Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule To Clarify Its Certification Port Fees, 55290-55293 [2024-14592]
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Federal Register / Vol. 89, No. 128 / Wednesday, July 3, 2024 / Notices
dealers’. . . .’’.15 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 16 and paragraph (f) of Rule
19b–4 17 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.
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–CBOE–2024–028 and should be
submitted on or before July 24, 2024.
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.18
J. Matthew DeLesDernier,
Deputy Secretary.
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CBOE–2024–028 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–CBOE–2024–028. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
15 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)).
16 15 U.S.C. 78s(b)(3)(A).
17 17 CFR 240.19b–4(f).
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[FR Doc. 2024–14593 Filed 7–2–24; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–100443; File No. SR–
CboeEDGX–2024–039]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule To Clarify Its
Certification Port Fees
June 27, 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 June 13,
2024, Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
PO 00000
18 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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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 EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’ or ‘‘EDGX
Options’’) is filing with the Securities
and Exchange Commission
(‘‘Commission’’) a proposed rule change
to amend its Fee Schedule. The text of
the proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fees Schedule to clarify its fees for
Certification Logical Port fees, effective
June 3, 2024 [sic].3
By way of background, the Exchange
offers a variety of logical ports, which
provide users with the ability within the
Exchange’s System to accomplish a
specific function through a connection,
such as order entry, data receipt or
access to information. Specifically, the
Exchange offers Logical Ports,4 Purge
3 The Exchange initially filed this proposed rule
change on May 31, 2024 for June 3, 2024
effectiveness (SR–CboeEDGX–2024–030). On June
13, 2024, the Exchange withdrew that filing and
submitted this filing.
4 Logical Ports include FIX and BOE ports (used
for order entry), drop logical port (which grants
users the ability to receive and/or send drop copies)
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Ports,5 Multicast PITCH GRP Ports and
Multicast PITCH Spin Server Ports.6 For
each type of the aforementioned logical
ports that is used in the production
environment, the Exchange also offers
corresponding ports which provide
Members and non-Members access to
the Exchange’s certification
environment to test proprietary systems
and applications (i.e., ‘‘Certification
Logical Ports’’). The certification
environment facilitates testing using
replicas of the Exchange’s production
environment process configurations
which provide for a robust and realistic
testing experience. For example, the
certification environment allows
unlimited firm-level testing of order
types, order entry, order management,
order throughput, acknowledgements,
risk settings, mass cancelations, and
purge requests. The Exchange currently
provides free of charge one Certification
Logical Port per port type offered in the
production environment (i.e., Logical
Ports, Purge, Multicast PITCH GRP, and
Multicast PITCH Spin Server Ports) and
a monthly fee of $250 per Certification
Logical Port for any additional
Certification Logical Ports.7
The Exchange proposes to make clear
in the notes section under the Logical
Port Fees section of the Fees Schedule
that the Certification Logical Port fees
only apply if the corresponding logical
port is also in the production
environment. For example, if the
Exchange intends to adopt a new port
type that has not yet been launched in
the live production environment, any
certification port for that port type will
be free until such time that the proposed
new port is in the production
environment. Once any new logical port
type is in the live production
environment, Members and NonMembers will only be entitled to one
free certification logical port for that
port type, and any additional
certifications ports of that type will be
assessed the regular monthly $250 per
port charge.
and ports that are used for receipt of certain market
data feeds.
5 Purge Ports are dedicated ports that permit a
user to simultaneously cancel all or a subset of its
orders in one or more symbols across multiple
logical ports by requesting the Exchange to effect
such cancellation.
6 Spin Ports and GRP Ports are used to request
and receive a retransmission of data from the
Exchange’s Multicast PITCH data feeds.
7 For example, if a Member maintains 3 FIX
Certification Logical Ports, 1 Purge Certification
Logical Port, and 1 set of Multicast PITCH Spin
Server Certification Logical Port, the Member will
be assessed $500 per month for Certification Logical
Port Fees (i.e., 1 FIX, 1 Purge and 1 set of Multicast
PITCH Spin Server Certification Logical Ports × $0
and 2 FIX Certification Logical Ports × $250).
