Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule, 19913-19915 [2024-05839]
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Federal Register / Vol. 89, No. 55 / Wednesday, March 20, 2024 / Notices
and Amendment No. 2, (SR–OCC–2023–
007) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.68
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–05834 Filed 3–19–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99741; File No. SR–
CboeEDGX–2024–016]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fees Schedule
March 14, 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 March 1,
2024, Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) 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.
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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 Fees Schedule. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.vcboe.com/us/
equities/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
16:52 Mar 19, 2024
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fees Schedule, effective 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
17 options venues to which market
participants may direct their order flow.
Based on publicly available information,
no single options exchange has more
than 16% of the market share.3 Thus, in
such a low-concentrated and highly
competitive market, no single options
exchange, including the Exchange,
possesses significant pricing power in
the execution of option order flow. The
Exchange believes that the ever-shifting
market share among the exchanges from
month to month demonstrates that
market participants can shift order flow
or discontinue to reduce use of certain
categories of products, in response to fee
changes. Accordingly, competitive
forces constrain the Exchange’s
transaction fees, and market participants
can readily trade on competing venues
if they deem pricing levels at those
other venues to be more favorable.
The Exchange assesses fees in
connection with orders routed away to
various exchanges. The Fees Schedule
currently lists fee codes and their
corresponding transaction fees for
certain Customer orders routed to other
options exchanges. Currently, under the
Fee Codes and Associated Fees section
of the Fees Schedule, fee code RP is
appended to routed Customer orders to
NYSE American (‘‘AMEX’’), BOX
Options Exchange (‘‘BOX’’), Nasdaq BX
Options (‘‘BX’’), Cboe Exchange, Inc.
(‘‘Cboe’’), MIAX Options Exchange
(‘‘MIAX’’) or Nasdaq PHLX LLC
(‘‘PHLX’’) (excluding orders in SPY
options) and assesses a charge of $0.25
per contract; fee code RQ is appended
to routed Customer orders in Penny
classes to NYSE Arca, Inc (‘‘ARCA’’),
Cboe BZX Exchange, Inc. (‘‘BZX’’), Cboe
3 See Cboe Global Markets U.S. Options Market
Monthly Volume Summary (February 26, 2024),
available at https://markets.cboe.com/us/options/
market_statistics/.
68 17
VerDate Sep<11>2014
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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19913
C2 Exchange, Inc. (‘‘C2’’), Nasdaq ISE
(‘‘ISE’’), ISE Gemini, LLC (‘‘GMNI’’), ISE
Mercury, LLC (‘‘MERC’’), MIAX
Emerald Exchange (‘‘EMLD’’), MIAX
Pearl Exchange (‘‘PERL’’), Nasdaq
Options Market LLC (‘‘NOM’’), MEMX
LLC (‘‘MEMX’’), or PHLX (for orders in
SPY options) and assesses a charge of
$0.85 per contract; and fee code RR is
appended to routed Customer orders in
Non-Penny classes to ARCA, BZX, C2,
ISE, GMNI, MERC, EMLD, PERL, NOM,
or MEMX and assesses a charge of
$1.25.
The Exchange notes that its current
approach to routing fees is to set forth
in a simple manner certain subcategories of fees that approximate the
cost of routing to other options
exchanges based on the cost of
transaction fees assessed by each venue
as well as costs to the Exchange for
routing (i.e., clearing fees, connectivity
and other infrastructure costs,
membership fees, etc.) (collectively,
‘‘Routing Costs’’). The Exchange then
monitors the fees charged as compared
to the costs of its routing services and
adjusts its routing fees and/or subcategories to ensure that the Exchange’s
fees do indeed result in a rough
approximation of overall Routing Costs
and are not significantly higher or lower
in any area. The Exchange notes that at
least one other options exchange
currently assesses routing fees in a
similar manner as the Exchange’s
current approach to assessing
approximate routing fees.4
The Exchange proposes to amend fee
code RP to exclude applicable Customer
orders routed to Nasdaq BX Options
(i.e., BX) and to amend fee codes RQ
and RR to add applicable Customer
orders routed to BX. The charge
assessed per contract for each fee code
remain the same under the proposed
rule change.
The proposed changes result in an
assessment of fees that, given fees of an
away options exchange, is more in line
with the Exchange’s current approach to
routing fees, that is, in a manner that
approximates the cost of routing
Customer orders to other away options
exchanges, based on the general cost of
transaction fees assessed by the subcategory of away options exchanges for
such orders (as well as the Exchange’s
Routing Costs).5 The Exchange notes
that routing through the Exchange is
optional and that Members will
4 See, e.g., MIAX Options Exchange Fee Schedule,
Section 1(c), ‘‘Fees for Customer Orders Routed to
Another Options Exchange.’’
