Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 1966-1970 [2024-00385]
Download as PDF
<![CDATA[
1966
Federal Register / Vol. 89, No. 8 / Thursday, January 11, 2024 / Notices
CRD system for registration and
disclosure. Accordingly, the Exchange
believes that the fees collected for such
use should likewise increase in lockstep
with the fees assessed to FINRA
members, as proposed by the Exchange.
The Exchange further believes that the
proposed fee change provides for the
equitable allocation of reasonable fees
and other charges, and does not unfairly
discriminate between customers,
issuers, brokers, and dealers. The fee
applies equally to all individuals and
firms required to report information the
CRD system, and the proposed change
will result in the same regulatory fees
being charged to all member
organizations required to report
information to CRD and for services
performed by FINRA regardless of
whether such member organizations are
FINRA members. Accordingly, the
Exchange believes that the fee collected
for such use should increase in lockstep
with the fee adopted by FINRA as of
January 2024, as proposed by the
Exchange.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,12 the Exchange believes that the
proposed rule change would not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Specifically,
the Exchange believes that the proposed
change will reflect a fee that will be
assessed by FINRA as of January 2024
and will thus result in the same
regulatory fee being charged to all
member organizations required to report
information to the CRD system and for
services performed by FINRA,
regardless of whether or not such
member organizations are FINRA
members.
ddrumheller on DSK120RN23PROD with NOTICES1
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective upon filing pursuant to Section
19(b)(3)(A) 13 of the Act and paragraph
(f) thereunder. At any time within 60
days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
12 See
15 U.S.C. 78f(b)(8).
13 15 U.S.C. 78s(b)(3)(A).
VerDate Sep<11>2014
17:31 Jan 10, 2024
Jkt 262001
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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–
NYSE–2023–51 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–NYSE–2023–51. 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
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
SR–NYSE–2023–51 and should be
submitted on or before February 1, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Christina Z. Milnor,
Assistant Secretary.
[FR Doc. 2024–00386 Filed 1–10–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99280; File No. SR–
CboeEDGX–2024–002]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
January 5, 2024.
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 January 2,
2024, 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.
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 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
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\11JAN1.SGM
11JAN1
Federal Register / Vol. 89, No. 8 / Thursday, January 11, 2024 / Notices
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 modifying the standard
rate associated with certain fee codes;
(2) by discontinuing Remove Volume
Tier 1; and (3) by modifying Remove
Volume Tier 3. The Exchange proposes
to implement these changes effective
January 2, 2024.
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,3 no single
registered equities exchange has more
than 13% 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.4 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
3 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (December 20,
2023), available at https://www.cboe.com/us/
equities/market_statistics/.
4 See EDGX Equities Fee Schedule, Standard
Rates.
VerDate Sep<11>2014
17:31 Jan 10, 2024
Jkt 262001
the total dollar value for orders that
remove liquidity.5 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.
Standard Rates
Currently, the Exchange offers
standard rates to add liquidity for orders
appended with fee codes 3,6 4,7 B,8 V,9
and Y.10 The Exchange now proposes to
revise the standard rebate associated
with securities priced below $1.00 from
$0.00009 per share to $0.00003 per
share for orders appended with fee
codes 3, 4, B, V, or Y. The purpose of
reducing the standard rebate associated
with securities priced below $1.00 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
decrease in the standard rebate
associated with securities priced below
$1.00, the standard rebate remains
competitive and continues to be more
favorable for Members than the standard
rate provided by competing
exchanges.11
Remove Volume Tiers
Under footnote 1 of the Fee Schedule,
the Exchange currently offers various
5 Id.
6 Fee code 3 is appended to orders adding
liquidity to EDGX in the pre and post market in
Tapes A or C securities.
7 Fee code 4 is appended to orders adding
liquidity to EDGX in the pre and post market in
Tape B securities.
8 Fee code B is appended to orders adding
liquidity to EDGX in Tape B securities.
9 Fee code V is appended to orders adding
liquidity to EDGX in Tape A securities.
10 Fee code Y is appended to orders adding
liquidity to EDGX in Tape C securities.
