Self-Regulatory Organizations; C2 Exchange, Inc.; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove Proposed Rule Change To Amend the Exchange's Fee Schedule Related to Physical Port Fees, 65432-65440 [2024-17699]
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Federal Register / Vol. 89, No. 154 / Friday, August 9, 2024 / Notices
furtherance of the purposes of the
Act.178
V. Commission’s Solicitation of
Comments
The Commission requests written
views, data, and arguments with respect
to the concerns identified above as well
as any other relevant concerns. Such
comments should be submitted by
August 30, 2024. Rebuttal comments
should be submitted by September 13,
2024. Although there do not appear to
be any issues relevant to approval or
disapproval that would be facilitated by
an oral presentation of views, data, and
arguments, the Commission will
consider, pursuant to Rule 19b–4, any
request for an opportunity to make an
oral presentation.179
The Commission asks that
commenters address the sufficiency and
merit of the Exchange’s statements in
support of the Proposal, in addition to
any other comments they may wish to
submit about the proposed rule changes.
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–
CboeEDGA–2024–022 on the subject
line.
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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–CboeEDGA–2024–022. 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
15 U.S.C. 78f(b)(4), (5), and (8).
U.S.C. 78s(b)(2). Section 19(b)(2) of the Act
grants the Commission flexibility to determine what
type of proceeding—either oral or notice and
opportunity for written comments—is appropriate
for consideration of a particular proposal by an
SRO. See Securities Acts Amendments of 1975,
Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
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–CboeEDGA–2024–022 and should
be submitted on or before August 30,
2024. Rebuttal comments should be
submitted by September 13, 2024.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(3)(C) of the Act,180 that
File No. SR–CboeEDGA–2024–022, be
and hereby is, temporarily suspended.
In addition, the Commission is
instituting proceedings to determine
whether the proposed rule change
should be approved or disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.181
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–17697 Filed 8–8–24; 8:45 am]
178 See
179 15
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181 17
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U.S.C. 78s(b)(3)(C).
CFR 200.30–3(a)(57).
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[Release No. 34–100652; File No. SR–C2–
2024–010]
Self-Regulatory Organizations; C2
Exchange, Inc.; Suspension of and
Order Instituting Proceedings To
Determine Whether To Approve or
Disapprove Proposed Rule Change To
Amend the Exchange’s Fee Schedule
Related to Physical Port Fees
August 5, 2024.
I. Introduction
On June 7, 2024, C2 Exchange, Inc.
(the ‘‘Exchange’’ or ‘‘C2’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’ or ‘‘SEC’’), pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange Act’’
or ‘‘Act’’),1 and Rule 19b–4 thereunder,2
a proposed rule change (File Number
SR–C2–2024–010) to increase fees for 10
gigabit (‘‘Gb’’) physical ports
(‘‘Proposal’’). The proposed rule change
was immediately effective upon filing
with the Commission pursuant to
Section 19(b)(3)(A) of the Act.3 The
proposed rule change was published for
comment in the Federal Register on
June 25, 2024.4 Pursuant to Section
19(b)(3)(C) of the Act,5 the Commission
is hereby: (1) temporarily suspending
the proposed rule change; and (2)
instituting proceedings to determine
whether to approve or disapprove the
proposed rule change.
II. Background and Description of the
Proposed Rule Change
The Exchange proposes to amend its
fee schedule relating to physical
connectivity fees by increasing the
monthly fee for 10 Gb physical ports
from $7,500 to $8,500 per port.6 The
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A). A proposed rule change
may take effect upon filing with the Commission if
it is designated by the exchange as ‘‘establishing or
changing a due, fee, or other charge imposed by the
self-regulatory organization on any person, whether
or not the person is a member of the self-regulatory
organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii).
4 See Securities Exchange Act Release No. 100364
(June 18, 2024), 89 FR 53134 (‘‘Notice’’).
5 15 U.S.C. 78s(b)(3)(C).
6 See Notice, 89 FR at 53134. The Exchange
initially filed the proposed fee changes on July 3,
2023 (SR–C2–2023–014). On September 1, 2023, the
Exchange withdrew that filing and submitted SR–
C2–2023–020. On September 29, 2023, the
Exchange states that the Securities and Exchange
Commission issued a Suspension of and Order
Instituting Proceedings to Determine whether to
Approve or Disapprove a Proposed Rule Change to
Amend its Fees Schedule Related to Physical Port
Fees. See Notice, 89 FR at 53134 n.3. On September
29, 2023, the Exchange filed the proposed fee
change (SR–C2–2023–021). On October 13, 2023,
2 17
BILLING CODE 8011–01–P
180 15
SECURITIES AND EXCHANGE
COMMISSION
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Exchanges states that, by way of
background, a physical port is utilized
by a Trading Permit Holder (‘‘TPH’’) or
non-TPH to connect to the Exchange at
the data centers where the Exchange’s
servers are located.7 Prior to this
proposed rule change, the Exchange
assessed the following physical
connectivity fees for TPHs and nonTPHs on a monthly basis: $2,500 per
physical port for a 1 Gb circuit and
$7,500 per physical port for a 10 Gb
circuit.8 The Exchange states the
proposed fee change better enables it to
continue to maintain and improve its
market technology and services and also
notes that the proposed fee amount,
even as amended, continues to be in
line with, or even lower than, amounts
assessed by other exchanges for similar
connections.9 The Exchange also states
that a single 10 Gb physical port can be
used to access the Systems of the
following affiliate exchanges: the Cboe
BYX Exchange, Inc., Cboe BZX
Exchange, Inc. (options and equities
platforms), Cboe EDGX Exchange, Inc.
(options and equities platforms), and
Cboe EDGA Exchange, Inc., (‘‘Affiliate
Exchanges’’).10 The Exchange states that
only one monthly fee applies per 10 Gb
physical port regardless of how many
affiliated exchanges are accessed
through that one port.11
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III. Suspension of the Proposed Rule
Change
Pursuant to Section 19(b)(3)(C) of the
Act,12 at any time within 60 days of the
the Exchange withdrew that filing and submitted
SR–C2–2023–022. On December 12, 2023, the
Exchange withdrew that filing and submitted SR–
C2–2023–025. On February 9, 2024, the Exchange
withdrew that filing and submitted SR–C2–2024–
004. On April 9, 2024, the Exchange withdrew that
filing and submitted SR–C2–2024–005. On June 7,
2024 the Exchange withdrew that filing and
submitted this filing.
7 See Notice, 89 FR at 53134.
8 See Notice, 89 FR at 53134.
9 See Notice, 89 FR at 53134 (citing The Nasdaq
Stock Market LLC (‘‘Nasdaq’’), General 8,
Connectivity to the Exchange. Nasdaq and its
affiliated exchanges charge a monthly fee of $15,000
for each 10Gb Ultra fiber connection to the
respective exchange, which is analogous to the
Exchange’s 10Gb physical port. See also id. (citing
New York Stock Exchange LLC, NYSE American
LLC, NYSE Arca, Inc., NYSE Chicago Inc., NYSE
National, Inc. Connectivity Fee Schedule, which
provides that 10 Gb LX LCN Circuits (which are
analogous to the Exchange’s 10 Gb physical port)
are assessed $22,000 per month, per port.)).
