Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule by Modifying Certain Tiers and Discontinuing the NBBO Setter Program, 88997-89001 [2023-28328]
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Federal Register / Vol. 88, No. 246 / Tuesday, December 26, 2023 / Notices
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–NYSE–2023–50 and should be
submitted on or before January 16, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–28327 Filed 12–22–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99204; File No. SR–FINRA–
2023–015]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Designation
of Longer Period for Commission
Action on Proposed Rule Change
Relating to Dissemination of
Information on Individual Transactions
in U.S. Treasury Securities and Related
Fees
khammond on DSKJM1Z7X2PROD with NOTICES
December 19, 2023.
30 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
20:25 Dec 22, 2023
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.5
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–28325 Filed 12–22–23; 8:45 am]
On November 2, 2023, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to (1) amend
FINRA Rules 6710 and 6750 to provide
that FINRA will disseminate
information on individual transactions
in U.S. Treasury Securities that are On-
VerDate Sep<11>2014
the-Run Nominal Coupons reported to
FINRA’s Trade Reporting and
Compliance Engine (‘‘TRACE’’) on an
end-of-day basis with specified
dissemination caps for large trades, and
(2) amend FINRA Rule 7730 to include
U.S. Treasury Securities within the
existing fee structure for end-of-day and
historic TRACE data. The proposed rule
change was published for comment in
the Federal Register on November 9,
2023.3 Section 19(b)(2) of the Act 4
provides that, within 45 days of the
publication of notice of the filing of a
proposed rule change, or within such
longer period up to 90 days as the
Commission may designate if it finds
such longer period to be appropriate
and publishes its reasons for so finding
or as to which the self-regulatory
organization consents, the Commission
shall either approve the proposed rule
change, disapprove the proposed rule
change, or institute proceedings to
determine whether the proposed rule
change should be disapproved. The 45th
day after publication of the notice for
this proposed rule change is December
24, 2023. The Commission is extending
this 45-day time period for Commission
action. The Commission finds that it is
appropriate to designate a longer period
within which to take action on the
proposed rule change so that it has
sufficient time to consider the proposed
rule change and the comments received.
Accordingly, pursuant to Section
19(b)(2) of the Act, the Commission
designates February 7, 2024, as the date
by which the Commission shall approve
or disapprove, or institute proceedings
to determine whether to disapprove, the
proposed rule change (File No. SR–
FINRA–2023–015).
Jkt 262001
BILLING CODE 8011–01–P
3 See Securities Exchange Act Release No. 98859
(November 3, 2023), 88 FR 77388. Comments
received on the proposed rule change are available
at: https://www.sec.gov/comments/sr-finra-2023015/srfinra2023015.htm.
4 15 U.S.C. 78s(b)(2).
5 17 CFR 200.30–3(a)(31).
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88997
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99207; File No. SR–
CboeBZX–2023–106]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule by Modifying Certain
Tiers and Discontinuing the NBBO
Setter Program
December 19, 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 December
12, 2023, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, 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/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 88, No. 246 / Tuesday, December 26, 2023 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
khammond on DSKJM1Z7X2PROD with NOTICES
1. Purpose
The Exchange proposes to amend its
Fee Schedule applicable to its equities
trading platform (‘‘BZX Equities’’) by (1)
modifying certain Add/Remove Volume
Tiers; (2) modifying the Lead Market
Maker (‘‘LMM’’) Pricing Tiers; and (3)
discontinuing the NBBO Setter Program.
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
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
3 The Exchange initially filed the proposed fee
change on December 1, 2023 (SR–CboeBZX–2023–
098). On December 12, 2023, the Exchange
withdrew that filing and submitted this proposal.
4 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (November 27,
2023), available at https://www.cboe.com/us/
equities/_statistics/.
5 See BZX Equities Fee Schedule, Standard Rates.
6 Id.
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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/Remove Volume Tiers
Under footnote 1 of the Fee Schedule,
the Exchange currently offers various
Add/Remove Volume Tiers that provide
enhanced rebates for orders yielding fee
codes B,7 V 8 and Y 9 where a Member
reaches certain add volume-based
criteria. The Exchange also offers
various Add/Remove Volume Tiers that
provide enhanced rebates for orders
yielding fee codes HB,10 HV 11 or HY 12
where a Member reaches certain nondisplayed add volume-based criteria.
