Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule To Modify Historical Depth Data Fees, 3456-3459 [2024-00844]
Download as PDF
<![CDATA[
3456
Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Notices
[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’. . . .’’.24 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
khammond on DSKJM1Z7X2PROD with NOTICES
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 25 and paragraph (f) of Rule
19b–4 26 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.
All submissions should refer to file
number SR–CBOE–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–CBOE–2024–002 and should be
submitted on or before February 8, 2024.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Sherry R. Haywood,
Assistant Secretary.
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CBOE–2024–002 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
24 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)).
25 15 U.S.C. 78s(b)(3)(A).
26 17 CFR 240.19b–4(f).
VerDate Sep<11>2014
17:32 Jan 17, 2024
Jkt 262001
[FR Doc. 2024–00848 Filed 1–17–24; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–99320; File No. SR–
CboeBYX–2024–001]
Self-Regulatory Organizations; Cboe
BYX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule To Modify Historical
Depth Data Fees
January 11, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
27 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00087
Fmt 4703
Sfmt 4703
notice is hereby given that on January 2,
2024, Cboe BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) 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 BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) proposes to
amend its Fees 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/BYX/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fees Schedule, effective January 2,
2024.
By way of background, the Exchange
currently makes available for purchase
Depth Data, which is a daily archive of
the Exchange’s depth of book real-time
feed, which provides depth-of-book
quotations and execution information
based on equity orders entered into the
System.3 The Exchange also offers
Historical Depth Data, which offers such
data on a historical basis, i.e. T+1 or
3 See BZX Fees Schedule and BZX Rule 11.22.
Daily end-of-day delivery is provided via the
DataShop SFTP. Files will typically become
available after 10 p.m. ET; see also BZX Rule 1.5,
which defines ‘‘System.’’
E:\FR\FM\18JAN1.SGM
18JAN1
Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
later, dating back to September 2019.
The Depth Data and Historical Depth
Data are available for purchase to
Members and Non-Members on the
Cboe LiveVol, LLC (‘‘LiveVol’’)
website,4 for internal use only; LiveVol
is a wholly owned subsidiary of the
Exchange’s parent company, Cboe
Global Markets, Inc.
The Exchange’s options platform
(‘‘BYX Options’’) [sic] and affiliated
equities and options exchanges (i.e.,
Cboe Exchange, Inc. (‘‘Cboe Options’’),
Cboe C2 Exchange, Inc. (‘‘C2 Options’’),
Cboe EDGX Exchange, Inc. (‘‘EDGX’’),
Cboe BZX Exchange, Inc. (‘‘BZX’’), and
Cboe EDGA Exchange, Inc. (‘‘EDGA’’),
(collectively, ‘‘Affiliates’’) also offer
similar data products.5 Particularly,
each of the Exchange’s Affiliates offer a
daily and historical archive of their
depth of book real-time feed with
execution information based on their
trading activity that is substantially
similar to the information provided by
the Exchange through its Depth Data
products.
Currently, the Exchange charges a fee
of $500 per month of Historical Depth
Data accessed by a user. This fee has
been in place, without change, since
April 2010 when the Exchange first
began charging for access to historical
quotation and transactions data from the
Exchange’s PITCH data feed (‘‘Historical
PITCH Data’’).6 In the time since, the
Exchange has made a number of
significant enhancements to its
platform, including, among other things,
implementing a more efficient means of
data delivery (via SFTP rather than
shipment of hard drives), which
consequently increases the value of the
market data product.
The Exchange now proposes to
increase the fee from $500 to $1,000 per
month of Historical Depth Data accessed
by a user.7 As is currently the case, the
data will be provided to data recipients
4 See https://datashop.cboe.com/cboe-us-equitiespitch.
5 See, for example, EDGX Fee Schedule, BZX Fee
Schedule, EDGA Fee Schedule.
