Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 46214-46218 [2024-11568]

Download as PDF 46214 Federal Register / Vol. 89, No. 103 / Tuesday, May 28, 2024 / Notices khammond on DSKJM1Z7X2PROD with NOTICES Document Production Lists in simplified customer arbitrations in which the customer requests a regular hearing. However, to the extent that parties are currently unaware of the DRS guidance and misunderstand the application of the Document Production Lists in simplified customer arbitrations, the codification of the DRS guidance could affect the discovery process. (d) Alternatives Considered An alternative to the proposed rule change is to automatically apply the Document Production Lists in paper cases and special proceedings without the need for the customer to make an election. Relative to the proposed rule change, all parties in paper cases and special proceedings would obtain the relevant documents and other information and further decrease the risk that arbitration outcomes do not reflect the actual merits of the underlying dispute. As discussed above, most customers appear pro se in paper cases and special proceedings and may have difficulty understanding the discovery process. Parties, however, would incur the costs associated with the application of the Document Production Lists in all cases, even when the documents and other information described on the Document Production Lists are not relevant to the case and their production may not impact arbitration outcomes. Another alternative is to pare the Document Production Lists for paper cases and special proceedings, to the extent possible, to those documents and other information that are thought to be more relevant for these arbitrations. Relative to the proposed rule change, this alternative may decrease production costs. However, given that the Document Production Lists were designed to capture those documents that are most likely to lead to the discovery of relevant information in customer arbitrations, paring down the Document Production Lists may reduce the ability of customers to access relevant documents and other information. It is not known how these countervailing effects may impact the decision of customers to apply the Document Production Lists and case outcomes. Finally, an alternative to the proposed rule change is to decrease the number of days for a party to respond when customers elect to apply the Document Production Lists in paper cases and special proceedings (e.g., from 60 days to 30 days). This may reduce the extent to which the time to resolution may lengthen. Some parties, however, VerDate Sep<11>2014 18:43 May 24, 2024 Jkt 262001 including customers who appear pro se, may incur additional costs to respond to the Document Production Lists within the shortened timeframe, such as by needing to obtain relevant documents on an expedited basis. Parties may also seek an extension, thereby lengthening the discovery process, nonetheless. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) by order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be 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: 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 such filing also will be available for inspection and copying at the principal office of FINRA. 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–FINRA–2024–008 and should be submitted on or before June 18, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.33 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–11584 Filed 5–24–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–100193; File No. SR– CboeBZX–2024–039] 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– FINRA–2024–008 on the subject line. Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule 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–FINRA–2024–008. 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 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 May 13, 2024, Cboe BZX Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. PO 00000 Frm 00160 Fmt 4703 Sfmt 4703 May 21, 2024. 33 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\28MYN1.SGM 28MYN1 Federal Register / Vol. 89, No. 103 / Tuesday, May 28, 2024 / Notices I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) 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/BZX/), 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 khammond on DSKJM1Z7X2PROD with NOTICES 1. Purpose The Exchange proposes to amend its Fee Schedule applicable to its equities trading platform (‘‘BZX Equities’’) by modifying certain Add/Remove Volume Tiers. The Exchange proposes to implement these changes effective May 13, 2024.3 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 3 The Exchange initially filed the proposed fee change on May 1, 2024 (SR–CboeBZX–2024–033). On May 9, 2024, the Exchange withdrew that filing and submitted SR–CboeBZX–2024–036. On May 13, 2024, the Exchange withdrew that filing and submitted this proposal. VerDate Sep<11>2014 18:43 May 24, 2024 Jkt 262001 available information,4 no single registered equities exchange has more than 16% of the market share. Thus, in such a low-concentrated and highly competitive market, no single equities exchange