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The Exchange notes that purchasing
additional Certification Logical Ports
continues to be voluntary and not
required in order to participate in the
production environment, including live
production trading on the Exchange.
Additionally, Members and nonMembers are not required to purchase
any particular production logical port in
order to receive a corresponding
Certification Logical Port free of charge.8
Further, the Exchange also notes that
other exchanges similarly assess fees
related to their respective testing
environments.9
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
Section 6(b)(4) of the Act,12 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Members and other persons using its
facilities.
As noted above, the Exchange’s
certification environment provides a
robust and realistic testing experience
using a replica of the Exchange’s
production environment process
configurations. This environment
enables market participants to manage
risk more effectively through testing
8 For example, a Member may obtain a
Certification Purge Port free of charge, even if that
Member has not otherwise purchased a Purge Port
for the live production environment. Certification
Logical Ports are not automatically enabled, but
rather must be proactively requested by Members or
Non-Members.
9 See e.g., Nasdaq Stock Market LLC, Equity 7,
Pricing Schedule, Section 130. See also MIAX
Options Exchange Fee Schedule, Section 4, Testing
and Certification Fees.
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
12 15 U.S.C. 78f(b)(4).
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55291
software development changes in
certification prior to implementing them
in the live trading environment, thereby
reducing the likelihood of a potentially
disruptive system failure in the live
trading environment, which has the
potential to affect all market
participants. The Exchange believes this
is especially true when testing a new
port type that has not yet launched in
the production environment. As such,
the Exchange believes it’s reasonable to
only assess the Certification Logical Port
fee to ports that are also available in the
production environment as to not
discourage the testing of new ports
ahead of any respective launch date.
The Exchange also believes applying the
Certification Logical Port fee is
reasonable once such ports are available
in the production environment because
while such ports will no longer be
completely free, Members and nonMembers will continue to be entitled to
receive free of charge one Certification
Logical Port for such port. The Exchange
continues to believe one Certification
Logical Port per logical port type will be
sufficient for most Members and nonMembers and indeed anticipates that
the majority of users will not purchase
additional Certification Logical Ports.
For those who wish to obtain additional
Certification Logical Ports based on
their respective business needs, such as
those wishing to test across various
diverse systems within their own
infrastructure, they are able to do so for
a modest fee. Indeed, the decision to
purchase additional ports is optional
and no market participant is required or
under any regulatory obligation to
purchase excess Certification Logical
Ports in order to access the Exchange’s
certification environment.13 Further, the
Exchange has observed that market
participants that do choose to purchase
additional Certification Logical Ports
maintain significantly fewer
Certification Logical Ports as compared
to the corresponding logical ports they
use in the production in environment.
The Exchange believes the proposal to
make clear that the Certification Logical
Port fee applies only to logical ports that
are in the production environment is
equitable and not unfairly
discriminatory because it applies
uniformly to all market participants that
13 Although many Members and Non-Members
use Certification Logical Ports on a daily basis, the
Exchange notes frequency of use of Certification
Logical Ports varies by user and depends on their
respective business needs. To the extent a Member
or Non-Member purchases additional Certification
Logical Ports and their needs later change, or they
determines they no longer wish to maintain excess
Certification Logical Ports, the Member or NonMember is free to cancel such ports for the
following month(s).
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Federal Register / Vol. 89, No. 128 / Wednesday, July 3, 2024 / Notices
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choose to obtain additional Certification
Logical Ports and all market participants
will have further clarity as to which
certification ports are subject to the
current fee. The Exchange also believes
the proposed change is reasonable,
equitable and not unfairly
discriminatory because it is designed to
encourage market participants to avail
themselves of Certification Logical Ports
for new port types before they launch to
become acclimated with the new
connectivity offering ahead of going live
in the trading environment. The
Exchange believes the proposal to add
this language to the notes section in the
Fees Schedule also provides clarity in
the rules as to when the Certification
Logical Port fee applies and reduces
potential confusion.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on intramarket or
intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed rule change will impose any
burden on intramarket competition
because as the proposed change applies
uniformly to all market participants.
