Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule, 19617-19620 [2024-05737]

Download as PDF Federal Register / Vol. 89, No. 54 / Tuesday, March 19, 2024 / Notices 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–NYSEARCA–2024–23 and should be submitted on or before April 9, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–05739 Filed 3–18–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–99727; File No. SR–CBOE– 2024–010] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule March 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 29, 2024, Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) filed with the Securities and Exchange Commission (the ‘‘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. ddrumheller on DSK120RN23PROD with NOTICES1 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe Options’’) 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://www.cboe.com/ AboutCBOE/CBOELegalRegulatory Home.aspx), at the Exchange’s Office of 21 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 17:41 Mar 18, 2024 Jkt 262001 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.3 Specifically, the Exchange proposes to amend the Global Trading Hours (‘‘GTH’’) Executing Agent Subsidy Program, set forth in the Fees Schedule. The GTH Executing Agent Subsidy Program offers a monthly subsidy to Trading Permit Holders (‘‘TPHs’’) with executing agent operations 4 during the GTH trading session. Pursuant to the current program, a designated GTH executing agent receives the monthly subsidy amount that corresponds to the number of contracts executed on behalf of customers (including public and brokerdealer customers) during GTH in a calendar month per the GTH Executing Agent Subsidy Program table, as shown in the table below. Qualifying customer volume is limited to those symbols that trade during GTH (i.e., SPX, VIX, and XSP). 19617 form to the Exchange no later than 3:00 p.m. on the second to last business day of a calendar month to be designated an GTH executing agent under the program, and thus eligible for the subsidy, beginning the following calendar month. The TPH must include on or with the form information demonstrating it maintains an GTH executing agent operation: (1) physically staffed throughout each entire GTH trading session and (2) willing to accept and execute orders on behalf of customers, including customers for which the agent does not hold accounts. The designation will be effective the first business day of the following calendar month, subject to the Exchange’s confirmation the TPH’s GTH executing agent operations satisfies these two conditions and will remain in effect until the Exchange receives an email from the TPH terminating its designation or the Exchange determines the TPH’s GTH executing agent operation no longer satisfies these two conditions. The Exchange proposes to amend the GTH Executing Agent Subsidy Program to only include SPX and VIX options that trade during GTH; as such, the Exchange proposes to add clarifying language to the table to reflect that qualifying customer volume under the program is limited to GTH monthly customer SPX and VIX Options volume. The Exchange also proposes to increase the GTH monthly customer volume thresholds, as well as certain subsidy amounts, as shown in the table below. GTH monthly customer SPX and VIX options volume 0–19,999 contracts ............... 20,000–39,999 contracts ...... 40,000–99,999 contracts ...... 100,000+ contracts ............... Subsidy $0.00 10,000 15,000 50,000 The proposed changes reflect the growth of the GTH trading session, which has occurred predominantly in 0–999 contracts .................... $0.00 SPX and VIX options. The proposed 1,000–4,999 contracts .......... 5,000 changes are designed to continue to 5,000–29,999 contracts ........ 15,000 encourage designated GTH executing 30,000+ contracts ................. 20,000 agents to increase their order flow executed as agent in SPX and VIX To become a designated GTH options that trade during GTH, to meet executing agent, a TPH must submit a the proposed amended volume thresholds and receive the proposed 3 The Exchange initially filed the proposed fee changes on February 1, 2024 (SR–CBOE–2024–007). corresponding subsidies. The Exchange On February 14, 2024, the Exchange withdrew that notes that incentivizing TPHs to filing and submitted SR–CBOE–2024–009. On conduct executing agent operations February 29, 2024, the Exchange withdrew that willing to accept orders from all filing and submitted SR–CBOE–2024–010. 