Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 12893-12898 [2024-03340]
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Federal Register / Vol. 89, No. 34 / Tuesday, February 20, 2024 / Notices
undue burden on intermarket
competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 8 and
subparagraph (f)(6) of Rule 19b–4
thereunder.9
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 10 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 11
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has
requested that the Commission waive
the 30-day operative delay so that the
proposal may become operative
immediately upon filing. The Exchange
states that a waiver of the operative
delay would permit the Exchange to
promptly correct an erroneous internal
cross reference. The Commission
believes that the proposed rule change
presents no novel legal or regulatory
issues and that waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
interest. Accordingly, the Commission
hereby waives the 30-day operative
delay and designates the proposed rule
change operative upon filing.12
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
8 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
10 17 CFR 240.19b–4(f)(6).
11 17 CFR 240.19b–4(f)(6)(iii).
12 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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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 shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
MIAX–2024–08 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–MIAX–2024–08. 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
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12893
subject to copyright protection. All
submissions should refer to file number
SR–MIAX–2024–08 and should be
submitted on or before March 12, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–03335 Filed 2–16–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99531; File No. SR–
CboeEDGX–2024–011]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
February 13, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
1, 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
13 17
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 89, No. 34 / Tuesday, February 20, 2024 / Notices
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.
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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 rate
associated with fee code DX; (2) by
introducing a new Add Volume Tier
and new Non-Displayed Add Volume
Tier; (3) by modifying certain NonDisplayed Add Volume Tiers; (4) by
modifying the Cross Asset Tier; and (5)
by discontinuing Growth Tier 5, NonDisplayed Step-Up Volume Tier 3, and
Retail Growth Tier 3. The Exchange
proposes to implement these changes
effective February 1, 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 14% of the market share. Thus, in
such a low-concentrated and highly
competitive market, no single equities
exchange possesses significant pricing
power in the execution of order flow.
The Exchange in particular operates a
‘‘Maker-Taker’’ model whereby it pays
rebates to members that add liquidity
and assesses fees to those that remove
liquidity. The Exchange’s Fee Schedule
sets forth the standard rebates and rates
applied per share for orders that provide
and remove liquidity, respectively.
Currently, for orders in securities priced
at or above $1.00, the Exchange
provides a standard rebate of $0.00160
per share for orders that add liquidity
and assesses a fee of $0.0030 per share
3 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (January 24,
2024), available at https://www.cboe.com/us/
equities/market_statistics/.
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for orders that remove liquidity.4 For
orders in securities priced below $1.00,
the Exchange provides a standard rebate
of $0.00003 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.
Fee Code DX
The Exchange currently offers fee
code DX, which is appended to
Midpoint Discretionary Orders
(‘‘MDOs’’) 6 using the Quote Depletion
Protection (‘‘QDP’’) 7 order instruction
that remove liquidity from the
Exchange. QDP is designed to provide
enhanced protections to MDOs by
tracking significant executions that
constitute the best bid or offer on the
EDGX Book 8 and enabling Users 9 to
avoid potentially unfavorable
executions by preventing MDOs entered
with the optional QDP instruction from
exercising discretion to trade at more
aggressive prices when QDP has been
triggered.10 Currently, orders appended
with fee code DX are assessed a fee of
$0.00100 per share in securities at or
above $1.00 and 0.30% of dollar value
for securities priced below $1.00. The
Exchange proposes to increase the fee to
$0.00150 per share in securities at or
above $1.00. There is no proposed
change in the fee assessed to securities
priced below $1.00. The purpose of
increasing the fee associated with fee
code DX in securities priced at or above
$1.00 is for business and competitive
reasons, as the Exchange believes that
increasing such fee as proposed would
decrease the Exchange’s expenditures
with respect to transaction pricing in a
manner that is still consistent with the
4 See EDGX Equities Fee Schedule, Standard
Rates.
5 Id.
6 See Exchange Rule 11.8(g).
7 See Exchange Rule 11.8(g)(10).
8 See Exchange Rule 1.5(d).
9 See Exchange Rule 1.5(ee).
10 See Securities Exchange Act Release No. 89007
(June 4, 2020), 85 FR 35454 (June 10, 2020) (SR–
CboeEDGX–2020–010) (‘‘Notice of Filing of
Amendment No. 1 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified
by Amendment No. 1, to Amend the Rule Relating
to MidPoint Discretionary Orders to Allow Optional
Offset or Quote Depletion Protection Instructions’’).
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Exchange’s overall pricing philosophy
of encouraging added liquidity.
Add Volume Tiers
Under footnote 1 of the Fee Schedule,
the Exchange currently offers various
Add/Remove Volume Tiers. In
particular, the Exchange offers seven
Add Volume Tiers that each provide an
enhanced rebate for Members’
qualifying orders yielding fee codes 3,11
4,12 B,13 V,14 and Y 15 where a Member
reaches certain add volume-based
criteria. The Exchange now proposes to
introduce a new Add Volume Tier to
provide Members an additional manner
in which they could receive an
enhanced rebate if certain criteria is
met. The criteria for proposed Add
Volume Tier 8 is as follows:
• Add Volume Tier 8 provides a
rebate of $0.0034 per share in securities
priced at or above $1.00 to qualifying
orders (i.e., orders yielding fee codes 3,
4, B, V, or Y) where (1) Member has a
total retail ADV 16 (yielding fee codes
ZA,17 ZO,18 ZM,19 and ZR 20) ≥0.80% of
the TCV 21 or Member has a total retail
ADV (yielding fee codes ZA, ZO, ZM,
and ZR) ≥80,000,000; and (2) Member
has a total remove ADV ≥0.80% of the
TCV or Member has a total remove ADV
≥80,000,000.
