Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend Its Fees Schedule, 42567-42571 [2024-10590]
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Federal Register / Vol. 89, No. 95 / Wednesday, May 15, 2024 / Notices
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.’’ 16 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’. . . .’’.17 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
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The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 18 and paragraph (f) of Rule
19b–4 19 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.
16 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
17 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)).
18 15 U.S.C. 78s(b)(3)(A).
19 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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–10591 Filed 5–14–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
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–
CboeBZX–2024–034 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–CboeBZX–2024–034. 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–CboeBZX–2024–034 and should be
submitted on or before June 5, 2024.
PO 00000
[Release No. 34–100089; File No. SR–C2–
2024–006]
Self-Regulatory Organizations; Cboe
C2 Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating To Amend Its
Fees Schedule
May 9, 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 May 1,
2024, Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe C2 Exchange, Inc. (the
‘‘Exchange’’ or ‘‘C2’’) proposes to amend
its Fees Schedule. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/ctwo/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
20 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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Federal Register / Vol. 89, No. 95 / Wednesday, May 15, 2024 / Notices
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
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1. Purpose
The Exchange proposes to amend its
Fees Schedule, effective May 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 approximately 15% of the market
share.3 Thus, in such a lowconcentrated 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.
Fee Code Updates
The Exchange first proposes to
increase fees for Non-Customer, NonMarket Maker and Market-Maker orders
that remove liquidity in Penny Classes.
Currently, the Exchange assesses a fee of
$0.49 per contract for Non-Customer,
Non-Market Maker orders and MarketMaker orders that remove liquidity in
Penny Classes (which orders yield fee
codes ‘‘PP’’ and ‘‘PR’’, respectively). The
Exchange proposes to increase the
Penny Class Remove transaction fee for
Non-Customer, Non-Market Maker
orders and Market-Maker orders, from
$0.49 per contract to $0.50 per
contract.4
Additionally, the Exchange proposes
to amend fees for Public Customer
3 See Cboe Global Markets U.S. Options Market
Volume Summary by Month (April 29, 2024),
available at https://markets.cboe.com/us/options/
market_statistics/.
4 The Exchange also proposes to update the rate
for fee codes PP and PR within the Transactions
Fees section of the Fees Schedule.
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orders in SPY, AAPL, QQQ, IWM, SLV,
AMC, AMD, AMZN, HYG, PLTR,
TSLA 5 and XLF that remove liquidity.
Currently, the Exchange assesses a fee of
$0.37 per contract for Public Customer
orders in SPY, AAPL, QQQ, IWM, SLV,
AMC, AMD, AMZN, HYG, PLTR, TSLA
and XLF that remove liquidity (which
orders yield fee code ‘‘SC’’). The
Exchange proposes to amend the
transaction fee for Public Customer
orders in SPY, AAPL, QQQ, IWM, SLV,
AMC, AMD, AMZN, HYG, PLTR, TSLA
and XLF that remove liquidity (and
yield fee code SC) from $0.37 per
contract to $0.40 per contract.6
The Exchange next proposes to amend
the rebate for C2 Market-Maker orders in
SPY, AAPL, QQQ, IWM, SLV, AMC,
AMD, AMZN, HYG, PLTR, TSLA and
XLF that add liquidity. Currently, the
Exchanges provides a rebate of $0.20 per
contract for C2 Market-Maker orders in
SPY, AAPL, QQQ, IWM, SLV, AMC,
AMD, AMZN, HYG, PLTR, TSLA and
XLF that add liquidity (which orders
yield fee code ‘‘SM’’). The Exchange
proposes to amend the rebate provided
for C2 Market-Maker orders in SPY,
AAPL, QQQ, IWM, SLV, AMC, AMD,
AMZN, HYG, PLTR, TSLA and XLF that
add liquidity (and yield fee code ‘‘PM’’),
from $0.20 per contract to $0.28 per
contract.7
Additionally, the Exchange proposes
to amend Footnote 1 (Market Maker
Volume Tiers), applicable to qualifying
C2 Market-Maker orders yielding fee
code SM. Pursuant to Footnote 1 of the
Fee Schedule, the Exchange currently
offers four Market-Maker Volume Tiers,
which provide enhanced rebates
between $0.26 and $0.32 per contract
for qualifying Market-Maker orders
yielding fee code SM where a TPH
meets required criteria. Specifically,
Tier 1 provides an enhanced rebate of
$0.26 per contract where a TPH: (1) has
an ADAV 8 in Market-Maker orders in
SPY, AAPL, QQQ, IWM, SLV, AMC,
AMD, AMZN, HYG, PLTR, TLSA, and
XLF (i.e., yielding fee codes SM or SL)
greater than or equal to 0.15% of
Average OCV.9 Tier 2 provides a higher
5 As part of the proposed rule change, the
Exchange proposes to correct the spelling of
‘‘TSLA’’ (from ‘‘TLSA’’) throughout the Fees
Schedule.
6 The Exchange also proposes to update the rate
for fee code SC within the Transactions Fees section
of the Fees Schedule.
7 The Exchange also proposes to update the rate
for fee code SM within the Transactions Fees
section of the Fees Schedule.
8 ‘‘ADAV’’ means average daily added volume
calculated as the number of contracts added, per
day.