4 An executing agent operation is one that accepts customers during GTH is intended to orders from customers (who may be public or increase customer accessibility to the broker-dealer customers and including customers GTH trading session. The Exchange for which the agent does not hold accounts) and believes that increased order flow submits the orders for execution (either directly to through designated GTH executing the Exchange or through another TPH). PO 00000 GTH monthly customer volume Frm 00051 Fmt 4703 Sfmt 4703 Subsidy E:\FR\FM\19MRN1.SGM 19MRN1 19618 Federal Register / Vol. 89, No. 54 / Tuesday, March 19, 2024 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 agents would allow the Exchange to grow participation during GTH, which may benefit all market participants, as additional liquidity to the Exchange during GTH would create more trading opportunities during GTH, and in turn attract market participants to submit additional order flow during GTH. 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.5 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 6 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) 7 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,8 which requires that Exchange rules provide for the equitable allocation of reasonable dues, fees, and other charges among its Trading Permit Holders and other persons using its facilities. The Exchange believes that the proposed rule change to amend the volume thresholds and certain corresponding subsidies for the GTH Executing Agent Subsidy Program is reasonably designed to encourage designated GTH executing agents to increase their customer order flow in SPX and VIX options traded during GTH. The Exchange believes the tiers, as proposed, are reasonable because they amend existing opportunities in a manner that incentivizes increased order flow to the GTH trading session via incrementally more challenging criteria in order to receive incrementally increasing subsidy amounts. 5 15 6 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 7 Id. 8 15 U.S.C. 78f(b)(4). VerDate Sep<11>2014 17:41 Mar 18, 2024 Jkt 262001 Further, the Exchange believes such changes are reasonable, as the proposed increased subsidy amounts remain commensurate with the higher volume thresholds proposed. The current program provides a maximum subsidy of $20,000 for designated GTH executing agents that submit 30,000 customer contracts or more in XSP, SPX or VIX options. The amended tiers, as proposed, present additional opportunities for designated GTH executing agents to receive larger subsidies than that which is currently offered by the program, for submitting a larger number of customer orders. Under the program as proposed, the maximum subsidy available is $50,000 for designated GTH executing agents that submit 100,000 customer contracts or more in SPX or VIX options. As noted above, the proposed changes reflect the growth of the GTH trading session, which has occurred predominantly in SPX and VIX options. The proposed changes are designed to continue to encourage designated GTH executing agents to increase their order flow executed as agent in SPX and VIX options that trade during GTH, to meet the proposed amended volume thresholds and receive the proposed corresponding subsidies. The Exchange believes that increased order flow would allow the Exchange to grow participation in the GTH trading session to the benefit of all market participants that trade during GTH, by providing greater trading opportunities as a result of increased liquidity, thereby attracting additional order flow from market participants during GTH. The Exchange believes the proposed volume thresholds and corresponding subsidy amounts provide benefits, similar to other volume incentives offered by the Exchange and other options exchanges, that are reasonably related to the value to an exchange’s market quality and associated higher levels of market activity, in this case, increased executing agent operations. The proposed changes to the volume thresholds are designed as an incentive to any and all TPHs conducting executing agent operations willing to accept orders from all customers during GTH to submit additional customer orders to the Exchange. Each will have the opportunity to submit the requisite order flow and will receive the applicable subsidy if the volume criteria is met. Under current criteria, one firm qualifies for the $15,000 subsidy and two firms qualify for the $20,000 subsidy. While the Exchange has no way of predicting with certainty how the proposed tiers will impact TPH PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 activity, the Exchange anticipates that approximately one TPH may be able to achieve the $10,000 subsidy (20,000– 39,999 contracts tier), one TPH may be able to achieve the $15,000 subsidy (40,000–99,999 contracts tier), and one TPH may be able to achieve the $50,000 subsidy (100,000 or more contracts tier). The Exchange also notes