In addition to the Add Volume Tiers
offered under footnote 1, the Exchange
also offers a Cross Asset Tier, which is
designed to incentivize Members to
achieve certain levels of participation
on both the Exchange’s equities and
options platform (‘‘EDGX Options’’).
The Exchange now proposes to amend
11 Fee code 3 is appended to orders adding
liquidity to EDGX in the pre and post market in
Tapes A or C securities.
12 Fee code 4 is appended to orders adding
liquidity to EDGX in the pre and post market in
Tape B securities.
13 Fee code B is appended to orders adding
liquidity to EDGX in Tape B securities.
14 Fee code V is appended to orders adding
liquidity to EDGX in Tape A securities.
15 Fee code Y is appended to orders adding
liquidity to EDGX in Tape C securities.
16 ‘‘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.
17 Fee code ZA is appended to Retail Orders
adding liquidity to EDGX.
18 Fee code ZO is appended to Retail orders
adding liquidity to EDGX in the pre and post
market.
19 Fee code ZM is appended to Retail orders
marked as Day/RHO or GTX that remove liquidity
from EDGX upon arrival.
20 Fee code ZR is appended to Retail Orders that
remove liquidity from EDGX.
21 ‘‘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.
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the criteria of the Cross Asset Tier as the
tier has expired. The proposed criteria
for the Cross Asset Tier is as follows:
• The Cross Asset Tier provides a
rebate of $0.0029 per share for securities
priced at or above $1.00 for qualifying
orders (i.e., orders yielding fee codes 3,
4, B, V, or Y) where (1) Member has a
Tape B & C ADAV ≥6,000,000; and (2)
Member has an Add ADV on EDGX
Options ≥300,000 in SPY.
The proposed Cross Asset Tier will no
longer have an expiration date as it will
no longer contain a component criteria
requiring Members to grow their volume
over a certain baseline month. In
conjunction with the proposed
modifications to the Cross Asset Tier,
the Exchange also proposes to remove
the definition of Market Maker Add 22
from the fee schedule as this term is no
longer being utilized.
Also under footnote 1, the Exchange
offers four Non-Displayed Add Volume
Tiers that each provide an enhanced
rebate for Members’ qualifying orders
yielding fee codes DM,23 HA,24 MM,25
and RP,26 where a Member reaches
certain volume-based criteria offered in
each tier. The Exchange now proposes
to introduce a new Non-Displayed Add
Volume Tier to provide Members an
additional manner in which they could
receive an enhanced rebate if certain
criteria is met. The criteria for proposed
Non-Displayed Add Volume Tier 5 is as
follows:
• Non-Displayed Add Volume Tier 5
provides a rebate of $0.0026 per share
for securities priced at or above $1.00
for qualifying orders (i.e., orders
yielding fee codes DM, HA, MM, or RP)
where (1) Member has a total retail ADV
(yielding fee codes ZA, ZO, ZM, and
ZR) ≥0.80% of the TCV or Member has
a total retail ADV (yielding fee codes
ZA, ZO, ZM, and ZR) ≥80,000,000; and
(2) Member has a total remove ADV
≥0.80% of the TCV or Member has a
total remove ADV ≥80,000,000.
In addition to introducing proposed
Non-Displayed Add Volume Tier 5, the
Exchange also proposes to amend NonDisplayed Add Volume Tiers 1–3 by
removing the second prong of criteria
from each of the three tiers and
modifying the TCV requirement for
Non-Displayed Add Volume Tiers 2 and
22 ‘‘Market Maker Add’’ means any order for the
account of a registered Market Maker on EDGX
Options appended with fee code NM or PM.
23 Fee code DM is appended to orders that add
liquidity using MidPoint Discretionary Order
within discretionary range.
24 Fee code HA is appended to non-displayed
orders that add liquidity.
25 Fee code MM is appended to non-displayed
orders that add liquidity using Mid-Point Peg.
26 Fee code RP is appended to non-displayed
orders that add liquidity using Supplemental Peg.
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3. Currently, the criteria for NonDisplayed Add Volume Tiers 1–3 is as
follows:
• Non-Displayed Add Volume Tier 1
provides a rebate of $0.0015 per share
for securities priced at or above $1.00
for qualifying orders (i.e., orders
yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV ≥0.05% of
TCV for Non-Displayed orders that yield
fee codes DM, HA, HI,27 MM or RP; or
Member has an ADAV ≥5,000,000 for
Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
• Non-Displayed Add Volume Tier 2
provides a rebate of $0.0020 per share
for securities priced at or above $1.00
for qualifying orders (i.e., orders
yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV ≥0.08% of
TCV for Non-Displayed orders that yield
fee codes DM, HA, HI, MM or RP; or
Member has an ADAV ≥8,000,000 for
Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
• Non-Displayed Add Volume Tier 3
provides a rebate of $0.0025 per share
for securities priced at or above $1.00
for qualifying orders (i.e., orders
yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV ≥0.10% of
TCV for Non-Displayed orders that yield
fee codes DM, HA, HI, MM or RP; or
Member has an ADAV ≥10,000,000 for
Non-Displayed orders that yield fee
codes DM, HA, HI, MM or RP.
The proposed criteria for NonDisplayed Add Volume Tiers 1–3 is as
follows:
• Non-Displayed Add Volume Tier 1
provides a rebate of $0.0015 per share
for securities priced at or above $1.00
for qualifying orders (i.e., orders
yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV ≥0.05% of
TCV for Non-Displayed orders that yield
fee codes DM, HA, HI, MM or RP.