6 See Securities Exchange Act Release No. 74050
(January 14, 2015), 80 FR 2989 (January 21, 2015)
(SR–BYX–2015–01); see also Securities Exchange
Act Release No. 74402 (March 2, 2015), 80 FR
12242 (March 6, 2015) (SR–BYX–2015–12),
pursuant to which ‘‘Historical PITCH’’ was renamed
‘‘Historical Depth.’’
7 As part of the proposed rule change, the
Exchange proposes to establish a separate
‘‘Historical Depth’’ table in its Fees Schedule, and
rename the current ‘‘BYX Historical Top, Historical
Depth or Historical Last Sale Data’’ to ‘‘BYX
Historical Top or Historical Last Sale Data.’’ The
Exchange also proposes to remove the fee related
to delivery per 1TB drive of data as the Exchange
does not provide 1TB drives anymore.
VerDate Sep<11>2014
17:32 Jan 17, 2024
Jkt 262001
for internal use only, and thus, no
redistribution will be permitted.
The Exchange notes that the Depth
Data products, including the Historical
Depth Data, are completely voluntary
products, in that the Exchange is not
required by any rule or regulation to
make the reports or services available
and that potential subscribers may
purchase it only if they voluntarily
choose to do so. Further, the Exchange
notes that other exchanges offer similar
products for a fee.8
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.9 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 10 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) 11 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange also believes the
proposed rule change is consistent with
Section 6(b)(4) of the Act,12 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Members and other persons using its
facilities.
In adopting Regulation NMS, the
Commission granted self-regulatory
organizations (‘‘SROs’’) and brokerdealers increased authority and
flexibility to offer new and unique
market data to the public. The
Commission has repeatedly expressed
its preference for competition over
regulatory intervention in determining
8 See, e.g., https://www.nasdaqtrader.com/
Trader.aspx?id=DPPriceListOptions#nom; and
https://www.nyse.com/publicdocs/nyse/data/
NYSE_Market_Data_Fee_Schedule.pdf.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
11 Id.
12 15 U.S.C. 78f(b)(4).
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
3457
prices, products, and services in the
securities markets. Particularly, 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.’’ 13
With respect to market data, the
decision of the United States Court of
Appeals for the District of Columbia
Circuit in NetCoalition v. SEC upheld
the Commission’s reliance on the
existence of competitive market
mechanisms to evaluate the
reasonableness and fairness of fees for
proprietary market data:
In fact, the legislative history indicates that
the Congress intended that the market system
‘evolve through the interplay of competitive
forces as unnecessary regulatory restrictions
are removed’ and that the SEC wield its
regulatory power ‘in those situations where
competition may not be sufficient,’ such as
in the creation of a ‘consolidated
transactional reporting system.’ 14
The court agreed with the
Commission’s conclusion that
‘‘Congress intended that ‘competitive
forces should dictate the services and
practices that constitute the U.S.
national market system for trading
equity securities.’ ’’ 15
More recently, the Commission
confirmed that it applies a ‘‘marketbased’’ test in its assessment of market
data fees, and that under that test:
the Commission considers whether the
exchange was subject to significant
competitive forces in setting the terms of its
proposal for [market data], including the
level of any fees. If an exchange meets this
burden, the Commission will find that its fee
rule is consistent with the Act unless there
is a substantial countervailing basis to find
that the terms of the rule violate the Act or
the rules thereunder.16
The Exchange operates in a highly
competitive environment. Indeed, there
are currently 16 registered equities
exchanges that trade equities. Based on
13 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
14 See NetCoalition v. SEC, 615 F.3d 525, 535
(D.C. Cir. 2010) (‘‘NetCoalition I’’) (quoting H.R.
Rep. No. 94–229 at 92 (1975), as reprinted in 1975
U.S.C.C.A.N. 323).