that the proposed volume tiers will not adversely impact any TPH’s pricing or their ability to qualify for other incentive programs. Rather, should a TPH that conducts executing agent operations not meet the criteria for a tier, the TPH will merely not receive the corresponding subsidy. Further, the Exchange believes limiting the GTH Executing Agent Subsidy Program to only include SPX and VIX options that trade during GTH is reasonable, given the Exchange wishes to incentivize increased order flow in SPX and VIX options during GTH. The Exchange also believes the proposed change is reasonable, as the Exchange no longer wishes to include XSP in the GTH Executing Agent Subsidy Program and is not required to do so. The Exchange also believes that the proposed rule change is equitable and not unfairly discriminatory. In particular, the Exchange believes that increasing the volume thresholds and certain corresponding subsidies for the GTH Executing Agent Subsidy Program is equitable and not unfairly discriminatory because TPHs that conduct executing agent operations willing to accept orders from all customers take on additional risks and potential costs (including those related to staffing and clearing) associated with this type of business. Such TPHs also provide benefits to investors during GTH, including increased customer accessibility to the GTH trading session and increased order flow. All TPHs that conduct this type of operation during GTH will continue to have the opportunity to become a designated GTH executing agent and thus eligible for the monthly subsidy commensurate with applicable customer volumes. As noted above, the proposed changes reflect the growth of the GTH trading session and are designed to continue to encourage designated GTH executing agents to increase their order flow executed as agent in SPX and VIX symbols that trade during GTH, to meet the proposed amended volume thresholds and receive the proposed corresponding subsidies. The Exchange believes the proposed change to offer up to a $50,000 subsidy to designated GTH executing agents that submit up to 100,000 contracts or more E:\FR\FM\19MRN1.SGM 19MRN1 Federal Register / Vol. 89, No. 54 / Tuesday, March 19, 2024 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 of customer SPX and VIX options orders is equitable and not unfairly discriminatory. As noted above, TPHs that conduct executing agent operations willing to accept orders from all customers take on additional risks and potential costs (including those related to staffing and clearing) associated with this type of business. For example, SPX and VIX options are high notional products and liquidity may be more challenging to navigate during GTH, which session runs for a total of thirteen hours, from 7:15pm CT to 8:15am CT. Further, achieving higher volume threshold may require TPHs to incur additional and incrementally higher costs, such as adding additional staff needed to handle such volumes during the GTH session. The proposed changes are therefore designed to encourage TPHs to incur these additional risks and potentially higher costs and not only act as designated GTH executing agents, but also incentivize them to strive to achieve the highest thresholds, by providing increasingly higher benefits for satisfying increasingly more stringent criteria. As such, the Exchange believes it is not unfairly discriminatory to offer incrementally higher subsidies to TPHs who act as designated GTH executing agents and submit up to 100,000 or more customer contracts in SPX or VIX. All designated GTH executing agents that participate in the program are eligible to receive the subsidy amounts, if they meet the corresponding volume threshold. Finally, the Exchange believes the proposed change to limit the GTH Executing Agent Subsidy Program to only include SPX and VIX options is equitable and not unfairly discriminatory, as the change will uniformly apply to all designated GTH executing agents that participate in the program. 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 change would encourage the submission of additional liquidity to the floor of a public exchange, thereby promoting market depth, price discovery and transparency and enhancing order execution and price improvement opportunities for all TPHs. As a result, the Exchange believes that the proposed change furthers the Commission’s goal in adopting Regulation NMS of fostering competition among orders, which VerDate Sep<11>2014 17:41 Mar 18, 2024 Jkt 262001 promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ 9 The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed changes apply uniformly to similarly situated TPHs. As stated, all TPHs that conduct executing agent operations willing to accept