5 See BX Options 7 (Pricing Schedule), Section 2.
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19914
Federal Register / Vol. 89, No. 55 / Wednesday, March 20, 2024 / Notices
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continue to be able to choose where to
route applicable Customer orders.
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.6 Specifically, the
Exchange believes the proposed rule
change is consistent with the section
6(b)(5) 7 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) 8 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,9 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 the proposed
rule change to amend fee codes RP, RQ,
and RR to account for BX’s current
assessment of fees for Customer orders
is reasonable because it is reasonably
designed to assess routing fees in line
with the Exchange’s current approach to
routing fees. That is, the proposed rule
change is intended to include Customer
orders in Penny Program and NonPenny classes routed to BX in the most
appropriate sub-category of fees that
approximates the cost of routing to a
group of away options exchanges based
on the cost of transaction fees assessed
by each venue as well as Routing Costs
to the Exchange.
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
6 15
7 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe the proposed
rule change to amend fee codes RP, RQ,
and RR will impose any burden on
intramarket competition. All Members’
Customer orders routing to BX and
currently yielding fee code RP will, as
proposed, yield fee code RQ or RR
(depending on whether the order is in
Penny Program or Non-Penny classes,
respectively) and will automatically and
uniformly be assessed the current fees
already in place for such routed orders,
as applicable.
The Exchange does not believe that
the proposed rule change will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange notes that at least one
other options exchange approximates
routing costs in a similar manner as the
Exchange’s current approach.11 Also, 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 16
other options exchanges and offexchange venues. Additionally, the
Exchange represents a small percentage
of the overall market. Based on publicly
available information, no single options
exchange has more than 16% of the
market share.12 Therefore, no exchange
possesses significant pricing power in
the execution of option order flow.
Indeed, participants can readily choose
10 See
8 Id.
9 15
incentives to be insufficient. The
proposed rule change 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. The Exchange notes that at
least one other options exchange
currently approximates routing fees in a
similar manner as the Exchange’s
current approach.10
Finally, the Exchange believes that
the proposed rule change is equitable
and not unfairly discriminatory because
all Members’ Customer orders in Penny
Program and Non-Penny classes routed
to BX will automatically yield fee codes
RQ or RR, respectively, and uniformly
be assessed the corresponding fee.
supra note 4.
11 Id.
U.S.C. 78f(b)(4).
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16:52 Mar 19, 2024
12 See
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supra note 3.
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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.’’ 13 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’. . . .’’.14 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 15 and paragraph (f) of Rule
19b–4 16 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
13 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
14 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)).
15 15 U.S.C. 78s(b)(3)(A).
16 17 CFR 240.19b–4(f).
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Federal Register / Vol. 89, No. 55 / Wednesday, March 20, 2024 / Notices
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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.
subject to copyright protection. All
submissions should refer to file number
SR–CboeEDGX–2024–016 and should be
submitted on or before April 10, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Sherry R. Haywood,
Assistant Secretary.
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. 2024–05839 Filed 3–19–24; 8:45 am]
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeEDGX–2024–016 on the subject
line.
Felicitas Private Markets Fund and
Skypoint Capital Advisors, LLC.
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–2024–016. 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
VerDate Sep<11>2014
16:52 Mar 19, 2024
Jkt 262001
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
35154; 812–15546]
March 15, 2024.
Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’).
ACTION: Notice.
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (the ‘‘Act’’) for an exemption from
sections 18(a)(2), 18(c) and 18(i) of the
Act and for an order pursuant to section
17(d) of the Act and rule 17d–1 under
the Act.
SUMMARY OF APPLICATION: Applicants
request an order to permit certain
registered closed-end investment
companies to issue multiple classes of
shares of beneficial interest with varying
sales loads and to impose asset-based
distribution and/or service fees.
APPLICANTS: Felicitas Private Markets
Fund and Skypoint Capital Advisors,
LLC.