The Exchange first proposes to modify
the enhanced rebate associated with
Non-Displayed Add Volume Tier 4.
Currently, Members who satisfy the
criteria of Non-Displayed Add Volume
Tier 4 receive an enhanced rebate of
$0.00275 per share for securities priced
at or above $1.00. As proposed,
Members who satisfy the criteria of
Non-Displayed Add Volume Tier 4 will
receive an enhanced rebate of $0.0027
per share for securities priced at or
above $1.00. The purpose of reducing
the enhanced rebate associated with
Non-Displayed Add Volume Tier 4 is for
business and competitive reasons, as the
Exchange believes that reducing such
rebate as proposed would decrease the
Exchange’s expenditures with respect to
transaction pricing in a manner that is
still consistent with the Exchange’s
overall pricing philosophy of
encouraging added liquidity. The
Exchange notes that despite the modest
decrease in the enhanced rebate
associated with Non-Displayed Add
Volume Tier 4, the enhanced rebate
remains competitive and continues to be
in-line with the enhanced rebates
7 Fee code B is appended to orders that add
liquidity to BZX in Tape B securities.
8 Fee code V is appended to orders that add
liquidity to BZX in Tape A securities.
9 Fee code Y is appended to orders that add
liquidity to BZX in Tape C securities.
10 Fee code HB is appended to orders that add
non-displayed liquidity to BZX in Tape B
securities.
11 Fee code HV is appended to orders that add
non-displayed liquidity to BZX in Tape A
securities.
12 Fee code HY is appended to orders that add
non-displayed liquidity to BZX in Tape C
securities.
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provided under Non-Displayed Add
Volume Tiers 1–3.13
Next, the Exchange proposes to
discontinue Non-Displayed Add
Volume Tier 5, as no Members have
satisfied the criteria within the past six
months and the Exchange no longer
wishes to, nor is required to, maintain
such tier. More specifically, the
proposed change removes this tier as the
Exchange would rather redirect future
resources and funding into other
programs and tiers intended to
incentivize increased order flow.
Lead Market Maker Pricing Tiers
Under footnote 14 of the Fee
Schedule, the Exchange offers a
comprehensive liquidity provision
program to incentivize Lead Market
Makers (‘‘LMMs’’) to provide enhanced
market quality across all BZX-listed
securities. Under the Exchange’s LMM
Program,14 the Exchange offers daily
incentives for LMMs in securities listed
on the Exchange for which the LMM
meets certain Minimum Performance
Standards.15 Such daily incentives are
determined based on the number of
Cboe-listed securities for which the
LMM meets the Minimum Performance
Standards and the average auction
volume across such securities.
Generally, the more LMM Securities 16
for which the LMM meets the Minimum
Performance Standards and the higher
the auction volume across those
securities, the greater the total daily
payment to the LMM. Currently,
pursuant to paragraph (D) of footnote 14
the Exchange offers LMM Add Volume
Tiers, which provide an enhanced
rebate to LMMs who reach certain add13 The Exchange notes that Non-Displayed Add
Volume Tier 1 pays an enhanced rebate of $0.0018
per share for securities priced at or above $1.00,
Non-Displayed Add Volume Tier 2 pays an
enhanced rebate of $0.0020 per share for securities
priced at or above $1.00, and Non-Displayed Add
Volume Tier 3 pays an enhanced rebate of $0.0025
for securities priced at or above $1.00. See BZX
Equities Fee Schedule, Footnote 1.
14 See Securities Exchange Act Release No. 72020
(April 25, 2014), 79 FR 24807 (May 1, 2014), SR–
BATS–2014–015 (‘‘Original LMM Filing’’).
15 As defined in Rule 11.8(e)(1)(E), the term
‘‘Minimum Performance Standards’’ means a set of
standards applicable to an LMM that may be
determined from time to time by the Exchange.
Such standards will vary between LMM Securities
depending on the price, liquidity, and volatility of
the LMM Security in which the LMM is registered.
The performance measurements will include (A)
Percent of time at the NBBO; (B) percent of
executions better than the NBBO; (C) average
displayed size; and (D) average quoted spread. For
additional detail, see Original LMM Filing.
16 See Rule 11.8(e)(1)(D). The term ‘‘LMM
Security’’ means a Listed Security that has an LMM.