orders from all customers will continue to have an opportunity to be eligible for the GTH Executing Agent Subsidy program. Also, such TPHs that conduct this type of operation take on additional risks and potential costs (including those related to staffing and clearing) associated with this type of business, and may provide benefits to investors during GTH, including increased customer accessibility to, and liquidity and trading opportunities during, the GTH trading session. The proposed changes reflect the growth of the GTH trading session and are designed to continue to encourage designated GTH executing agents to increase their order flow executed as agent in SPX and VIX symbols that trade during GTH, to meet the proposed amended volume thresholds and receive the proposed corresponding subsidies. The Exchange also does not believe that the proposed changes will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the Act because each of the proposed changes applies only to fees and programs applicable to transactions in products exclusively listed on the Exchange. 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 10 and paragraph (f) of Rule 19b–4 11 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 9 See Securities Exchange Act Release No. 51808, 70 FR 37495, 37498–99 (June 29, 2005) (S7–10–04) (Final Rule). 10 15 U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f). PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 19619 action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– CBOE–2024–010 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–CBOE–2024–010. 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 E:\FR\FM\19MRN1.SGM 19MRN1 19620 Federal Register / Vol. 89, No. 54 / Tuesday, March 19, 2024 / Notices submissions should refer to file number SR–CBOE–2024–010 and should be submitted on or before April 9, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–05737 Filed 3–18–24; 8:45 am] BILLING CODE 8011–01–P 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 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–99728; File No. SR– CboeEDGX–2024–015] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule March 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 March 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. ddrumheller on DSK120RN23PROD with NOTICES1 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) proposes to amend its Fee Schedule. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ options/regulation/rule_filings/edgx/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 17:41 Mar 18, 2024 Jkt 262001 The Exchange proposes to amend its Fee Schedule applicable to its equities trading platform (‘‘EDGX Equities’’) by modifying the rates associated with the Remove Volume Tiers. The Exchange proposes to implement these changes effective March 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 16% 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 3 See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date (February 21, 2024), available at https://www.cboe.com/us/ equities/_statistics/. 4 See EDGX Equities Fee Schedule, Standard Rates. PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 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. Remove Volume Tiers Under footnote 1 of the Fee Schedule, the Exchange currently offers various Add/Remove Volume Tiers. In particular, the Exchange offers two Remove Volume Tiers that each provide a reduced fee for Members’ qualifying orders yielding fee codes BB,6 N 7 and W 8 where a Member reaches certain add volume-based criteria. Currently, the Exchange assesses a reduced fee of $0.00275 per share in securities at or above $1.00 and 0.28% of dollar value for securities priced below $1.00 for orders appended with fee codes BB, N, or W that satisfy the criteria of Remove Volume Tier 1 and 2. The Exchange now proposes to increase the reduced fee to $0.00285 per share in securities at or above $1.00 for orders appended with fee codes BB, N, or W that satisfy the criteria of Remove Volume Tiers 1 and 2. There is no proposed change in the reduced fee assessed to securities priced below $1.00. The purpose of increasing the fee associated with the Remove Volume Tiers 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. 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.9 Specifically, the Exchange believes the proposed rule change is consistent with the Section 5 Id. 6 Fee code BB is appended to orders that remove liquidity from EDGX in Tape B securities. 7 Fee code N is appended to orders that remove liquidity from EDGX in Tape C securities. 8 Fee code W is appended to orders that remove liquidity from EDGX in Tape A securities. 9 15 U.S.C. 78f(b). E:\FR\FM\19MRN1.SGM 19MRN1