10 See Notice, 89 FR at 53134. The Affiliate
Exchanges are also submitted contemporaneous
substantively similar rule filings.
11 See Notice, 89 FR at 53134. The Exchange
states that conversely, other exchange groups charge
separate port fees for access to separate, but
affiliated, exchanges. See Notice, 89 FR at 53134 n.6
(citing Securities and Exchange Release No. 99822
(March 21, 2024), 89 FR 21337 (March 27, 2024)
(SR–MIAX–2024–016)).
12 15 U.S.C. 78s(b)(3)(C).
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date of filing of an immediately effective
proposed rule change pursuant to
Section 19(b)(1) of the Act,13 the
Commission summarily may
temporarily suspend the change in the
rules of a self-regulatory organization
(‘‘SRO’’) 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. A temporary suspension of the
proposed rule changes is necessary and
appropriate to allow for additional
analysis of the proposed rule change’s
consistency with the Act and the rules
thereunder.
A. Exchange Statements In Support of
the Proposal
In support of the Proposal, the
Exchange states that it 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.14 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 15 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.16
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) requirement that the
rules of an exchange not be designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.17
The Exchange also believes the
proposed rule change is consistent with
Section 6(b)(4) of the Act, which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
TPHs and other persons using its
facilities.18
The Exchange states that it operates in
a highly competitive environment.19
The Exchange states that on May 21,
2019, the SEC Division of Trading and
13 15
U.S.C. 78s(b)(1).
Notice, 89 FR at 53134; 15 U.S.C. 78f(b).
15 See Notice, 89 FR at 53134; 15 U.S.C. 78f(b)(5).
16 See Notice, 89 FR at 53134.
17 See Notice, 89 FR at 53134; 15 U.S.C. 78f(b)(5).
18 See Notice, 89 FR at 53134; 15 U.S.C. 78f(b)(4).
19 See Notice, 89 FR at 53134.
14 See
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Markets issued non-rulemaking fee
filing guidance titled ‘‘Staff Guidance on
SRO Rule Filings Relating to Fees’’
(‘‘Fee Guidance’’), which provided,
among other things, that in determining
whether a proposed fee is constrained
by significant competitive forces, the
Commission will consider whether
there are reasonable substitutes for the
product or service that is the subject of
a proposed fee.20 As described in further
detail below, the Exchange believes
substitutable products are in fact
available to market participants,
including by third-party resellers of the
Exchange’s physical connectivity, and
the availability to trade all of the
products offered at the Exchange at one
of the 16 other options exchanges that
trade options or other off-exchange
trading platforms.21
The Exchange states that the 2019 Fee
Guidance also acknowledged that
platform competition may demonstrate
a competitive environment and
therefore constrain aggregate returns,
regardless of the pricing of individual
products, and that platforms often have
joint products.22 The Exchange states
that exchanges themselves are
platforms.23 Particularly, the Exchange
states that exchanges are multi-sided
platforms that facilitate interactions
between multiple sides of the market—
buyers and sellers, companies and
investors, and traders and market
watchers—and their value is dependent
on attracting users to the multiple sides
of the platform.24 As described in
further detail below, the Exchange
believes that competition among
exchanges as trading platforms (and
between exchanges and alternative
trading venues) constrain exchanges
from charging excessive fees for any
exchange products, including trading,
listings, connectivity and market data.
20 See Notice, 89 FR at 53134–35. (citing
Chairman Jay Clayton, Statement on Division of
Trading and Markets Staff Fee Guidance, June 12,
2019). The Exchange states that the Fee Guidance
also recognized that ‘‘products need to be
substantially similar but not identical to be
substitutable.’’ Id.
21 See Notice, 89 FR at 53135. The Exchanges
states that a substitute, or substitutable good, in
economics and consumer theory refers to a product
or service that consumers see as essentially the
same or similar-enough to another product. See id.
at n.12 (citing https://www.investopedia.com/terms/
s/substitute.asp).
22 See Notice, 89 FR at 53135 (citing Fee
Guidance).
23 See Notice, 89 FR at 53135. The Exchanges
states that the Supreme Court in Ohio v. American
Express Co. recognized that, as platforms facilitate
transactions between two or more sides of a market,
their value is dependent on attracting users to both
sides of the platform (i.e., network effects). See id.
at n.14 (citing Ohio v. American Express Co. 138
S. Ct. 2274, 585 U.S. 529 (2018)).
24 See Notice, 89 FR at 53135.
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As such, fees need not be analyzed from
only one side, but rather can, and
should, be considered within the larger
context of the platform to test for anticompetitive behavior.25 The Exchange
states that nothing in the Exchange Act
requires the individual examination of
specific product fees in isolation.26
Rather, the Exchange states that the Act
generally requires the rules of an
exchange to provide for the ‘‘equitable
allocation of reasonable dues, fees and
other charges among members and
issuers and other persons using its
facilities.’’ 27
The Exchange believes the proposed
fee change is reasonable as it reflects a
moderate increase in physical
connectivity fees for 10 Gb physical
ports.28 Further, the Exchange states
that the current 10 Gb physical port fee
has remained unchanged since June
2018.29 The Exchange explains that
since its last increase over 6 years ago
however, there has been notable
inflation.30 Particularly, the Exchange
states that the dollar has had an average
inflation rate of 3.76% per year between
2018 and today, producing a cumulative
price increase of approximately 24.8%
inflation since the fee for the 10 Gb
physical port was last modified.31
Moreover, the Exchange states that it
historically does not increase fees every
year, notwithstanding inflation.32
Accordingly, the Exchange believes the
proposed fee of $8,500 is reasonable as
it only represents an approximate 13%
increase from the rate adopted six years
ago, notwithstanding the cumulative
inflation rate of inflation of 24.8%.33
The Exchange states that were the
Exchange to adjust fully for inflation, it
would be proposing a monthly rate of
$9,360, which is 10% more than the
Exchange is actually proposing.34 To
further demonstrate, the Exchange notes
that $8,500 in 2024 is equivalent to
approximately $6,800 in 2018, when
adjusted for inflation.35 Accordingly,
the Exchange believes the proposed rate
is also reasonable as it is nearly 20%
lower than the rate adopted in 2018 (i.e.,
$7,500) when adjusted for inflation.36
25 See
Notice, 89 FR at 53135.
Notice, 89 FR at 53135.
27 See Notice, 89 FR at 53135 (citing 15 U.S.C.
78f(b)(4)).