possesses significant pricing power in the execution of order flow. The Exchange in particular operates a ‘‘Maker-Taker’’ model whereby it pays rebates to members that add liquidity and assesses fees to those that remove liquidity. The Exchange’s Fee Schedule sets forth the standard rebates and rates applied per share for orders that provide and remove liquidity, respectively. Currently, for orders in securities priced at or above $1.00, the Exchange provides a standard rebate of $0.00160 per share for orders that add liquidity and assesses a fee of $0.0030 per share for orders that remove liquidity.5 For orders in securities priced below $1.00, the Exchange does not provide a rebate for orders that add liquidity and assesses a fee of 0.30% of the total dollar value for orders that remove liquidity.6 Additionally, in response to the competitive environment, the Exchange also offers tiered pricing which provides Members opportunities to qualify for higher rebates or reduced fees where certain volume criteria and thresholds are met. Tiered pricing provides an incremental incentive for Members to strive for higher tier levels, which provides increasingly higher benefits or discounts for satisfying increasingly more stringent criteria. Add/Remove Volume Tiers Under footnote 1 of the Fee Schedule, the Exchange offers various Add/ Remove Volume Tiers. In particular, the Exchange offers eight Add Volume Tiers that provide enhanced rebates for orders yielding fee codes B,7 V 8 and Y 9 where a Member reaches certain add volumebased criteria. The Exchange now proposes to modify Add Volume Tier 8 by lowering the requirement in the first prong of criteria. The current criteria for Add Volume Tier 8 is as follows: • Add Volume Tier 8 provides a rebate of $0.0031 per share in securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee codes B, V, or Y) where a Member: (1) has an 4 See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date (April 23, 2024), available at https://www.cboe.com/us/equities/ market_statistics/. 5 See BZX Equities Fee Schedule, Standard Rates. 6 Id. 7 Fee code B is appended to displayed orders that add liquidity to BZX in Tape B securities. 8 Fee code V is appended to displayed orders that add liquidity to BZX in Tape A securities. 9 Fee code Y is appended to displayed orders that add liquidity to BZX in Tape C securities. PO 00000 Frm 00161 Fmt 4703 Sfmt 4703 46215 ADAV 10 as a percentage of TCV 11 ≥0.50%; and (2) Member has a Tape B ADV 12 ≥1.50% of the Tape B TCV; and (3) Member has a Remove ADV ≥0.30% of the TCV. The proposed criteria for Add Volume Tier 8 is as follows: • Add Volume Tier 8 provides a rebate of $0.0031 per share in securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee codes B, V, or Y) where a Member: (1) has an ADAV as a percentage of TCV ≥0.42%; and (2) Member has a Tape B ADV ≥1.50% of the Tape B TCV; and (3) Member has a Remove ADV ≥0.30% of the TCV. In addition to the Add/Remove Volume Tiers offered under footnote 1, the Exchange also offers four NonDisplayed Add Volume Tiers that each provide an enhanced rebate for Members’ qualifying orders yielding fee codes HB,13 HV,14 or HY,15 where a Member reaches certain volume-based criteria offered in each tier. The Exchange now proposes to modify NonDisplayed Add Volume Tier 1. The current criteria for Non-Displayed Add Volume Tier 1 is as follows: • Non-Displayed Add Volume Tier 1 provides a rebate of $0.0018 per share in securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee codes HB, HV, or HY) where a Member adds an ADV ≥0.05% of the TCV as Non-Displayed orders that yield fee codes HB, HI,16 HV or HY. The proposed criteria for NonDisplayed Add Volume Tier 1 is as follows: • Non-Displayed Add Volume Tier 1 provides a rebate of $0.0018 per share in securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee codes HB, HV, or HY) where a Member adds an ADV ≥0.06% of the TCV as Non-Displayed orders that yield fee codes HB, HI, HV or HY. 10 ‘‘ADAV’’ means average daily added volume calculated as the number of shares added per day. ADAV is calculated on a monthly basis. 11 ‘‘TCV’’ means total consolidated volume calculated as the volume reported by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the month for which the fees apply. 12 ‘‘ADV’’ means average daily volume calculated as the number of shares added or removed, combined, per day, calculated on a monthly basis. 13 Fee code HB is appended to non-displayed orders that add liquidity to BZX in Tape B securities. 14 Fee code HV is appended to non-displayed orders that add liquidity to BZX in Tape A securities. 15 Fee code HY is appended to non-displayed orders that add liquidity to BZX in Tape C securities. 