• Non-Displayed Add Volume Tier 2
provides a rebate of $0.0020 per share
for securities priced at or above $1.00
for qualifying orders (i.e., orders
yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV ≥0.10% of
TCV for Non-Displayed orders that yield
fee codes DM, HA, HI, MM or RP.
• Non-Displayed Add Volume Tier 3
provides a rebate of $0.0025 per share
for securities priced at or above $1.00
for qualifying orders (i.e., orders
yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV ≥0.12% of
TCV for Non-Displayed orders that yield
fee codes DM, HA, HI, MM or RP.
Together, the proposed addition of
Add Volume Tier 8 and Non-Displayed
27 Fee code HI is appended to non-displayed
orders that receive price improvement and add
liquidity to EDGX.
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12895
Add Volume Tier 5, proposed
amendment to the Cross Asset Tier, and
proposed amendments to NonDisplayed Add Volume Tiers 1–3 are
each intended to provide Members an
opportunity to earn an enhanced rebate
by increasing their order flow to the
Exchange, which further contributes to
a deeper, more liquid market and
provides even more execution
opportunities for active market
participants. Incentivizing an increase
in liquidity adding volume through
enhanced rebate opportunities
encourages liquidity adding Members
on the Exchange to contribute to a
deeper, more liquid market, 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.
In addition to the proposed additions
and modifications to footnote 1
discussed above, the Exchange now
proposes to discontinue Growth Tier 5
and Non-Displayed Step-Up Volume
Tier 3 as the Exchange no longer wishes
to, nor is required to, maintain such
tiers. More specifically, the proposed
change removes these tiers as the
Exchange would rather redirect future
resources and funding into other
programs and tiers intended to
incentivize increased order flow.
Retail Volume Tiers
Under footnote 2 of the Fee Schedule,
the Exchange currently offers various
Retail Volume Tiers which provide an
enhanced rebate for Retail Member
Organizations (‘‘RMOs’’) 28 an
opportunity to receive an enhanced
rebate from the standard rebate for
Retail Orders 29 that add liquidity (i.e.,
yielding fee code ZA or ZO). Currently,
the Exchange offers one Retail Growth
Tiers where an RMO is eligible for an
enhanced rebate for qualifying orders
(i.e., yielding fee code ZA or ZO)
meeting certain add volume-based
criteria, including ‘‘growing’’ its volume
over a certain baseline month. The
Exchange now proposes to discontinue
Retail Growth Tier 3 as the Exchange no
longer wishes to, nor is required to,
28 See EDGX Rule 11.21(a)(1). A ‘‘Retail Member
Organization’’ or ‘‘RMO’’ is a Member (or a division
thereof) that has been approved by the Exchange
under this Rule to submit Retail Orders.
29 See EDGX Rule 11.21(a)(2). A ‘‘Retail Order’’ is
an agency or riskless principal order that meets the
criteria of FINRA Rule 5320.03 that originates from
a natural person and is submitted to the Exchange
by a Retail Member Organization, provided that no
change is made to the terms of the order with
respect to price or side of the market and the order
does not originate from a trading algorithm or any
other computerized methodology.
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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.
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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.30 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 31 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) 32 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) 33 as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its Members and
other persons using its facilities.
As described above, the Exchange
operates in a highly competitive market
in which market participants can
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. The
Exchange believes that its proposal to:
(1) introduce a new Add Volume Tier
and new Non-Displayed Add Volume
Tier; (2) modify certain Non-Displayed
Add Volume Tiers; and (3) modify the
Cross Asset Tier reflects a competitive
pricing structure designed to incentivize
market participants to direct their order
flow to the Exchange, which the
Exchange believes would enhance
market quality to the benefit of all
Members. Additionally, the Exchange
notes that relative volume-based
incentives and discounts have been
30 15
31 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
34 See, e.g., BZX Equities Fee Schedule, Footnote
1, Add/Remove Volume Tiers.
35 See, e.g., EDGX Equities Fee Schedule,
Footnote 1, Add/Remove Volume Tiers.
32 Id.
33 15
U.S.C. 78f(b)(4).
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widely adopted by exchanges,34
including the Exchange,35 and are
reasonable, equitable and nondiscriminatory because they are open to
all Members on an equal basis and
provide additional benefits or discounts
that are reasonably related to (i) the
value to an exchange’s market quality
and (ii) associated higher levels of
market activity, such as higher levels of
liquidity provision and/or growth
patterns. Competing equity exchanges
offer similar tiered pricing structures,
including schedules of rebates and fees
that apply based upon members
achieving certain volume and/or growth
thresholds, as well as assess similar fees
or rebates for similar types of orders, to
that of the Exchange.
In particular, the Exchange believes
its proposal to: (1) introduce a new Add
Volume Tier and new Non-Displayed
Add Volume Tier; (2) modify certain
Non-Displayed Add Volume Tiers; and
(3) modify the Cross Asset Tier is
reasonable because the new and revised
tiers will be available to all Members
and provide all Members with an
opportunity to receive an enhanced
rebate, including additional
opportunities to receive an enhanced
rebate with the addition of proposed
Add Volume Tier 8 and proposed NonDisplayed Add Volume Tier 5. The
Exchange further believes its proposal
to: (1) introduce a new Add Volume
Tier and new Non-Displayed Add
Volume Tier; (2) modify certain NonDisplayed Add Volume Tiers; and (3)
modify the Cross Asset Tier 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
modified criteria in proposed NonDisplayed Add Volume Tiers 1–3 and
the Cross Asset Tier is slightly more
difficult than the current criteria found
in those respective tiers, 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
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market transparency and improve
market quality, for all investors.