28 See Notice, 89 FR at 53135.
29 See Notice, 89 FR at 53135 (citing Securities
and Exchange Release No. 83455 (June 15, 2018),
83 FR 28892 (June 21, 2018) (SR–C2–2018–014)).
30 See Notice, 89 FR at 53135.
31 See Notice, 89 FR at 53135 (citing https://
www.officialdata.org/us/inflation/2010?amount=1).
32 See Notice, 89 FR at 53135.
33 See Notice, 89 FR at 53135.
34 See Notice, 89 FR at 53135.
35 See Notice, 89 FR at 53135.
36 See Notice, 89 FR at 53135.
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The Exchange states it is also unaware
of any standard that suggests any fee
proposal that exceeds a certain yearly or
cumulative inflation rate is
unreasonable, and in any event, in this
instance the increase is well below the
cumulative rate.37 The Exchange also
believes its offerings are more affordable
as compared to similar offerings at
competitor exchanges.38
The Exchange also notes TPHs and
non-TPHs will continue to choose the
method of connectivity based on their
specific needs and no broker-dealer is
required to become a TPH of, let alone
connect directly to, the Exchange.39 The
Exchange states that there is also no
regulatory requirement that any market
participant connect to any one
particular exchange.40 The Exchange
explains that market participants may
voluntarily choose to become a member
of one or more of a number of different
exchanges, of which, the Exchange is
but one choice.41 Additionally, the
Exchange states that any Exchange
member that is dissatisfied with the
proposal is free to choose not to be a
member of the Exchange and send order
flow to another exchange.42 The
Exchange states that, moreover, direct
connectivity is not a requirement to
participate on the Exchange.43 The
Exchange also believes substitutable
products and services are available to
market participants, including, among
other things, other options exchanges
that a market participant may connect to
in lieu of the Exchange, indirect
connectivity to the Exchange via a thirdparty reseller of connectivity, and/or
trading of any options product, such as
within the Over-the-Counter (OTC)
markets which do not require
connectivity to the Exchange.44 The
Exchange states that there are currently
17 registered options exchanges that
trade options (13 of which are not
affiliated with Cboe), some of which
have similar or lower connectivity
37 See
Notice, 89 FR at 53135.
Notice, 89 FR at 53135. The Exchange
states that Nasdaq and its affiliated exchanges
charge a monthly fee of $15,000 for each 10Gbps
Ultra fiber connection to the respective exchange,
which is analogous to the Exchange’s 10Gbps
physical port. Id. (citing The Nasdaq Stock Market
LLC (‘‘Nasdaq’’), General 8, Connectivity to the
Exchange). See also id. (citing New York Stock
Exchange LLC, NYSE American LLC, NYSE Arca,
Inc., NYSE Chicago Inc., NYSE National, Inc.
Connectivity Fee Schedule, which provides that 10
Gbps LX LCN Circuits (which are analogous to the
Exchange’s 10 Gbps physical port) are assessed
$22,000 per month, per port).
39 See Notice, 89 FR at 53135.
40 See Notice, 89 FR at 53135.
41 See Notice, 89 FR at 53135.
42 See Notice, 89 FR at 53135.
43 See Notice, 89 FR at 53135.
44 See Notice, 89 FR at 53135.
38 See
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fees.45 The Exchange states that, based
on publicly available information, no
single options exchange has more than
approximately 18% of the market
share.46 The Exchange states that
further, low barriers to entry mean that
new exchanges may rapidly enter the
market and offer additional substitute
platforms to further compete with the
Exchange and the products it offers.47
The Exchange explains that, for
example, there are 3 exchanges that
have been added in the U.S. options
markets in the last 5 years (i.e., Nasdaq
MRX, LLC, MIAX Pearl, LLC, MIAX
Emerald LLC, and most recently, MEMX
LLC).48
The Exchange states that there is no
regulatory requirement that any market
participant connect to any one options
exchange, nor that any market
participant connect at a particular
connection speed or act in a particular
capacity on the Exchange, or trade any
particular product offered on an
exchange.49 The Exchange states that
moreover, membership is not a
requirement to participate on the
Exchange.50 The Exchange states that it
is unaware of any one options exchange
whose membership includes every
registered broker-dealer.51 The
Exchange explains, by way of example,
that while the Exchange has 52 TPHs
(i.e., members), Cboe EDGX has 51
members that trade options, and Cboe
BZX has 61 members that trade
options.52 The Exchange states that
there is also no firm that is a member
of C2 Options only.53 The Exchange
states that further, based on publicly
available information regarding a
sample of the Exchange’s competitors,
NYSE American Options has 71
members, and NYSE Arca Options has
69 members, MIAX Options has 46
members, and MIAX Pearl Options has
40 members.54
The Exchange states that a market
participant may also submit orders to
45 See
Notice, 89 FR at 53135.
Notice, 89 FR at 53135 (citing Cboe Global
Markets U.S. Options Market Volume Summary
(June 6, 2024), available at https://
markets.cboe.com/us/options/market_statistics/).
47 See Notice, 89 FR at 53135.
48 See Notice, 89 FR at 53135.
49 See Notice, 89 FR at 53135.
50 See Notice, 89 FR at 53135.
51 See Notice, 89 FR at 53135.
52 See Notice, 89 FR at 53135–36.
53 See Notice, 89 FR at 53136.
54 See Notice, 89 FR at 53136 (citing https://
www.nyse.com/markets/american-options/
membership#directory; https://www.nyse.com/
markets/arca-options/membership#directory;
https://www.miaxglobal.com/sites/default/files/
page-files/MIAX_Options_Exchange_Members_
April_2023_04282023.pdf; https://
www.miaxglobal.com/sites/default/files/page-files/
MIAX_Pearl_Exchange_Members_01172023_0.pdf).
46 See
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the Exchange via a TPH broker or a
third-party reseller of connectivity.55
The Exchange notes that third-party
non-TPHs also resell exchange
connectivity.56 The Exchange explains
that this indirect connectivity is another
viable alternative for market
participants to trade on the Exchange
without connecting directly to the
Exchange (and thus not pay the
Exchange connectivity fees), which
alternative is already being used by nonTPHs and further constrains the price
that the Exchange is able to charge for
connectivity to its Exchange.57 The
Exchange notes that it could, but
chooses not to, preclude market
participants from reselling its
connectivity.58 Unlike other exchanges,
the Exchange states that it also chooses
not to adopt fees that would be assessed
to third-party resellers on a per
customer basis (i.e., fee based on
number of TPHs that connect to the
Exchange indirectly via the thirdparty).59 The Exchange states that these
third-party resellers may purchase the
Exchange’s physical ports and resell
access to such ports either alone or as
part of a package of services.60 The
Exchange notes that multiple TPHss are
able to share a single physical port (and
corresponding bandwidth) with other
non-affiliated TPHs if purchased
through a third-party re-seller.61 The
55 See
Notice, 89 FR at 53136.
Notice, 89 FR at 53136.