16 Fee code HI is appended to non-displayed orders that add liquidity to BZX and receive price improvement. E:\FR\FM\28MYN1.SGM 28MYN1 46216 Federal Register / Vol. 89, No. 103 / Tuesday, May 28, 2024 / Notices khammond on DSKJM1Z7X2PROD with NOTICES The proposed, modified Add Volume Tier 8 and Non-Displayed Add Volume Tier 1 are intended to continue to provide an additional opportunity to incentivize Members to earn an enhanced rebate by increasing their order flow to the Exchange, which further contributes to a deeper, more liquid market and provides even more execution opportunities for active market participants. While the proposed criteria for Add Volume Tier 8 is slightly less difficult than existing criteria and the proposed criteria for Non-Displayed Add Volume Tier 1 is slightly more difficult than existing criteria, the Exchange believes that both tiers continue to offer an enhanced rebate that is commensurate with the proposed criteria. Incentivizing an increase in liquidity adding volume through enhanced rebate opportunities encourages liquidity-adding Members on the Exchange to increase transactions and take execution opportunities provided by such increased liquidity, together providing for overall enhanced price discovery and price improvement opportunities on the Exchange. As such, increased overall order flow benefits all Members by contributing towards a robust and well-balanced market ecosystem. 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.17 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 18 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) 19 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) 20 as it is 17 15 18 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 19 Id. 20 15 U.S.C. 78f(b)(4). VerDate Sep<11>2014 18:43 May 24, 2024 Jkt 262001 designed to provide for the equitable allocation of reasonable dues, fees and other charges among its Members and other persons using its facilities. As described above, the Exchange operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. The Exchange believes that its proposal to modify Add Volume Tier 8 and NonDisplayed Add Volume Tier 1 reflects a competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange, which the Exchange believes would enhance market quality to the benefit of all Members. Specifically, the Exchange’s proposal to introduce slightly different criteria to Add Volume Tier 8 and Non-Displayed Add Volume Tier 1 is not a significant departure from existing criteria, is reasonably correlated to the enhanced rebate offered by the Exchange and other competing exchanges,21 and will continue to incentivize Members to submit order flow to the Exchange. Additionally, the Exchange notes that relative volumebased incentives and discounts have been widely adopted by exchanges,22 including the Exchange,23 and are reasonable, equitable and nondiscriminatory because they are open to all Members on an equal basis and provide additional benefits or discounts that are reasonably related to (i) the value to an exchange’s market quality and (ii) associated higher levels of market activity, such as higher levels of liquidity provision and/or growth patterns. Competing equity exchanges offer similar tiered pricing structures, including schedules or rebates and fees that apply based upon members achieving certain volume and/or growth thresholds, as well as assess similar fees or rebates for similar types of orders, to that of the Exchange. In particular, the Exchange believes its proposal to modify Add Volume Tier 8 and Non-Displayed Add Volume Tier 1 is reasonable because the revised tiers will be available to all Members and provide all Members with an opportunity to receive an enhanced 21 See Nasdaq Price List, Add and Remove Rates, Rebate to Add Displayed Liquidity, Shares Executed at or Above $1.00, available at https:// nasdaqtrader.com/Trader.aspx?id=PriceList Trading2; see also MEMX Equities Fee Schedule, Non-Display Add Tiers, available at https:// info.memxtrading.com/equities-trading-resources/ us-equities-fee-schedule/. 22 See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/Remove Volume Tiers. 23 See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove Volume Tiers. PO 00000 Frm 00162 Fmt 4703 Sfmt 4703 rebate. The Exchange further believes its proposal to modify Add Volume Tier 8 and Non-Displayed Add Volume Tier 1 will provide a reasonable means to encourage liquidity adding displayed orders in Members’ order flow to the Exchange and to incentivize Members to continue to provide liquidity adding and liquidity removing volume to the Exchange by offering them an opportunity to receive an enhanced rebate on qualifying orders. An overall increase in activity would deepen the Exchange’s liquidity pool, offer additional cost savings, support the quality of price discovery, promote market transparency and improve market quality, for all investors. The Exchange believes that its proposal to modify Add Volume Tier 8 and Non-Displayed Add Volume Tier 1 is reasonable as the proposed criteria do not represent a significant departure from the criteria currently offered in the Fee Schedule. The Exchange also believes that the proposal represents an equitable allocation of fees and rebates and is not unfairly discriminatory because all Members continue to be eligible for the proposed Add Volume Tier 8 and Non-Displayed Add Volume Tier 1 and have the opportunity to meet the tiers’ criteria and receive the corresponding enhanced rebate if such criteria is met. Without having a view of activity on other markets and offexchange venues, the Exchange has no way of knowing whether this proposed rule change would definitely result in any Members qualifying for proposed Add Volume Tier 8 and Non-Displayed Add Volume Tier 1. While the Exchange has no way of predicting with certainty how the proposed changes will impact Member activity, based on the prior month’s volume, the Exchange anticipates that at least one Member will be able to satisfy proposed Add Volume Tier 8 and at least three Members will be able to satisfy proposed NonDisplayed Add Volume Tier 1. The Exchange also notes that proposed changes will not adversely impact any Member’s ability to qualify for enhanced rebates offered under other tiers. Should a Member not meet the proposed new criteria, the Member will merely not receive that corresponding enhanced rebate. