Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 28823-28825 [2024-08357]
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Federal Register / Vol. 89, No. 77 / Friday, April 19, 2024 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024–08359 Filed 4–18–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99961; File No. SR–
CboeBYX–2024–011]
Self-Regulatory Organizations; Cboe
BYX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
April 15, 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 April 1,
2024, Cboe BYX Exchange, Inc.
(‘‘Exchange’’ or ‘‘BYX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) proposes to
amend its 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/
equities/regulation/rule_filings/BYX/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
lotter on DSK11XQN23PROD with NOTICES1
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
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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 (‘‘BYX Equities’’) to
increase its monthly fee assessed on
Members’ MPIDs. The Exchange
proposes to implement these changes
effective April 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 15% 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 further notes that brokerdealers are not compelled to be
Members of the Exchange, and a
significant proportion of broker-dealers
that trade U.S. equity securities have, in
fact, chosen not to apply for
membership on the Exchange.
By way of background, an MPID is a
four-character unique identifier that is
approved by the Exchange and assigned
to a Member for use on the Exchange to
identify the Member firm on the orders
sent to the Exchange and resulting
executions. Members may choose to
request more than one MPID as a unique
identifier(s) for their transactions on the
Exchange. The Exchange notes that a
Member may have multiple MPIDs for
use by separate business units and
trading desks or to support Sponsored
Participant access.4 Certain members
3 See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (March 20, 2024),
available at https://www.cboe.com/us/equities/
market_statistics/.
4 A Sponsored Participant is a person which has
entered into a sponsorship arrangement with a
Sponsoring Member pursuant to Rule 11.3, which
permits a Sponsored Participant to obtain
authorized access to the System only if such access
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Sfmt 4703
28823
currently leverage multiple MPIDs to
obtain benefits from and added value in
their participation on the Exchange.
Multiple MPIDs provide unique benefits
to and efficiencies for Members by
allowing: (1) Members to manage their
trading activity more efficiently by
assigning different MPIDs to different
trading desks and/or strategies within
the firm; and (2) Sponsoring Members 5
to segregate Sponsored Participants by
MPID to allow for detailed client-level
reporting, billing, and administration,
and to market the ability to use separate
MPIDs to Sponsored Participants,
which, in turn, may serve as a potential
incentive for increased order flow
traded through the Sponsoring Member.
The Exchange currently assesses a fee
applicable to Members that use multiple
MPIDs to facilitate their trading on the
Exchange. Specifically, the Exchange
assesses a monthly MPID Fee of $150
per MPID per Member, with a Member’s
first MPID provided free of charge. The
MPID Fee is assessed on a pro-rated
basis for new MPIDs by charging a
Member based on the trading day in the
month during which an additional
MPID becomes effective for use. If a
Member cancels an additional MPID on
or after the first business day of the
month, the Member will be required to
pay the entire MPID Fee for that month.
The Exchange now proposes to
increase the monthly MPID Fee from
$150 per MPID per Member to $250 per
MPID per Member. The Exchange
believes the proposed increase
continues to align with the additional
value and benefits provided to Members
that choose to utilize more than one
MPID to facilitate their trading on the
Exchange. The Exchange also believes
that continuing to assess a fee on
additional MPIDs will be beneficial
because such fee will promote efficiency
in MPID use.
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.6 Specifically,
is authorized in advance by one or more Sponsoring
Members. See Rules 1.5(z) and 11.3.
5 A Sponsoring Member is a Member that is a
registered broker-dealer and that has been
designated by a Sponsored Participant to execute,
clear and settle transactions resulting from the
System. The Sponsoring Member shall be either (i)
a clearing firm with membership in a clearing
agency registered with the Commission that
maintains facilities through which transactions may
be cleared or (ii) a correspondent firm with a
clearing arrangement with any such clearing firm.
See Rule 1.5(aa).
6 15 U.S.C. 78f(b).
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Federal Register / Vol. 89, No. 77 / Friday, April 19, 2024 / Notices
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 as
well as Section 6(b)(4) 9 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 the
proposed MPID Fee is consistent with
the Act in that it is reasonable,
equitable, and not unfairly
discriminatory. In particular, the
Exchange believes that the proposed fee
is reasonable because it is reasonably
aligned with the benefits provided to
Members that choose to utilize multiple
MPIDs to facilitate their trading on the
Exchange. While each Member must
have an MPID to participate on the
Exchange, additional MPIDs are
optional and will be assessed the fee, as
amended. Additional MPIDs currently
allow for Members to realize certain
benefits from and added value to their
participation on the Exchange but also
require the Exchange to allocate
additional administrative resources to
manage each MPID that a Member
chooses to use for its trading activity.
Therefore, the Exchange believes that it
is reasonable to assess a modest fee on
any additional MPIDs that Members
choose to use to facilitate their trading.