9 ‘‘OCV’’ means, the total equity and ETF options
volume that clears in the Customer range at the
Options Clearing Corporation (‘‘OCC’’) for the
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rebate of $0.28 per contract where a
TPH meets the more stringent criteria of
having an ADAV in Market-Maker
orders in SPY, AAPL, QQQ, IWM, SLV,
AMC, AMD, AMZN, HYG, PLTR, TLSA,
and XLF (i.e., yielding fee codes SM or
SL) greater than or equal to 0.35% of
Average OCV. Tier 3 provides a rebate
of $0.31 per contract if a TPH has an
ADAV in Market-Maker orders in SPY,
AAPL, QQQ, IWM, SLV, AMC, AMD,
AMZN, HYG, PLTR, TSLA, and XLF
(i.e., yielding fee codes SM or SL)
greater than or equal to 0.60% of
Average OCV. Finally, Tier 4 provides
an enhanced rebate of $0.32 per contract
if a TPH has an ADAV in Market-Maker
orders in SPY, AAPL, QQQ, IWM, SLV,
AMC, AMD, AMZN, HYG, PLTR, TSLA,
and XLF (i.e., yielding fee codes SM or
SL) greater than or equal to 0.70% of
Average OCV.
The Exchange proposes to amend the
required criteria for Tiers 1 through 4,
as well as the associated enhanced
rebates. Specifically, the Exchange
proposes to: amend Tier 1 criteria to
state that a TPH must have an ADAV in
Market-Maker orders in SPY, AAPL,
QQQ, IWM, SLV, AMC, AMD, AMZN,
HYG, PLTR, TSLA, and XLF (i.e.,
yielding fee codes SM or SL) greater
than or equal to 0.35% of Average OCV;
amend Tier 2 criteria to state that a TPH
must have an ADAV in Market-Maker
orders in SPY, AAPL, QQQ, IWM, SLV,
AMC, AMD, AMZN, HYG, PLTR, TSLA,
and XLF (i.e., yielding fee codes SM or
SL) greater than or equal to 0.65% of
Average OCV; amend Tier 3 criteria to
state that a TPH must have an ADAV in
Market-Maker orders in SPY, AAPL,
QQQ, IWM, SLV, AMC, AMD, AMZN,
HYG, PLTR, TSLA, and XLF (i.e.,
yielding fee codes SM or SL) greater
than or equal to 0.85% of Average OCV;
and amend Tier 4 criteria to state that
a TPH must have an ADAV in MarketMaker orders in SPY, AAPL, QQQ,
IWM, SLV, AMC, AMD, AMZN, HYG,
PLTR, TSLA, and XLF (i.e., yielding fee
codes SM or SL) greater than or equal
to 1.05% of Average OCV. Additionally,
the Exchange proposes to change the
enhanced rebate for Tier 1 from $0.26
per contract to $0.30 per contract, for
Tier 2 from $0.28 per contract to $0.32
per contract, for Tier 3 from $0.31 to
$0.34 per contract, and for Tier 4 from
$0.32 per contract to $0.36.
Finally, the Exchange proposes to
amend the Access Fees section of the
Fees Schedule. Currently, the Fees
Schedule states that Trading Permit
month for which the fees apply, excluding volume
on any day that the Exchange experiences an
Exchange System Disruption and on any day with
a scheduled early market close.
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Holders will only be assessed a single
monthly fee for each type of Trading
Permit it holds and provides the
example that a TPH with two MarketMaker Permits and one Electronic
Access Permit would be assessed a total
of $6,000 per month ($5,000 for a
Market-Maker Permit and $1,000 for an
Electronic Access Permit). The
Exchange proposes to correct an
inaccuracy contained within the
example. Specifically, the Exchange
proposes to remove reference to two
Market-Maker Permits, as TPHs are not
permitted to hold two Market-Maker
permits. As amended the language
would read that a TPH with one MarketMaker Permit and one Electronic Access
Permit would be assessed a total of
$5,000 per month ($5,000 for a MarketMaker Permit and $1,000 for an
Electronic Access Permit).
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.10 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 11 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) 12 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,13 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.
As described above, the Exchange
operates in a highly competitive market
in which market participants can
10 15
11 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
12 Id.
13 15
U.S.C. 78f(b)(4).
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readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. Further,
the Exchange notes that other exchanges
offer tiered product-specific pricing
and/or incentives.14 The proposed
changes to Exchange execution fees and
rebates are intended to attract order flow
to the Exchange by continuing to offer
competitive pricing while also creating
additional incentives to providing
aggressively priced displayed liquidity,
which the Exchange believes would
enhance market quality to the benefit of
all market participants.