57 See Notice, 89 FR at 53136. The Exchange
states that third-party resellers of connectivity play
an important role in the capital markets
infrastructure ecosystem. For example, according to
the Exchange, third-party resellers can help unify
access for customers who want exposure to
multiple financial markets that are geographically
dispersed by establishing connectivity to all of the
different exchanges, so the customers themselves do
not have to. The Exchange further states that many
of the third-party connectivity resellers also act as
distribution agents for all of the market data
generated by the exchanges as they can use their
established connectivity to subscribe to, and
redistribute, data over their networks. The
Exchange explains that this may remove barriers
that infrastructure requirements may otherwise
pose for customers looking to access multiple
markets and real-time data feeds. The Exchange
further explains that this facilitation of overall
access to the marketplace is ultimately beneficial
for the entire capital markets ecosystem, including
the Exchange, on which such firms transact
business. See id. at n.25.
58 See Notice, 89 FR at 53136.
59 See Notice, 89 FR at 53136 (citing Nasdaq Price
List—U.S. Direct Connection and Extranet Fees,
available at, US Direct-Extranet Connection
(nasdaqtrader.com); and Securities Exchange Act
Release Nos. 74077 (January 16, 2022), 80 FR 3683
(January 23, 2022) (SR–NASDAQ–2015–002); and
82037 (November 8, 2022), 82 FR 52953 (November
15, 2022) (SR–NASDAQ–2017–114)).
60 See Notice, 89 FR at 53136.
61 See Notice, 89 FR at 53136. The Exchange
states that for example, a third-party reseller may
purchase one 10 Gb physical port from the
Exchange and resell that connectivity to three
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Exchange explains that this allows
resellers to mutualize the costs of the
ports for market participants and
provide such ports at a price that may
be lower than the Exchange charges due
to this mutualized connectivity.62 The
Exchange states that these third-party
sellers may also provide an additional
value to market participants in addition
to the physical port itself as they may
also manage and monitor these
connections, and clients of these thirdparties may also be able to connect from
the same colocation facility either from
their own racks or using the thirdparty’s managed racks and
infrastructure which may provide
further cost-savings.63 The Exchange
believes such third-party resellers may
also use the Exchange’s connectivity as
an incentive for market participants to
purchase further services such as
hosting services.64 That is, the Exchange
states, that even firms that wish to
utilize a single, dedicated 10 Gb port
(i.e., use one single 10 Gb port
themselves instead of sharing a port
with other firms), may still realize cost
savings via a third-party reseller as it
relates to a physical port because such
reseller may be providing a discount on
the physical port to incentivize the
purchase of additional services and
infrastructure support alongside the
physical port offering (e.g., providing
space, hosting, power, and other longhaul connectivity options).65 The
Exchange explains that this is similar to
cell phone carriers offering a new
iPhone at a discount (or even at no cost)
if purchased in connection with a new
monthly phone plan.66 The Exchange
states that these services may reevaluate
reselling or offering Cboe’s direct
connectivity if they deem the fees to be
excessive.67 Further, as noted above, the
Exchange does not receive any
connectivity revenue when connectivity
is resold by a third-party, which often
is resold to multiple customers, some of
whom are agency broker-dealers that
have numerous customers of their
own.68 The Exchange states, for
example, there are approximately 12
third parties who resell Exchange
connectivity across the 7 Affiliated
Exchanges, which are all accessible on
the same network.69 The Exchange
different market participants who may only need 3
Gb each and leverage the same single port. Id. at
n.27.
62 See Notice, 89 FR at 53136.
63 See Notice, 89 FR at 53136.
64 See Notice, 89 FR at 53136.
65 See Notice, 89 FR at 53136.
66 See Notice, 89 FR at 53136.
67 See Notice, 89 FR at 53136.
68 See Notice, 89 FR at 53136.
69 See Notice, 89 FR at 53136.
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65435
explains that these third-party resellers
collectively maintain approximately 48
physical ports from the Exchange, but
have collectively almost 200 unique
customers downstream, connected
through these multi-Exchange ports.70
The Exchange states that therefore,
given the availability of third-party
providers that also offer connectivity
solutions, the Exchange believes
participation on the Exchange remains
affordable (notwithstanding the
proposed fee change) for all market
participants, including trading firms
that may be able to take advantage of
lower costs that result from mutualized
connectivity and/or from other services
provided alongside the physical port
offerings.71 The Exchange states that
because third-party resellers also act as
a viable alternative to direct
connectivity to the Exchange, the price
that the Exchange is able to charge for
direct connectivity to its Exchange is
constrained.72 The Exchange states that
moreover, if the Exchange were to assess
supracompetitve rates, members and
non-members (such as third-party
resellers) alike, may decide not to
purchase, or to reduce its use of, the
Exchange’s direct connectivity.73 The
Exchange explains that disincentivizing
market participants from purchasing
Exchange connectivity would only serve
to discourage participation on the
Exchange which ultimately does not
benefit the Exchange.74 Further, the
Exchange believes its offerings are more
affordable as compared to similar
offerings at competitor exchanges.75
Accordingly, the Exchange states that
vigorous competition among national
securities exchanges provides many
alternatives for firms to voluntarily
decide whether direct connectivity to
the Exchange is appropriate and
worthwhile, and as noted above, no
broker-dealer is required to become a
TPH of the Exchange, let alone connect
directly to it.76 The Exchange explains
70 See
Notice, 89 FR at 53136.
Notice, 89 FR at 53136.
72 See Notice, 89 FR at 53136.
73 See Notice, 89 FR at 53136.
74 See Notice, 89 FR at 53136.
75 See Notice, 89 FR at 53136 (citing The Nasdaq
Stock Market LLC (‘‘Nasdaq’’), General 8,
Connectivity to the Exchange. Nasdaq and its
affiliated exchanges charge a monthly fee of $15,000
for each 10Gbps Ultra fiber connection to the
respective exchange, which is analogous to the
Exchange’s 10Gbps physical port. See also id.
(citing New York Stock Exchange LLC, NYSE
American LLC, NYSE Arca, Inc., NYSE Chicago
Inc., NYSE National, Inc. Connectivity Fee
Schedule, which provides that 10 Gbps LX LCN
Circuits (which are analogous to the Exchange’s 10
Gbps physical port) are assessed $22,000 per
month, per port.)).