Agencies

[Federal Register Volume 89, Number 54 (Tuesday, March 19, 2024)]
[Notices]
[Pages 19617-19620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-05737]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99727; File No. SR-CBOE-2024-010]


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

March 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 29, 2024, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') filed with the Securities and Exchange Commission 
(the ``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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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.\3\ Specifically, 
the Exchange proposes to amend the Global Trading Hours (``GTH'') 
Executing Agent Subsidy Program, set forth in the Fees Schedule. The 
GTH Executing Agent Subsidy Program offers a monthly subsidy to Trading 
Permit Holders (``TPHs'') with executing agent operations \4\ during 
the GTH trading session. Pursuant to the current program, a designated 
GTH executing agent receives the monthly subsidy amount that 
corresponds to the number of contracts executed on behalf of customers 
(including public and broker-dealer customers) during GTH in a calendar 
month per the GTH Executing Agent Subsidy Program table, as shown in 
the table below. Qualifying customer volume is limited to those symbols 
that trade during GTH (i.e., SPX, VIX, and XSP).
---------------------------------------------------------------------------

    \3\ The Exchange initially filed the proposed fee changes on 
February 1, 2024 (SR-CBOE-2024-007). On February 14, 2024, the 
Exchange withdrew that filing and submitted SR-CBOE-2024-009. On 
February 29, 2024, the Exchange withdrew that filing and submitted 
SR-CBOE-2024-010.
    \4\ An executing agent operation is one that accepts orders from 
customers (who may be public or broker-dealer customers and 
including customers for which the agent does not hold accounts) and 
submits the orders for execution (either directly to the Exchange or 
through another TPH).

------------------------------------------------------------------------
               GTH monthly customer volume                    Subsidy
------------------------------------------------------------------------
0-999 contracts.........................................           $0.00
1,000-4,999 contracts...................................           5,000
5,000-29,999 contracts..................................          15,000
30,000+ contracts.......................................          20,000
------------------------------------------------------------------------

    To become a designated GTH executing agent, a TPH must submit a 
form to the Exchange no later than 3:00 p.m. on the second to last 
business day of a calendar month to be designated an GTH executing 
agent under the program, and thus eligible for the subsidy, beginning 
the following calendar month. The TPH must include on or with the form 
information demonstrating it maintains an GTH executing agent 
operation: (1) physically staffed throughout each entire GTH trading 
session and (2) willing to accept and execute orders on behalf of 
customers, including customers for which the agent does not hold 
accounts. The designation will be effective the first business day of 
the following calendar month, subject to the Exchange's confirmation 
the TPH's GTH executing agent operations satisfies these two conditions 
and will remain in effect until the Exchange receives an email from the 
TPH terminating its designation or the Exchange determines the TPH's 
GTH executing agent operation no longer satisfies these two conditions.
    The Exchange proposes to amend the GTH Executing Agent Subsidy 
Program to only include SPX and VIX options that trade during GTH; as 
such, the Exchange proposes to add clarifying language to the table to 
reflect that qualifying customer volume under the program is limited to 
GTH monthly customer SPX and VIX Options volume. The Exchange also 
proposes to increase the GTH monthly customer volume thresholds, as 
well as certain subsidy amounts, as shown in the table below.

------------------------------------------------------------------------
     GTH monthly customer SPX and VIX options volume          Subsidy
------------------------------------------------------------------------
0-19,999 contracts......................................           $0.00
20,000-39,999 contracts.................................          10,000
40,000-99,999 contracts.................................          15,000
100,000+ contracts......................................          50,000
------------------------------------------------------------------------

    The proposed changes reflect the growth of the GTH trading session, 
which has occurred predominantly in SPX and VIX options. The proposed 
changes are designed to continue to encourage designated GTH executing 
agents to increase their order flow executed as agent in SPX and VIX 
options that trade during GTH, to meet the proposed amended volume 
thresholds and receive the proposed corresponding subsidies. The 
Exchange notes that incentivizing TPHs to conduct executing agent 
operations willing to accept orders from all customers during GTH is 
intended to increase customer accessibility to the GTH trading session. 
The Exchange believes that increased order flow through designated GTH 
executing

[[Page 19618]]