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, as discussed above, the Exchange believes that the proposed change would E:\FR\FM\28MYN1.SGM 28MYN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 89, No. 103 / Tuesday, May 28, 2024 / Notices encourage the submission of additional order flow to a public exchange, thereby promoting market depth, execution incentives and enhanced execution opportunities, as well as price discovery and transparency for all Members. As a result, the Exchange believes that the proposed changes further the Commission’s goal in adopting Regulation NMS of fostering competition among orders, which promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ The Exchange believes the proposed rule changes do not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Particularly, the Exchange’s proposal to modify Add Volume Tier 8 and Non-Displayed Add Volume Tier 1 will apply to all Members equally in that all Members are eligible for the new and modified tiers, have a reasonable opportunity to meet the proposed tiers’ criteria and will receive the enhanced rebate on their qualifying orders if such criteria is met. The Exchange does not believe the proposed changes burden competition, but rather, enhance competition as they are intended to increase the competitiveness of BZX by amending existing pricing incentives in order to attract order flow and incentivize participants to increase their participation on the Exchange, providing for additional execution opportunities for market participants and improved price transparency. Greater overall order flow, trading opportunities, and pricing transparency benefits all market participants on the Exchange by enhancing market quality and continuing to encourage Members to send orders, thereby contributing towards a robust and well-balanced market ecosystem. Next, the Exchange believes the proposed rule changes does not impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. As previously discussed, the Exchange operates in a highly competitive market. Members have numerous alternative venues that they may participate on and direct their order flow, including other equities exchanges, off-exchange venues, and alternative trading systems. Additionally, the Exchange represents a small percentage of the overall market. Based on publicly available information, no single equities exchange has more than 16% of the market share.24 Therefore, no exchange possesses significant pricing power in the 24 Supra note 4. VerDate Sep<11>2014 18:43 May 24, 2024 Jkt 262001 execution of order flow. Indeed, participants can readily choose to send their orders to other exchange and offexchange venues if they deem fee levels at those other venues to be more favorable. Moreover, the Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation 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.’’ 25 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’. . . .’’.26 Accordingly, the Exchange does not believe its proposed fee change imposes any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 27 and paragraph (f) of Rule 19b–4 28 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may 25 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 26 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)). 27 15 U.S.C. 78s(b)(3)(A). 28 17 CFR 240.19b–4(f). PO 00000 Frm 00163 Fmt 4703 Sfmt 4703 46217 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: 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–2024–039 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–2024–039. 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 E:\FR\FM\28MYN1.SGM 28MYN1 46218 Federal Register / Vol. 89, No. 103 / Tuesday, May 28, 2024 / Notices submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR–CboeBZX–2024–039 and should be submitted on or before June 18, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.29 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–11568 Filed 5–24–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–100203; File No. SRCboeBZX–2024–037] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.13 To Describe the Manner in Which the Exchange Processes Executions in Securities Priced Below $1.00 Received From Away Trading Centers Priced in Fractional Pennies May 21, 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 May 10, 2024, Cboe BZX Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) 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. khammond on DSKJM1Z7X2PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) proposes to amend Rule 11.13 to describe the manner in which the Exchange processes executions in securities priced below $1.00 received from away Trading Centers priced in fractional pennies. 