See also Rule 11.8(e)(1)(B). The term ‘‘Listed
Security’’ means any ETP or any Primary Equity
Security or Closed-End Fund listed on the Exchange
pursuant to Rule 14.8 or 14.9.
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Federal Register / Vol. 88, No. 246 / Tuesday, December 26, 2023 / Notices
volume based criteria. Now, the
Exchange proposes to update the
applicable fee codes for LMM Add
Volume Tiers 2, 3, and 4 to remove fee
codes ZV,17 ZB,18 and ZY.19
Specifically, the Exchange proposes to:
(i) amend LMM Add Volume Tier 2 to
apply to orders yielding fee codes V and
HV (removing fee code ZV); (ii) amend
LMM Add Volume Tier 3 to apply to
orders yielding fee codes B and HB
(removing fee code ZB); and (iii) amend
LMM Add Volume Tier 4 to apply to
orders yielding fee codes Y and HY
(removing fee code ZY). The purpose of
eliminating certain fee codes from LMM
Add Volume Tiers 2–4 is for business
and competitive reasons, as the
Exchange believes that eliminating such
fee codes as proposed would decrease
the Exchange’s expenditures with
respect to transaction pricing in a
manner that is still consistent with the
Exchange’s overall pricing philosophy
of encouraging added liquidity. The
Exchange notes that despite eliminating
fee codes associated with retail orders
from LMM Add Volume Tiers 2–4,
LMM Add Volume Tiers 2–4 will
continue to provide enhanced rebates
for liquidity-adding orders in displayed
and non-displayed orders, which does
not represent a significant departure
from the enhanced rebate offered under
LMM Add Volume Tier 1.
khammond on DSKJM1Z7X2PROD with NOTICES
NBBO Setter Program
Under footnote 20 of the Fee Schedule
the Exchange offers its NBBO Setter
Program, which offers an enhanced
rebate to Members which reach certain
add volume criteria in NBBO Setter
Securities.20 The Exchange now
proposes to discontinue the NBBO
Setter Program as the Exchange no
longer wishes to, nor is required to,
maintain such tier. More specifically,
the proposed change removes this tier as
the Exchange would rather redirect
future resources and funding into other
programs and tiers intended to
incentivize increased order flow. In
addition, the Exchange proposes to
eliminate the terms Setter NBBO,21
NBBO Setter Securities, Baseline Setter
17 Fee code ZV is appended to Retail Orders that
add liquidity to BZX in Tape A securities.
18 Fee code ZB is appended to Retail Orders that
add liquidity to BZX in Tape B securities.
19 Fee code ZY is appended to Retail Orders that
add liquidity to BZX in Tape C securities.
20 NBBO Setter Securities means a list of
securities included in the NBBO Setter Program, the
universe of which will be determined by the
Exchange and published in a Notice distributed to
Members and on the Exchange’s website.
21 Setter NBBO means a quotation of at least 100
shares that is better than the NBBO or a quotation
of a notional size of at least $10,000.00 that is better
than the NBBO.
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20:25 Dec 22, 2023
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ADAV,22 and Current Setter ADAV 23
from the Definitions section of the Fee
Schedule as these terms apply only to
the NBBO Setter Program.
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.24 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 25 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) 26 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) 27 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
lower the enhanced rebate paid to
Members that satisfy the criteria of NonDisplayed Add Volume Tier 4 is
reasonable, equitable, and consistent
with the Act because such change is
designed to decrease the Exchange’s
expenditures with respect to transaction
pricing in order to offset some of the
costs associated with the Exchange’s
22 Baseline Setter ADAV means ADAV calculated
as the number of displayed shares added per day
that establish a new NBBO in NBBO Setter
Securities. ADAV means average daily added
volume calculated as the number of shares added
per day, calculated on a monthly basis.
23 Current Setter ADAV means ADAV calculated
as the number of displayed shares added per day
that establish a new Setter NBBO in NBBO Setter
Securities.
24 15 U.S.C. 78f(b).
25 15 U.S.C. 78f(b)(5).
26 Id.
27 15 U.S.C. 78f(b)(4).