76 See Notice, 89 FR at 53136.
71 See
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that in the event that a market
participant views the Exchange’s
proposed fee change as more or less
attractive than the competition, that
market participant can choose to
connect to the Exchange indirectly or
may choose not to connect to that
exchange and connect instead to one or
more of the other 13 non-Cboe affiliated
options markets.77 The Exchange states
that market participants are free to
choose which exchange to use to satisfy
their business needs.78 The Exchange
states that, moreover, if the Exchange
were to assess supracompetitve rates,
members and non-members alike, may
decide not to purchase, or to reduce
their use of, the Exchange’s direct
connectivity.79 The Exchange states that
disincentivizing market participants
from purchasing Exchange connectivity
would only serve to discourage
participation on the Exchange which
ultimately does not benefit the
Exchange.80 The Exchange states that,
for example, if the Exchange charges
excessive fees, it may stand to lose not
only connectivity revenues but also
revenues associated with the execution
of orders routed to it, and, to the extent
applicable, market data revenues.81 The
Exchange believes that this competitive
dynamic imposes powerful restraints on
the ability of any exchange to charge
unreasonable fees for connectivity.82
Notwithstanding the foregoing, the
Exchange still believes that the
proposed fee increase is reasonable,
equitably allocated and not unfairly
discriminatory, even for market
participants that determine to connect
directly to the Exchange for business
purposes, as those business reasons
should presumably result in revenue
capable of covering the proposed fee.83
The Exchange states that additionally,
in connection with a proposed
amendment to the National Market
System Plan Governing the
Consolidated Audit Trail (‘‘CAT NMS
Plan’’) the Commission again discussed
the existence of competition in the
marketplace generally, and particularly
for exchanges with unique business
models.84 The Exchange states that the
Commission recognized that while some
exchanges may have a unique business
model that is not currently offered by
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77 See
Notice, 89 FR at 53136.
78 See Notice, 89 FR at 53136.
79 See Notice, 89 FR at 53136–37.
80 See Notice, 89 FR at 53137.
81 See Notice, 89 FR at 53137.
82 See Notice, 89 FR at 53137.
83 See Notice, 89 FR at 53137.
84 See Notice, 89 FR at 53137 (citing Securities
Exchange Act Release No. 86901 (September 9,
2019), 84 FR 48458 (September 13, 2019) (File No.
S7–13–19)).
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competitors, a competitor could create
similar business models if demand were
adequate, and if a competitor did not do
so, the Commission believes it would be
likely that new entrants would do so if
the exchange with that unique business
model was otherwise profitable.85
The Exchange states that, as noted
above, exchanges also compete as
platforms.86 The Exchange explains that
in the context of the competition among
platforms, different exchanges operate a
variety of different business models.87
The Exchange further explains that, in
fact, there are a number of ways an
exchange can differentiate itself, such as
by pricing structure, technology and
functionality offerings, and products.88
The Exchange states that market
participants can access the exchange
without purchasing anything from an
exchange, instead using third-party
routers and data.89 The Exchange
explains that for those whose business
models necessitate the purchase of some
mix of trading, connectivity, and data
services, there are a variety of options at
different price points, allowing market
participants to exercise choice, and
forcing exchanges to compete on their
offerings and prices.90 The Exchange
states that further, all elements of the
platform—trade executions, market
data, connectivity, membership, and
listings—operate in concert.91 The
Exchange explains that, for example,
trade executions increase the value of
market data; market data functions as an
advertisement for on-exchange trading;
listings increase the value of trade
executions and market data; and greater
liquidity on the exchange enhances the
value of ports and connectivity
services.92 As such, the Exchange states
that demand for one set of platform
services depends on the demand for
other services and therefore to make its
platform attractive to multiple
constituencies, an exchange must
consider inter-side externalities.93 The
Exchange explains that in assessing
competition for exchange services,
exchanges must also consider not only
explicit costs, such as fees for trading,
market data, and connectivity, but the
implicit costs, such as realized spreads,
85 See Notice, 89 FR at 53137 (citing Securities
Exchange Act Release No. 86901 (September 9,
2019), 84 FR 48458 (September 13, 2019) (File No.
S7–13–19)).
86 See Notice, 89 FR at 53137.
87 See Notice, 89 FR at 53137.
88 See Notice, 89 FR at 53137.
89 See Notice, 89 FR at 53137.
90 See Notice, 89 FR at 53137.
91 See Notice, 89 FR at 53137.
92 See Notice, 89 FR at 53137.
93 See Notice, 89 FR at 53137.
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Fmt 4703
Sfmt 4703
of trading on an exchange.94 The
Exchange states that, when accounting
for explicit and implicit costs, research
has found that competition has largely
equalized all-in trading costs to users
across exchanges.95 The Exchange states
that, for example, data has shown that
venues with the highest explicit costs
(typically inverted and fee-fee venues)
have the lowest implicit costs from
markouts 96 and vice versa.97 The
Exchange states that implicit costs
explain how venues with higher explicit
costs manage to compete with
seemingly much cheaper venues (and
conversely, how exchanges with higher
implicit costs use lower fees to
compete).98 The Exchange further states
that additional research also confirms
that market participants route trades in
a way that not only accounts for explicit
and implicit costs—but also very
efficiently values opportunity costs, like
lower odds of getting a fill on inverted
venues.99 As such, the Exchange
believes the proposed fee change is
reasonable as exchanges are constrained
from charging excessive fees for any
exchange product, including physical
connectivity.100
The Exchange also believes the
proposed fee increase is reasonable in
light of recent and anticipated
connectivity-related upgrades and
changes.101 The Exchange states that it
and its affiliated exchanges recently
launched a multi-year initiative to
improve Cboe Exchange Platform
performance and capacity requirements
to increase competitiveness, support
growth and advance a consistent world
class platform.102 The Exchange
94 See
Notice, 89 FR at 53137.
Notice, 89 FR at 53137 (citing Mackintosh,
Phil & Normyle, Michael. ‘‘How Exchanges
Compete: An Economic Analysis of Platform
Competition.’’ Nasdaq, March 2024, https://
www.nasdaq.com/How-Exchanges-Compete-AnEconomic-Analysis-of-Platform-Competition
(‘‘Mackintosh and Normyle’’)).
96 The Exchange explains that per-trade markout
is a measure of theoretical profitability from the
perspective of a liquidity provider. See Notice, 89
FR at 53137 n.32.
97 See Notice, 89 FR at 53137 (citing Mackintosh
and Normyle).
98 See Notice, 89 FR at 53137. The Exchange
states that, for example, research by Nasdaq found
that it is over 60% more expensive to trade on the
costliest exchange than on the cheapest. According
to the Exchange, such a sizeable disparity suggests
that there is another factor that keeps these
exchanges in competition. Specifically, the
Exchange states that when implicit costs are
considered, the difference in cost to trade is
minimized. See id.
99 See Notice, 89 FR at 53137 (citing Bershova,
Nataliya & Jaquet, Paul. (2019). Execution Quality
and Fee Structure: Passive Lit Executions. Bernstein
Electronic Trading, Execution Research).