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/bzx/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. 29 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 18:43 May 24, 2024 Jkt 262001 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 Rule 11.13 to describe the manner in which the Exchange processes executions in securities priced below $1.00 received from away Trading Centers 3 priced in fractional pennies.4 Currently, the Exchange does not accept or rank orders priced in fractional pennies in securities priced below $1.00 5 for orders posted to the BZX Book,6 but may receive executions priced in fractional pennies through its routing broker-dealer affiliate, Cboe Trading, Inc. (‘‘Cboe Trading’’ or the ‘‘Routing Broker’’). Today, when the Exchange’s Routing Broker receives an execution in a security priced below $1.00 from certain away Trading Centers priced in fractional pennies, the Routing Broker truncates the execution price to four decimal places by eliminating any values beyond four decimal places 3 See Rule 2.11. A ‘‘Trading Center’’ means a securities exchange other than the Exchange, facilities of securities exchanges, automated trading systems, electronic communications networks, or other brokers or dealers. 4 For purposes of this filing, the term ‘‘fractional pennies’’ or ‘‘fractional penny’’ means an execution out to five decimal places or more (i.e., $0.00001 or finer). The Exchange notes that it accepts and ranks orders in securities priced below $1.00 out to four decimal places ($0.0001). While quotations and executions in $0.0001 increments are also known as fractional penny quotations (executions), the Exchange is limiting the use of the term ‘‘fractional penny’’ or ‘‘fractional pennies’’ within this proposal to executions out to five or more decimal places to categorize a specific issue with increments finer than $0.0001. 5 See Rule 11.11(a)(2). ‘‘Bids, offers, orders of indications of interests in securities traded on the Exchange shall not be made in an increment smaller than $0.0001 if those bids, offers or indications of interests are priced less than $1.00 per share and the security is an NMS stock pursuant to Commission Rule 600(b)(46) and is trading on the Exchange.’’ 6 See Rule 1.5(e). The term ‘‘BZX Book’’ shall mean the System’s electronic file of orders. PO 00000 Frm 00164 Fmt 4703 Sfmt 4703 priori [sic] to transmitting the execution price back to the Exchange.7 The Exchange now proposes that for each Exchange order in a security priced below $1.00 that the Routing Broker routes to an away Trading Center, and for which it receives an execution in fractional pennies, that such execution will be rounded up or down in favor of the Exchange order—i.e., the Routing Broker will round down to the nearest $0.0001 for all buy executions, and round up to the nearest $0.0001 for all sell executions. Pursuant to Rule 2.11, the Exchange relies on its Routing Broker to provide outbound routing services from the Exchange to a routing destination. Rule 2.11 also provides the authority to the Exchange or the Routing Broker to cancel orders on the Exchange’s equity securities platform when a technical or system issue occurs. In addition, Rule 2.11 also describes the operation of an error account for Cboe Trading. While Rule 2.11 speaks to the authority of the Routing Broker to provide outbound routing services, Rule 11.13(b) describes the manner in which orders are routed away from the Exchange to an away Trading Center. The Exchange proposes to add subparagraph (6) to Rule 11.13(b) to describe the order handling behavior of fractional penny executions on away Trading Centers. Specifically, the Exchange proposes that in order to process executions which occur in securities priced below $1.00 in fractional pennies on away Trading Centers, the Exchange’s Routing Broker will perform an adjustment to each fractional penny execution. In particular, for all buy executions in securities priced below $1.00 received from an away Trading Center in fractional pennies, the Routing Broker will round down to the nearest $0.0001. Additionally, for all sell executions in securities priced below $1.00 received from an away Trading Center in fractional pennies, the Routing Broker will round up to the nearest $0.0001. The only exception to this rounding behavior will occur when a buy execution in securities priced below $1.00 in fractional pennies received from an away Trading Center would result in the Routing Broker rounding down to a price of $0.0000. In this instance, and this instance only, the Routing Broker will instead round up to the minimum price of $0.0001 in order to comply with Rule 11.11(a)(2). The Routing Broker will afford the Exchange 7 For example, if the Routing Broker receives an execution from an away Trading Center priced at $0.50037, it truncates the price to $0.5003 prior to transmitting the execution price back to the Exchange. E:\FR\FM\28MYN1.SGM 28MYN1