Additionally, the Exchange does not
believe that the proposed fee creates an
undue burden on competition because
the Exchange will continue to offer free
of charge one Certification Logical Port
per each logical port type once offered
in the production environment. Also as
discussed, the purchase of additional
ports is optional and based on the
business needs of each market
participant. Moreover, such market
participants will continue to benefit
from access to the certification
environment, which the Exchange
believes provides a robust and realistic
testing experience via a replica of the
production environment, which may be
especially critical during the time
leading up to the launch of a new port
type in the production environment.
The Exchange does not believe that
the proposed rule changes will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
Particularly, the proposed change
applies only to the Exchange’s
certification environment. Additionally,
the Exchange notes that it operates in a
highly competitive market. Members
have numerous alternative venues that
they may participate on and direct their
order flow, including 16 other options
exchanges, as well as a number of
alternative trading systems and other
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off-exchange venues, where competitive
products are available for trading.
Indeed, participants can readily choose
to send their orders to other exchanges,
and, additionally off-exchange venues,
if they deem overall 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.’’ 14 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’. . . .’’.15 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 16 and paragraph (f) of Rule
19b–4 17 thereunder. At any time within
14 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
15 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)).
16 15 U.S.C. 78s(b)(3)(A).
17 17 CFR 240.19b–4(f).
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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:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeEDGX–2024–039 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–CboeEDGX–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
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Federal Register / Vol. 89, No. 128 / Wednesday, July 3, 2024 / Notices
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–CboeEDGX–2024–039 and should be
submitted on or before July 24, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–14592 Filed 7–2–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100447; File No. SR–ISE–
2024–17]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Order Approving a Proposed
Rule Change To Amend the Strike
Interval for Options on ExchangeTraded Fund Shares and To Allow $1
Strike Price Intervals Above $200 for
Options on SPDR Gold Shares (GLD)
June 28, 2024.
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I. Introduction
On May 3, 2024, Nasdaq ISE, LLC
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend Options 4, Section 5 of the
Exchange’s rules to (i) permit options on
exchange-traded fund shares to have an
interval of $1 or greater where the strike
price is $200 or less and $5.00 or greater
where the strike price is greater than
$200 and (ii) list options on SPDR®
Gold Shares (‘‘GLD’’) with $1 strike
price intervals instead of $5 strike price
intervals when the strike price of the
option is greater than $200. The
proposed rule change was published for
comment in the Federal Register on
May 20, 2024.3 The Commission did not
receive any comment letters on the
proposed rule change. This order
approves the proposed rule change.
II. Description of the Proposal
Currently, Options 4, Section 5 of the
Exchange’s rules provides that the
interval between strike prices of series
of options on exchange-traded fund
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 100133
(May 14, 2024), 89 FR 43936 (‘‘Notice’’).
1 15
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shares (‘‘ETFs’’) 4 will be fixed at a price
per share which is reasonably close to
the price per share at which the
underlying security is traded in the
primary market at or about the same
time such series of options is first open
for trading on the Exchange, or at such
intervals as may have been established
on another options exchange prior to the
initiation of trading on the Exchange,5
except that the interval between strike
prices of series of options on SPDR S&P
500 ETF (‘‘SPY’’), iShares Core S&P 500
ETF (‘‘IVV’’), PowerShares QQQ Trust
(‘‘QQQ’’), iShares Russell 2000 Index
Fund (‘‘IWM’’), and the SPDR Dow
Jones Industrial Average ETF (‘‘DIA’’)
may be $1 or greater.6
The Exchange proposes to establish
an alternative to the strike price interval
regime described above. Specifically,
ISE would also allow the interval for
options on ETFs to be $1 or greater
where the strike price is $200 or less
and $5.00 or greater where the strike
price is greater than $200.7 As described
above, the Exchange may fix the interval
between strike prices of series of options
on ETFs at such intervals as may have
been established on another options
exchange prior to the initiation of
trading on the Exchange.8 The Exchange
states that today, Cboe Exchange, Inc.