The Exchange believes the proposed
change to increase the standard fee for
Non-Customer, Non-Market Maker and
Market-Maker orders that remove
liquidity in Penny Classes (i.e., yield fee
codes fee codes ‘‘PP’’ and ‘‘PR’’,
respectively) and Public Customer
orders in SPY, AAPL, QQQ, IWM, SLV,
AMC, AMD, AMZN, HYG, PLTR, TSLA
and XLF that remove liquidity (which
orders yield fee code ‘‘SC’’) are
reasonable because they are modest
increases and are still in line with (and
in some instances lower than) fees
assessed for similar transactions at other
exchanges.15 The Exchange believes the
proposed changes are equitable and not
unfairly discriminatory as they will
apply to all Non-Customer, Non-Market
Maker and Market-Maker orders that
remove liquidity in Penny Classes (i.e.,
yield fee codes fee codes ‘‘PP’’ and
‘‘PR’’, respectively) and all Public
Customer orders in SPY, AAPL, QQQ,
IWM, SLV, AMC, AMD, AMZN, HYG,
PLTR, TSLA and XLF that remove
liquidity (which orders yield fee code
‘‘SC’’) equally, as applicable.
Further, the Exchange believes the
proposed change to increase the rebate
14 See, e.g., MIAX Pearl Fee Schedule, Section 1
Transaction Rebates/Fees, which provides for
product-specific pricing for SPY, QQQ, and IWM;
and Nasdaq ISE Pricing Schedule, Section 3,
Footnote 5, which provides for tiered rebates for
Market Maker SPY, QQQ, IWM orders that add
liquidity between $0.10 and $0.26 per contract, as
well as tired [sic] rebates for Market Maker orders
in similar, single-name options (AMZN, META, and
NVDA) between $0.15 and $0.22.
15 See, e.g., MIAX Pearl Fee Schedule, Section 1
Transaction Rebates/Fees, which provides for fees
of $0.42 to $0.46 per contract for priority customer
SPY orders that remove liquidity, $0.45 to $0.48 per
contract for priority customer IWM and QQQ orders
that remove liquidity, $0.47 to $0.48 per contract
for priority customer orders in Penny Classes other
than SPY, QQQ and IWM orders that remove
liquidity, $0.50 per contract for Non-Priority
Customer, Firm, BD and Non-MIAX Pearl Market
Maker orders in Penny Classes that remove
liquidity, and $0.50 per contract for all MIAX Pearl
Market Maker orders in Penny Classes that remove
liquidity. See also Nasdaq ISE Pricing Schedule,
Section 3, Footnote 5, which provides for fees of
$0.46 per contract for Priority Customer orders in
Select Symbols that remove liquidity.
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42569
for C2 Market-Maker orders in SPY,
AAPL, QQQ, IWM, SLV, AMC, AMD,
AMZN, HYG, PLTR, TSLA and XLF that
add liquidity (which yield fee code
‘‘SM’’) is reasonable, because such
market participants are providing
liquidity in SPY, AAPL, QQQ, IWM,
SLV, AMC, AMD, AMZN, HYG, PLTR,
TSLA and XLF options to the benefit of
all market participants. Increased add
volume order flow, particularly by
liquidity providers, contributes to a
deeper, more liquid market, which, in
turn, provides for increased execution
opportunities and thus overall enhanced
price discovery and price improvement
opportunities on the Exchange. As such,
this benefits all market participants by
contributing towards a robust and wellbalanced market ecosystem, offering
additional flexibility for all investors to
enjoy cost savings, supporting the
quality of price discovery, promoting
market transparency and improving
investor protection.
The Exchange believes its proposed
change is reasonable as it is competitive
and in line with pricing of at least one
other exchange.16 Additionally, the
Exchange believes that it is equitable
and not unfairly discriminatory to
assess higher rebates to Market-Makers
that add liquidity as compared to other
market participants, because MarketMakers, unlike other market
participants, take on a number of
obligations, including quoting
obligations, which other market
participants do not have. Further, these
rebates are intended to incentivize
Market-Makers to quote and trade more
on the Exchange, thereby providing
more trading opportunities for all
market participants. The Exchange notes
that the proposed changes to MarketMaker rebates for orders in SPY, AAPL,
QQQ, IWM, SLV, AMC, AMD, AMZN,
HYG, PLTR, TSLA and XLF that add
liquidity will be applied equally to all
Market-Makers.
The Exchange believes the MarketMaker Volume Tiers, as amended,
continue to be a reasonable means to
encourage Market-Makers to increase
their order flow to specific multiplylisted options on the Exchange (i.e.,
SPY, AAPL, QQQ, IWM, SLV, AMC,
AMD, AMZN, HYG, PLTR, TSLA, and
XLF). The Exchange notes that
increased Market-Maker activity,
particularly, facilitates tighter spreads
and an increase in overall liquidity
provider activity, both of which signal
additional corresponding increase in
16 See, e.g., MIAX Pearl Fee Schedule, Section 1
Transaction Rebates/Fees, which provides for
rebates ranging between $0.22 and $0.48 for all
MIAX Pearl Market Maker orders in Penny Classes
that add liquidity.