Agencies

[Federal Register Volume 89, Number 103 (Tuesday, May 28, 2024)]
[Notices]
[Pages 46214-46218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-11568]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100193; File No. SR-CboeBZX-2024-039]


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

May 21, 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 May 13, 2024, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 46215]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') 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/BZX/), 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 (``BZX Equities'') by modifying certain Add/
Remove Volume Tiers. The Exchange proposes to implement these changes 
effective May 13, 2024.\3\
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    \3\ The Exchange initially filed the proposed fee change on May 
1, 2024 (SR-CboeBZX-2024-033). On May 9, 2024, the Exchange withdrew 
that filing and submitted SR-CboeBZX-2024-036. On May 13, 2024, the 
Exchange withdrew that filing and submitted this proposal.
---------------------------------------------------------------------------

    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,\4\ no single registered equities exchange has more than 
16% of the market share. Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow. The Exchange in 
particular operates a ``Maker-Taker'' model whereby it pays rebates to 
members that add liquidity and assesses fees to those that remove 
liquidity. The Exchange's Fee Schedule sets forth the standard rebates 
and rates applied per share for orders that provide and remove 
liquidity, respectively. Currently, for orders in securities priced at 
or above $1.00, the Exchange provides a standard rebate of $0.00160 per 
share for orders that add liquidity and assesses a fee of $0.0030 per 
share for orders that remove liquidity.\5\ For orders in securities 
priced below $1.00, the Exchange does not provide a rebate for orders 
that add liquidity and assesses a fee of 0.30% of the total dollar 
value for orders that remove liquidity.\6\ Additionally, in response to 
the competitive environment, the Exchange also offers tiered pricing 
which provides Members opportunities to qualify for higher rebates or 
reduced fees where certain volume criteria and thresholds are met. 
Tiered pricing provides an incremental incentive for Members to strive 
for higher tier levels, which provides increasingly higher benefits or 
discounts for satisfying increasingly more stringent criteria.
---------------------------------------------------------------------------

    \4\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (April 23, 2024), available at https://www.cboe.com/us/equities/market_statistics/.
    \5\ See BZX Equities Fee Schedule, Standard Rates.
    \6\ Id.
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Add/Remove Volume Tiers
    Under footnote 1 of the Fee Schedule, the Exchange offers various 
Add/Remove Volume Tiers. In particular, the Exchange offers eight Add 
Volume Tiers that provide enhanced rebates for orders yielding fee 
codes B,\7\ V \8\ and Y \9\ where a Member reaches certain add volume-
based criteria. The Exchange now proposes to modify Add Volume Tier 8 
by lowering the requirement in the first prong of criteria. The current 
criteria for Add Volume Tier 8 is as follows:
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    \7\ Fee code B is appended to displayed orders that add 
liquidity to BZX in Tape B securities.
    \8\ Fee code V is appended to displayed orders that add 
liquidity to BZX in Tape A securities.
    \9\ Fee code Y is appended to displayed orders that add 
liquidity to BZX in Tape C securities.
---------------------------------------------------------------------------

     Add Volume Tier 8 provides a rebate of $0.0031 per share 
in securities priced at or above $1.00 to qualifying orders (i.e., 
orders yielding fee codes B, V, or Y) where a Member: (1) has an ADAV 
\10\ as a percentage of TCV \11\ >=0.50%; and (2) Member has a Tape B 
ADV \12\ >=1.50% of the Tape B TCV; and (3) Member has a Remove ADV 
>=0.30% of the TCV.
---------------------------------------------------------------------------

    \10\ ``ADAV'' means average daily added volume calculated as the 
number of shares added per day. ADAV is calculated on a monthly 
basis.
    \11\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply.
    \12\ ``ADV'' means average daily volume calculated as the number 
of shares added or removed, combined, per day, calculated on a 
monthly basis.
---------------------------------------------------------------------------

    The proposed criteria for Add Volume Tier 8 is as follows:
     Add Volume Tier 8 provides a rebate of $0.0031 per share 
in securities priced at or above $1.00 to qualifying orders (i.e., 
orders yielding fee codes B, V, or Y) where a Member: (1) has an ADAV 
as a percentage of TCV >=0.42%; and (2) Member has a Tape B ADV >=1.50% 
of the Tape B TCV; and (3) Member has a Remove ADV >=0.30% of the TCV.
    In addition to the Add/Remove Volume Tiers offered under footnote 
1, the Exchange also offers four Non-Displayed Add Volume Tiers that 
each provide an enhanced rebate for Members' qualifying orders yielding 
fee codes HB,\13\ HV,\14\ or HY,\15\ where a Member reaches certain 
volume-based criteria offered in each tier. The Exchange now proposes 
to modify Non-Displayed Add Volume Tier 1. The current criteria for 
Non-Displayed Add Volume Tier 1 is as follows:
---------------------------------------------------------------------------

    \13\ Fee code HB is appended to non-displayed orders that add 
liquidity to BZX in Tape B securities.
    \14\ Fee code HV is appended to non-displayed orders that add 
liquidity to BZX in Tape A securities.
    \15\ Fee code HY is appended to non-displayed orders that add 
liquidity to BZX in Tape C securities.
---------------------------------------------------------------------------

     Non-Displayed Add Volume Tier 1 provides a rebate of 
$0.0018 per share in securities priced at or above $1.00 to qualifying 
orders (i.e., orders yielding fee codes HB, HV, or HY) where a Member 
adds an ADV >=0.05% of the TCV as Non-Displayed orders that yield fee 
codes HB, HI,\16\ HV or HY.
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    \16\ Fee code HI is appended to non-displayed orders that add 
liquidity to BZX and receive price improvement.
---------------------------------------------------------------------------