FILING DATES: The application was filed
on February 1, 2024.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing on any application by
emailing the SEC’s Secretary at
Secretarys-Office@sec.gov and serving
the Applicants with a copy of the
request by email, if an email address is
listed for the relevant Applicant below,
or personally or by mail, if a physical
address is listed for the relevant
Applicant below. Hearing requests
should be received by the Commission
by 5:30 p.m. on April 9, 2024, and
should be accompanied by proof of
service on the Applicants, in the form
of an affidavit, or, for lawyers, a
certificate of service. Pursuant to rule 0–
5 under the Act, hearing requests should
state the nature of the writer’s interest,
any facts bearing upon the desirability
of a hearing on the matter, the reason for
the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicants:
Joshua B. Deringer, Esq., Faegre Drinker
Biddle & Reath LLP, joshua.deringer@
faegredrinker.com, Veena K. Jain, Faegre
Drinker Biddle & Reath LLP,
veena.jain@faegredrinker.com, with a
copy to Brian Smith, Skypoint Capital
Advisors, LLC, bsmith@
skypointfunds.com.
FOR FURTHER INFORMATION CONTACT:
Trace W. Rakestraw, Senior Special
Counsel, at (202) 551–6825 (Division of
Investment Management, Chief
Counsel’s Office).
SUPPLEMENTARY INFORMATION: For
Applicants’ representations, legal
analysis, and conditions, please refer to
Applicants’ application, filed February
1, 2024, which may be obtained via the
Commission’s website by searching for
the file number at the top of this
document, or for an Applicant using the
Company name search field on the
SEC’s EDGAR system. The SEC’s
EDGAR system may be searched at
https://www.sec.gov/edgar/searchedgar/
legacy/companysearch.html. You may
also call the SEC’s Public Reference
Room at (202) 551–8090.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–05918 Filed 3–19–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99737; File No. SR–
EMERALD–2024–09]
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Increase Fees for the
ToM Market Data Product and
Establish Fees for the cToM Market
Data Product
March 14, 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, MIAX Emerald, LLC (‘‘MIAX
Emerald’’ or ‘‘Exchange’’), filed with the
1 15
17 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00120
Fmt 4703
Sfmt 4703
19915
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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]]>Agencies
[Federal Register Volume 89, Number 55 (Wednesday, March 20, 2024)]
[Notices]
[Pages 19913-19915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-05839]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99741; File No. SR-CboeEDGX-2024-016]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fees Schedule
March 14, 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 March 1, 2024, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
amend its Fees Schedule. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.vcboe.com/us/equities/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fees Schedule, effective 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 17 options venues to which market participants
may direct their order flow. Based on publicly available information,
no single options exchange has more than 16% of the market share.\3\
Thus, in such a low-concentrated and highly competitive market, no
single options exchange, including the Exchange, possesses significant
pricing power in the execution of option order flow. The Exchange
believes that the ever-shifting market share among the exchanges from
month to month demonstrates that market participants can shift order
flow or discontinue to reduce use of certain categories of products, in
response to fee changes. Accordingly, competitive forces constrain the
Exchange's transaction fees, and market participants can readily trade
on competing venues if they deem pricing levels at those other venues
to be more favorable.
---------------------------------------------------------------------------
\3\ See Cboe Global Markets U.S. Options Market Monthly Volume
Summary (February 26, 2024), available at https://markets.cboe.com/us/options/market_statistics/.
---------------------------------------------------------------------------
The Exchange assesses fees in connection with orders routed away to
various exchanges. The Fees Schedule currently lists fee codes and
their corresponding transaction fees for certain Customer orders routed
to other options exchanges. Currently, under the Fee Codes and
Associated Fees section of the Fees Schedule, fee code RP is appended
to routed Customer orders to NYSE American (``AMEX''), BOX Options
Exchange (``BOX''), Nasdaq BX Options (``BX''), Cboe Exchange, Inc.
(``Cboe''), MIAX Options Exchange (``MIAX'') or Nasdaq PHLX LLC
(``PHLX'') (excluding orders in SPY options) and assesses a charge of
$0.25 per contract; fee code RQ is appended to routed Customer orders
in Penny classes to NYSE Arca, Inc (``ARCA''), Cboe BZX Exchange, Inc.
(``BZX''), Cboe C2 Exchange, Inc. (``C2''), Nasdaq ISE (``ISE''), ISE
Gemini, LLC (``GMNI''), ISE Mercury, LLC (``MERC''), MIAX Emerald
Exchange (``EMLD''), MIAX Pearl Exchange (``PERL''), Nasdaq Options
Market LLC (``NOM''), MEMX LLC (``MEMX''), or PHLX (for orders in SPY
options) and assesses a charge of $0.85 per contract; and fee code RR
is appended to routed Customer orders in Non-Penny classes to ARCA,
BZX, C2, ISE, GMNI, MERC, EMLD, PERL, NOM, or MEMX and assesses a
charge of $1.25.