The Exchange again notes that it is
optional for a Member to request and
employ additional MPIDs, and a large
portion (approximately 68%) of the
Exchange’s Members currently utilize
7 15
U.S.C. 78f(b)(5).
8 Id.
9 15
U.S.C. 78f(b)(4).
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just the one MPID necessary to
participate on the Exchange.
The Exchange also believes that
assessing a fee on additional MPIDs
continues to be reasonably designed to
promote efficiency in MPID use. When
the Exchange first implemented the
current MPID Fee,10 it observed as a
result that Members were incentivized
to more effectively administer their
MPIDs and reduce the number of underused or superfluous MPIDs, or MPIDs
that did not contribute additional value
to a Member’s participation on the
Exchange. Reduction of such MPIDs, in
turn, reduces Exchange resources
allocated to administration and
maintenance of those MPIDs. In
particular, the Exchange observed that
within the first few months of
introducing the previous MPID Fee, the
number of MPIDs on the Exchange
decreased by approximately 18%,
demonstrating that Members may
choose to be more efficient in their use
of MPIDs in response to an MPID Fee,
such as that proposed in this fee
change.11
The Exchange further believes the
proposed MPID Fee change is
reasonable because the amount assessed
continues to be less than the analogous
fees charged by at least one other
market; namely, Nasdaq Stock Market
LLC (‘‘Nasdaq’’).12 The Exchange’s
proposed MPID Fee increase to $250 a
month per MPID, with no charge
associated with a Members’ first MPID,
continues to be lower than Nasdaq’s
MPID fee of $550 per MPID, which is
charged for all MPIDs used by a Nasdaq
member, including a member’s first
MPIDs.
The Exchange believes that the
proposed MPID Fee change is equitable
and not unfairly discriminatory because
it will apply equally to all Members that
choose to employ two or more MPIDs
based on the number of additional
MPIDs that they use to facilitate their
trading on the Exchange. As stated,
additional MPIDs beyond a Member’s
first MPID are optional, and Members
may choose to trade using such
additional MPIDs to achieve additional
benefits and added value to support
their individual business needs.
Moreover, the Exchange believes the
proposed fee is equitable and not
10 See Securities and Exchange Release No. 90943
(January 19, 2021), 86 FR 7146 (January 26, 2021)
(SR–CboeBYX–2021–004).
11 The reduction in MPIDs may also demonstrate
that Members are free to cancel MPIDs on the
Exchange and choose, instead, to utilize unique
identifiers associated with participation on other
exchanges.
12 See Nasdaq Price List, MPID Fees, available at
https://nasdaqtrader.com/Trader.aspx?
id=PriceListTrading2.
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unfairly discriminatory because it is
proportional to the potential value or
benefit received by Members with a
greater number of MPIDs. That is, those
Members that choose to employ a
greater number of additional MPIDs
have the opportunity to more effectively
manage firm-wide trading activity and
client-level administration, as well as
potentially appeal to customers through
the use of separate MPIDs, which may
result in increased order flow through a
Sponsoring Member. A Member may
request at any time that the Exchange
terminate an MPID, including MPIDs
that may be under-used or superfluous,
or that do not contribute additional
value to a Member’s participation on the
Exchange.
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 intramarket competition
that is not necessary in furtherance of
the purposes of the Act because the
proposed change will apply equally to
all Members that choose to employ
additional MPIDs and equally to each
additional MPID. As stated, additional
MPIDs are optional and Members may
choose to utilize additional MPIDs, or
not, based on their view of the
additional benefits and added value
provided by utilizing the single MPID
necessary to participate on the
Exchange. The Exchange believes the
proposed fee will be assessed
proportionately to the potential value or
benefit received by Members with a
greater number of MPIDs and notes that
a Member may continue to request at
any time that the Exchange terminate
any MPID, including those that may be
under-used or superfluous, or that do
not contribute additional value to a
Member’s participation on the
Exchange.
Next, the Exchange believes the
proposed rule change does not impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
As previously discussed, the Exchange
operates in a highly competitive market,
including competition for exchange
memberships. Members have numerous
alternative venues that they may
participate on, including 15 other
equities exchanges, as well as offexchange venues, including alternative
trading systems, where competitive
products are available for trading.
Indeed, participants can readily choose
to submit their order flow to other
exchange and off-exchange venues if
they deem fee levels at those other
venues to be more favorable. In addition
E:\FR\FM\19APN1.SGM
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Federal Register / Vol. 89, No. 77 / Friday, April 19, 2024 / Notices
to this the Exchange notes that at least
one other exchange currently has higher
MPID fees in place, which have been
previously filed with the Commission.
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.
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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
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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02:06 Apr 19, 2024
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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.