11 See, e.g., NYSE Arca Fee Equities Fees and
Charges; Standard Rates, available at https://
www.nyse.com/publicdocs/nyse/markets/nyse-arca/
NYSE_Arca_Marketplace_Fees.pdf; see also Nasdaq
Price List; Add and Remove Rates; Rebates and
Fees, Shares Executed Below $1.00, available at
https://www.nasdaqtrader.com/Trader.aspx?id=
PriceListTrading2. NYSE Arca provides a rebate to
add liquidity equal to 0.0% of Dollar Value for
securities priced below $1.00 and Nasdaq provides
rebates of $0.00 to add liquidity in securities priced
below $1.00.
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
1967
Add/Remove Volume Tiers. In
particular, the Exchange offers three
Remove Volume Tiers that each assess
a reduced fee for Members’ qualifying
orders yielding fee codes BB,12 N,13 and
W 14 where a Member reaches certain
add volume-based criteria. The
Exchange now proposes to discontinue
Remove Volume Tier 1 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
conjunction with discontinuing Remove
Volume Tier 1, the Exchange proposes
to renumber Remove Volume Tiers 2
and 3 as Remove Volume Tiers 1 and 2,
respectively, following the deletion of
current Remove Volume Tier 1.
In addition to the proposed deletion
of Remove Tier 1, the Exchange
proposes to amend the criteria of
proposed Remove Volume Tier 2
(current Remove Volume Tier 3).
Currently, the criteria for proposed
Remove Volume Tier 2 is as follows:
• Proposed Remove Volume Tier 2
(current 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 15
≥0.30% of the TCV; 16 and (2) Member
has a total remove ADV 17 ≥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.
Now, the Exchange proposes to
amend the second prong of criteria in
proposed Remove Volume Tier 2 by
removing the total remove ADV share
requirement. The proposed criteria is as
follows:
• Proposed Remove Volume Tier 2
provides a reduced fee of $0.00275 per
12 Fee code BB is appended to orders that remove
liquidity from EDGX in Tape B securities.
13 Fee code N is appended to orders that remove
liquidity from EDGX in Tape C securities.
14 Fee code W is appended to orders that remove
liquidity from EDGX in Tape A securities.
15 ADAV means average daily added volume
calculated as the number of shares added per day,
calculated on a monthly basis.
16 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.
17 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.
E:\FR\FM\11JAN1.SGM
11JAN1
1968
Federal Register / Vol. 89, No. 8 / Thursday, January 11, 2024 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
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 ≥040% of the TCV;
and (3) Member adds Retail Pre Market
Order ADV (i.e., yielding fee code ZO)
≥3,000,000.
The proposed amendment to
proposed Remove Volume Tier 2 is
intended to slightly increase the
difficulty of achieving an existing
opportunity to earn an enhanced rebate
by providing a single alternative for
Members to increase their order flow to
the Exchange. Submitting increased
order flow to the Exchange will further
contribute to a deeper, more liquid
market and provide even more
execution opportunities for active
market participants. Incentivizing an
increase in liquidity adding volume,
through enhanced rebate 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.
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.18 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 19 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
18 15
19 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
VerDate Sep<11>2014
17:31 Jan 10, 2024
Jkt 262001
the Section 6(b)(5) 20 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) 21 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) modify the standard rebates
associated with securities priced below
$1.00 and (2) modify proposed Retail
Volume Tier 2 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 proposed
criteria for proposed Remove Volume
Tier 2 is not a significant departure from
existing criteria, continues to be
reasonably correlated to the enhanced
rebate offered by the Exchange and
other competing exchanges,22 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,23 including the Exchange,24
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
20 Id.
21 15
U.S.C. 78f(b)(4).
e.g., 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; and MEMX Equities Fee Schedule,
Liquidity Removal Tier, available at https://
info.memxtrading.com/equities-trading-resources/
us-equities-fee-schedule/.
23 See, e.g., BZX Equities Fee Schedule, Footnote
1, Add/Remove Volume Tiers.
24 See, e.g., EDGX Equities Fee Schedule,
Footnote 1, Add/Remove Volume Tiers.
22 See,
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
or rebates for similar types of orders, to
that of the Exchange.