15 Id. at 535.
16 See Securities Exchange Act Release No. 34–
90217 (October 16, 2020), 85 FR 67392 (October 22,
2020) (SR–NYSENAT–2020–05) (Order Approving a
Proposed Rule Change to Establish Fees for the
NYSE National Integrated Feed) (internal quotation
marks omitted), quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74781 (December 9, 2008) (NYSE ArcaBook
Approval Order).
E:\FR\FM\18JAN1.SGM
18JAN1
khammond on DSKJM1Z7X2PROD with NOTICES
3458
Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Notices
publicly available information, no single
equities exchange has more than 13% of
the equity market share.17 Making
similar data products available to
market participants fosters competition
in the marketplace, and constrains the
ability of exchanges to charge
supercompetitive fees. In the event that
a market participant views one
exchange’s data product as more
attractive than the competition, that
market participant can, and often does,
switch between similar products. The
proposed fees are a result of the
competitive environment of the U.S.
equities industry as the Exchange seeks
to increase fees for Historical Depth
Data, while continuing to attract
purchasers.
The Exchange’s Historical Depth Data
is a competitively priced alternative to
historical depth of book data
disseminated by other national
securities exchanges. The Exchange’s
Depth Data products, including
Historical Depth Data, benefits a wide
range of investors that participate in the
national market system. As noted above,
Nasdaq and NYSE have a similar Depth
Data offerings for a charge.18 The
Exchange therefore believes that the
proposed fees are reasonable and set at
a level to compete with other equity
exchanges that offer similar reports.
Indeed, proposing fees that are
excessively higher than established fees
for similar data products would simply
serve to reduce demand for the
Exchange’s data product, which as
noted, is entirely optional. As such, if a
market participant views another
exchange’s potential report as more
attractive, then such market participant
can merely choose not to purchase the
Exchange’s Historical Depth Data
offering and instead purchase another
exchange’s similar data product, which
offers similar data points, albeit based
on other market’s trading activity.
Further, the Exchange believes the
fees are reasonable, as even with the
proposed fee increase, they continue to
represent a relatively modest fee for
historical depth of book data that has
proven valuable for investors. The
Exchange believes the fee, as proposed,
remains reasonable, as the moderate
increase is the first increase to the fee
since its introduction in 2010.
The Exchange also believes that the
proposed fee is reasonable because it is
reasonably aligned with the value and
benefits provided to users that choose to
17 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (December 8,
2023), available at https://www.cboe.com/us/
equities/market_statistics/.
18 See supra note 8.
VerDate Sep<11>2014
17:32 Jan 17, 2024
Jkt 262001
purchase Historical Depth Data from the
Exchange. As discussed above,
Historical Depth Data may be beneficial
to Members and non-Members as it may
provide helpful trading information
regarding investor sentiment that may
allow market participants to make more
informed trading decisions and may be
used to create and test trading models
and analytical strategies and provide
comprehensive insight into trading on
the Exchange. As noted above, the
Exchange has made a number of
significant enhancements to its
platform, including, among other things,
implementing a more efficient means of
data delivery (via SFTP rather than
shipment of hard drives), which
consequently increases the value of the
market data product.
In addition, the Exchange believes
that the proposed fees are equitable and
not unfairly discriminatory because they
will apply to all similarly situated
Members and non-Members that choose
to purchase Historical Depth Data
equally. As stated, Historical Depth Data
is completely optional and not
necessary for trading. Rather, the
Exchange voluntarily makes Historical
Depth Data available, and users may
choose to purchase the data based on
their own individual business needs.
Potential purchasers may purchase
Historical Depth Data at any time if they
believe it to be valuable or may decline
to purchase it. Moreover, several other
exchanges offer a similar data product
which offer the same type of data
content through similar reports.19
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange operates in a highly
competitive environment in which the
Exchange must continually adjust its
fees to remain competitive. Because
competitors are free to modify their own
fees in response, the Exchange believes
that the degree to which fee changes in
this market may impose any burden on
competition is extremely limited. As
discussed above, the Exchange’s
Historical Depth Data offering is subject
to direct competition from several other
exchanges that offer similar data
products. The proposed rule changes are
grounded in the Exchange’s efforts to
compete more effectively. In this
competitive environment, potential
purchasers are free to choose which, if
any, similar product to purchase to
19 See
PO 00000
supra note 8.
