayed Add Volume Tier 4. The proposed criteria for 
Non-Displayed Add Volume Tier 4 is as follows:
     Non-Displayed Add Volume Tier 4 provides a rebate of 
$0.0025 per share for securities priced at or above $1.00 to qualifying 
orders (i.e., orders yielding fee DM, HA, MM, or RP) where: (1) Member 
has a total remove ADV >=0.40% of the TCV or Member has a total remove 
ADV >=40,000,000; and (2) Member has a Hidden, Primary Peg ADV 
>=1,000,000; and (3) Member has a Hidden Midpoint ADV (i.e., yielding 
fee codes DM or MM) >=5,000,000.
    The Exchange also proposes to make minor grammatical changes to the 
introductory text associated with the Non-Displayed Add Volume Tiers. 
These changes are non-substantive in nature.
Remove Volume Tiers
    In addition to the Add/Remove Volume Tiers and Non-Displayed Add 
Volume Tiers offered under footnote 1, the Exchange also offers three 
Remove Volume Tiers that each assess a reduced fee for Members' 
qualifying orders yielding fee codes BB,\21\ N,\22\ and W \23\ where a 
Member reaches certain add volume-based criteria. The Exchange now 
proposes to amend Remove Volume Tier 3. Currently, the criteria for 
Remove Volume Tier 3 is as follows:
---------------------------------------------------------------------------

    \21\ Fee code BB is appended to orders that remove liquidity 
from EDGX in Tape B securities.
    \22\ Fee code N is appended to orders that remove liquidity from 
EDGX in Tape C securities.
    \23\ Fee code W is appended to orders that remove liquidity from 
EDGX in Tape A securities.
---------------------------------------------------------------------------

     Remove Volume Tier 3 provides a reduced fee of $0.00275 
per share for securities priced at or above $1.00 to qualifying orders 
(i.e., orders yielding fee codes BB, N, or W) and a reduced fee of 
0.28% of total dollar value for securities priced below $1.00 where: 
(1) Member has an ADAV >=0.30% of the TCV; and (2) Member has a total 
remove ADV >=0.40% of the TCV; and (3) Member adds Retail Pre Market 
Order ADV (i.e., yielding fee code ZO) >=3,000,000.
    Now, the Exchange proposes to amend the second prong of criteria in 
Remove Volume Tier 3. The proposed criteria is as follows:
     Proposed Remove Volume Tier 3 provides a reduced fee of 
$0.00275 per share for securities priced at or above $1.00 to 
qualifying orders (i.e., orders yielding fee codes BB, N, or W) and a 
reduced fee of 0.28% of total dollar value for securities priced below 
$1.00 where: (1) Member has an ADAV >=0.30% of the TCV; and (2) Member 
has a total remove ADV >=0.40% of the TCV or Member has a total remove 
ADV >=40,000,000; and (3) Member adds Retail Pre Market Order ADV 
(i.e., yielding fee code ZO) >=3,000,000.
Retail Volume Tiers
    Pursuant to footnote 2 of the Fee Schedule, the Exchange offers 
Retail Volume Tiers which provide Retail Member Organizations 
(``RMOs'') \24\ an opportunity to receive an enhanced rebate from the 
standard rebate for Retail Orders \25\ that add liquidity (i.e., 
yielding fee code ZA or ZO). Currently, the Retail Volume Tiers offer 
two Retail Volume Tiers where a Member is eligible for an enhanced 
rebate for qualifying orders (i.e., yielding fee code ZA or ZO) meeting 
certain add volume-based criteria. The Exchange now proposes to 
introduce Retail Volume Tier 3. The proposed criteria for Retail Volume 
Tier 3 is as follows:
---------------------------------------------------------------------------

    \24\ See EDGX Rule 11.21(a)(1). A ``Retail Member Organization'' 
or ``RMO'' is a Member (or a division thereof) that has been 
approved by the Exchange under this Rule to submit Retail Orders.
    \25\ See EDGX Rule 11.21(a)(2). A ``Retail Order'' is an agency 
or riskless principal order that meets the criteria of FINRA Rule 
5320.03 that originates from a natural person and is submitted to 
the Exchange by a Retail Member Organization, provided that no 
change is made to the terms of the order with respect to price or 
side of market and the order does not originate from a trading 
algorithm or any other computerized methodology.
---------------------------------------------------------------------------