The Exchange notes that its current approach to routing fees is to
set forth in a simple manner certain sub-categories of fees that
approximate the cost of routing to other options exchanges based on the
cost of transaction fees assessed by each venue as well as costs to the
Exchange for routing (i.e., clearing fees, connectivity and other
infrastructure costs, membership fees, etc.) (collectively, ``Routing
Costs''). The Exchange then monitors the fees charged as compared to
the costs of its routing services and adjusts its routing fees and/or
sub-categories to ensure that the Exchange's fees do indeed result in a
rough approximation of overall Routing Costs and are not significantly
higher or lower in any area. The Exchange notes that at least one other
options exchange currently assesses routing fees in a similar manner as
the Exchange's current approach to assessing approximate routing
fees.\4\
---------------------------------------------------------------------------
\4\ See, e.g., MIAX Options Exchange Fee Schedule, Section 1(c),
``Fees for Customer Orders Routed to Another Options Exchange.''
---------------------------------------------------------------------------
The Exchange proposes to amend fee code RP to exclude applicable
Customer orders routed to Nasdaq BX Options (i.e., BX) and to amend fee
codes RQ and RR to add applicable Customer orders routed to BX. The
charge assessed per contract for each fee code remain the same under
the proposed rule change.
The proposed changes result in an assessment of fees that, given
fees of an away options exchange, is more in line with the Exchange's
current approach to routing fees, that is, in a manner that
approximates the cost of routing Customer orders to other away options
exchanges, based on the general cost of transaction fees assessed by
the sub-category of away options exchanges for such orders (as well as
the Exchange's Routing Costs).\5\ The Exchange notes that routing
through the Exchange is optional and that Members will
[[Page 19914]]
continue to be able to choose where to route applicable Customer
orders.
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\5\ See BX Options 7 (Pricing Schedule), Section 2.
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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.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
section 6(b)(5) \7\ 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) \8\ 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,\9\ 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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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
\9\ 15 U.S.C. 78f(b)(4).
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The Exchange believes the proposed rule change to amend fee codes
RP, RQ, and RR to account for BX's current assessment of fees for
Customer orders is reasonable because it is reasonably designed to
assess routing fees in line with the Exchange's current approach to
routing fees. That is, the proposed rule change is intended to include
Customer orders in Penny Program and Non-Penny classes routed to BX in
the most appropriate sub-category of fees that approximates the cost of
routing to a group of away options exchanges based on the cost of
transaction fees assessed by each venue as well as Routing Costs to the
Exchange.
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 proposed rule change
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. The Exchange notes that at least one other options exchange
currently approximates routing fees in a similar manner as the
Exchange's current approach.\10\
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\10\ See supra note 4.
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Finally, the Exchange believes that the proposed rule change is
equitable and not unfairly discriminatory because all Members' Customer
orders in Penny Program and Non-Penny classes routed to BX will
automatically yield fee codes RQ or RR, respectively, and uniformly be
assessed the corresponding fee.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe the proposed rule change to amend fee codes RP, RQ, and RR will
impose any burden on intramarket competition. All Members' Customer
orders routing to BX and currently yielding fee code RP will, as
proposed, yield fee code RQ or RR (depending on whether the order is in
Penny Program or Non-Penny classes, respectively) and will
automatically and uniformly be assessed the current fees already in
place for such routed orders, as applicable.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
notes that at least one other options exchange approximates routing
costs in a similar manner as the Exchange's current approach.\11\ Also,
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 16 other options
exchanges and off-exchange venues. Additionally, the Exchange
represents a small percentage of the overall market. Based on publicly
available information, no single options exchange has more than 16% of
the market share.\12\ Therefore, no exchange possesses significant
pricing power in the execution of option 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.'' \13\ 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'. . . .''.\14\ 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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\11\ Id.
\12\ See supra note 3.
\13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\14\ 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 \15\ and paragraph (f) of Rule 19b-4 \16\
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
[[Page 19915]]
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act. If the Commission takes such action, the Commission will
institute proceedings to determine whether the proposed rule change
should be approved or disapproved.
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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-2024-016 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-2024-016. 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-2024-016 and should be
submitted on or before April 10, 2024.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-05839 Filed 3-19-24; 8:45 am]
BILLING CODE 8011-01-P