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88999
current pricing structure, which
provides various rebates for liquidityadding orders, and the Exchange’s
operations generally, in a manner that is
consistent with the Exchange’s overall
pricing philosophy of encouraging
added liquidity. The proposed lower
enhanced rebate ($0.0027 per share) is
reasonable and appropriate because it
represents only a modest decrease from
the current enhanced rebate ($0.00275
per share) and remains competitive with
the enhanced rebates offered under
Non-Displayed Add Volume Tiers 1–3.
The Exchange further believes that the
proposed decrease to the enhanced
rebate associated with Non-Displayed
Add Volume Tier 4 is not unfairly
discriminatory because it applies to all
Members equally, in that all Members
will receive the reduced enhanced
rebate upon satisfying the criteria of
Non-Displayed Add Volume Tier 4.
Similarly, the Exchange believes that
its proposal to eliminate fee codes ZV,
ZB, and ZY from LMM Add Volume
Tiers 2–4 is reasonable, equitable, and
consistent with the Act because such
change is designed to decrease the
Exchange’s expenditures with respect to
transaction pricing in order to offset
some of the costs associated with the
Exchange’s current pricing structure,
which provides various rebates for
liquidity-adding orders, and the
Exchange’s operations generally, in a
manner that is consistent with the
Exchange’s overall pricing philosophy
of encouraging added liquidity. The
Exchange further believes that the
proposal to eliminate fee codes ZV, ZB,
and ZY from LMM Add Volume Tiers
2–4 is not unfairly discriminatory
because it applies to all LMMs equally,
in that no LMMs will be permitted to
use fee codes ZV, ZB, or ZY to receive
an enhanced rebate under LMM Add
Volume Tiers 2–4 and all LMMs are still
eligible to receive an enhanced rebate by
satisfying the criteria of LMM Add
Volume Tiers 2–4 pursuant to the
remaining fee codes. The remaining fee
codes applicable to LMM Add Volume
Tiers 2–4 do not represent a significant
departure from LMM Add Volume Tier
1, which all LMMs continue to be
eligible to receive an enhanced rebate
from.
Finally, The Exchange believes that
its proposal to eliminate Non-Displayed
Add Volume Tier 5 and the NBBO
Setter Tier is reasonable because the
Exchange is not required to maintain
these tiers or provide Members an
opportunity to receive enhanced
rebates. The Exchange believes its
proposal to eliminate these tiers is also
equitable and not unfairly
discriminatory because it applies to all
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Federal Register / Vol. 88, No. 246 / Tuesday, December 26, 2023 / Notices
Members (i.e., the tiers will not be
available for any Member). The
Exchange also notes that the proposed
rule change to remove these tiers merely
results in Members not receiving an
enhanced rebate, which, as noted above,
the Exchange is not required to offer or
maintain. Furthermore, the proposed
rule change to eliminate Non-Displayed
Add Volume Tier 5 and the NBBO
Setter Tier enables the Exchange to
redirect resources and funding into
other programs and tiers intended to
incentivize increased order flow.
khammond on DSKJM1Z7X2PROD with NOTICES
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 Non-Displayed
Add Volume Tier 4 and LMM Add
Volume Tiers 2–4 will apply to all
Members and LMMs equally in that all
Members and LMMs are eligible for 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 BZX
by 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. The
proposed change to eliminate NonDisplayed Add Volume Tier 5 and the
NBBO Setter Program will not impose
any burden on intramarket competition
because the changes apply to all
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20:25 Dec 22, 2023
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Members uniformly, as in, the tiers will
no longer be available to any Member.
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.28
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.’’ 29 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’ . . . .’’.30 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
28 Supra
note 4.
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
30 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)).
29 See
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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 31 and paragraph (f) of Rule
19b–4 32 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–
CboeBZX–2023–106 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–2023–106. 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
31 15
32 17
E:\FR\FM\26DEN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
26DEN1
Federal Register / Vol. 88, No. 246 / Tuesday, December 26, 2023 / Notices
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–2023–106 and should be
submitted on or before January 16, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–28328 Filed 12–22–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99205; File No. SR–NYSE–
2023–41]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Withdrawal of Proposed Rule Change
To Amend Its Price List
khammond on DSKJM1Z7X2PROD with NOTICES
December 19, 2023.