agents would allow the Exchange to grow participation during GTH, which 
may benefit all market participants, as additional liquidity to the 
Exchange during GTH would create more trading opportunities during GTH, 
and in turn attract market participants to submit additional order flow 
during GTH.
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.\5\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \6\ 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) \7\ 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,\8\ which requires 
that Exchange rules provide for the equitable allocation of reasonable 
dues, fees, and other charges among its Trading Permit Holders and 
other persons using its facilities.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ Id.
    \8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change to amend the 
volume thresholds and certain corresponding subsidies for the GTH 
Executing Agent Subsidy Program is reasonably designed to encourage 
designated GTH executing agents to increase their customer order flow 
in SPX and VIX options traded during GTH. The Exchange believes the 
tiers, as proposed, are reasonable because they amend existing 
opportunities in a manner that incentivizes increased order flow to the 
GTH trading session via incrementally more challenging criteria in 
order to receive incrementally increasing subsidy amounts.
    Further, the Exchange believes such changes are reasonable, as the 
proposed increased subsidy amounts remain commensurate with the higher 
volume thresholds proposed. The current program provides a maximum 
subsidy of $20,000 for designated GTH executing agents that submit 
30,000 customer contracts or more in XSP, SPX or VIX options. The 
amended tiers, as proposed, present additional opportunities for 
designated GTH executing agents to receive larger subsidies than that 
which is currently offered by the program, for submitting a larger 
number of customer orders. Under the program as proposed, the maximum 
subsidy available is $50,000 for designated GTH executing agents that 
submit 100,000 customer contracts or more in SPX or VIX options. As 
noted above, the proposed changes reflect the growth of the GTH trading 
session, which has occurred predominantly in SPX and VIX options. The 
proposed changes are designed to continue to encourage designated GTH 
executing agents to increase their order flow executed as agent in SPX 
and VIX options that trade during GTH, to meet the proposed amended 
volume thresholds and receive the proposed corresponding subsidies. The 
Exchange believes that increased order flow would allow the Exchange to 
grow participation in the GTH trading session to the benefit of all 
market participants that trade during GTH, by providing greater trading 
opportunities as a result of increased liquidity, thereby attracting 
additional order flow from market participants during GTH.
    The Exchange believes the proposed volume thresholds and 
corresponding subsidy amounts provide benefits, similar to other volume 
incentives offered by the Exchange and other options exchanges, that 
are reasonably related to the value to an exchange's market quality and 
associated higher levels of market activity, in this case, increased 
executing agent operations. The proposed changes to the volume 
thresholds are designed as an incentive to any and all TPHs conducting 
executing agent operations willing to accept orders from all customers 
during GTH to submit additional customer orders to the Exchange. Each 
will have the opportunity to submit the requisite order flow and will 
receive the applicable subsidy if the volume criteria is met. Under 
current criteria, one firm qualifies for the $15,000 subsidy and two 
firms qualify for the $20,000 subsidy. While the Exchange has no way of 
predicting with certainty how the proposed tiers will impact TPH 
activity, the Exchange anticipates that approximately one TPH may be 
able to achieve the $10,000 subsidy (20,000-39,999 contracts tier), one 
TPH may be able to achieve the $15,000 subsidy (40,000-99,999 contracts 
tier), and one TPH may be able to achieve the $50,000 subsidy (100,000 
or more contracts tier). The Exchange also notes that the proposed 
volume tiers will not adversely impact any TPH's pricing or their 
ability to qualify for other incentive programs. Rather, should a TPH 
that conducts executing agent operations not meet the criteria for a 
tier, the TPH will merely not receive the corresponding subsidy.
    Further, the Exchange believes limiting the GTH Executing Agent 
Subsidy Program to only include SPX and VIX options that trade during 
GTH is reasonable, given the Exchange wishes to incentivize increased 
order flow in SPX and VIX options during GTH. The Exchange also 
believes the proposed change is reasonable, as the Exchange no longer 
wishes to include XSP in the GTH Executing Agent Subsidy Program and is 
not required to do so.
    The Exchange also believes that the proposed rule change is 
equitable and not unfairly discriminatory. In particular, the Exchange 
believes that increasing the volume thresholds and certain 
corresponding subsidies for the GTH Executing Agent Subsidy Program is 
equitable and not unfairly discriminatory because TPHs that conduct 
executing agent operations willing to accept orders from all customers 
take on additional risks and potential costs (including those related 
to staffing and clearing) associated with this type of business. Such 
TPHs also provide benefits to investors during GTH, including increased 
customer accessibility to the GTH trading session and increased order 
flow. All TPHs that conduct this type of operation during GTH will 
continue to have the opportunity to become a designated GTH executing 
agent and thus eligible for the monthly subsidy commensurate with 
applicable customer volumes. As noted above, the proposed changes 
reflect the growth of the GTH trading session and are designed to 
continue to encourage designated GTH executing agents to increase their 
order flow executed as agent in SPX and VIX symbols that trade during 
GTH, to meet the proposed amended volume thresholds and receive the 
proposed corresponding subsidies.
    The Exchange believes the proposed change to offer up to a $50,000 
subsidy to designated GTH executing agents that submit up to 100,000 
contracts or more