BILLING CODE 8011–01–P
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–
CboeBYX–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–CboeBYX–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–CboeBYX–2024–011 and should be
submitted on or before May 10, 2024.
Frm 00110
Fmt 4703
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024–08357 Filed 4–18–24; 8:45 am]
IV. Solicitation of Comments
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28825
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99959; File No. SR–
CboeEDGA–2024–011]
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule
April 15, 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 April 1,
2024, Cboe EDGA Exchange, Inc.
(‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. 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 EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) 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/
equities/regulation/rule_filings/edga/),
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
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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]]>Agencies
[Federal Register Volume 89, Number 77 (Friday, April 19, 2024)]
[Notices]
[Pages 28823-28825]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08357]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99961; File No. SR-CboeBYX-2024-011]
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule
April 15, 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 April 1, 2024, Cboe BYX Exchange, Inc. (``Exchange'' or ``BYX'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BYX Exchange, Inc. (the ``Exchange'' or ``BYX'') proposes to
amend its 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/equities/regulation/rule_filings/BYX/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fee Schedule applicable to its
equities trading platform (``BYX Equities'') to increase its monthly
fee assessed on Members' MPIDs. The Exchange proposes to implement
these changes effective April 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
15% 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 further
notes that broker-dealers are not compelled to be Members of the
Exchange, and a significant proportion of broker-dealers that trade
U.S. equity securities have, in fact, chosen not to apply for
membership on the Exchange.
---------------------------------------------------------------------------
\3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (March 20, 2024), available at https://www.cboe.com/us/equities/market_statistics/.
---------------------------------------------------------------------------
By way of background, an MPID is a four-character unique identifier
that is approved by the Exchange and assigned to a Member for use on
the Exchange to identify the Member firm on the orders sent to the
Exchange and resulting executions. Members may choose to request more
than one MPID as a unique identifier(s) for their transactions on the
Exchange. The Exchange notes that a Member may have multiple MPIDs for
use by separate business units and trading desks or to support
Sponsored Participant access.\4\ Certain members currently leverage
multiple MPIDs to obtain benefits from and added value in their
participation on the Exchange. Multiple MPIDs provide unique benefits
to and efficiencies for Members by allowing: (1) Members to manage
their trading activity more efficiently by assigning different MPIDs to
different trading desks and/or strategies within the firm; and (2)
Sponsoring Members \5\ to segregate Sponsored Participants by MPID to
allow for detailed client-level reporting, billing, and administration,
and to market the ability to use separate MPIDs to Sponsored
Participants, which, in turn, may serve as a potential incentive for
increased order flow traded through the Sponsoring Member.
---------------------------------------------------------------------------
\4\ A Sponsored Participant is a person which has entered into a
sponsorship arrangement with a Sponsoring Member pursuant to Rule
11.3, which permits a Sponsored Participant to obtain authorized
access to the System only if such access is authorized in advance by
one or more Sponsoring Members. See Rules 1.5(z) and 11.3.
\5\ A Sponsoring Member is a Member that is a registered broker-
dealer and that has been designated by a Sponsored Participant to
execute, clear and settle transactions resulting from the System.
The Sponsoring Member shall be either (i) a clearing firm with
membership in a clearing agency registered with the Commission that
maintains facilities through which transactions may be cleared or
(ii) a correspondent firm with a clearing arrangement with any such
clearing firm. See Rule 1.5(aa).
---------------------------------------------------------------------------
The Exchange currently assesses a fee applicable to Members that
use multiple MPIDs to facilitate their trading on the Exchange.
Specifically, the Exchange assesses a monthly MPID Fee of $150 per MPID
per Member, with a Member's first MPID provided free of charge. The
MPID Fee is assessed on a pro-rated basis for new MPIDs by charging a
Member based on the trading day in the month during which an additional
MPID becomes effective for use. If a Member cancels an additional MPID
on or after the first business day of the month, the Member will be
required to pay the entire MPID Fee for that month.
The Exchange now proposes to increase the monthly MPID Fee from
$150 per MPID per Member to $250 per MPID per Member. The Exchange
believes the proposed increase continues to align with the additional
value and benefits provided to Members that choose to utilize more than
one MPID to facilitate their trading on the Exchange. The Exchange also
believes that continuing to assess a fee on additional MPIDs will be
beneficial because such fee will promote efficiency in MPID use.