Frm 00089
Fmt 4703
Sfmt 4703
satisfy their need for market
information. As a result, the Exchange
believes this proposed rule change
permits fair competition among national
securities exchanges.
Additionally, the Exchange believes
the proposed rule change does not
impose any burden on intramarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. The proposed
Historical Depth Data fees will apply
equally to Members and non-Members
who purchase Historical Depth Data.
Moreover, purchase of Historical Depth
Data is optional.
Finally, the Exchange believes the
proposed rule change does not impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
As previously discussed, similar
products are offered by Nasdaq and
NYSE. Moreover, the Commission has
repeatedly expressed its preference for
competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’. Accordingly, the
Exchange does not believe its proposal
imposes any burden on intermarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
E:\FR\FM\18JAN1.SGM
18JAN1
Federal Register / Vol. 89, No. 12 / Thursday, January 18, 2024 / Notices
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 20 and paragraph (f) of Rule
19b–4 21 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:
khammond on DSKJM1Z7X2PROD with NOTICES
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–
CboeBYX–2024–001 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–CboeBYX–2024–001. 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–CboeBYX–2024–001 and should be
submitted on or before February 8, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–00844 Filed 1–17–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99325; File No. SR–C2–
2024–001]
Self-Regulatory Organizations; Cboe
C2 Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fee
Schedule To Add Historical Depth Data
Fee
January 11, 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 C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) 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 C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) proposes to amend
its Fees 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/
22 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
20 15
U.S.C. 78s(b)(3)(A).
21 17 CFR 240.19b–4(f).
VerDate Sep<11>2014
17:32 Jan 17, 2024
1 15
Jkt 262001
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
3459
options/regulation/rule_filings/ctwo/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fees Schedule, effective January 2,
2024.
By way of background, the Exchange
currently makes available for purchase
Depth Data, which is a daily archive of
the Exchange’s depth of book real-time
feed, which provides depth-of-book
quotations and execution information
based on options orders entered into the
System.3 The Exchange also offers
Historical Depth Data, for no charge,
which offers such data on a historical
basis, i.e., T+1 or later, dating back to
October 2019. The Depth Data and
Historical Depth Data are available to
Members and Non-Members on the
Cboe LiveVol, LLC (‘‘LiveVol’’)
website,4 for internal use only; LiveVol
is a wholly owned subsidiary of the
Exchange’s parent company, Cboe
Global Markets, Inc.
The Exchange and affiliated equities
and options exchanges (i.e., Cboe
Exchange, Inc. (‘‘Cboe Options’’), Cboe
EDGX Exchange, Inc. (‘‘EDGX’’), Cboe
BYX Exchange, Inc. (‘‘BYX’’), Cboe BZX
Exchange, Inc. (‘‘BZX’’), and Cboe
EDGA Exchange, Inc. (‘‘EDGA’’)
(collectively, ‘‘Affiliates’’) also offer
similar data products. Particularly, each
of the Exchange’s Affiliates offer a daily
and historical archive of their depth of
book real-time feed with execution
information based on their trading
3 See Exchange Fees Schedule. Daily end-of-day
delivery is provided via the DataShop SFTP. Files
will typically become available after 8 p.m. ET; see
also Exchange Rule 1.1, which defines ‘‘System.’’