In particular, the Exchange believes
its proposal to modify proposed Retail
Volume Tier 2 is reasonable because the
revised tier will be available to all
Members and provide all Members with
an opportunity to receive an enhanced
rebate. The Exchange further believes
the proposed modification to proposed
Remove Volume Tier 2 will provide a
reasonable means to encourage liquidity
adding displayed orders 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
opportunity to receive an enhanced
rebate on qualifying orders. While the
proposed criteria in proposed Remove
Volume Tier 2 is slightly more difficult
than the current criteria found in that
tier, the proposed criteria is not a
significant departure from existing
criteria, is reasonably correlated to the
enhanced rebate 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.
Further, the Exchange believes that its
proposal to modify the standard rebate
associated with securities priced below
$1.00 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 decreased standard rebate of
$0.00003 per share is reasonable and
appropriate because it remains
competitive with the standard rebate
offered by other exchanges.25 The
Exchange further believes that the
proposed decrease to the standard
rebate associated with securities priced
below $1.00 is not unfairly
discriminatory because it applies to all
Members equally, in that all Members
will received the lower standard rebate
upon submitting orders appended with
fee codes B, V, Y, 3, or 4.
The Exchange believes that its
proposal to eliminate current Remove
25 Supra
E:\FR\FM\11JAN1.SGM
note 11.
11JAN1
Federal Register / Vol. 89, No. 8 / Thursday, January 11, 2024 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
Volume Tier 1 is reasonable because the
Exchange is not required to maintain
this tier nor is it required to provide
Members an opportunity to receive
enhanced rebates. The Exchange
believes its proposal to eliminate this
tier is also equitable and not unfairly
discriminatory because it applies to all
Members (i.e., the tier will not be
available for any Member). The
Exchange also notes that the proposed
rule change to remove this tier 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 current Remove
Volume Tier 1 enables the Exchange to
redirect resources and funding into
other programs and tiers intended to
incentivize increased order flow.
The Exchange believes that the
proposed changes to its standard rebate
associated with securities priced below
$1.00 and Remove Volume Tiers are
reasonable as they do not represent a
significant departure from the criteria or
rebates 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 standard rebate and revised
tier and have the opportunity to meet
the revised tier’s 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 Remove
Volume Tier 2. 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
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
VerDate Sep<11>2014
17:31 Jan 10, 2024
Jkt 262001
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
standard rebate associated with
securities priced below $1.00 and the
proposed changes to proposed Remove
Volume Tier 2 will apply to all
Members equally in that all Members
are eligible for the standard rebate and
the proposed revised tier, have a
reasonable opportunity to meet the
proposed tier’s 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.
The Exchange believes the proposed
elimination of Remove Volume Tier 1
does not impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Particularly,
the proposed change to eliminate the
Remove Volume Tier 1 will not impose
any burden on intramarket competition
because the changes apply to all
Members uniformly, as in, the tier 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.
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
1969
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 13% of the market share.26
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.’’ 27 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’. . . .’’.28 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.
26 Supra
note 3.
Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
28 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)).
27 See
E:\FR\FM\11JAN1.SGM
11JAN1
1970
Federal Register / Vol. 89, No. 8 / Thursday, January 11, 2024 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 29 and paragraph (f) of Rule
19b–4 30 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:
ddrumheller on DSK120RN23PROD with NOTICES1
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeEDGX–2024–002 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–2024–002. 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
29 15
30 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
VerDate Sep<11>2014
17:31 Jan 10, 2024
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–2024–002 and should be
submitted on or before February 1, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Christina Z. Milnor,
Assistant Secretary.
[FR Doc. 2024–00385 Filed 1–10–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release Nos. 33–11263; 34–99276; IA–
6521; IC–35085]
Adjustments to Civil Monetary Penalty
Amounts
Securities and Exchange
Commission.
ACTION: Notice of annual inflation
adjustment of civil monetary penalties.
AGENCY:
The Securities and Exchange
Commission (‘‘Commission’’) is
publishing this notice (‘‘Notice’’)
pursuant to the Federal Civil Penalties
Inflation Adjustment Act Improvements
Act of 2015 (‘‘2015 Act’’). This Act
requires all agencies to annually adjust
for inflation the civil monetary penalties
that can be imposed under the statutes
administered by the agency and publish
the adjusted amounts in the Federal
Register. This Notice sets forth the
annual inflation adjustment of the
maximum amount of civil monetary
penalties (‘‘CMPs’’) administered by the
Commission under the Securities Act of
1933, the Securities Exchange Act of
1934 (‘‘Exchange Act’’), the Investment
Company Act of 1940, the Investment
SUMMARY:
31 17
Jkt 262001
PO 00000
CFR 200.30–3(a)(12).