On November 1, 2023, New York
Stock Exchange LLC (‘‘NYSE’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder 2 a proposed rule change to
amend its Price List to: (1) modify fee
rates and requirements for transactions
that remove liquidity from the
Exchange; (2) offer a monthly rebate for
Designated Market Maker units with 150
or fewer assigned securities along with
incentives for affiliated Supplemental
Liquidity Providers; and (3) eliminate
an underutilized fee for transactions
33 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
20:25 Dec 22, 2023
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.4
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–28326 Filed 12–22–23; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration # 20139; NEW YORK
Disaster Number NY–20005 Declaration of
Economic Injury]
Administrative Declaration of an
Economic Injury Disaster for the State
of New York
U.S. Small Business
Administration.
ACTION: Notice.
Jkt 262001
New York: New York, Queens,
Richmond
The Interest Rates are:
Percent
Business and Small Agricultural
Cooperatives without Credit
Available Elsewhere ..................
Non-Profit Organizations without
Credit Available Elsewhere .......
4.000
2.375
The number assigned to this disaster
for economic injury is 201390.
The State which received an EIDL
Declaration is New York.
(Catalog of Federal Domestic Assistance
Number 59008)
Isabella Guzman,
Administrator.
[FR Doc. 2023–28418 Filed 12–22–23; 8:45 am]
BILLING CODE 8026–09–P
AGENCY:
DEPARTMENT OF STATE
This is a notice of an
Economic Injury Disaster Loan (EIDL)
declaration for the State of NEW YORK
dated 12/19/2023.
Incident: Five-Alarm Fire.
Incident Period: 08/20/2023.
DATES: Issued on 12/19/2023.
Economic Injury (EIDL) Loan
Application Deadline Date: 09/19/2024.
ADDRESSES: Visit the MySBA Loan
Portal at https://lending.sba.gov to
apply for a disaster assistance loan.
FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster
Recovery & Resilience, U.S. Small
Business Administration, 409 3rd Street
SW, Suite 6050, Washington, DC 20416,
(202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
Administrator’s EIDL declaration,
applications for disaster loans may be
submitted online using the MySBA
Loan Portal https://lending.sba.gov or
other locally announced locations.
Please contact the SBA disaster
assistance customer service center by
email at disastercustomerservice@
sba.gov or by phone at 1–800–659–2955
for further assistance.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Kings.
Contiguous Counties:
SUMMARY:
3 See Securities Exchange Act Release No. 98953
(November 15, 2023), 88 FR 81114.
4 17 CFR 200.30–3(a)(12).
1 15
VerDate Sep<11>2014
that remove liquidity from the Exchange
in Tape B and C securities. The
proposed rule change was published for
comment on November 21, 2023.3 On
December 18, 2023, NYSE withdrew the
proposed rule change (SR–NYSE–2023–
41).
89001
PO 00000
Frm 00138
Fmt 4703
Sfmt 9990
[Delegation of Authority No. 548]
Delegation of Authority; Overseas Real
Property Management
By virtue of the authority of the
Secretary of State pursuant to the laws
of the United States, and as delegated by
Department of State Delegation of
Authority No. 514, I hereby delegate to
the Director of Overseas Buildings
Operations, to the extent authorized by
law, all functions and authorities for
overseas real property management as
described in the Foreign Service
Buildings Act, 1926, as amended (22
U.S.C. ch. 8).
The functions delegated herein may
be re-delegated, to the extent authorized
by law. This delegation of authority
does not revoke, supersede, or affect any
other delegation of authority. Any
authority covered by this delegation
may also be exercised by the Secretary,
the Deputy Secretary, the Deputy
Secretary for Management and
Resources, and the Under Secretary for
Management.
This document will be published in
the Federal Register.
Dated: December 15, 2023.
John R. Bass,
Under Secretary for Management,
Department of State.
[FR Doc. 2023–28298 Filed 12–22–23; 8:45 am]
BILLING CODE 4710–10–P
E:\FR\FM\26DEN1.SGM
26DEN1
]]>Agencies
[Federal Register Volume 88, Number 246 (Tuesday, December 26, 2023)]
[Notices]
[Pages 88997-89001]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-28328]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99207; File No. SR-CboeBZX-2023-106]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule by Modifying Certain Tiers and Discontinuing the NBBO
Setter Program
December 19, 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 December 12, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe 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/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 88998]]
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 (``BZX Equities'') by (1) modifying certain
Add/Remove Volume Tiers; (2) modifying the Lead Market Maker (``LMM'')
Pricing Tiers; and (3) discontinuing the NBBO Setter Program. 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-CboeBZX-2023-098). On December 12, 2023, the
Exchange withdrew that filing and submitted this proposal.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\4\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (November 27, 2023), available at https://www.cboe.com/us/equities/_statistics/.