     Proposed Retail Volume Tier 3 provides an enhanced rebate 
of $0.0037 per share for securities priced above $1.00 to qualifying 
orders (i.e., orders yielding fee ZA or ZO) where: (1) Member has a 
total remove ADV >=0.40% of the TCV or Member has a total remove ADV 
>=40,000,000; and (2) Member has a Hidden, Primary Peg ADV >=1,000,000; 
and (3) Member has a Hidden Midpoint ADV (i.e., yielding fee codes DM 
or MM) >=5,000,000.
    Together, the proposed addition of Retail Volume Tier 3, proposed 
addition of Add Volume Tier 7, proposed amendment to the Market Quality 
Tier, proposed addition of Non-Displayed Add Volume Tier 4, and 
proposed amendment to Remove Volume Tier 3 are each intended to provide 
Members an alternative opportunity to earn an enhanced rebate or a 
reduced fee by increasing their order flow to the Exchange, which 
further contributes to a deeper, more liquid market and provides even 
more execution opportunities for active market participants. 
Incentivizing an increase in liquidity adding or removing volume, 
through enhanced rebate or reduced fee opportunities, encourages 
liquidity adding Members on the Exchange to contribute to a deeper, 
more liquid market, and liquidity executing Members on the Exchange to 
increase transactions and take execution opportunities provided by such 
increased liquidity, together providing for overall enhanced price 
discovery and price improvement opportunities on the Exchange. As such, 
increased overall order flow benefits all Members by contributing 
towards a robust and well-balanced market ecosystem.
    The Exchange also proposes to make minor grammatical changes to the 
introductory text associated with the Retail Volume Tiers. These 
changes are non-substantive in nature.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\26\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \27\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and

[[Page 87015]]

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) \28\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \29\ 
as 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.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f(b).
    \27\ 15 U.S.C. 78f(b)(5).
    \28\ Id.
    \29\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    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 Exchange believes that 
its proposal to: (1) introduce new Add Volume Tier 7; (2) modify the 
Market Quality Tier; (3) introduce new Non-Displayed Add Volume Tier 4; 
(4) modify Remove Volume Tier 3; and (5) introduce new Retail Volume 
Tier 3 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. Specifically, the Exchange's proposal to introduce 
slightly more difficult criteria to its Market Quality Tier and Remove 
Volume Tier is not a significant departure from existing criteria, is 
reasonably correlated to the enhanced rebate or reduced fee offered by 
the Exchange and other competing exchanges,\30\ and will continue to 
incentivize Members to submit order flow to the Exchange. Additionally, 
the Exchange notes that relative volume-based incentives and discounts 
have been widely adopted by exchanges,\31\ including the Exchange,\32\ 
and are reasonable, equitable and non-discriminatory because they are 
open to all Members on an equal basis and provide additional benefits 
or discounts that are reasonably related to (i) the value to an 
exchange's market quality and (ii) associated higher levels of market 
activity, such as higher levels of liquidity provision and/or growth 
patterns. Competing equity exchanges offer similar tiered pricing 
structures, including schedules of rebates and fees that apply based 
upon 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. Further, the Exchange believes that its proposal to 
incentivize Hidden, Primary Peg ADV \33\ and Hidden Midpoint ADV \34\ 
will encourage Members to submit additional non-displayed orders to the 
Exchange using pegged order types. The Exchange believes that non-
displayed, Primary Peg \35\ orders will reduce the number of cancel/
replace messages submitted by Members to the Exchange and non-displayed 
MidPoint Peg \36\ orders will encourage greater liquidity with the 
potential for price improvement on the Exchange.
---------------------------------------------------------------------------

    \30\ See MIAX Pearl Equities Exchange Fee Schedule, Remove 
Volume Tier, available at https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Pearl_Equities_Fee_Schedule_12012023.pdf See also MEMX Equities 
Fee Schedule, Liquidity Removal Tier, available at https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/.
    \31\ See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove 
Volume Tiers.
    \32\ See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
    \33\ Supra note 15.
    \34\ Supra notes 16-17.
    \35\ See EDGX Equities Rule 11.6(j)(2). A ``Primary Peg'' order 
is an order with instructions to peg to the NBB, for a buy order, or 
the NBO, for a sell order.
    \36\ See EDGX Equities Rule 11.8(d). A MidPoint Peg Order is a 
non-displayed Market Order or Limit Order with an instruction to 
execute at the midpoint of the NBBO, or, alternatively, pegged to 
the less aggressive of the midpoint of the NBBO or one minimum price 
variation inside the same side of the NBBO as the order.
---------------------------------------------------------------------------