The Exchange believes that its
proposal to eliminate current Growth
Tier 5, Non-Displayed Step-Up Volume
Tier 3, and Retail Growth Tier 3 is
reasonable because the Exchange is not
required to maintain these tiers, nor is
it required to provide Members an
opportunity to receive enhanced
rebates. The Exchange believes its
proposal to eliminate these tiers is also
equitable and not unfairly
discriminatory because it applies to all
Members (i.e., the tiers will not be
available for any Member). The
Exchange also notes that the proposed
rule change to remove these tiers merely
results in Members not receiving an
enhanced rebate, which, as noted above,
the Exchange is not required to offer or
maintain. Furthermore, the proposed
rule change to eliminate current Growth
Tier 5, Non-Displayed Step-Up Volume
Tier 3, and Retail Growth Tier 3 enables
the Exchange to redirect resources and
funding into other programs and tiers
intended to incentivize increased order
flow.
Further, the Exchange believes that its
proposal to modify the fee associated
with fee code DX 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 increased fee of
$0.0015 per share is reasonable and
appropriate because while it is slightly
higher than the existing fee, it remains
lower than other fees assessed by the
Exchange in order to remove liquidity.36
The Exchange further believes that the
proposed increase to the fee associated
with fee code DX is not unfairly
discriminatory because it applies to all
Members equally, in that all Members
will be assessed the higher fee upon
submitting orders appended with fee
codes DX.
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
36 See e.g., EDGX Equity Fee Schedule, Fee Codes
and Associated Fees. For example, orders with a fee
code of BB, N, or W are assessed a fee of $0.00300.
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ddrumheller on DSK120RN23PROD with NOTICES1
predicting with certainty how the
proposed changes will impact Member
activity, based on the prior months
volume, the Exchange anticipates that at
least one Member will be able to satisfy
proposed Add Volume Tier 8, at least
one Member will be able to satisfy the
proposed Cross Asset Tier, at least one
Member will be able to satisfy proposed
Non-Displayed Tier 1, at least two
Members will be able to satisfy
proposed Non-Displayed Tier 2, at least
one Member will be able to satisfy
proposed Non-Displayed Tier 3, and at
least one Member will be able to satisfy
proposed Non-Displayed Add Volume
Tier 5. 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: (1) introduce
a new Add Volume Tier and new NonDisplayed Add Volume Tier; (2) modify
certain Non-Displayed Add Volume
Tiers; and (3) modify the Cross Asset
Tier will apply to all Members equally
in that all Members are eligible for the
proposed new and revised tiers, have a
reasonable opportunity to meet the
proposed new and revised tiers’ criteria
and will receive the enhanced rebate on
their qualifying orders if such criteria is
met. Further, the proposed change to the
fee associated with fee code DX do not
impose an unnecessary burden as all
Members will be subject to the higher
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16:54 Feb 16, 2024
Jkt 262001
fee assessed to orders appended with fee
code DX. 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 existing pricing incentives
and adopting new 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 Growth Tier 5, NonDisplayed Step-Up Volume Tier 3, and
Retail Growth Tier 3 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
eliminate Growth Tier 5, Non-Displayed
Step-Up Volume Tier 3, and Retail
Growth Tier 3 will not impose any
burden on intramarket competition
because the changes apply to all
Members uniformly, as in, the tiers will
no longer be available to any Member.
Next, the Exchange believes the
proposed rule changes does not impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
As previously discussed, the Exchange
operates in a highly competitive market.
Members have numerous alternative
venues that they may participate on and
direct their order flow, including other
equities exchanges, off-exchange
venues, and alternative trading systems.
Additionally, the Exchange represents a
small percentage of the overall market.
Based on publicly available information,
no single equities exchange has more
than 14% of the market share.37
Therefore, no exchange possesses
significant pricing power in the
execution of order flow. Indeed,
participants can readily choose to send
their orders to other exchange and offexchange venues if they deem fee levels
at those other venues to be more
favorable. Moreover, the Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
37 Supra
PO 00000
note 3.
Frm 00086
Fmt 4703
Sfmt 4703
12897
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 38 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’.39 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 40 and paragraph (f) of Rule
19b–4 41 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
38 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
39 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
40 15 U.S.C. 78s(b)(3)(A).
41 17 CFR 240.19b–4(f).
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Federal Register / Vol. 89, No. 34 / Tuesday, February 20, 2024 / Notices
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:
[FR Doc. 2024–03340 Filed 2–16–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 34–99526; File No. SR–MIAX–
2024–07]
• 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–2024–011 on the subject
line.
Self-Regulatory Organizations; Miami
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Its Fee Schedule for
Purge Ports
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
ddrumheller on DSK120RN23PROD with NOTICES1
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.42
Sherry R. Haywood,
Assistant Secretary.
All submissions should refer to file
number SR–CboeEDGX–2024–011. 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–2024–011 and should be
submitted on or before March 12, 2024.
VerDate Sep<11>2014
16:54 Feb 16, 2024
Jkt 262001
February 13, 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
31, 2024, Miami International Securities
Exchange, LLC (‘‘MIAX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) a
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
The Exchange proposes to amend the
MIAX Options Exchange Fee Schedule
(the ‘‘Fee Schedule’’) to amend fees for
Purge Ports.3
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxglobal.com/markets/
us-options/miax-options/rule-filings, at
MIAX’s principal office, 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
42 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 The proposed fee change is based on a recent
proposal by Nasdaq Phlx LLC (‘‘Phlx’’) to adopt fees
for purge ports. See Securities Exchange Act
Release No. 97825 (June 30, 2023), 88 FR 43405
(July 7, 2023) (SR–Phlx–2023–28).