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order flow from other market
participants, contributing towards a
robust, well-balanced market ecosystem,
particularly in multiply-listed options
on the Exchange. The Exchange also
believes that the proposed enhanced
rebates offered under Tiers 1 through 4
are reasonably based on the difficulty of
satisfying the tiers’ amended criteria
and ensures the proposed rebate and
thresholds appropriately reflect the
incremental difficulty in achieving the
Market-Maker Volume Tier. The
Exchange believes that the proposed
enhanced rebates are also in line with
the enhanced rebates currently offered
by another exchange for similar
products.17
The Exchange believes that the
Market-Maker Volume Tiers, as
amended, represent an equitable
allocation of fees and is not unfairly
discriminatory because it applies
uniformly to all Market-Makers, in that
all Market-Makers have the opportunity
to compete for and achieve the proposed
tiers. The enhanced rebates will apply
automatically and uniformly to all
Market-Makers that achieve the
proposed corresponding criteria. While
the Exchange has no way of knowing
whether this proposed rule change
would definitively result in any
particular Market-Maker qualifying for
the proposed tiers, the Exchange
believes that approximately five MarketMakers will reasonably be able to
achieve the amended criteria in Tier 1;
approximately one Market-Makers [sic]
will be able to achieve the amended
criteria in Tier 2; and currently no
Market-Makers would be able to achieve
the amended criteria in Tiers 3 and 4.
The Exchange notes that the tiers are
open to any Market-Maker that satisfies
the tiers’ criteria.
The Exchange lastly notes that it does
not believe the tiers, as amended, will
adversely impact any TPH’s pricing.
Rather, should a TPH not meet the
proposed criteria, the TPH will merely
not receive the enhanced rebates
corresponding to the tiers, and will
instead receive the standard rebate.
Finally, the Exchange believes the
proposed change to the Access Fees
section of the Fees Schedule is
reasonable, as the proposed change
corrects an inaccurate reference within
the Fees Schedule, thereby mitigating
any potential confusion for TPHs.
17 See, e.g., MIAX Pearl Fee Schedule, Section 1
Transaction Rebates/Fees, which provides for
rebates ranging between $0.22 and $0.48 for all
MIAX Pearl Market Maker orders in Penny Classes
that add liquidity.
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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 believes the proposed rule
change does not impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Particularly,
the proposed change applies to all
similarly situated TPHs equally. As
noted above, the changes to increase the
standard transaction fees for NonCustomer, Non-Market Maker and
Market-Maker orders that remove
liquidity in Penny Classes (i.e., yield fee
codes fee codes ‘‘PP’’ and ‘‘PR’’,
respectively) and Public Customer
orders in SPY, AAPL, QQQ, IWM, SLV,
AMC, AMD, AMZN, HYG, PLTR, TSLA
and XLF that remove liquidity (which
orders yield fee code ‘‘SC’’) will be
applied equally to all Non-Customer,
Non-Market Maker and Market-Maker
orders that remove liquidity in Penny
Classes (i.e., yield fee codes fee codes
‘‘PP’’ and ‘‘PR’’, respectively) and all
Public Customer orders in SPY, AAPL,
QQQ, IWM, SLV, AMC, AMD, AMZN,
HYG, PLTR, TSLA and XLF that remove
liquidity (which orders yield fee code
‘‘SC’’) equally, as applicable.
Further, the proposed changes to
Market-Maker rebates for orders in SPY,
AAPL, QQQ, IWM, SLV, AMC, AMD,
AMZN, HYG, PLTR, TSLA and XLF that
add liquidity will be applied equally to
all Market-Makers. The Exchange
believes that the proposed change to
increase the C2 Market-Maker rebate for
orders in SPY, AAPL, QQQ, IWM, SLV,
AMC, AMD, AMZN, HYG, PLTR, TSLA,
and XLF will incentivize entry on the
Exchange of more aggressive SPY,
AAPL, QQQ, IWM, SLV, AMC, AMD,
AMZN, HYG, PLTR, TSLA, and XLF
orders that will maintain tighter
spreads, benefitting both TPHs and
public investors criteria and, as a result,
provide for deeper levels of liquidity,
increasing trading opportunities for
other market participants, thus signaling
further trading activity, ultimately
incentivizing more overall order flow
and improving price transparency on
the Exchange. Finally, as noted above,
the changes to the Market-Maker
Volume Tiers apply uniformly to all
Market-Makers, in that all MarketMakers have the opportunity to compete
for and achieve the tiers, as amended;
the enhanced rebates, as amended, will
apply automatically and uniformly to all
Market-Makers that achieve the
proposed corresponding criteria.
PO 00000
Frm 00151
Fmt 4703
Sfmt 4703
Finally, the Exchange believes the
proposed change to the Access Fees
section of the Fees Schedule will not
impose a burden on competition, as the
proposed change merely corrects an
inaccurate reference within the Fees
Schedule, thereby mitigating any
potential confusion for TPHs.
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.
TPHs have numerous alternative venues
that they may participate on and
director [sic] 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 15% of the
market share.18 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.’’ The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’. Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
18 See
E:\FR\FM\15MYN1.SGM
supra note 3.
15MYN1
Federal Register / Vol. 89, No. 95 / Wednesday, May 15, 2024 / Notices
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 19 and paragraph (f) of Rule
19b–4 20 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
lotter on DSK11XQN23PROD with NOTICES1
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–
C2–2024–006 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–C2–2024–006. 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
19 15
20 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
VerDate Sep<11>2014
19:12 May 14, 2024
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–C2–2024–006 and should be
submitted on or before June 5, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–10590 Filed 5–14–24; 8:45 am]
BILLING CODE 8011–01–P
Business Administration, 409 3rd Street
SW, Suite 6050, Washington, DC 20416,
(202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
Administrator’s EIDL declaration,
applications for disaster loans may be
submitted online using the MySBA
Loan Portal https://lending.sba.gov or
other locally announced locations.