    The proposed criteria for Non-Displayed Add Volume Tier 1 is as 
follows:
     Non-Displayed Add Volume Tier 1 provides a rebate of 
$0.0018 per share in securities priced at or above $1.00 to qualifying 
orders (i.e., orders yielding fee codes HB, HV, or HY) where a Member 
adds an ADV >=0.06% of the TCV as Non-Displayed orders that yield fee 
codes HB, HI, HV or HY.

[[Page 46216]]

    The proposed, modified Add Volume Tier 8 and Non-Displayed Add 
Volume Tier 1 are intended to continue to provide an additional 
opportunity to incentivize Members to earn an enhanced rebate by 
increasing their order flow to the Exchange, which further contributes 
to a deeper, more liquid market and provides even more execution 
opportunities for active market participants. While the proposed 
criteria for Add Volume Tier 8 is slightly less difficult than existing 
criteria and the proposed criteria for Non-Displayed Add Volume Tier 1 
is slightly more difficult than existing criteria, the Exchange 
believes that both tiers continue to offer an enhanced rebate that is 
commensurate with the proposed criteria. Incentivizing an increase in 
liquidity adding volume through enhanced rebate opportunities 
encourages liquidity-adding Members on the Exchange to increase 
transactions and take execution opportunities provided by such 
increased liquidity, together providing for overall enhanced price 
discovery and price improvement opportunities on the Exchange. As such, 
increased overall order flow benefits all Members by contributing 
towards a robust and well-balanced market ecosystem.
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.\17\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \18\ 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) \19\ 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) \20\ 
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.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ Id.
    \20\ 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. The Exchange believes that 
its proposal to modify Add Volume Tier 8 and Non-Displayed Add Volume 
Tier 1 reflects a competitive pricing structure designed to incentivize 
market participants to direct their order flow to the Exchange, which 
the Exchange believes would enhance market quality to the benefit of 
all Members. Specifically, the Exchange's proposal to introduce 
slightly different criteria to Add Volume Tier 8 and Non-Displayed Add 
Volume Tier 1 is not a significant departure from existing criteria, is 
reasonably correlated to the enhanced rebate offered by the Exchange 
and other competing exchanges,\21\ and will continue to incentivize 
Members to submit order flow to the Exchange. Additionally, the 
Exchange notes that relative volume-based incentives and discounts have 
been widely adopted by exchanges,\22\ including the Exchange,\23\ and 
are reasonable, equitable and non-discriminatory because they are open 
to all Members on an equal basis and provide additional benefits or 
discounts that are reasonably related to (i) the value to an exchange's 
market quality and (ii) associated higher levels of market activity, 
such as higher levels of liquidity provision and/or growth patterns. 
Competing equity exchanges offer similar tiered pricing structures, 
including schedules or rebates and fees that apply based upon members 
achieving certain volume and/or growth thresholds, as well as assess 
similar fees or rebates for similar types of orders, to that of the 
Exchange.
---------------------------------------------------------------------------

    \21\ See Nasdaq Price List, Add and Remove Rates, Rebate to Add 
Displayed Liquidity, Shares Executed at or Above $1.00, available at 
https://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2; see also 
MEMX Equities Fee Schedule, Non-Display Add Tiers, available at 
https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/.
    \22\ See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
    \23\ See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove 
Volume Tiers.
---------------------------------------------------------------------------