4 See https://datashop.cboe.com/cboe-us-optionsmulticast-pitch.
E:\FR\FM\18JAN1.SGM
18JAN1
]]>Agencies
[Federal Register Volume 89, Number 12 (Thursday, January 18, 2024)]
[Notices]
[Pages 3456-3459]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-00844]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99320; File No. SR-CboeBYX-2024-001]
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule To Modify Historical Depth Data Fees
January 11, 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 BYX Exchange, Inc. (the ``Exchange'' or
``BYX'') 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 BYX Exchange, Inc. (the ``Exchange'' or ``BYX'') proposes to
amend its Fees 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/BYX/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fees Schedule, effective January
2, 2024.
By way of background, the Exchange currently makes available for
purchase Depth Data, which is a daily archive of the Exchange's depth
of book real-time feed, which provides depth-of-book quotations and
execution information based on equity orders entered into the
System.\3\ The Exchange also offers Historical Depth Data, which offers
such data on a historical basis, i.e. T+1 or
[[Page 3457]]
later, dating back to September 2019. The Depth Data and Historical
Depth Data are available for purchase to Members and Non-Members on the
Cboe LiveVol, LLC (``LiveVol'') website,\4\ for internal use only;
LiveVol is a wholly owned subsidiary of the Exchange's parent company,
Cboe Global Markets, Inc.
---------------------------------------------------------------------------
\3\ See BZX Fees Schedule and BZX Rule 11.22. Daily end-of-day
delivery is provided via the DataShop SFTP. Files will typically
become available after 10 p.m. ET; see also BZX Rule 1.5, which
defines ``System.''
\4\ See https://datashop.cboe.com/cboe-us-equities-pitch.
---------------------------------------------------------------------------
The Exchange's options platform (``BYX Options'') [sic] and
affiliated equities and options exchanges (i.e., Cboe Exchange, Inc.
(``Cboe Options''), Cboe C2 Exchange, Inc. (``C2 Options''), Cboe EDGX
Exchange, Inc. (``EDGX''), Cboe BZX Exchange, Inc. (``BZX''), and Cboe
EDGA Exchange, Inc. (``EDGA''), (collectively, ``Affiliates'') also
offer similar data products.\5\ Particularly, each of the Exchange's
Affiliates offer a daily and historical archive of their depth of book
real-time feed with execution information based on their trading
activity that is substantially similar to the information provided by
the Exchange through its Depth Data products.
---------------------------------------------------------------------------
\5\ See, for example, EDGX Fee Schedule, BZX Fee Schedule, EDGA
Fee Schedule.
---------------------------------------------------------------------------
Currently, the Exchange charges a fee of $500 per month of
Historical Depth Data accessed by a user. This fee has been in place,
without change, since April 2010 when the Exchange first began charging
for access to historical quotation and transactions data from the
Exchange's PITCH data feed (``Historical PITCH Data'').\6\ In the time
since, the Exchange has made a number of significant enhancements to
its platform, including, among other things, implementing a more
efficient means of data delivery (via SFTP rather than shipment of hard
drives), which consequently increases the value of the market data
product.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 74050 (January 14,
2015), 80 FR 2989 (January 21, 2015) (SR-BYX-2015-01); see also
Securities Exchange Act Release No. 74402 (March 2, 2015), 80 FR
12242 (March 6, 2015) (SR-BYX-2015-12), pursuant to which
``Historical PITCH'' was renamed ``Historical Depth.''
---------------------------------------------------------------------------
The Exchange now proposes to increase the fee from $500 to $1,000
per month of Historical Depth Data accessed by a user.\7\ As is
currently the case, the data will be provided to data recipients for
internal use only, and thus, no redistribution will be permitted.
---------------------------------------------------------------------------
\7\ As part of the proposed rule change, the Exchange proposes
to establish a separate ``Historical Depth'' table in its Fees
Schedule, and rename the current ``BYX Historical Top, Historical
Depth or Historical Last Sale Data'' to ``BYX Historical Top or
Historical Last Sale Data.'' The Exchange also proposes to remove
the fee related to delivery per 1TB drive of data as the Exchange
does not provide 1TB drives anymore.