\5\ See BZX Equities Fee Schedule, Standard Rates.
\6\ Id.
---------------------------------------------------------------------------
Add/Remove Volume Tiers
Under footnote 1 of the Fee Schedule, the Exchange currently offers
various Add/Remove Volume Tiers that provide enhanced rebates for
orders yielding fee codes B,\7\ V \8\ and Y \9\ where a Member reaches
certain add volume-based criteria. The Exchange also offers various
Add/Remove Volume Tiers that provide enhanced rebates for orders
yielding fee codes HB,\10\ HV \11\ or HY \12\ where a Member reaches
certain non-displayed add volume-based criteria. The Exchange first
proposes to modify the enhanced rebate associated with Non-Displayed
Add Volume Tier 4. Currently, Members who satisfy the criteria of Non-
Displayed Add Volume Tier 4 receive an enhanced rebate of $0.00275 per
share for securities priced at or above $1.00. As proposed, Members who
satisfy the criteria of Non-Displayed Add Volume Tier 4 will receive an
enhanced rebate of $0.0027 per share for securities priced at or above
$1.00. The purpose of reducing the enhanced rebate associated with Non-
Displayed Add Volume Tier 4 is for business and competitive reasons, as
the Exchange believes that reducing such rebate as proposed would
decrease the Exchange's expenditures with respect to transaction
pricing in a manner that is still consistent with the Exchange's
overall pricing philosophy of encouraging added liquidity. The Exchange
notes that despite the modest decrease in the enhanced rebate
associated with Non-Displayed Add Volume Tier 4, the enhanced rebate
remains competitive and continues to be in-line with the enhanced
rebates provided under Non-Displayed Add Volume Tiers 1-3.\13\
---------------------------------------------------------------------------
\7\ Fee code B is appended to orders that add liquidity to BZX
in Tape B securities.
\8\ Fee code V is appended to orders that add liquidity to BZX
in Tape A securities.
\9\ Fee code Y is appended to orders that add liquidity to BZX
in Tape C securities.
\10\ Fee code HB is appended to orders that add non-displayed
liquidity to BZX in Tape B securities.
\11\ Fee code HV is appended to orders that add non-displayed
liquidity to BZX in Tape A securities.
\12\ Fee code HY is appended to orders that add non-displayed
liquidity to BZX in Tape C securities.
\13\ The Exchange notes that Non-Displayed Add Volume Tier 1
pays an enhanced rebate of $0.0018 per share for securities priced
at or above $1.00, Non-Displayed Add Volume Tier 2 pays an enhanced
rebate of $0.0020 per share for securities priced at or above $1.00,
and Non-Displayed Add Volume Tier 3 pays an enhanced rebate of
$0.0025 for securities priced at or above $1.00. See BZX Equities
Fee Schedule, Footnote 1.
---------------------------------------------------------------------------
Next, the Exchange proposes to discontinue Non-Displayed Add Volume
Tier 5, as no Members have satisfied the criteria within the past six
months and the Exchange no longer wishes to, nor is required to,
maintain such tier. More specifically, the proposed change removes this
tier as the Exchange would rather redirect future resources and funding
into other programs and tiers intended to incentivize increased order
flow.