1 15
PO 00000
Frm 00087
Fmt 4703
Sfmt 4703
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 the
fees for Purge Ports, which is a function
enabling Market Makers 4 to cancel all
open quotes or a subset of open quotes
through a single cancel message. The
Exchange currently provides Market
Makers the option to purchase Purge
Ports to assist in their quoting activity.
Purge Ports provide Market Makers with
the ability to send purge messages to the
Exchange System.5 Purge Ports are not
capable of sending or receiving any
other type of messages or information.
The use of Purge Ports is completely
optional and no rule or regulation
requires that a Market Maker utilize
them.
The Exchange initially filed the
proposal on September 29, 2023 (SR–
MIAX–2023–37) (the ‘‘Initial
Proposal’’).6 On November 22, 2023, the
Exchange withdrew the Initial Proposal
and replaced with a revised filing (SR–
MIAX–2023–43) (the ‘‘Second
Proposal’’).7 On January 31, 2024, the
Exchange withdrew the Second
Proposal and replaced it with this
further revised filing (the ‘‘Third
Proposal’’) (SR–MIAX–2024–07).
The Exchange is including a cost
analysis in this filing to justify the
proposed fees. As described more fully
below, the cost analysis includes,
among other things, descriptions of how
the Exchange allocated costs among it
and its affiliated exchanges for similar
proposed fee changes (separately
between MIAX Pearl Options 8 and
4 The term ‘‘Market Makers’’ refers to Lead Market
Makers (‘‘LMMs’’), Primary Lead Market Makers
(‘‘PLMMs’’), and Registered Market Makers
(‘‘RMMs’’) collectively. See Exchange Rule 100.
5 The term ‘‘System’’ means the automated
trading system used by the Exchange for the trading
of securities. See Exchange Rule 100.
6 See Securities Exchange Act Release No. 98732
(October 12, 2023), 88 FR 71913 (October 18, 2023)
(SR–MIAX–2023–37).
7 See Securities Exchange Act Release No. 99088
(December 5, 2023), 88 FR 85958 (December 11,
2023) (SR–MIAX–2023–43).
8 MIAX Pearl Options is the options market of
MIAX PEARL, LLC (‘‘MIAX Pearl’’), which also
operates an equities trading facility called MIAX
Pearl Equities. See Exchange Rule 100 and MIAX
Pearl Rule 1901.
E:\FR\FM\20FEN1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 34 (Tuesday, February 20, 2024)]
[Notices]
[Pages 12893-12898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03340]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99531; File No. SR-CboeEDGX-2024-011]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule
February 13, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 1, 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
[[Page 12894]]
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fee Schedule applicable to its
equities trading platform (``EDGX Equities'') as follows: (1) by
modifying the rate associated with fee code DX; (2) by introducing a
new Add Volume Tier and new Non-Displayed Add Volume Tier; (3) by
modifying certain Non-Displayed Add Volume Tiers; (4) by modifying the
Cross Asset Tier; and (5) by discontinuing Growth Tier 5, Non-Displayed
Step-Up Volume Tier 3, and Retail Growth Tier 3. The Exchange proposes
to implement these changes effective February 1, 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
14% of the market share. Thus, in such a low-concentrated and highly
competitive market, no single equities exchange possesses significant
pricing power in the execution of order flow. The Exchange in
particular operates a ``Maker-Taker'' model whereby it pays rebates to
members that add liquidity and assesses fees to those that remove
liquidity. The Exchange's Fee Schedule sets forth the standard rebates
and rates applied per share for orders that provide and remove
liquidity, respectively. Currently, for orders in securities priced at
or above $1.00, the Exchange provides a standard rebate of $0.00160 per
share for orders that add liquidity and assesses a fee of $0.0030 per
share for orders that remove liquidity.\4\ For orders in securities
priced below $1.00, the Exchange provides a standard rebate of $0.00003
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 (January 24, 2024), available at https://www.cboe.com/us/equities/market_statistics/.
\4\ See EDGX Equities Fee Schedule, Standard Rates.
\5\ Id.
---------------------------------------------------------------------------
Fee Code DX
The Exchange currently offers fee code DX, which is appended to
Midpoint Discretionary Orders (``MDOs'') \6\ using the Quote Depletion
Protection (``QDP'') \7\ order instruction that remove liquidity from
the Exchange. QDP is designed to provide enhanced protections to MDOs
by tracking significant executions that constitute the best bid or
offer on the EDGX Book \8\ and enabling Users \9\ to avoid potentially
unfavorable executions by preventing MDOs entered with the optional QDP
instruction from exercising discretion to trade at more aggressive
prices when QDP has been triggered.\10\ Currently, orders appended with
fee code DX are assessed a fee of $0.00100 per share in securities at
or above $1.00 and 0.30% of dollar value for securities priced below
$1.00. The Exchange proposes to increase the fee to $0.00150 per share
in securities at or above $1.00. There is no proposed change in the fee
assessed to securities priced below $1.00. The purpose of increasing
the fee associated with fee code DX in securities priced at or above
$1.00 is for business and competitive reasons, as the Exchange believes
that increasing such fee 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.
---------------------------------------------------------------------------
\6\ See Exchange Rule 11.8(g).
\7\ See Exchange Rule 11.8(g)(10).