Frm 00096
Fmt 4703
Sfmt 4703
Advisers Act of 1940, and certain
penalties under the Sarbanes-Oxley Act
of 2002. These amounts are effective
beginning on January 15, 2024, and will
apply to all penalties imposed after that
date for violations of the
aforementioned statutes that occurred
after November 2, 2015.
FOR FURTHER INFORMATION CONTACT:
Stephen M. Ng, Senior Special Counsel,
Office of the General Counsel, at (202)
551–7957, or Hannah W. Riedel, Senior
Counsel, Office of the General Counsel,
at (202) 551–7918.
SUPPLEMENTARY INFORMATION:
I. Background
This Notice is being published
pursuant to the 2015 Act,1 which
amended the Federal Civil Penalties
Inflation Adjustment Act of 1990
(‘‘Inflation Adjustment Act’’).2 The
Inflation Adjustment Act previously had
been amended by the Debt Collection
Improvement Act of 1996 (‘‘DCIA’’) 3 to
require that each Federal agency adopt
regulations at least once every four years
that adjust for inflation the CMPs that
can be imposed under the statutes
administered by the agency. Pursuant to
this requirement, the Commission
previously adopted regulations in 1996,
2001, 2005, 2009, and 2013 to adjust the
maximum amount of the CMPs that
could be imposed under the statutes the
Commission administers.4
The 2015 Act replaces the inflation
adjustment formula prescribed in the
DCIA with a new formula for calculating
the inflation-adjusted amount of CMPs.
The 2015 Act requires that agencies use
this new formula to re-calculate the
inflation-adjusted amounts of the
penalties they administer on an annual
basis and publish these new amounts in
1 Public Law 114–74 Sec. 701, 129 Stat. 599–601
(Nov. 2, 2015), codified at 28 U.S.C. 2461 note.
2 Public Law 101–410, 104 Stat. 890–892 (1990),
codified at 28 U.S.C. 2461 note.
3 Public Law. 104–134, title III, section
31001(s)(1), 110 Stat. 1321–373 (1996), codified at
28 U.S.C. 2461 note.
4 See Release Nos. 33–7361, 34–37912, IA–1596,
IC–22310, dated Nov. 1, 1996 (effective Dec. 9,
1996), previously found at 17 CFR 201.1001 and
Table I to Subpart E of Part 201; Release Nos. 33–
7946, 34–43897, IA–1921, IC–24846, dated Jan. 31,
2001 (effective Feb. 2, 2001), previously found at 17
CFR 201.1002 and Table II to Subpart E of Part 201;
Release Nos. 33–8530, 34–51136, IA–2348, IC–
26748, dated Feb. 9, 2005 (effective Feb. 14, 2005),
previously found at 17 CFR 201.1003 and Table III
to Subpart E of Part 201; Release Nos. 33–9009, 34–
59449, IA–2845, IC–28635, dated Feb. 25, 2009
(effective Mar. 3, 2009), previously found at 17 CFR
201.1004 and Table IV to Subpart E of Part 201; and
Release Nos. 33–9387, 34–68994, IA–3557, IC–
30408, dated Feb. 27, 2013 (effective Mar. 5, 2013),
previously found at 17 CFR 201.1005 and Table V
to Subpart E of Part 201. The penalty amounts
contained in these releases have now been
consolidated into Table I to 17 CFR 201.1001.
E:\FR\FM\11JAN1.SGM
11JAN1
]]>Agencies
[Federal Register Volume 89, Number 8 (Thursday, January 11, 2024)]
[Notices]
[Pages 1966-1970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-00385]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99280; File No. SR-CboeEDGX-2024-002]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule
January 5, 2024.
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 January 2, 2024, 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.
---------------------------------------------------------------------------
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 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
[[Page 1967]]
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
modifying the standard rate associated with certain fee codes; (2) by
discontinuing Remove Volume Tier 1; and (3) by modifying Remove Volume
Tier 3. The Exchange proposes to implement these changes effective
January 2, 2024.
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,\3\ no single registered equities exchange has more than
13% 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.\4\ 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.\5\
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.
---------------------------------------------------------------------------
\3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (December 20, 2023), available at https://www.cboe.com/us/equities/market_statistics/.