    In particular, the Exchange believes its proposal to: (1) introduce 
new Add Volume Tier 7; (2) modify the Market Quality Tier; (3) 
introduce new Non-Displayed Add Volume Tier 4; (4) modify Remove Volume 
Tier 3; and (5) introduce new Retail Volume Tier 3 is reasonable 
because the revised tiers will be available to all Members and provide 
all Members with an additional opportunity to receive an enhanced 
rebate or a reduced fee. The Exchange further believes the proposed 
modifications to its Add Volume Tier, Non-Displayed Add Volume Tier, 
and Retail Volume Tier will provide a reasonable means to encourage 
liquidity adding displayed orders and liquidity adding non-displayed 
orders, respectively, in Members' order flow to the Exchange and to 
incentivize Members to continue to provide liquidity adding volume to 
the Exchange by offering them an additional opportunity to receive an 
enhanced rebate or reduced fee on qualifying orders. Further, the 
Exchange wishes to encourage the use of the Primary Peg and MidPoint 
Peg order types by introducing criteria specific to Hidden, Primary Peg 
ADV and Hidden Midpoint ADV. While the proposed criteria in the Market 
Quality Tier and Remove Volume Tier 3 are slightly more difficult than 
the current criteria found in those tiers, the proposed criteria is not 
a significant departure from existing criteria, is reasonably 
correlated to the enhanced rebate or reduced fee offered by the 
Exchange, and will continue to incentivize Members to submit order flow 
to the Exchange. An overall increase in activity would deepen the 
Exchange's liquidity pool, offers additional cost savings, support the 
quality of price discovery, promote market transparency and improve 
market quality, for all investors.
    The Exchange believes that the proposed changes to its Add/Remove 
Volume Tiers, Market Quality Tier, Non-Displayed Add Volume Tier, and 
Retail Volume Tier are reasonable as they do not represent a 
significant departure from the criteria currently offered in the Fee 
Schedule. The Exchange also believes that the proposal represents an 
equitable allocation of fees and rebates and is not unfairly 
discriminatory because all Members will be eligible for the proposed 
new tiers and have the opportunity to meet the tiers' criteria and 
receive the corresponding enhanced rebate 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 rule 
change would definitely result in any Members qualifying the new 
proposed tiers. While the Exchange has no way of predicting with 
certainty how the proposed changes will impact Member activity, based 
on the prior months volume, the Exchange anticipates that at least one 
Member will be able to satisfy proposed Add Volume Tier 7, at least two 
Members will be able to satisfy the proposed Market Quality Tier, at 
least one Member will be able to satisfy proposed Non-Displayed Add 
Volume Tier 4, at least one Member will be able to satisfy proposed 
Remove Volume Tier 3, and at least 1 Member will be able to satisfy 
proposed Retail Volume Tier 3. The Exchange also notes that proposed 
changes will not adversely impact any Member's ability to qualify for 
enhanced rebates offered under other tiers. Should a Member not meet 
the proposed new criteria, the

[[Page 87016]]

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. Rather, as discussed above, 
the Exchange believes that the proposed changes would encourage the 
submission of additional order flow to a public exchange, thereby 
promoting market depth, execution incentives and enhanced execution 
opportunities, as well as price discovery and transparency for all 
Members. As a result, the Exchange believes that the proposed changes 
further 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.''
    The Exchange believes the proposed rule changes do not impose any 
burden on intramarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Particularly, the proposed 
changes to the Exchange's Add/Remove Volume Tiers, Market Quality Tier, 
Non-Displayed Add Volume Tier, and Retail Volume Tier will apply to all 
Members equally in that all Members are eligible for each of the Tiers, 
have a reasonable opportunity to meet the Tiers' criteria and will 
receive the enhanced rebate on their qualifying orders if such criteria 
is met. The Exchange does not believe the proposed changes burden 
competition, but rather, enhances competition as it is intended to 
increase the competitiveness of EDGX by amending an existing pricing 
incentive and adopting pricing incentives in order to attract order 
flow and incentivize participants to increase their participation on 
the Exchange, providing for additional execution opportunities for 
market participants and improved price transparency. Greater overall 
order flow, trading opportunities, and pricing transparency benefits 
all market participants on the Exchange by enhancing market quality and 
continuing to encourage Members to send orders, thereby contributing 
towards a robust and well-balanced market ecosystem.
    Next, the Exchange believes the proposed rule changes 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 that they may participate on 
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the 
Exchange represents a small percentage of the overall market. Based on 
publicly available information, no single equities exchange has more 
than 14% of the market share.\37\ Therefore, no exchange possesses 
significant pricing power in the execution of order flow. Indeed, 
participants can readily choose to send their orders to other exchange 
and off-exchange venues 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.'' \38\ 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' . . . .''.\39\ 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.
---------------------------------------------------------------------------

    \37\ Supra note 3.
    \38\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \39\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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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 \40\ and paragraph (f) of Rule 19b-4 \41\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \40\ 15 U.S.C. 78s(b)(3)(A).
    \41\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

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-CboeEDGX-2023-078 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-CboeEDGX-2023-078. 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

[[Page 87017]]

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-CboeEDGX-2023-078 and should be 
submitted on or before January 5, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\42\
---------------------------------------------------------------------------

    \42\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27528 Filed 12-14-23; 8:45 am]
BILLING CODE 8011-01-P
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