\8\ See Exchange Rule 1.5(d).
\9\ See Exchange Rule 1.5(ee).
\10\ See Securities Exchange Act Release No. 89007 (June 4,
2020), 85 FR 35454 (June 10, 2020) (SR-CboeEDGX-2020-010) (``Notice
of Filing of Amendment No. 1 and Order Granting Accelerated Approval
of a Proposed Rule Change, as Modified by Amendment No. 1, to Amend
the Rule Relating to MidPoint Discretionary Orders to Allow Optional
Offset or Quote Depletion Protection Instructions'').
---------------------------------------------------------------------------
Add Volume Tiers
Under footnote 1 of the Fee Schedule, the Exchange currently offers
various Add/Remove Volume Tiers. In particular, the Exchange offers
seven Add Volume Tiers that each provide an enhanced rebate for
Members' qualifying orders yielding fee codes 3,\11\ 4,\12\ B,\13\
V,\14\ and Y \15\ where a Member reaches certain add volume-based
criteria. The Exchange now proposes to introduce a new Add Volume Tier
to provide Members an additional manner in which they could receive an
enhanced rebate if certain criteria is met. The criteria for proposed
Add Volume Tier 8 is as follows:
---------------------------------------------------------------------------
\11\ Fee code 3 is appended to orders adding liquidity to EDGX
in the pre and post market in Tapes A or C securities.
\12\ Fee code 4 is appended to orders adding liquidity to EDGX
in the pre and post market in Tape B securities.
\13\ Fee code B is appended to orders adding liquidity to EDGX
in Tape B securities.
\14\ Fee code V is appended to orders adding liquidity to EDGX
in Tape A securities.
\15\ Fee code Y is appended to orders adding liquidity to EDGX
in Tape C securities.
---------------------------------------------------------------------------
Add Volume Tier 8 provides a rebate of $0.0034 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes 3, 4, B, V, or Y) where (1) Member has a
total retail ADV \16\ (yielding fee codes ZA,\17\ ZO,\18\ ZM,\19\ and
ZR \20\) >=0.80% of the TCV \21\ or Member has a total retail ADV
(yielding fee codes ZA, ZO, ZM, and ZR) >=80,000,000; and (2) Member
has a total remove ADV >=0.80% of the TCV or Member has a total remove
ADV >=80,000,000.
---------------------------------------------------------------------------
\16\ ``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.
\17\ Fee code ZA is appended to Retail Orders adding liquidity
to EDGX.
\18\ Fee code ZO is appended to Retail orders adding liquidity
to EDGX in the pre and post market.
\19\ Fee code ZM is appended to Retail orders marked as Day/RHO
or GTX that remove liquidity from EDGX upon arrival.
\20\ Fee code ZR is appended to Retail Orders that remove
liquidity from EDGX.
\21\ ``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.
---------------------------------------------------------------------------
In addition to the Add Volume Tiers offered under footnote 1, the
Exchange also offers a Cross Asset Tier, which is designed to
incentivize Members to achieve certain levels of participation on both
the Exchange's equities and options platform (``EDGX Options''). The
Exchange now proposes to amend
[[Page 12895]]
the criteria of the Cross Asset Tier as the tier has expired. The
proposed criteria for the Cross Asset Tier is as follows:
The Cross Asset Tier provides a rebate of $0.0029 per
share for securities priced at or above $1.00 for qualifying orders
(i.e., orders yielding fee codes 3, 4, B, V, or Y) where (1) Member has
a Tape B & C ADAV >=6,000,000; and (2) Member has an Add ADV on EDGX
Options >=300,000 in SPY.
The proposed Cross Asset Tier will no longer have an expiration
date as it will no longer contain a component criteria requiring
Members to grow their volume over a certain baseline month. In
conjunction with the proposed modifications to the Cross Asset Tier,
the Exchange also proposes to remove the definition of Market Maker Add
\22\ from the fee schedule as this term is no longer being utilized.
---------------------------------------------------------------------------
\22\ ``Market Maker Add'' means any order for the account of a
registered Market Maker on EDGX Options appended with fee code NM or
PM.
---------------------------------------------------------------------------
Also under footnote 1, the Exchange offers four Non-Displayed Add
Volume Tiers that each provide an enhanced rebate for Members'
qualifying orders yielding fee codes DM,\23\ HA,\24\ MM,\25\ and
RP,\26\ where a Member reaches certain volume-based criteria offered in
each tier. The Exchange now proposes to introduce a new Non-Displayed
Add Volume Tier to provide Members an additional manner in which they
could receive an enhanced rebate if certain criteria is met. The
criteria for proposed Non-Displayed Add Volume Tier 5 is as follows:
---------------------------------------------------------------------------
\23\ Fee code DM is appended to orders that add liquidity using
MidPoint Discretionary Order within discretionary range.
\24\ Fee code HA is appended to non-displayed orders that add
liquidity.
\25\ Fee code MM is appended to non-displayed orders that add
liquidity using Mid-Point Peg.
\26\ Fee code RP is appended to non-displayed orders that add
liquidity using Supplemental Peg.
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Non-Displayed Add Volume Tier 5 provides a rebate of
$0.0026 per share for securities priced at or above $1.00 for
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP)
where (1) Member has a total retail ADV (yielding fee codes ZA, ZO, ZM,
and ZR) >=0.80% of the TCV or Member has a total retail ADV (yielding
fee codes ZA, ZO, ZM, and ZR) >=80,000,000; and (2) Member has a total
remove ADV >=0.80% of the TCV or Member has a total remove ADV
>=80,000,000.