---------------------------------------------------------------------------
The Exchange notes that the Depth Data products, including the
Historical Depth Data, are completely voluntary products, in that the
Exchange is not required by any rule or regulation to make the reports
or services available and that potential subscribers may purchase it
only if they voluntarily choose to do so. Further, the Exchange notes
that other exchanges offer similar products for a fee.\8\
---------------------------------------------------------------------------
\8\ See, e.g., https://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#nom; and https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\9\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \10\ 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) \11\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange also believes the proposed rule
change is consistent with Section 6(b)(4) of the Act,\12\ which
requires that Exchange rules provide for the equitable allocation of
reasonable dues, fees, and other charges among its Members and other
persons using its facilities.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
\12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. Particularly, 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.'' \13\
---------------------------------------------------------------------------
\13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
With respect to market data, the decision of the United States
Court of Appeals for the District of Columbia Circuit in NetCoalition
v. SEC upheld the Commission's reliance on the existence of competitive
market mechanisms to evaluate the reasonableness and fairness of fees
for proprietary market data:
In fact, the legislative history indicates that the Congress
intended that the market system `evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are
removed' and that the SEC wield its regulatory power `in those
situations where competition may not be sufficient,' such as in the
creation of a `consolidated transactional reporting system.' \14\
---------------------------------------------------------------------------
\14\ See NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010)
(``NetCoalition I'') (quoting H.R. Rep. No. 94-229 at 92 (1975), as
reprinted in 1975 U.S.C.C.A.N. 323).
The court agreed with the Commission's conclusion that ``Congress
intended that `competitive forces should dictate the services and
practices that constitute the U.S. national market system for trading
equity securities.' '' \15\
---------------------------------------------------------------------------
\15\ Id. at 535.
---------------------------------------------------------------------------
More recently, the Commission confirmed that it applies a ``market-
based'' test in its assessment of market data fees, and that under that
test:
the Commission considers whether the exchange was subject to
significant competitive forces in setting the terms of its proposal
for [market data], including the level of any fees. If an exchange
meets this burden, the Commission will find that its fee rule is
consistent with the Act unless there is a substantial countervailing
basis to find that the terms of the rule violate the Act or the
rules thereunder.\16\
---------------------------------------------------------------------------
\16\ See Securities Exchange Act Release No. 34-90217 (October
16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05)
(Order Approving a Proposed Rule Change to Establish Fees for the
NYSE National Integrated Feed) (internal quotation marks omitted),
quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74781 (December 9, 2008) (NYSE ArcaBook Approval
Order).
The Exchange operates in a highly competitive environment. Indeed,
there are currently 16 registered equities exchanges that trade
equities. Based on
[[Page 3458]]
publicly available information, no single equities exchange has more
than 13% of the equity market share.\17\ Making similar data products
available to market participants fosters competition in the
marketplace, and constrains the ability of exchanges to charge
supercompetitive fees. In the event that a market participant views one
exchange's data product as more attractive than the competition, that
market participant can, and often does, switch between similar
products. The proposed fees are a result of the competitive environment
of the U.S. equities industry as the Exchange seeks to increase fees
for Historical Depth Data, while continuing to attract purchasers.
---------------------------------------------------------------------------
\17\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (December 8, 2023), available at https://www.cboe.com/us/equities/market_statistics/.
---------------------------------------------------------------------------
The Exchange's Historical Depth Data is a competitively priced
alternative to historical depth of book data disseminated by other
national securities exchanges. The Exchange's Depth Data products,
including Historical Depth Data, benefits a wide range of investors
that participate in the national market system. As noted above, Nasdaq
and NYSE have a similar Depth Data offerings for a charge.\18\ The
Exchange therefore believes that the proposed fees are reasonable and
set at a level to compete with other equity exchanges that offer
similar reports. Indeed, proposing fees that are excessively higher
than established fees for similar data products would simply serve to
reduce demand for the Exchange's data product, which as noted, is
entirely optional. As such, if a market participant views another
exchange's potential report as more attractive, then such market
participant can merely choose not to purchase the Exchange's Historical
Depth Data offering and instead purchase another exchange's similar
data product, which offers similar data points, albeit based on other
market's trading activity.