Please contact the SBA disaster
assistance customer service center by
email at disastercustomerservice@
sba.gov or by phone at 1–800–659–2955
for further assistance.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Monterey.
Contiguous Counties:
California: Fresno, Kings, San Benito,
San Luis Obispo, Santa Cruz
The Interest Rates are:
Percent
Business and Small Agricultural
Cooperatives without Credit
Available Elsewhere ..............
Non-Profit Organizations without Credit Available Elsewhere .....................................
(Catalog of Federal Domestic Assistance
Number 59008)
[Disaster Declaration #20324; CALIFORNIA
Disaster Number CA–20017 Declaration of
Economic Injury]
Isabella Guzman,
Administrator.
Administrative Declaration of an
Economic Injury Disaster for the State
of California
BILLING CODE 8026–09–P
Small Business Administration.
ACTION: Notice.
AGENCY:
This is a notice of an
Economic Injury Disaster Loan (EIDL)
declaration for the State of California
dated 05/09/2024.
Incident: Highway 1 Collapse and
Closure.
Incident Period: 03/30/2024 and
continuing.
DATES: Issued on 05/09/2024.
Economic Injury (EIDL) Loan
Application Deadline Date: 02/10/2025.
ADDRESSES: Visit the MySBA Loan
Portal at https://lending.sba.gov to
apply for a disaster assistance loan.
FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster
Recovery & Resilience, U.S. Small
SUMMARY:
PO 00000
CFR 200.30–3(a)(12).
Frm 00152
Fmt 4703
Sfmt 4703
4.000
3.250
The number assigned to this disaster
for economic injury is 203240.
The State which received an EIDL
Declaration is California.
SMALL BUSINESS ADMINISTRATION
21 17
Jkt 262001
42571
[FR Doc. 2024–10621 Filed 5–14–24; 8:45 am]
DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
[Docket No. FHWA–2024–0039]
Agency Information Collection
Activities: Request for Comments for a
New Information Collection
Federal Highway
Administration (FHWA), DOT.
ACTION: Notice and request for
comments.
AGENCY:
The FHWA invites public
comments about our intention to request
the Office of Management and Budget’s
(OMB) approval for a new information
collection, which is summarized below
under SUPPLEMENTARY INFORMATION. We
are required to publish this notice in the
Federal Register by the Paperwork
Reduction Act of 1995.
SUMMARY:
E:\FR\FM\15MYN1.SGM
15MYN1
]]>Agencies
[Federal Register Volume 89, Number 95 (Wednesday, May 15, 2024)]
[Notices]
[Pages 42567-42571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-10590]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100089; File No. SR-C2-2024-006]
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Amend Its Fees Schedule
May 9, 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 May 1, 2024, Cboe C2 Exchange, Inc. (the ``Exchange'' or
``C2'') 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 C2 Exchange, Inc. (the ``Exchange'' or ``C2'') proposes to
amend its Fees Schedule. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/ctwo/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set
[[Page 42568]]
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 May 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 approximately 15% 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 Volume Summary
by Month (April 29, 2024), available at https://markets.cboe.com/us/options/market_statistics/.
---------------------------------------------------------------------------
Fee Code Updates
The Exchange first proposes to increase fees for Non-Customer, Non-
Market Maker and Market-Maker orders that remove liquidity in Penny
Classes. Currently, the Exchange assesses a fee of $0.49 per contract
for Non-Customer, Non-Market Maker orders and Market-Maker orders that
remove liquidity in Penny Classes (which orders yield fee codes ``PP''
and ``PR'', respectively). The Exchange proposes to increase the Penny
Class Remove transaction fee for Non-Customer, Non-Market Maker orders
and Market-Maker orders, from $0.49 per contract to $0.50 per
contract.\4\
---------------------------------------------------------------------------
\4\ The Exchange also proposes to update the rate for fee codes
PP and PR within the Transactions Fees section of the Fees Schedule.
---------------------------------------------------------------------------
Additionally, the Exchange proposes to amend fees for Public
Customer orders in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG, PLTR,
TSLA \5\ and XLF that remove liquidity. Currently, the Exchange
assesses a fee of $0.37 per contract for Public Customer orders in SPY,
AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG, PLTR, TSLA and XLF that
remove liquidity (which orders yield fee code ``SC''). The Exchange
proposes to amend the transaction fee for Public Customer orders in
SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG, PLTR, TSLA and XLF that
remove liquidity (and yield fee code SC) from $0.37 per contract to
$0.40 per contract.\6\
---------------------------------------------------------------------------
\5\ As part of the proposed rule change, the Exchange proposes
to correct the spelling of ``TSLA'' (from ``TLSA'') throughout the
Fees Schedule.
\6\ The Exchange also proposes to update the rate for fee code
SC within the Transactions Fees section of the Fees Schedule.