In addition to introducing proposed Non-Displayed Add Volume Tier
5, the Exchange also proposes to amend Non-Displayed Add Volume Tiers
1-3 by removing the second prong of criteria from each of the three
tiers and modifying the TCV requirement for Non-Displayed Add Volume
Tiers 2 and 3. Currently, the criteria for Non-Displayed Add Volume
Tiers 1-3 is as follows:
Non-Displayed Add Volume Tier 1 provides a rebate of
$0.0015 per share for securities priced at or above $1.00 for
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV >=0.05% of TCV for Non-Displayed orders that
yield fee codes DM, HA, HI,\27\ MM or RP; or Member has an ADAV
>=5,000,000 for Non-Displayed orders that yield fee codes DM, HA, HI,
MM or RP.
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\27\ Fee code HI is appended to non-displayed orders that
receive price improvement and add liquidity to EDGX.
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Non-Displayed Add Volume Tier 2 provides a rebate of
$0.0020 per share for securities priced at or above $1.00 for
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV >=0.08% of TCV for Non-Displayed orders that
yield fee codes DM, HA, HI, MM or RP; or Member has an ADAV >=8,000,000
for Non-Displayed orders that yield fee codes DM, HA, HI, MM or RP.
Non-Displayed Add Volume Tier 3 provides a rebate of
$0.0025 per share for securities priced at or above $1.00 for
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV >=0.10% of TCV for Non-Displayed orders that
yield fee codes DM, HA, HI, MM or RP; or Member has an ADAV
>=10,000,000 for Non-Displayed orders that yield fee codes DM, HA, HI,
MM or RP.
The proposed criteria for Non-Displayed Add Volume Tiers 1-3 is as
follows:
Non-Displayed Add Volume Tier 1 provides a rebate of
$0.0015 per share for securities priced at or above $1.00 for
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV >=0.05% of TCV for Non-Displayed orders that
yield fee codes DM, HA, HI, MM or RP.
Non-Displayed Add Volume Tier 2 provides a rebate of
$0.0020 per share for securities priced at or above $1.00 for
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV >=0.10% of TCV for Non-Displayed orders that
yield fee codes DM, HA, HI, MM or RP.
Non-Displayed Add Volume Tier 3 provides a rebate of
$0.0025 per share for securities priced at or above $1.00 for
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP)
where Member has an ADAV >=0.12% of TCV for Non-Displayed orders that
yield fee codes DM, HA, HI, MM or RP.
Together, the proposed addition of Add Volume Tier 8 and Non-
Displayed Add Volume Tier 5, proposed amendment to the Cross Asset
Tier, and proposed amendments to Non-Displayed Add Volume Tiers 1-3 are
each intended to provide Members an opportunity to earn an enhanced
rebate by increasing their order flow to the Exchange, which further
contributes to a deeper, more liquid market and provides even more
execution opportunities for active market participants. Incentivizing
an increase in liquidity adding volume through enhanced rebate
opportunities encourages liquidity adding Members on the Exchange to
contribute to a deeper, more liquid market, 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.
In addition to the proposed additions and modifications to footnote
1 discussed above, the Exchange now proposes to discontinue Growth Tier
5 and Non-Displayed Step-Up Volume Tier 3 as the Exchange no longer
wishes to, nor is required to, maintain such tiers. More specifically,
the proposed change removes these tiers as the Exchange would rather
redirect future resources and funding into other programs and tiers
intended to incentivize increased order flow.
Retail Volume Tiers
Under footnote 2 of the Fee Schedule, the Exchange currently offers
various Retail Volume Tiers which provide an enhanced rebate for Retail
Member Organizations (``RMOs'') \28\ an opportunity to receive an
enhanced rebate from the standard rebate for Retail Orders \29\ that
add liquidity (i.e., yielding fee code ZA or ZO). Currently, the
Exchange offers one Retail Growth Tiers where an RMO is eligible for an
enhanced rebate for qualifying orders (i.e., yielding fee code ZA or
ZO) meeting certain add volume-based criteria, including ``growing''
its volume over a certain baseline month. The Exchange now proposes to
discontinue Retail Growth Tier 3 as the Exchange no longer wishes to,
nor is required to,
[[Page 12896]]
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.
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\28\ See EDGX Rule 11.21(a)(1). A ``Retail Member Organization''
or ``RMO'' is a Member (or a division thereof) that has been
approved by the Exchange under this Rule to submit Retail Orders.
\29\ See EDGX Rule 11.21(a)(2). A ``Retail Order'' is an agency
or riskless principal order that meets the criteria of FINRA Rule
5320.03 that originates from a natural person and is submitted to
the Exchange by a Retail Member Organization, provided that no
change is made to the terms of the order with respect to price or
side of the market and the order does not originate from a trading
algorithm or any other computerized methodology.
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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.\30\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \31\ 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) \32\ 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) \33\
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.
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\30\ 15 U.S.C. 78f(b).
\31\ 15 U.S.C. 78f(b)(5).
\32\ Id.
\33\ 15 U.S.C. 78f(b)(4).
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As described above, the Exchange operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. The Exchange believes that
its proposal to: (1) introduce a new Add Volume Tier and new Non-
Displayed Add Volume Tier; (2) modify certain Non-Displayed Add Volume
Tiers; and (3) modify the Cross Asset Tier reflects a competitive
pricing structure designed to incentivize market participants to direct
their order flow to the Exchange, which the Exchange believes would
enhance market quality to the benefit of all Members. Additionally, the
Exchange notes that relative volume-based incentives and discounts have
been widely adopted by exchanges,\34\ including the Exchange,\35\ 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.