Lead Market Maker Pricing Tiers
Under footnote 14 of the Fee Schedule, the Exchange offers a
comprehensive liquidity provision program to incentivize Lead Market
Makers (``LMMs'') to provide enhanced market quality across all BZX-
listed securities. Under the Exchange's LMM Program,\14\ the Exchange
offers daily incentives for LMMs in securities listed on the Exchange
for which the LMM meets certain Minimum Performance Standards.\15\ Such
daily incentives are determined based on the number of Cboe-listed
securities for which the LMM meets the Minimum Performance Standards
and the average auction volume across such securities. Generally, the
more LMM Securities \16\ for which the LMM meets the Minimum
Performance Standards and the higher the auction volume across those
securities, the greater the total daily payment to the LMM. Currently,
pursuant to paragraph (D) of footnote 14 the Exchange offers LMM Add
Volume Tiers, which provide an enhanced rebate to LMMs who reach
certain add-
[[Page 88999]]
volume based criteria. Now, the Exchange proposes to update the
applicable fee codes for LMM Add Volume Tiers 2, 3, and 4 to remove fee
codes ZV,\17\ ZB,\18\ and ZY.\19\ Specifically, the Exchange proposes
to: (i) amend LMM Add Volume Tier 2 to apply to orders yielding fee
codes V and HV (removing fee code ZV); (ii) amend LMM Add Volume Tier 3
to apply to orders yielding fee codes B and HB (removing fee code ZB);
and (iii) amend LMM Add Volume Tier 4 to apply to orders yielding fee
codes Y and HY (removing fee code ZY). The purpose of eliminating
certain fee codes from LMM Add Volume Tiers 2-4 is for business and
competitive reasons, as the Exchange believes that eliminating such fee
codes as proposed would decrease the Exchange's expenditures with
respect to transaction pricing in a manner that is still consistent
with the Exchange's overall pricing philosophy of encouraging added
liquidity. The Exchange notes that despite eliminating fee codes
associated with retail orders from LMM Add Volume Tiers 2-4, LMM Add
Volume Tiers 2-4 will continue to provide enhanced rebates for
liquidity-adding orders in displayed and non-displayed orders, which
does not represent a significant departure from the enhanced rebate
offered under LMM Add Volume Tier 1.
---------------------------------------------------------------------------
\14\ See Securities Exchange Act Release No. 72020 (April 25,
2014), 79 FR 24807 (May 1, 2014), SR-BATS-2014-015 (``Original LMM
Filing'').
\15\ As defined in Rule 11.8(e)(1)(E), the term ``Minimum
Performance Standards'' means a set of standards applicable to an
LMM that may be determined from time to time by the Exchange. Such
standards will vary between LMM Securities depending on the price,
liquidity, and volatility of the LMM Security in which the LMM is
registered. The performance measurements will include (A) Percent of
time at the NBBO; (B) percent of executions better than the NBBO;
(C) average displayed size; and (D) average quoted spread. For
additional detail, see Original LMM Filing.
\16\ See Rule 11.8(e)(1)(D). The term ``LMM Security'' means a
Listed Security that has an LMM. See also Rule 11.8(e)(1)(B). The
term ``Listed Security'' means any ETP or any Primary Equity
Security or Closed-End Fund listed on the Exchange pursuant to Rule
14.8 or 14.9.
\17\ Fee code ZV is appended to Retail Orders that add liquidity
to BZX in Tape A securities.
\18\ Fee code ZB is appended to Retail Orders that add liquidity
to BZX in Tape B securities.
\19\ Fee code ZY is appended to Retail Orders that add liquidity
to BZX in Tape C securities.
---------------------------------------------------------------------------
NBBO Setter Program
Under footnote 20 of the Fee Schedule the Exchange offers its NBBO
Setter Program, which offers an enhanced rebate to Members which reach
certain add volume criteria in NBBO Setter Securities.\20\ The Exchange
now proposes to discontinue the NBBO Setter Program as the Exchange no
longer wishes to, nor is required to, maintain such tier. More
specifically, the proposed change removes this tier as the Exchange
would rather redirect future resources and funding into other programs
and tiers intended to incentivize increased order flow. In addition,
the Exchange proposes to eliminate the terms Setter NBBO,\21\ NBBO
Setter Securities, Baseline Setter ADAV,\22\ and Current Setter ADAV
\23\ from the Definitions section of the Fee Schedule as these terms
apply only to the NBBO Setter Program.
---------------------------------------------------------------------------
\20\ NBBO Setter Securities means a list of securities included
in the NBBO Setter Program, the universe of which will be determined
by the Exchange and published in a Notice distributed to Members and
on the Exchange's website.
\21\ Setter NBBO means a quotation of at least 100 shares that
is better than the NBBO or a quotation of a notional size of at
least $10,000.00 that is better than the NBBO.
\22\ Baseline Setter ADAV means ADAV calculated as the number of
displayed shares added per day that establish a new NBBO in NBBO
Setter Securities. ADAV means average daily added volume calculated
as the number of shares added per day, calculated on a monthly
basis.
\23\ Current Setter ADAV means ADAV calculated as the number of
displayed shares added per day that establish a new Setter NBBO in
NBBO Setter Securities.