(‘‘Cboe’’) 9 permits the interval between
strike prices of series of options on ETFs
to be $1 or greater where the strike price
is $200 or less and $5.00 or greater
where the strike price is greater than
$200.10 The Exchange states that its
proposal adopts Cboe’s language.11
The Exchange also proposes to permit
strike intervals to be $1 or greater where
the strike price is greater than $200 for
options on GLD,12 similar to options on
SPY, IVV, QQQ, IWM, and DIA.13 The
Exchange states that $1 strike price
intervals already exist below the $200
Exchange Rule Options 4, Section 3(h).
Exchange Rule Options 4, Section 5(d).
6 See Exchange Rule Options 4, Section 5(e).
7 See proposed Exchange Rule Options 4, Section
5(d).
8 See supra note 5.
9 See Cboe Rule 4.5, Interpretation and Policy
.07(a).
10 See Notice, supra note 3, at 43936.
11 See id.
12 According to the Exchange, GLD is an ETF
whose shares are designed to closely track the price
and performance of the price of gold bullion. See
id. The Exchange states: ‘‘GLD is widely quoted as
an indicator of gold stock prices’’ and the ‘‘leading
product in its asset class that trades within a
‘complex’ where, in addition to the underlying
security, there are multiple instruments available
for hedging such as, COMEX Gold Futures; Gold
Daily Futures; iShares GOLD Trust; SPDR GOLD
Minishares Trust; Aberdeen Physical Gold Trust;
and GraniteShares Gold Shares.’’ Id.
13 See proposed Exchange Rule Options 4,
Section 5(e).
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4 See
5 See
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55293
price point and that GLD has
consistently inclined in price toward
the $200 level.14 In light of this, the
Exchange believes that continuing to
maintain the current $5 strike intervals
above $200 may have a negative effect
on investing, trading and hedging
opportunities, and volume, particularly
to the extent it impacts the ability of
market participants to roll their
positions once strike prices pass $200.15
The Exchange states that the proposed
strike setting regime will ‘‘permit strikes
to be set to more closely reflect the
increasing value in the underlying and
allows investors and traders to roll open
positions from a lower strike to a higher
strike in conjunction with the price
movements of the underlying ETF.’’ 16
The Exchange acknowledges that the
proposal would increase the total
number of options series available on
the Exchange, but represents that it and
the Options Price Reporting Authority
(‘‘OPRA’’) have the necessary system
capacity to handle any potential
additional traffic associated with the
proposal.17 The Exchange also states
that its members would not have a
capacity issue as a result of the
proposal.18 Further, the Exchange
represents that the proposal would not
cause fragmentation of liquidity but, by
providing more trading opportunities to
market participants, instead would
increase both available liquidity as well
as price efficiency.19
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange.20 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act,21 which requires,
among other things, that a national
securities exchange have rules designed
to prevent fraudulent and manipulative
acts and practices, to promote just and
14 See
Notice, supra note 3, at 43937.
id. For example, the Exchange states that
‘‘to move a position from a $200 strike to a $205
strike under the current rule, an investor would
need for the underlying product to move 2.5%’’
whereas rolling an open position from a $200 to a
$201 strike represents ‘‘only a 0.5% move from the
underlying.’’ Id.
16 Id.
17 See id.
18 See id.
19 See id.
20 15 U.S.C. 78f(b). In approving this proposed
rule change, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
21 15 U.S.C. 78f(b)(5).
15 See
E:\FR\FM\03JYN1.SGM
03JYN1
]]>Agencies
[Federal Register Volume 89, Number 128 (Wednesday, July 3, 2024)]
[Notices]
[Pages 55290-55293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14592]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100443; File No. SR-CboeEDGX-2024-039]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule To Clarify Its Certification Port Fees
June 27, 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 June 13, 2024, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'' or ``EDGX
Options'') is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend its Fee Schedule. The
text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fees Schedule to clarify its
fees for Certification Logical Port fees, effective June 3, 2024
[sic].\3\
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\3\ The Exchange initially filed this proposed rule change on
May 31, 2024 for June 3, 2024 effectiveness (SR-CboeEDGX-2024-030).
On June 13, 2024, the Exchange withdrew that filing and submitted
this filing.