100 See Notice, 89 FR at 53137.
101 See Notice, 89 FR at 53137.
102 See Notice, 89 FR at 53137.
95 See
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explains that the goal of the project,
among other things, is to provide faster
and more consistent order handling and
matching performance for options,
while ensuring quicker processing time
and supporting increasing volumes and
capacity needs.103 The Exchange states
that, for example, the Exchange recently
performed switch hardware
upgrades.104 The Exchange explains
that, particularly, the Exchange replaced
existing customer access switches with
newer models, which the Exchange
believes resulted in increased
determinism, and the recent switch
upgrades also increased the Exchange’s
capacity to accommodate more physical
ports by nearly 50%.105 The Exchange
states that network bandwidth was also
increased nearly two-fold as a result of
the upgrades, which among other
things, can lead to reduce message
queuing.106 The Exchange also believes
these newer models result in less
natural variance in the processing of
messages.107 The Exchange notes that it
incurred costs associated with
purchasing and upgrading to these
newer models, of which the Exchange
has not otherwise passed through or
offset.108
The Exchange states that as of April
1, 2024, market participants also having
the option of connecting to a new data
center (i.e., Secaucus NY6 Data Center
(‘‘NY6’’)), in addition to the current data
centers at NY4 and NY5.109 The
Exchange states that it made NY6
available in response to customer
requests in connection with their need
for additional space and capacity.110
The Exchange explains that in order to
make this space available, the Exchange
expended significant resources to
prepare this space, and will also incur
ongoing costs with respect to
maintaining this offering, including
costs related to power, space, fiber,
cabinets, panels, labor and maintenance
of racks.111 The Exchange states it also
incurred a large cost with respect to
ensuring NY6 would be latency
equalized, as it is for NY4 and NY5.112
The Exchange states that it also has
made various other improvements since
the current physical port rates were
adopted in 2018.113 The Exchanges
states that, for example, the Exchange
ddrumheller on DSK120RN23PROD with NOTICES1
103 See
Notice, 89 FR at 53137.
Notice, 89 FR at 53137.
105 See Notice, 89 FR at 53137.
106 See Notice, 89 FR at 53137.
107 See Notice, 89 FR at 53137.
108 See Notice, 89 FR at 53137.
109 See Notice, 89 FR at 53137.
110 See Notice, 89 FR at 53137.
111 See Notice, 89 FR at 53137.
112 See Notice, 89 FR at 53137–38.
113 See Notice, 89 FR at 53138.
104 See
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has updated its customer portal to
provide more transparency with respect
to firms’ respective connectivity
subscriptions, enabling them to better
monitor, evaluate and adjust their
connections based on their evolving
business needs.114 The Exchange
explains that it also performs proactive
audits on a weekly basis to ensure that
all customer cross connects continue to
fall within allowable tolerances for
Latency Equalized connections.115
Accordingly, the Exchange states that it
has expended, and will continue to
expend, resources to innovate and
modernize technology so that it may
benefit its TPHs and continue to
compete among other options
markets.116 The Exchange explains that
its ability to continue to innovate with
technology and offer new products to
market participants allows the Exchange
to remain competitive in the options
space which currently has 17 options
markets and potential new entrants.117
The Exchange states that if the Exchange
were not able to assess incrementally
higher fees for its connectivity, it would
effectively impact how the Exchange
manages its technology and hamper the
Exchange’s ability to continue to invest
in and fund access services in a manner
that allows it to meet existing and
anticipated access demands of market
participants.118 The Exchange explains
that disapproval of fee changes such as
the proposal herein, could also have the
adverse effect of discouraging an
exchange from improving its operations
and implementing innovative
technology to the benefit of market
participants if it believes the
Commission would later prevent that
exchange from recouping costs and
monetizing its operational
enhancements, thus adversely
impacting competition.119
The Exchange also believes the
proposed fee is reasonable as it is still
in line with, or even lower than,
amounts assessed by other exchanges
for similar connections.120 Indeed, the
114 See
Notice, 89 FR at 53138.
Notice, 89 FR at 53138.
116 See Notice, 89 FR at 53138.
117 See Notice, 89 FR at 53138.
118 See Notice, 89 FR at 53138.
119 See Notice, 89 FR at 53138.
120 See Notice, 89 FR at 53138 (citing The Nasdaq
Stock Market LLC (‘‘Nasdaq’’), General 8,
Connectivity to the Exchange. Nasdaq and its
affiliated exchanges charge a monthly fee of $15,000
for each 10Gb Ultra fiber connection to the
respective exchange, which is analogous to the
Exchange’s 10Gb physical port. See also id. (citing
New York Stock Exchange LLC, NYSE American
LLC, NYSE Arca, Inc., NYSE Chicago Inc., NYSE
National, Inc. Connectivity Fee Schedule, which
provides that 10 Gb LX LCN Circuits (which are
analogous to the Exchange’s 10 Gb physical port)
are assessed $22,000 per month, per port.)).
115 See
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65437
Exchange believes assessing fees at a
lower rate than fees assessed by other
exchanges for analogous connectivity
(which were similarly adopted via the
rule filing process and filed with the
Commission) is reasonable.121 The
Exchange states that the proposed fee is
also the same as is concurrently being
proposed for its Affiliate Exchanges.122
Further, the Exchange states that TPHs
are able to utilize a single port to
connect to all of its Affiliate Exchanges
and will only be charged one single fee
(i.e., a market participant will only be
assessed the proposed $8,500 even if it
uses that physical port to connect to the
Exchange and another (or even all 6) of
its Affiliate Exchanges).123 Particularly,
the Exchange believes the proposed
monthly per port fee is reasonable,
equitable and not unfairly
discriminatory since as the Exchange
has determined to not charge multiple
fees for the same port.124 Indeed, the
Exchange notes that several ports are in
fact purchased and utilized across one
or more of the Exchange’s affiliated
Exchanges (and charged only once).125
The Exchange also believes that the
proposed fee change is not unfairly
discriminatory because it would be
assessed uniformly across all market
participants that purchase the physical
ports.126 The Exchange believes
increasing the fee for 10 Gb physical
ports and charging a higher fee as
compared to the 1 Gb physical port is
equitable as the 1 Gb physical port is 1/
10th the size of the 10 Gb physical port
and therefore does not offer access to
many of the products and services
offered by the Exchange (e.g., ability to
receive certain market data products).127
The Exchange explains that, thus, the
value of the 1 Gb alternative is lower
than the value of the 10 Gb alternative,
when measured based on the type of
Exchange access it offers.128 The
Exchange states that, moreover, market
participants that purchase 10 Gb
physical ports utilize the most
bandwidth and therefore consume the
most resources from the network.129 The
Exchange also anticipates that firms that
utilize 10 Gb ports will benefit the most
from the Exchange’s investment in
offering NY6 as the Exchange
anticipates there will be much higher
quantities of 10 Gb physical ports
121 See
Notice, 89 FR at 53138.
Notice, 89 FR at 53138.