---------------------------------------------------------------------------
The Exchange next proposes to amend the rebate for C2 Market-Maker
orders in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG, PLTR, TSLA and
XLF that add liquidity. Currently, the Exchanges provides a rebate of
$0.20 per contract for C2 Market-Maker orders in SPY, AAPL, QQQ, IWM,
SLV, AMC, AMD, AMZN, HYG, PLTR, TSLA and XLF that add liquidity (which
orders yield fee code ``SM''). The Exchange proposes to amend the
rebate provided for C2 Market-Maker orders in SPY, AAPL, QQQ, IWM, SLV,
AMC, AMD, AMZN, HYG, PLTR, TSLA and XLF that add liquidity (and yield
fee code ``PM''), from $0.20 per contract to $0.28 per contract.\7\
---------------------------------------------------------------------------
\7\ The Exchange also proposes to update the rate for fee code
SM within the Transactions Fees section of the Fees Schedule.
---------------------------------------------------------------------------
Additionally, the Exchange proposes to amend Footnote 1 (Market
Maker Volume Tiers), applicable to qualifying C2 Market-Maker orders
yielding fee code SM. Pursuant to Footnote 1 of the Fee Schedule, the
Exchange currently offers four Market-Maker Volume Tiers, which provide
enhanced rebates between $0.26 and $0.32 per contract for qualifying
Market-Maker orders yielding fee code SM where a TPH meets required
criteria. Specifically, Tier 1 provides an enhanced rebate of $0.26 per
contract where a TPH: (1) has an ADAV \8\ in Market-Maker orders in
SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG, PLTR, TLSA, and XLF
(i.e., yielding fee codes SM or SL) greater than or equal to 0.15% of
Average OCV.\9\ Tier 2 provides a higher rebate of $0.28 per contract
where a TPH meets the more stringent criteria of having an ADAV in
Market-Maker orders in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG,
PLTR, TLSA, and XLF (i.e., yielding fee codes SM or SL) greater than or
equal to 0.35% of Average OCV. Tier 3 provides a rebate of $0.31 per
contract if a TPH has an ADAV in Market-Maker orders in SPY, AAPL, QQQ,
IWM, SLV, AMC, AMD, AMZN, HYG, PLTR, TSLA, and XLF (i.e., yielding fee
codes SM or SL) greater than or equal to 0.60% of Average OCV. Finally,
Tier 4 provides an enhanced rebate of $0.32 per contract if a TPH has
an ADAV in Market-Maker orders in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD,
AMZN, HYG, PLTR, TSLA, and XLF (i.e., yielding fee codes SM or SL)
greater than or equal to 0.70% of Average OCV.
---------------------------------------------------------------------------
\8\ ``ADAV'' means average daily added volume calculated as the
number of contracts added, per day.
\9\ ``OCV'' means, the total equity and ETF options volume that
clears in the Customer range at the Options Clearing Corporation
(``OCC'') for the month for which the fees apply, excluding volume
on any day that the Exchange experiences an Exchange System
Disruption and on any day with a scheduled early market close.
---------------------------------------------------------------------------
The Exchange proposes to amend the required criteria for Tiers 1
through 4, as well as the associated enhanced rebates. Specifically,
the Exchange proposes to: amend Tier 1 criteria to state that a TPH
must have an ADAV in Market-Maker orders in SPY, AAPL, QQQ, IWM, SLV,
AMC, AMD, AMZN, HYG, PLTR, TSLA, and XLF (i.e., yielding fee codes SM
or SL) greater than or equal to 0.35% of Average OCV; amend Tier 2
criteria to state that a TPH must have an ADAV in Market-Maker orders
in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG, PLTR, TSLA, and XLF
(i.e., yielding fee codes SM or SL) greater than or equal to 0.65% of
Average OCV; amend Tier 3 criteria to state that a TPH must have an
ADAV in Market-Maker orders in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD,
AMZN, HYG, PLTR, TSLA, and XLF (i.e., yielding fee codes SM or SL)
greater than or equal to 0.85% of Average OCV; and amend Tier 4
criteria to state that a TPH must have an ADAV in Market-Maker orders
in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG, PLTR, TSLA, and XLF
(i.e., yielding fee codes SM or SL) greater than or equal to 1.05% of
Average OCV. Additionally, the Exchange proposes to change the enhanced
rebate for Tier 1 from $0.26 per contract to $0.30 per contract, for
Tier 2 from $0.28 per contract to $0.32 per contract, for Tier 3 from
$0.31 to $0.34 per contract, and for Tier 4 from $0.32 per contract to
$0.36.
Finally, the Exchange proposes to amend the Access Fees section of
the Fees Schedule. Currently, the Fees Schedule states that Trading
Permit
[[Page 42569]]
Holders will only be assessed a single monthly fee for each type of
Trading Permit it holds and provides the example that a TPH with two
Market-Maker Permits and one Electronic Access Permit would be assessed
a total of $6,000 per month ($5,000 for a Market-Maker Permit and
$1,000 for an Electronic Access Permit). The Exchange proposes to
correct an inaccuracy contained within the example. Specifically, the
Exchange proposes to remove reference to two Market-Maker Permits, as
TPHs are not permitted to hold two Market-Maker permits. As amended the
language would read that a TPH with one Market-Maker Permit and one
Electronic Access Permit would be assessed a total of $5,000 per month
($5,000 for a Market-Maker Permit and $1,000 for an Electronic Access
Permit).
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.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ 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) \12\ 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,\13\ 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.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ Id.