\4\ See EDGX Equities Fee Schedule, Standard Rates.
\5\ Id.
---------------------------------------------------------------------------
Standard Rates
Currently, the Exchange offers standard rates to add liquidity for
orders appended with fee codes 3,\6\ 4,\7\ B,\8\ V,\9\ and Y.\10\ The
Exchange now proposes to revise the standard rebate associated with
securities priced below $1.00 from $0.00009 per share to $0.00003 per
share for orders appended with fee codes 3, 4, B, V, or Y. The purpose
of reducing the standard rebate associated with securities priced below
$1.00 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
decrease in the standard rebate associated with securities priced below
$1.00, the standard rebate remains competitive and continues to be more
favorable for Members than the standard rate provided by competing
exchanges.\11\
---------------------------------------------------------------------------
\6\ Fee code 3 is appended to orders adding liquidity to EDGX in
the pre and post market in Tapes A or C securities.
\7\ Fee code 4 is appended to orders adding liquidity to EDGX in
the pre and post market in Tape B securities.
\8\ Fee code B is appended to orders adding liquidity to EDGX in
Tape B securities.
\9\ Fee code V is appended to orders adding liquidity to EDGX in
Tape A securities.
\10\ Fee code Y is appended to orders adding liquidity to EDGX
in Tape C securities.
\11\ See, e.g., NYSE Arca Fee Equities Fees and Charges;
Standard Rates, available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf; see also Nasdaq
Price List; Add and Remove Rates; Rebates and Fees, Shares Executed
Below $1.00, available at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2. NYSE Arca provides a rebate to add
liquidity equal to 0.0% of Dollar Value for securities priced below
$1.00 and Nasdaq provides rebates of $0.00 to add liquidity in
securities priced below $1.00.
---------------------------------------------------------------------------
Remove Volume Tiers
Under footnote 1 of the Fee Schedule, the Exchange currently offers
various Add/Remove Volume Tiers. In particular, the Exchange offers
three Remove Volume Tiers that each assess a reduced fee for Members'
qualifying orders yielding fee codes BB,\12\ N,\13\ and W \14\ where a
Member reaches certain add volume-based criteria. The Exchange now
proposes to discontinue Remove Volume Tier 1 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 conjunction with
discontinuing Remove Volume Tier 1, the Exchange proposes to renumber
Remove Volume Tiers 2 and 3 as Remove Volume Tiers 1 and 2,
respectively, following the deletion of current Remove Volume Tier 1.
---------------------------------------------------------------------------
\12\ Fee code BB is appended to orders that remove liquidity
from EDGX in Tape B securities.
\13\ Fee code N is appended to orders that remove liquidity from
EDGX in Tape C securities.
\14\ Fee code W is appended to orders that remove liquidity from
EDGX in Tape A securities.
---------------------------------------------------------------------------
In addition to the proposed deletion of Remove Tier 1, the Exchange
proposes to amend the criteria of proposed Remove Volume Tier 2
(current Remove Volume Tier 3). Currently, the criteria for proposed
Remove Volume Tier 2 is as follows:
Proposed Remove Volume Tier 2 (current 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 \15\
>=0.30% of the TCV; \16\ and (2) Member has a total remove ADV \17\
>=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.
---------------------------------------------------------------------------
\15\ ADAV means average daily added volume calculated as the
number of shares added per day, calculated on a monthly basis.
\16\ 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.
\17\ 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.
---------------------------------------------------------------------------
Now, the Exchange proposes to amend the second prong of criteria in
proposed Remove Volume Tier 2 by removing the total remove ADV share
requirement. The proposed criteria is as follows:
Proposed Remove Volume Tier 2 provides a reduced fee of
$0.00275 per
[[Page 1968]]
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 >=040% of the TCV; and (3) Member adds Retail Pre Market
Order ADV (i.e., yielding fee code ZO) >=3,000,000.
The proposed amendment to proposed Remove Volume Tier 2 is intended
to slightly increase the difficulty of achieving an existing
opportunity to earn an enhanced rebate by providing a single
alternative for Members to increase their order flow to the Exchange.
Submitting increased order flow to the Exchange will further contribute
to a deeper, more liquid market and provide even more execution
opportunities for active market participants. Incentivizing an increase
in liquidity adding volume, through enhanced rebate 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.