123 See Notice, 89 FR at 53138.
124 See Notice, 89 FR at 53138.
125 See Notice, 89 FR at 53138.
126 See Notice, 89 FR at 53138.
127 See Notice, 89 FR at 53138.
128 See Notice, 89 FR at 53138.
129 See Notice, 89 FR at 53138.
122 See
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connecting from NY6 as compared to 1
Gb ports.130 Indeed, the Exchange notes
that 10 Gb physical ports account for
approximately 90% of physical ports
across the NY4, NY5, and NY6 data
centers, and to date, 80% of new port
connections in NY6 are 10 Gb ports.131
As such, the Exchange believes the
proposed fee change for 10 Gb physical
ports is reasonably and appropriately
allocated.132
The Exchange states that it is not
required by the Exchange Act, nor any
other rule or regulation, to undertake a
cost-of-service or rate-making approach
with respect to fee proposals.133 The
Exchange states that, moreover,
Congress’s intent in enacting the 1975
Amendments to the Act was to enable
competition—rather than government
order—to determine prices.134 The
Exchange explains that the principal
purpose of the amendments was to
facilitate the creation of a national
market system for the trading of
securities.135 The Exchange states that
Congress intended that this ‘‘national
market system evolve through the
interplay of competitive forces as
unnecessary regulatory restrictions are
removed,’’ and that other provisions of
the Act confirm that intent.136 The
Exchange states that, for example, the
Act provides that an exchange must
design its rules ‘‘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.’’ 137
The Exchange further states that,
likewise, the Act grants the Commission
authority to amend or repeal ‘‘[t]he rules
of [an] exchange [that] impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of this chapter.’’ 138 The
Exchange explains that, in short, the
promotion of free and open competition
was a core congressional objective in
creating the national market system.139
130 See
Notice, 89 FR at 53138.
Notice, 89 FR at 53138.
132 See Notice, 89 FR at 53138.
133 See Notice, 89 FR at 53138.
134 See Notice, 89 FR at 53138.
135 See Notice, 89 FR at 53138.
136 See Notice, 89 FR at 53138 (citing H.R. Rep.
No. 94–229, at 92 (1975) (Conf. Rep.) (emphasis
added)).
137 See Notice, 89 FR at 53138 (citing 15 U.S.C.
78f(b)(5)).
138 See Notice, 89 FR at 53138 (citing 15 U.S.C.
78f(8)).
139 See Notice, 89 FR at 53138 (citing 15 U.S.C.
78k–l(a)(1)(C)(ii) (purposes of Exchange Act include
to promote ‘‘fair competition among brokers and
dealers, among exchange markets, and between
exchange markets and markets other than exchange
markets’’); Order, 73 FR at 74781 (‘‘The Exchange
Act and its legislative history strongly support the
Commission’s reliance on competition, whenever
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131 See
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The Exchange states that, indeed, the
Commission has historically interpreted
that mandate to promote competitive
forces to determine prices whenever
compatible with a national market
system.140 Accordingly, the Exchange
believes it has met its burden to
demonstrate that its proposed fee
change is reasonable and consistent
with the immediate filing process
chosen by Congress, which created a
system whereby market forces
determine access fees in the vast
majority of cases, subject to oversight
only in particular cases of abuse or
market failure.141 The Exchange
believes that, finally, and importantly,
that, even if it were possible as a matter
of economic theory, cost-based pricing
for the proposed fee would be so
complicated that it could not be done
practically.142 Indeed, the Exchange
believes that classification of costs
could likely not be done without ongoing debate over formulas for
allocation,143 continual auditing, and
considerable expense.144 The Exchange
also believes cost-based analysis could
create disincentives to reduce costs
through efficient operation or
innovation.145 Moreover, the Exchange
believes that the industry could
experience frequent rate increases based
on escalating expense levels.146 The
Exchange lastly cautions that as
disputes arise regarding the appropriate
possible, in meeting its regulatory responsibilities
for overseeing the SROs and the national market
system.’’)).
140 See Notice, 89 FR at 53138.
141 See Notice, 89 FR at 53138.
142 See Notice, 89 FR at 53138.
143 See Notice, 89 FR at 53138–39, n.41 (citing
letter from Brian Sopinsky, General Counsel,
Susquehanna International Group, LLP (‘‘SIG’’), to
Vanessa Countryman, Secretary, Commission, dated
February 7, 2023, letters from Gerald D. O’Connell,
SIG, to Vanessa Countryman, Secretary,
Commission, dated March 21, 2023, May 24, 2023,
July 24, 2023 and September 18, 2023, and letters
from John C. Pickford, SIG, to Vanessa Countryman,
Secretary, Commission, dated January 4, 2024, and
March 1, 2024 and letters from Thomas M. Merritt,
Deputy General Counsel, Virtu Financial, Inc., to
Vanessa Countryman, Secretary, Commission, dated
November 8, 2023 and January 2, 2024. See also
Securities Exchange Act Release No. 93883
(December 30, 2021), 87 FR 523 (January 5, 2022)
(SR–IEX–2021–14) (Suspension of and Order
Instituting Proceedings To Determine Whether To
Approve or Disapprove a Proposed Rule Change To
Amend Its Fee Schedule for Market Data Fees) and
Securities Exchange Act Release No. 94888 (May
11, 2022), 87 FR 29892 (May 17, 2022) (SR–PEARL–
2022–18) (Notice of Filing of a Proposed Rule
Change To Amend the MIAX PEARL Options Fee
Schedule To Increase Certain Connectivity Fees and
To Increase the Monthly Fees for MIAX Express
Network Full Service Port; Suspension of and Order
Instituting Proceedings To Determine Whether To
Approve or Disapprove the Proposed Rule Change)).
144 See Notice, 89 FR at 53138–39.
145 See Notice, 89 FR at 53139.
146 See Notice, 89 FR at 53139.
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Fmt 4703
Sfmt 4703
measure and calculation of relevant
costs and allocation of common costs,
the Commission could find itself
engaging in the kind of rigid ratemaking
not contemplated by Section 11A of the
Exchange Act and which, according to
the Exchange, the Commission has
historically sought to avoid.147
The Exchange also 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.148 The Exchange states that the
proposed fee change will not impact
intramarket competition because it will
apply to all similarly situated TPHs
equally (i.e., all market participants that
choose to purchase the 10 Gb physical
port).149 Additionally, the Exchange
does not believe its proposed pricing
will impose a barrier to entry to smaller
participants and notes that its proposed
connectivity pricing is associated with
relative usage of the various market
participants.150 For example, the
Exchange states that market participants
with modest capacity needs can
continue to buy the less expensive 1 Gb
physical port (which cost is not
changing) or may choose to obtain
access via a third-party re-seller.151 The
Exchange states that while pricing may
be increased for the larger capacity
physical ports, such options provide far
more capacity and are purchased by
those that consume more resources from
the network.152 Accordingly, the
Exchange states that the proposed
connectivity fees do not favor certain
categories of market participants in a
manner that would impose a burden on
competition; rather, the allocation
reflects the network resources
consumed by the various size of market
participants—lowest bandwidth
consuming members pay the least, and
highest bandwidth consuming members
pays the most.153
The Exchange states that the proposed
fee is also still lower than some fees for
similar connectivity on other exchanges
and therefore may stimulate intermarket
competition by attracting additional
firms to connect to the Exchange or at
least should not deter interested
participants from connecting directly to
the Exchange.154 Further, if the changes
proposed herein are unattractive to
market participants, the Exchange states
147 See
Notice, 89 FR at 53139.