\13\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
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. Further, the Exchange notes
that other exchanges offer tiered product-specific pricing and/or
incentives.\14\ The proposed changes to Exchange execution fees and
rebates are intended to attract order flow to the Exchange by
continuing to offer competitive pricing while also creating additional
incentives to providing aggressively priced displayed liquidity, which
the Exchange believes would enhance market quality to the benefit of
all market participants.
---------------------------------------------------------------------------
\14\ See, e.g., MIAX Pearl Fee Schedule, Section 1 Transaction
Rebates/Fees, which provides for product-specific pricing for SPY,
QQQ, and IWM; and Nasdaq ISE Pricing Schedule, Section 3, Footnote
5, which provides for tiered rebates for Market Maker SPY, QQQ, IWM
orders that add liquidity between $0.10 and $0.26 per contract, as
well as tired [sic] rebates for Market Maker orders in similar,
single-name options (AMZN, META, and NVDA) between $0.15 and $0.22.
---------------------------------------------------------------------------
The Exchange believes the proposed change to increase the standard
fee for Non-Customer, Non-Market Maker and Market-Maker orders that
remove liquidity in Penny Classes (i.e., yield fee codes fee codes
``PP'' and ``PR'', respectively) and Public Customer orders in SPY,
AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG, PLTR, TSLA and XLF that
remove liquidity (which orders yield fee code ``SC'') are reasonable
because they are modest increases and are still in line with (and in
some instances lower than) fees assessed for similar transactions at
other exchanges.\15\ The Exchange believes the proposed changes are
equitable and not unfairly discriminatory as they will apply to all
Non-Customer, Non-Market Maker and Market-Maker orders that remove
liquidity in Penny Classes (i.e., yield fee codes fee codes ``PP'' and
``PR'', respectively) and all Public Customer orders in SPY, AAPL, QQQ,
IWM, SLV, AMC, AMD, AMZN, HYG, PLTR, TSLA and XLF that remove liquidity
(which orders yield fee code ``SC'') equally, as applicable.
---------------------------------------------------------------------------
\15\ See, e.g., MIAX Pearl Fee Schedule, Section 1 Transaction
Rebates/Fees, which provides for fees of $0.42 to $0.46 per contract
for priority customer SPY orders that remove liquidity, $0.45 to
$0.48 per contract for priority customer IWM and QQQ orders that
remove liquidity, $0.47 to $0.48 per contract for priority customer
orders in Penny Classes other than SPY, QQQ and IWM orders that
remove liquidity, $0.50 per contract for Non-Priority Customer,
Firm, BD and Non-MIAX Pearl Market Maker orders in Penny Classes
that remove liquidity, and $0.50 per contract for all MIAX Pearl
Market Maker orders in Penny Classes that remove liquidity. See also
Nasdaq ISE Pricing Schedule, Section 3, Footnote 5, which provides
for fees of $0.46 per contract for Priority Customer orders in
Select Symbols that remove liquidity.
---------------------------------------------------------------------------
Further, the Exchange believes the proposed change to increase the
rebate for C2 Market-Maker orders in SPY, AAPL, QQQ, IWM, SLV, AMC,
AMD, AMZN, HYG, PLTR, TSLA and XLF that add liquidity (which yield fee
code ``SM'') is reasonable, because such market participants are
providing liquidity in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG,
PLTR, TSLA and XLF options to the benefit of all market participants.
Increased add volume order flow, particularly by liquidity providers,
contributes to a deeper, more liquid market, which, in turn, provides
for increased execution opportunities and thus overall enhanced price
discovery and price improvement opportunities on the Exchange. As such,
this benefits all market participants by contributing towards a robust
and well-balanced market ecosystem, offering additional flexibility for
all investors to enjoy cost savings, supporting the quality of price
discovery, promoting market transparency and improving investor
protection.
The Exchange believes its proposed change is reasonable as it is
competitive and in line with pricing of at least one other
exchange.\16\ Additionally, the Exchange believes that it is equitable
and not unfairly discriminatory to assess higher rebates to Market-
Makers that add liquidity as compared to other market participants,
because Market-Makers, unlike other market participants, take on a
number of obligations, including quoting obligations, which other
market participants do not have. Further, these rebates are intended to
incentivize Market-Makers to quote and trade more on the Exchange,
thereby providing more trading opportunities for all market
participants. The Exchange notes that the proposed changes to Market-
Maker rebates for orders in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN,
HYG, PLTR, TSLA and XLF that add liquidity will be applied equally to
all Market-Makers.
---------------------------------------------------------------------------
\16\ See, e.g., MIAX Pearl Fee Schedule, Section 1 Transaction
Rebates/Fees, which provides for rebates ranging between $0.22 and
$0.48 for all MIAX Pearl Market Maker orders in Penny Classes that
add liquidity.