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\34\ See, e.g., BZX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
\35\ See, e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
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In particular, the Exchange believes its proposal to: (1) introduce
a new Add Volume Tier and new Non-Displayed Add Volume Tier; (2) modify
certain Non-Displayed Add Volume Tiers; and (3) modify the Cross Asset
Tier is reasonable because the new and revised tiers will be available
to all Members and provide all Members with an opportunity to receive
an enhanced rebate, including additional opportunities to receive an
enhanced rebate with the addition of proposed Add Volume Tier 8 and
proposed Non-Displayed Add Volume Tier 5. The Exchange further believes
its proposal to: (1) introduce a new Add Volume Tier and new Non-
Displayed Add Volume Tier; (2) modify certain Non-Displayed Add Volume
Tiers; and (3) modify the Cross Asset Tier 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 modified
criteria in proposed Non-Displayed Add Volume Tiers 1-3 and the Cross
Asset Tier is slightly more difficult than the current criteria found
in those respective tiers, 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.
The Exchange believes that its proposal to eliminate current Growth
Tier 5, Non-Displayed Step-Up Volume Tier 3, and Retail Growth Tier 3
is reasonable because the Exchange is not required to maintain these
tiers, nor is it required to provide Members an opportunity to receive
enhanced rebates. The Exchange believes its proposal to eliminate these
tiers is also equitable and not unfairly discriminatory because it
applies to all Members (i.e., the tiers will not be available for any
Member). The Exchange also notes that the proposed rule change to
remove these tiers merely results in Members not receiving an enhanced
rebate, which, as noted above, the Exchange is not required to offer or
maintain. Furthermore, the proposed rule change to eliminate current
Growth Tier 5, Non-Displayed Step-Up Volume Tier 3, and Retail Growth
Tier 3 enables the Exchange to redirect resources and funding into
other programs and tiers intended to incentivize increased order flow.
Further, the Exchange believes that its proposal to modify the fee
associated with fee code DX 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 increased fee of $0.0015 per share is
reasonable and appropriate because while it is slightly higher than the
existing fee, it remains lower than other fees assessed by the Exchange
in order to remove liquidity.\36\ The Exchange further believes that
the proposed increase to the fee associated with fee code DX is not
unfairly discriminatory because it applies to all Members equally, in
that all Members will be assessed the higher fee upon submitting orders
appended with fee codes DX.
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\36\ See e.g., EDGX Equity Fee Schedule, Fee Codes and
Associated Fees. For example, orders with a fee code of BB, N, or W
are assessed a fee of $0.00300.
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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
[[Page 12897]]
predicting with certainty how the proposed changes will impact Member
activity, based on the prior months volume, the Exchange anticipates
that at least one Member will be able to satisfy proposed Add Volume
Tier 8, at least one Member will be able to satisfy the proposed Cross
Asset Tier, at least one Member will be able to satisfy proposed Non-
Displayed Tier 1, at least two Members will be able to satisfy proposed
Non-Displayed Tier 2, at least one Member will be able to satisfy
proposed Non-Displayed Tier 3, and at least one Member will be able to
satisfy proposed Non-Displayed Add Volume Tier 5. 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: (1) introduce a new Add Volume Tier and new Non-Displayed
Add Volume Tier; (2) modify certain Non-Displayed Add Volume Tiers; and
(3) modify the Cross Asset Tier will apply to all Members equally in
that all Members are eligible for the proposed new and revised tiers,
have a reasonable opportunity to meet the proposed new and revised
tiers' criteria and will receive the enhanced rebate on their
qualifying orders if such criteria is met. Further, the proposed change
to the fee associated with fee code DX do not impose an unnecessary
burden as all Members will be subject to the higher fee assessed to
orders appended with fee code DX. 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
existing pricing incentives and adopting new 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 Growth Tier 5,
Non-Displayed Step-Up Volume Tier 3, and Retail Growth Tier 3 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 eliminate Growth Tier 5, Non-Displayed Step-Up
Volume Tier 3, and Retail Growth Tier 3 will not impose any burden on
intramarket competition because the changes apply to all Members
uniformly, as in, the tiers will no longer be available to any Member.
Next, the Exchange believes the proposed rule changes does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the
Exchange represents a small percentage of the overall market. Based on
publicly available information, no single equities exchange has more
than 14% of the market share.\37\ Therefore, no exchange possesses
significant pricing power in the execution of order flow. Indeed,
participants can readily choose to send their orders to other exchange
and off-exchange venues if they deem fee levels at those other venues
to be more favorable. Moreover, the Commission has repeatedly expressed
its preference for competition over regulatory intervention in
determining prices, products, and services in the securities markets.
Specifically, in Regulation NMS, the Commission highlighted the
importance of market forces in determining prices and SRO revenues and,
also, recognized that current regulation of the market system ``has
been remarkably successful in promoting market competition in its
broader forms that are most important to investors and listed
companies.'' \38\ The fact that this market is competitive has also
long been recognized by the courts. In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .''.\39\ Accordingly, the Exchange does not believe its
proposed fee change imposes any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
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\37\ Supra note 3.
\38\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\39\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \40\ and paragraph (f) of Rule 19b-4 \41\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule
[[Page 12898]]
change should be approved or disapproved.
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\40\ 15 U.S.C. 78s(b)(3)(A).
\41\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-CboeEDGX-2024-011 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-2024-011. 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-2024-011 and should
be submitted on or before March 12, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\42\
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\42\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-03340 Filed 2-16-24; 8:45 am]
BILLING CODE 8011-01-P