[[Page 19619]]

of customer SPX and VIX options orders is equitable and not unfairly 
discriminatory. As noted above, TPHs that conduct executing agent 
operations willing to accept orders from all customers take on 
additional risks and potential costs (including those related to 
staffing and clearing) associated with this type of business. For 
example, SPX and VIX options are high notional products and liquidity 
may be more challenging to navigate during GTH, which session runs for 
a total of thirteen hours, from 7:15pm CT to 8:15am CT. Further, 
achieving higher volume threshold may require TPHs to incur additional 
and incrementally higher costs, such as adding additional staff needed 
to handle such volumes during the GTH session. The proposed changes are 
therefore designed to encourage TPHs to incur these additional risks 
and potentially higher costs and not only act as designated GTH 
executing agents, but also incentivize them to strive to achieve the 
highest thresholds, by providing increasingly higher benefits for 
satisfying increasingly more stringent criteria. As such, the Exchange 
believes it is not unfairly discriminatory to offer incrementally 
higher subsidies to TPHs who act as designated GTH executing agents and 
submit up to 100,000 or more customer contracts in SPX or VIX. All 
designated GTH executing agents that participate in the program are 
eligible to receive the subsidy amounts, if they meet the corresponding 
volume threshold.
    Finally, the Exchange believes the proposed change to limit the GTH 
Executing Agent Subsidy Program to only include SPX and VIX options is 
equitable and not unfairly discriminatory, as the change will uniformly 
apply to all designated GTH executing agents that participate in the 
program.

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 change would encourage the 
submission of additional liquidity to the floor of a public exchange, 
thereby promoting market depth, price discovery and transparency and 
enhancing order execution and price improvement opportunities for all 
TPHs. As a result, the Exchange believes that the proposed change 
furthers 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.'' \9\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 51808, 70 FR 37495, 
37498-99 (June 29, 2005) (S7-10-04) (Final Rule).
---------------------------------------------------------------------------

    The Exchange does not believe that the proposed rule change will 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
notes that the proposed changes apply uniformly to similarly situated 
TPHs. As stated, all TPHs that conduct executing agent operations 
willing to accept orders from all customers will continue to have an 
opportunity to be eligible for the GTH Executing Agent Subsidy program. 
Also, such TPHs that conduct this type of operation take on additional 
risks and potential costs (including those related to staffing and 
clearing) associated with this type of business, and may provide 
benefits to investors during GTH, including increased customer 
accessibility to, and liquidity and trading opportunities during, the 
GTH trading session. The proposed changes reflect the growth of the GTH 
trading session and are designed to continue to encourage designated 
GTH executing agents to increase their order flow executed as agent in 
SPX and VIX symbols that trade during GTH, to meet the proposed amended 
volume thresholds and receive the proposed corresponding subsidies.
    The Exchange also does not believe that the proposed changes will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the Act because each of the proposed 
changes applies only to fees and programs applicable to transactions in 
products exclusively listed on the Exchange.

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 \10\ and paragraph (f) of Rule 19b-4 \11\ 
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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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-CBOE-2024-010 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-CBOE-2024-010. 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

[[Page 19620]]

submissions should refer to file number SR-CBOE-2024-010 and should be 
submitted on or before April 9, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-05737 Filed 3-18-24; 8:45 am]
BILLING CODE 8011-01-P
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