---------------------------------------------------------------------------
The Exchange believes the Market-Maker Volume Tiers, as amended,
continue to be a reasonable means to encourage Market-Makers to
increase their order flow to specific multiply-listed options on the
Exchange (i.e., SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG, PLTR,
TSLA, and XLF). The Exchange notes that increased Market-Maker
activity, particularly, facilitates tighter spreads and an increase in
overall liquidity provider activity, both of which signal additional
corresponding increase in
[[Page 42570]]
order flow from other market participants, contributing towards a
robust, well-balanced market ecosystem, particularly in multiply-listed
options on the Exchange. The Exchange also believes that the proposed
enhanced rebates offered under Tiers 1 through 4 are reasonably based
on the difficulty of satisfying the tiers' amended criteria and ensures
the proposed rebate and thresholds appropriately reflect the
incremental difficulty in achieving the Market-Maker Volume Tier. The
Exchange believes that the proposed enhanced rebates are also in line
with the enhanced rebates currently offered by another exchange for
similar products.\17\
---------------------------------------------------------------------------
\17\ See, e.g., MIAX Pearl Fee Schedule, Section 1 Transaction
Rebates/Fees, which provides for rebates ranging between $0.22 and
$0.48 for all MIAX Pearl Market Maker orders in Penny Classes that
add liquidity.
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The Exchange believes that the Market-Maker Volume Tiers, as
amended, represent an equitable allocation of fees and is not unfairly
discriminatory because it applies uniformly to all Market-Makers, in
that all Market-Makers have the opportunity to compete for and achieve
the proposed tiers. The enhanced rebates will apply automatically and
uniformly to all Market-Makers that achieve the proposed corresponding
criteria. While the Exchange has no way of knowing whether this
proposed rule change would definitively result in any particular
Market-Maker qualifying for the proposed tiers, the Exchange believes
that approximately five Market-Makers will reasonably be able to
achieve the amended criteria in Tier 1; approximately one Market-Makers
[sic] will be able to achieve the amended criteria in Tier 2; and
currently no Market-Makers would be able to achieve the amended
criteria in Tiers 3 and 4. The Exchange notes that the tiers are open
to any Market-Maker that satisfies the tiers' criteria.
The Exchange lastly notes that it does not believe the tiers, as
amended, will adversely impact any TPH's pricing. Rather, should a TPH
not meet the proposed criteria, the TPH will merely not receive the
enhanced rebates corresponding to the tiers, and will instead receive
the standard rebate.
Finally, the Exchange believes the proposed change to the Access
Fees section of the Fees Schedule is reasonable, as the proposed change
corrects an inaccurate reference within the Fees Schedule, thereby
mitigating any potential confusion for TPHs.
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 believes the
proposed rule change does not impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Particularly, the proposed change applies to all
similarly situated TPHs equally. As noted above, the changes to
increase the standard transaction fees for Non-Customer, Non-Market
Maker and Market-Maker orders that remove liquidity in Penny Classes
(i.e., yield fee codes fee codes ``PP'' and ``PR'', respectively) and
Public Customer orders in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN,
HYG, PLTR, TSLA and XLF that remove liquidity (which orders yield fee
code ``SC'') will be applied equally to all Non-Customer, Non-Market
Maker and Market-Maker orders that remove liquidity in Penny Classes
(i.e., yield fee codes fee codes ``PP'' and ``PR'', respectively) and
all Public Customer orders in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN,
HYG, PLTR, TSLA and XLF that remove liquidity (which orders yield fee
code ``SC'') equally, as applicable.
Further, the proposed changes to Market-Maker rebates for orders in
SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG, PLTR, TSLA and XLF that
add liquidity will be applied equally to all Market-Makers. The
Exchange believes that the proposed change to increase the C2 Market-
Maker rebate for orders in SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN,
HYG, PLTR, TSLA, and XLF will incentivize entry on the Exchange of more
aggressive SPY, AAPL, QQQ, IWM, SLV, AMC, AMD, AMZN, HYG, PLTR, TSLA,
and XLF orders that will maintain tighter spreads, benefitting both
TPHs and public investors criteria and, as a result, provide for deeper
levels of liquidity, increasing trading opportunities for other market
participants, thus signaling further trading activity, ultimately
incentivizing more overall order flow and improving price transparency
on the Exchange. Finally, as noted above, the changes to the Market-
Maker Volume Tiers apply uniformly to all Market-Makers, in that all
Market-Makers have the opportunity to compete for and achieve the
tiers, as amended; the enhanced rebates, as amended, will apply
automatically and uniformly to all Market-Makers that achieve the
proposed corresponding criteria. Finally, the Exchange believes the
proposed change to the Access Fees section of the Fees Schedule will
not impose a burden on competition, as the proposed change merely
corrects an inaccurate reference within the Fees Schedule, thereby
mitigating any potential confusion for TPHs.
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. TPHs
have numerous alternative venues that they may participate on and
director [sic] 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 15% of the market
share.\18\ 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.'' The fact that
this market is competitive has also long been recognized by the courts.
In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit
stated as follows: ``[n]o one disputes that competition for order flow
is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .''. Accordingly, the Exchange
does not believe its proposed fee change imposes any burden on
competition that is not necessary or
[[Page 42571]]
appropriate in furtherance of the purposes of the Act.
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\18\ See supra note 3.
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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 \19\ and paragraph (f) of Rule 19b-4 \20\
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.
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 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-C2-2024-006 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-C2-2024-006. 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-C2-2024-006 and
should be submitted on or before June 5, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-10590 Filed 5-14-24; 8:45 am]
BILLING CODE 8011-01-P