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By way of background, the Exchange offers a variety of logical
ports, which provide users with the ability within the Exchange's
System to accomplish a specific function through a connection, such as
order entry, data receipt or access to information. Specifically, the
Exchange offers Logical Ports,\4\ Purge
[[Page 55291]]
Ports,\5\ Multicast PITCH GRP Ports and Multicast PITCH Spin Server
Ports.\6\ For each type of the aforementioned logical ports that is
used in the production environment, the Exchange also offers
corresponding ports which provide Members and non-Members access to the
Exchange's certification environment to test proprietary systems and
applications (i.e., ``Certification Logical Ports''). The certification
environment facilitates testing using replicas of the Exchange's
production environment process configurations which provide for a
robust and realistic testing experience. For example, the certification
environment allows unlimited firm-level testing of order types, order
entry, order management, order throughput, acknowledgements, risk
settings, mass cancelations, and purge requests. The Exchange currently
provides free of charge one Certification Logical Port per port type
offered in the production environment (i.e., Logical Ports, Purge,
Multicast PITCH GRP, and Multicast PITCH Spin Server Ports) and a
monthly fee of $250 per Certification Logical Port for any additional
Certification Logical Ports.\7\
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\4\ Logical Ports include FIX and BOE ports (used for order
entry), drop logical port (which grants users the ability to receive
and/or send drop copies) and ports that are used for receipt of
certain market data feeds.
\5\ Purge Ports are dedicated ports that permit a user to
simultaneously cancel all or a subset of its orders in one or more
symbols across multiple logical ports by requesting the Exchange to
effect such cancellation.
\6\ Spin Ports and GRP Ports are used to request and receive a
retransmission of data from the Exchange's Multicast PITCH data
feeds.
\7\ For example, if a Member maintains 3 FIX Certification
Logical Ports, 1 Purge Certification Logical Port, and 1 set of
Multicast PITCH Spin Server Certification Logical Port, the Member
will be assessed $500 per month for Certification Logical Port Fees
(i.e., 1 FIX, 1 Purge and 1 set of Multicast PITCH Spin Server
Certification Logical Ports x $0 and 2 FIX Certification Logical
Ports x $250).
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The Exchange proposes to make clear in the notes section under the
Logical Port Fees section of the Fees Schedule that the Certification
Logical Port fees only apply if the corresponding logical port is also
in the production environment. For example, if the Exchange intends to
adopt a new port type that has not yet been launched in the live
production environment, any certification port for that port type will
be free until such time that the proposed new port is in the production
environment. Once any new logical port type is in the live production
environment, Members and Non-Members will only be entitled to one free
certification logical port for that port type, and any additional
certifications ports of that type will be assessed the regular monthly
$250 per port charge.
The Exchange notes that purchasing additional Certification Logical
Ports continues to be voluntary and not required in order to
participate in the production environment, including live production
trading on the Exchange. Additionally, Members and non-Members are not
required to purchase any particular production logical port in order to
receive a corresponding Certification Logical Port free of charge.\8\
Further, the Exchange also notes that other exchanges similarly assess
fees related to their respective testing environments.\9\
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\8\ For example, a Member may obtain a Certification Purge Port
free of charge, even if that Member has not otherwise purchased a
Purge Port for the live production environment. Certification
Logical Ports are not automatically enabled, but rather must be
proactively requested by Members or Non-Members.
\9\ See e.g., Nasdaq Stock Market LLC, Equity 7, Pricing
Schedule, Section 130. See also MIAX Options Exchange Fee Schedule,
Section 4, Testing and Certification Fees.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\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
Section 6(b)(4) of the Act,\12\ which requires that Exchange rules
provide for the equitable allocation of reasonable dues, fees, and
other charges among its Members and other persons using its facilities.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78f(b)(4).