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.\18\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \19\ 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) \20\ 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) \21\
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.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(5).
\20\ Id.
\21\ 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) modify the standard rebates associated with
securities priced below $1.00 and (2) modify proposed Retail Volume
Tier 2 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 proposed criteria for proposed Remove
Volume Tier 2 is not a significant departure from existing criteria,
continues to be reasonably correlated to the enhanced rebate offered by
the Exchange and other competing exchanges,\22\ 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,\23\ including the Exchange,\24\
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.
---------------------------------------------------------------------------
\22\ See, e.g., 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; and MEMX Equities Fee
Schedule, Liquidity Removal Tier, available at https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/.
\23\ See, e.g., BZX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
\24\ See, e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
---------------------------------------------------------------------------
In particular, the Exchange believes its proposal to modify
proposed Retail Volume Tier 2 is reasonable because the revised tier
will be available to all Members and provide all Members with an
opportunity to receive an enhanced rebate. The Exchange further
believes the proposed modification to proposed Remove Volume Tier 2
will provide a reasonable means to encourage liquidity adding displayed
orders 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 opportunity to receive an enhanced rebate on
qualifying orders. While the proposed criteria in proposed Remove
Volume Tier 2 is slightly more difficult than the current criteria
found in that tier, the proposed criteria is not a significant
departure from existing criteria, is reasonably correlated to the
enhanced rebate 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.
Further, the Exchange believes that its proposal to modify the
standard rebate associated with securities priced below $1.00 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
decreased standard rebate of $0.00003 per share is reasonable and
appropriate because it remains competitive with the standard rebate
offered by other exchanges.\25\ The Exchange further believes that the
proposed decrease to the standard rebate associated with securities
priced below $1.00 is not unfairly discriminatory because it applies to
all Members equally, in that all Members will received the lower
standard rebate upon submitting orders appended with fee codes B, V, Y,
3, or 4.
---------------------------------------------------------------------------
\25\ Supra note 11.
---------------------------------------------------------------------------
The Exchange believes that its proposal to eliminate current Remove
[[Page 1969]]
Volume Tier 1 is reasonable because the Exchange is not required to
maintain this tier nor is it required to provide Members an opportunity
to receive enhanced rebates. The Exchange believes its proposal to
eliminate this tier is also equitable and not unfairly discriminatory
because it applies to all Members (i.e., the tier will not be available
for any Member). The Exchange also notes that the proposed rule change
to remove this tier 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 current
Remove Volume Tier 1 enables the Exchange to redirect resources and
funding into other programs and tiers intended to incentivize increased
order flow.
The Exchange believes that the proposed changes to its standard
rebate associated with securities priced below $1.00 and Remove Volume
Tiers are reasonable as they do not represent a significant departure
from the criteria or rebates 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 standard rebate
and revised tier and have the opportunity to meet the revised tier's
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 Remove Volume Tier 2.
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
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 standard rebate associated with securities
priced below $1.00 and the proposed changes to proposed Remove Volume
Tier 2 will apply to all Members equally in that all Members are
eligible for the standard rebate and the proposed revised tier, have a
reasonable opportunity to meet the proposed tier's 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.
The Exchange believes the proposed elimination of Remove Volume
Tier 1 does not impose any burden on intramarket competition that is
not necessary or appropriate in furtherance of the purposes of the Act.
Particularly, the proposed change to eliminate the Remove Volume Tier 1
will not impose any burden on intramarket competition because the
changes apply to all Members uniformly, as in, the tier 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 13% of the market share.\26\ 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.'' \27\ 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'. . . .''.\28\ 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.
---------------------------------------------------------------------------
\26\ Supra note 3.
\27\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\28\ 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)).
---------------------------------------------------------------------------
[[Page 1970]]
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 \29\ and paragraph (f) of Rule 19b-4 \30\
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.
---------------------------------------------------------------------------
\29\ 15 U.S.C. 78s(b)(3)(A).
\30\ 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-2024-002 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-2024-002. 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-CboeEDGX-2024-002 and should
be submitted on or before February 1, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
---------------------------------------------------------------------------
\31\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Christina Z. Milnor,
Assistant Secretary.
[FR Doc. 2024-00385 Filed 1-10-24; 8:45 am]
BILLING CODE 8011-01-P