---------------------------------------------------------------------------
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.\24\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \25\ 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) \26\ 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) \27\
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.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(5).
\26\ Id.
\27\ 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 lower the enhanced rebate paid to Members that satisfy
the criteria of Non-Displayed Add Volume Tier 4 is reasonable,
equitable, and consistent with the Act because such change is designed
to decrease the Exchange's expenditures with respect to transaction
pricing in order to offset some of the costs associated with the
Exchange's current pricing structure, which provides various rebates
for liquidity-adding orders, and the Exchange's operations generally,
in a manner that is consistent with the Exchange's overall pricing
philosophy of encouraging added liquidity. The proposed lower enhanced
rebate ($0.0027 per share) is reasonable and appropriate because it
represents only a modest decrease from the current enhanced rebate
($0.00275 per share) and remains competitive with the enhanced rebates
offered under Non-Displayed Add Volume Tiers 1-3. The Exchange further
believes that the proposed decrease to the enhanced rebate associated
with Non-Displayed Add Volume Tier 4 is not unfairly discriminatory
because it applies to all Members equally, in that all Members will
receive the reduced enhanced rebate upon satisfying the criteria of
Non-Displayed Add Volume Tier 4.
Similarly, the Exchange believes that its proposal to eliminate fee
codes ZV, ZB, and ZY from LMM Add Volume Tiers 2-4 is reasonable,
equitable, and consistent with the Act because such change is designed
to decrease the Exchange's expenditures with respect to transaction
pricing in order to offset some of the costs associated with the
Exchange's current pricing structure, which provides various rebates
for liquidity-adding orders, and the Exchange's operations generally,
in a manner that is consistent with the Exchange's overall pricing
philosophy of encouraging added liquidity. The Exchange further
believes that the proposal to eliminate fee codes ZV, ZB, and ZY from
LMM Add Volume Tiers 2-4 is not unfairly discriminatory because it
applies to all LMMs equally, in that no LMMs will be permitted to use
fee codes ZV, ZB, or ZY to receive an enhanced rebate under LMM Add
Volume Tiers 2-4 and all LMMs are still eligible to receive an enhanced
rebate by satisfying the criteria of LMM Add Volume Tiers 2-4 pursuant
to the remaining fee codes. The remaining fee codes applicable to LMM
Add Volume Tiers 2-4 do not represent a significant departure from LMM
Add Volume Tier 1, which all LMMs continue to be eligible to receive an
enhanced rebate from.
Finally, The Exchange believes that its proposal to eliminate Non-
Displayed Add Volume Tier 5 and the NBBO Setter Tier is reasonable
because the Exchange is not required to maintain these tiers or provide
Members an opportunity to receive enhanced rebates. The Exchange
believes its proposal to eliminate these tiers is also equitable and
not unfairly discriminatory because it applies to all
[[Page 89000]]
Members (i.e., the tiers will not be available for any Member). The
Exchange also notes that the proposed rule change to remove these tiers
merely results in Members not receiving an enhanced rebate, which, as
noted above, the Exchange is not required to offer or maintain.
Furthermore, the proposed rule change to eliminate Non-Displayed Add
Volume Tier 5 and the NBBO Setter Tier enables the Exchange to redirect
resources and funding into other programs and tiers intended to
incentivize increased order flow.
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 Non-Displayed Add Volume Tier 4 and LMM Add Volume Tiers 2-4
will apply to all Members and LMMs equally in that all Members and LMMs
are eligible for 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 BZX by
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. The proposed change to
eliminate Non-Displayed Add Volume Tier 5 and the NBBO Setter Program
will not impose any burden on intramarket competition because the
changes apply to all Members uniformly, as in, the tiers will no longer
be available to any Member.
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.\28\ 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.'' \29\ 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' . . . .''.\30\ 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.
---------------------------------------------------------------------------
\28\ Supra note 4.
\29\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\30\ 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 \31\ and paragraph (f) of Rule 19b-4 \32\
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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\31\ 15 U.S.C. 78s(b)(3)(A).
\32\ 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-2023-106 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-2023-106. 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
[[Page 89001]]
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-2023-106 and should be submitted
on or before January 16, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
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\33\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-28328 Filed 12-22-23; 8:45 am]
BILLING CODE 8011-01-P