---------------------------------------------------------------------------
\18\ See supra note 8.
---------------------------------------------------------------------------
Further, the Exchange believes the fees are reasonable, as even
with the proposed fee increase, they continue to represent a relatively
modest fee for historical depth of book data that has proven valuable
for investors. The Exchange believes the fee, as proposed, remains
reasonable, as the moderate increase is the first increase to the fee
since its introduction in 2010.
The Exchange also believes that the proposed fee is reasonable
because it is reasonably aligned with the value and benefits provided
to users that choose to purchase Historical Depth Data from the
Exchange. As discussed above, Historical Depth Data may be beneficial
to Members and non-Members as it may provide helpful trading
information regarding investor sentiment that may allow market
participants to make more informed trading decisions and may be used to
create and test trading models and analytical strategies and provide
comprehensive insight into trading on the Exchange. As noted above, the
Exchange has made a number of significant enhancements to its platform,
including, among other things, implementing a more efficient means of
data delivery (via SFTP rather than shipment of hard drives), which
consequently increases the value of the market data product.
In addition, the Exchange believes that the proposed fees are
equitable and not unfairly discriminatory because they will apply to
all similarly situated Members and non-Members that choose to purchase
Historical Depth Data equally. As stated, Historical Depth Data is
completely optional and not necessary for trading. Rather, the Exchange
voluntarily makes Historical Depth Data available, and users may choose
to purchase the data based on their own individual business needs.
Potential purchasers may purchase Historical Depth Data at any time if
they believe it to be valuable or may decline to purchase it. Moreover,
several other exchanges offer a similar data product which offer the
same type of data content through similar reports.\19\
---------------------------------------------------------------------------
\19\ See supra note 8.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange operates in a
highly competitive environment in which the Exchange must continually
adjust its fees to remain competitive. Because competitors are free to
modify their own fees in response, the Exchange believes that the
degree to which fee changes in this market may impose any burden on
competition is extremely limited. As discussed above, the Exchange's
Historical Depth Data offering is subject to direct competition from
several other exchanges that offer similar data products. The proposed
rule changes are grounded in the Exchange's efforts to compete more
effectively. In this competitive environment, potential purchasers are
free to choose which, if any, similar product to purchase to satisfy
their need for market information. As a result, the Exchange believes
this proposed rule change permits fair competition among national
securities exchanges.
Additionally, the Exchange believes the proposed rule change does
not impose any burden on intramarket competition that is not necessary
or appropriate in furtherance of the purposes of the Act. The proposed
Historical Depth Data fees will apply equally to Members and non-
Members who purchase Historical Depth Data. Moreover, purchase of
Historical Depth Data is optional.
Finally, the Exchange believes the proposed rule change does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, similar products are offered by Nasdaq and NYSE. Moreover,
the Commission has repeatedly expressed its preference for competition
over regulatory intervention in determining prices, products, and
services in the securities markets. Specifically, in Regulation NMS,
the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' The fact that this
market is competitive has also long been recognized by the courts. In
NetCoalition v. Securities and Exchange Commission, the D.C. Circuit
stated as follows: ``[n]o one disputes that competition for order flow
is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .''. Accordingly, the Exchange
does not believe its proposal imposes any burden on intermarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
[[Page 3459]]
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 \20\ and paragraph (f) of Rule 19b-4 \21\
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.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 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-CboeBYX-2024-001 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-CboeBYX-2024-001. 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-CboeBYX-2024-001 and should
be submitted on or before February 8, 2024.
---------------------------------------------------------------------------
\22\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-00844 Filed 1-17-24; 8:45 am]
BILLING CODE 8011-01-P