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.\6\ Specifically,
[[Page 28824]]
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 as well as Section 6(b)(4) \9\ 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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\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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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 the proposed MPID Fee is consistent with
the Act in that it is reasonable, equitable, and not unfairly
discriminatory. In particular, the Exchange believes that the proposed
fee is reasonable because it is reasonably aligned with the benefits
provided to Members that choose to utilize multiple MPIDs to facilitate
their trading on the Exchange. While each Member must have an MPID to
participate on the Exchange, additional MPIDs are optional and will be
assessed the fee, as amended. Additional MPIDs currently allow for
Members to realize certain benefits from and added value to their
participation on the Exchange but also require the Exchange to allocate
additional administrative resources to manage each MPID that a Member
chooses to use for its trading activity. Therefore, the Exchange
believes that it is reasonable to assess a modest fee on any additional
MPIDs that Members choose to use to facilitate their trading. The
Exchange again notes that it is optional for a Member to request and
employ additional MPIDs, and a large portion (approximately 68%) of the
Exchange's Members currently utilize just the one MPID necessary to
participate on the Exchange.
The Exchange also believes that assessing a fee on additional MPIDs
continues to be reasonably designed to promote efficiency in MPID use.
When the Exchange first implemented the current MPID Fee,\10\ it
observed as a result that Members were incentivized to more effectively
administer their MPIDs and reduce the number of under-used or
superfluous MPIDs, or MPIDs that did not contribute additional value to
a Member's participation on the Exchange. Reduction of such MPIDs, in
turn, reduces Exchange resources allocated to administration and
maintenance of those MPIDs. In particular, the Exchange observed that
within the first few months of introducing the previous MPID Fee, the
number of MPIDs on the Exchange decreased by approximately 18%,
demonstrating that Members may choose to be more efficient in their use
of MPIDs in response to an MPID Fee, such as that proposed in this fee
change.\11\
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\10\ See Securities and Exchange Release No. 90943 (January 19,
2021), 86 FR 7146 (January 26, 2021) (SR-CboeBYX-2021-004).
\11\ The reduction in MPIDs may also demonstrate that Members
are free to cancel MPIDs on the Exchange and choose, instead, to
utilize unique identifiers associated with participation on other
exchanges.
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The Exchange further believes the proposed MPID Fee change is
reasonable because the amount assessed continues to be less than the
analogous fees charged by at least one other market; namely, Nasdaq
Stock Market LLC (``Nasdaq'').\12\ The Exchange's proposed MPID Fee
increase to $250 a month per MPID, with no charge associated with a
Members' first MPID, continues to be lower than Nasdaq's MPID fee of
$550 per MPID, which is charged for all MPIDs used by a Nasdaq member,
including a member's first MPIDs.
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\12\ See Nasdaq Price List, MPID Fees, available at https://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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The Exchange believes that the proposed MPID Fee change is
equitable and not unfairly discriminatory because it will apply equally
to all Members that choose to employ two or more MPIDs based on the
number of additional MPIDs that they use to facilitate their trading on
the Exchange. As stated, additional MPIDs beyond a Member's first MPID
are optional, and Members may choose to trade using such additional
MPIDs to achieve additional benefits and added value to support their
individual business needs. Moreover, the Exchange believes the proposed
fee is equitable and not unfairly discriminatory because it is
proportional to the potential value or benefit received by Members with
a greater number of MPIDs. That is, those Members that choose to employ
a greater number of additional MPIDs have the opportunity to more
effectively manage firm-wide trading activity and client-level
administration, as well as potentially appeal to customers through the
use of separate MPIDs, which may result in increased order flow through
a Sponsoring Member. A Member may request at any time that the Exchange
terminate an MPID, including MPIDs that may be under-used or
superfluous, or that do not contribute additional value to a Member's
participation on the Exchange.
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 intramarket competition that is not necessary in
furtherance of the purposes of the Act because the proposed change will
apply equally to all Members that choose to employ additional MPIDs and
equally to each additional MPID. As stated, additional MPIDs are
optional and Members may choose to utilize additional MPIDs, or not,
based on their view of the additional benefits and added value provided
by utilizing the single MPID necessary to participate on the Exchange.
The Exchange believes the proposed fee will be assessed proportionately
to the potential value or benefit received by Members with a greater
number of MPIDs and notes that a Member may continue to request at any
time that the Exchange terminate any MPID, including those that may be
under-used or superfluous, or that do not contribute additional value
to a Member's participation on the Exchange.
Next, the Exchange believes the proposed rule change does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market,
including competition for exchange memberships. Members have numerous
alternative venues that they may participate on, including 15 other
equities exchanges, as well as off-exchange venues, including
alternative trading systems, where competitive products are available
for trading. Indeed, participants can readily choose to submit their
order flow to other exchange and off-exchange venues if they deem fee
levels at those other venues to be more favorable. In addition
[[Page 28825]]
to this the Exchange notes that at least one other exchange currently
has higher MPID fees in place, which have been previously filed with
the Commission. 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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\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 action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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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-CboeBYX-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-CboeBYX-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-CboeBYX-2024-011 and should
be submitted on or before May 10, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-08357 Filed 4-18-24; 8:45 am]
BILLING CODE 8011-01-P