    In particular, the Exchange believes its proposal to modify Add 
Volume Tier 8 and Non-Displayed Add Volume Tier 1 is reasonable because 
the revised tiers will be available to all Members and provide all 
Members with an opportunity to receive an enhanced rebate. The Exchange 
further believes its proposal to modify Add Volume Tier 8 and Non-
Displayed Add Volume Tier 1 will provide a reasonable means to 
encourage liquidity adding displayed orders in Members' order flow to 
the Exchange and to incentivize Members to continue to provide 
liquidity adding and liquidity removing volume to the Exchange by 
offering them an opportunity to receive an enhanced rebate on 
qualifying orders. An overall increase in activity would deepen the 
Exchange's liquidity pool, offer additional cost savings, support the 
quality of price discovery, promote market transparency and improve 
market quality, for all investors.
    The Exchange believes that its proposal to modify Add Volume Tier 8 
and Non-Displayed Add Volume Tier 1 is reasonable as the proposed 
criteria do not represent a significant departure from the criteria 
currently offered in the Fee Schedule. The Exchange also believes that 
the proposal represents an equitable allocation of fees and rebates and 
is not unfairly discriminatory because all Members continue to be 
eligible for the proposed Add Volume Tier 8 and Non-Displayed Add 
Volume Tier 1 and have the opportunity to meet the tiers' criteria and 
receive the corresponding enhanced rebate if such criteria is met. 
Without having a view of activity on other markets and off-exchange 
venues, the Exchange has no way of knowing whether this proposed rule 
change would definitely result in any Members qualifying for proposed 
Add Volume Tier 8 and Non-Displayed Add Volume Tier 1. While the 
Exchange has no way of predicting with certainty how the proposed 
changes will impact Member activity, based on the prior month's volume, 
the Exchange anticipates that at least one Member will be able to 
satisfy proposed Add Volume Tier 8 and at least three Members will be 
able to satisfy proposed Non-Displayed Add Volume Tier 1. The Exchange 
also notes that proposed changes will not adversely impact any Member's 
ability to qualify for enhanced rebates offered under other tiers. 
Should a Member not meet the proposed new criteria, the Member will 
merely not receive that corresponding enhanced rebate.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Rather, as discussed above, 
the Exchange believes that the proposed change would

[[Page 46217]]

encourage the submission of additional order flow to a public exchange, 
thereby promoting market depth, execution incentives and enhanced 
execution opportunities, as well as price discovery and transparency 
for all Members. As a result, the Exchange believes that the proposed 
changes further the Commission's goal in adopting Regulation NMS of 
fostering competition among orders, which promotes ``more efficient 
pricing of individual stocks for all types of orders, large and 
small.''
    The Exchange believes the proposed rule changes do not impose any 
burden on intramarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Particularly, the Exchange's 
proposal to modify Add Volume Tier 8 and Non-Displayed Add Volume Tier 
1 will apply to all Members equally in that all Members are eligible 
for the new and modified tiers, have a reasonable opportunity to meet 
the proposed tiers' criteria and will receive the enhanced rebate on 
their qualifying orders if such criteria is met. The Exchange does not 
believe the proposed changes burden competition, but rather, enhance 
competition as they are intended to increase the competitiveness of BZX 
by amending existing pricing incentives in order to attract order flow 
and incentivize participants to increase their participation on the 
Exchange, providing for additional execution opportunities for market 
participants and improved price transparency. Greater overall order 
flow, trading opportunities, and pricing transparency benefits all 
market participants on the Exchange by enhancing market quality and 
continuing to encourage Members to send orders, thereby contributing 
towards a robust and well-balanced market ecosystem.
    Next, the Exchange believes the proposed rule changes does not 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. As previously 
discussed, the Exchange operates in a highly competitive market. 
Members have numerous alternative venues that they may participate on 
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the 
Exchange represents a small percentage of the overall market. Based on 
publicly available information, no single equities exchange has more 
than 16% of the market share.\24\ Therefore, no exchange possesses 
significant pricing power in the execution of order flow. Indeed, 
participants can readily choose to send their orders to other exchange 
and off-exchange venues if they deem fee levels at those other venues 
to be more favorable. Moreover, the Commission has repeatedly expressed 
its preference for competition over regulatory intervention in 
determining prices, products, and services in the securities markets. 
Specifically, in Regulation NMS, the Commission highlighted the 
importance of market forces in determining prices and SRO revenues and, 
also, recognized that current regulation of the market system ``has 
been remarkably successful in promoting market competition in its 
broader forms that are most important to investors and listed 
companies.'' \25\ 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'. . . .''.\26\ 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.
---------------------------------------------------------------------------

    \24\ Supra note 4.
    \25\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \26\ 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)).
---------------------------------------------------------------------------

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 \27\ and paragraph (f) of Rule 19b-4 \28\ 
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.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78s(b)(3)(A).
    \28\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2024-039 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-2024-039. 
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

[[Page 46218]]

submitted material that is obscene or subject to copyright protection. 
All submissions should refer to file number SR-CboeBZX-2024-039 and 
should be submitted on or before June 18, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
---------------------------------------------------------------------------

    \29\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-11568 Filed 5-24-24; 8:45 am]
BILLING CODE 8011-01-P
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