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As noted above, the Exchange's certification environment provides a
robust and realistic testing experience using a replica of the
Exchange's production environment process configurations. This
environment enables market participants to manage risk more effectively
through testing software development changes in certification prior to
implementing them in the live trading environment, thereby reducing the
likelihood of a potentially disruptive system failure in the live
trading environment, which has the potential to affect all market
participants. The Exchange believes this is especially true when
testing a new port type that has not yet launched in the production
environment. As such, the Exchange believes it's reasonable to only
assess the Certification Logical Port fee to ports that are also
available in the production environment as to not discourage the
testing of new ports ahead of any respective launch date. The Exchange
also believes applying the Certification Logical Port fee is reasonable
once such ports are available in the production environment because
while such ports will no longer be completely free, Members and non-
Members will continue to be entitled to receive free of charge one
Certification Logical Port for such port. The Exchange continues to
believe one Certification Logical Port per logical port type will be
sufficient for most Members and non-Members and indeed anticipates that
the majority of users will not purchase additional Certification
Logical Ports. For those who wish to obtain additional Certification
Logical Ports based on their respective business needs, such as those
wishing to test across various diverse systems within their own
infrastructure, they are able to do so for a modest fee. Indeed, the
decision to purchase additional ports is optional and no market
participant is required or under any regulatory obligation to purchase
excess Certification Logical Ports in order to access the Exchange's
certification environment.\13\ Further, the Exchange has observed that
market participants that do choose to purchase additional Certification
Logical Ports maintain significantly fewer Certification Logical Ports
as compared to the corresponding logical ports they use in the
production in environment.
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\13\ Although many Members and Non-Members use Certification
Logical Ports on a daily basis, the Exchange notes frequency of use
of Certification Logical Ports varies by user and depends on their
respective business needs. To the extent a Member or Non-Member
purchases additional Certification Logical Ports and their needs
later change, or they determines they no longer wish to maintain
excess Certification Logical Ports, the Member or Non-Member is free
to cancel such ports for the following month(s).
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The Exchange believes the proposal to make clear that the
Certification Logical Port fee applies only to logical ports that are
in the production environment is equitable and not unfairly
discriminatory because it applies uniformly to all market participants
that
[[Page 55292]]
choose to obtain additional Certification Logical Ports and all market
participants will have further clarity as to which certification ports
are subject to the current fee. The Exchange also believes the proposed
change is reasonable, equitable and not unfairly discriminatory because
it is designed to encourage market participants to avail themselves of
Certification Logical Ports for new port types before they launch to
become acclimated with the new connectivity offering ahead of going
live in the trading environment. The Exchange believes the proposal to
add this language to the notes section in the Fees Schedule also
provides clarity in the rules as to when the Certification Logical Port
fee applies and reduces potential confusion.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket or intermarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act. The
Exchange does not believe that the proposed rule change will impose any
burden on intramarket competition because as the proposed change
applies uniformly to all market participants. Additionally, the
Exchange does not believe that the proposed fee creates an undue burden
on competition because the Exchange will continue to offer free of
charge one Certification Logical Port per each logical port type once
offered in the production environment. Also as discussed, the purchase
of additional ports is optional and based on the business needs of each
market participant. Moreover, such market participants will continue to
benefit from access to the certification environment, which the
Exchange believes provides a robust and realistic testing experience
via a replica of the production environment, which may be especially
critical during the time leading up to the launch of a new port type in
the production environment.
The Exchange does not believe that the proposed rule changes will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. Particularly,
the proposed change applies only to the Exchange's certification
environment. Additionally, the Exchange notes that it operates in a
highly competitive market. Members have numerous alternative venues
that they may participate on and direct their order flow, including 16
other options exchanges, as well as a number of alternative trading
systems and other off-exchange venues, where competitive products are
available for trading. Indeed, participants can readily choose to send
their orders to other exchanges, and, additionally off-exchange venues,
if they deem overall 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.'' \14\ 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'. . . .''.\15\
Accordingly, the Exchange does not believe its proposed fee change
imposes any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
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\14\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\15\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \16\ and paragraph (f) of Rule 19b-4 \17\
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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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-CboeEDGX-2024-039 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-CboeEDGX-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
[[Page 55293]]
that you wish to make available publicly. We may redact in part or
withhold entirely from publication submitted material that is obscene
or subject to copyright protection. All submissions should refer to
file number SR-CboeEDGX-2024-039 and should be submitted on or before
July 24, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-14592 Filed 7-2-24; 8:45 am]
BILLING CODE 8011-01-P