Notice, 89 FR at 53139.
149 See Notice, 89 FR at 53139.
150 See Notice, 89 FR at 53139.
151 See Notice, 89 FR at 53139.
152 See Notice, 89 FR at 53139.
153 See Notice, 89 FR at 53139.
154 See Notice, 89 FR at 53139.
148 See
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that it can, and likely will, see a decline
in connectivity via 10 Gb physical ports
as a result.155 The Exchange states that
it operates in a highly competitive
market in which market participants can
determine whether or not to connect
directly to the Exchange based on the
value received compared to the cost of
doing so.156 The Exchange states that
market participants have numerous
alternative venues that they may
participate on and direct their order
flow, including 13 non-Cboe affiliated
options markets, as well as off-exchange
venues, where competitive products are
available for trading.157 Moreover, the
Exchange states that the Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets.158 Specifically, the Exchange
states that 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.’’ 159 The
Exchange states that the fact that this
market is competitive has also long been
recognized by the courts.160
Accordingly, the Exchange does not
believe its proposed change imposes
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.161
B. Suspension
When exchanges file their proposed
rule changes with the Commission,
including fee filings like the Exchange’s
present proposal, they are required to
provide a statement supporting the
155 See
Notice, 89 FR at 53139.
Notice, 89 FR at 53139.
157 See Notice, 89 FR at 53139.
158 See Notice, 89 FR at 53139.
159 See Notice, 89 FR at 53139 (citing Securities
Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005)).
160 See Notice, 89 FR at 53139. The Exchange
states that 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’. . . .’’ (citing 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))).
161 See Notice, 89 FR at 53139.
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proposal’s basis under the Act and the
rules and regulations thereunder
applicable to the exchange.162 The
instructions to Form 19b–4, on which
exchanges file their proposed rule
changes, specify that such statement
‘‘should be sufficiently detailed and
specific to support a finding that the
proposed rule change is consistent with
[those] requirements.’’ 163
Section 6 of the Act, including
Sections 6(b)(4), (5), and (8), requires
the rules of an exchange to: (1) provide
for the equitable allocation of reasonable
fees among members, issuers, and other
persons using the exchange’s
facilities; 164 (2) perfect the mechanism
of a free and open market and a national
market system, protect investors and the
public interest, and not be designed to
permit unfair discrimination between
customers, issuers, brokers, or
dealers; 165 and (3) not impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act.166
In temporarily suspending the
Exchange’s proposed rule change, the
Commission intends to further consider
whether the Proposal to increase its 10
Gb physical port connectivity fee is
consistent with the statutory
requirements applicable to a national
securities exchange under the Act. The
Commission will consider, among other
things, whether the Exchange has
provided sufficient information to
demonstrate that the Exchange is subject
to significant competitive forces when
setting the proposed port connectivity
fees. In particular, the Commission will
consider whether the proposed rule
change satisfies the standards under the
Act and the rules thereunder requiring,
among other things, that an exchange’s
rules provide for the equitable
allocation of reasonable fees among
members, issuers, and other persons
using its facilities; not permit unfair
discrimination between customers,
issuers, brokers or dealers; and do not
impose any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.167
Therefore, the Commission finds that
it is appropriate in the public interest,
for the protection of investors, and
162 See 17 CFR 240.19b–4 (Item 3 entitled ‘‘SelfRegulatory Organization’s Statement of the Purpose
of, and Statutory Basis for, the Proposed Rule
Change’’). To date, the Commission has received
one comment letter on proposed rule change, which
does not appear to be relevant to the instant filing.
See Ross Letter.
163 See id.
164 15 U.S.C. 78f(b)(4).
165 15 U.S.C. 78f(b)(5).
166 15 U.S.C. 78f(b)(8).
167 See 15 U.S.C. 78f(b)(4), (5), and (8),
respectively.
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Fmt 4703
Sfmt 4703
65439
otherwise in furtherance of the purposes
of the Act, to temporarily suspend the
proposed rule change.168
IV. Proceedings To Determine Whether
To Approve or Disapprove the
Proposed Rule Changes
In addition to temporarily suspending
the Proposal, the Commission also
hereby institutes proceedings pursuant
to Sections 19(b)(3)(C) 169 and
19(b)(2)(B) of the Act 170 to determine
whether the Exchange’s proposed rule
change should be approved or
disapproved. Institution of proceedings
does not indicate that the Commission
has reached any conclusions with
respect to any of the issues involved.
Rather, the Commission seeks and
encourages interested persons to
provide additional comment on the
proposed rule change to inform the
Commission’s analysis of whether to
approve or disapprove the proposed
rule change.
Pursuant to Section 19(b)(2)(B) of the
Act,171 the Commission is providing
notice of the grounds for possible
disapproval under consideration:
• Whether the Exchange has
demonstrated how the proposed fee is
consistent with Section 6(b)(4) of the
Act, which requires that the rules of a
national securities exchange ‘‘provide
for the equitable allocation of reasonable
dues, fees, and other charges among its
members and issuers and other persons
using its facilities’’; 172
• Whether the Exchange has
demonstrated how the proposed fee is
consistent with Section 6(b)(5) of the
Act, which requires, among other
things, that the rules of a national
securities exchange not be ‘‘designed to
permit unfair discrimination between
customers, issuers, brokers, or
dealers’’; 173 and
168 For purposes of temporarily suspending the
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).
169 15 U.S.C. 78s(b)(3)(C). Once the Commission
temporarily suspends a proposed rule change,
Section 19(b)(3)(C) of the Act requires that the
Commission institute proceedings under Section
19(b)(2)(B) to determine whether a proposed rule
change should be approved or disapproved.
170 15 U.S.C. 78s(b)(2)(B).
171 Id. Section 19(b)(2)(B) of the Act also provides
that proceedings to determine whether to
disapprove a proposed rule change must be
concluded within 180 days of the date of
publication of notice of the filing of the proposed
rule change. See id. The time for conclusion of the
proceedings may be extended for up to 60 days if
the Commission finds good cause for such
extension and publishes its reasons for so finding,
or if the exchange consents to the longer period. See
id.
172 15 U.S.C. 78f(b)(4).
173 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 89, No. 154 / Friday, August 9, 2024 / Notices
• Whether the Exchange has
demonstrated how the proposed fee is
consistent with Section 6(b)(8) of the
Act, which requires that the rules of a
national securities exchange ‘‘not
impose any burden on competition not
necessary or appropriate in furtherance
of the purposes of [the Act].’’ 174
As discussed in Section III above, the
Exchange made various arguments in
support of the Proposal. There are
questions as to whether the Exchange
has provided sufficient information to
demonstrate that the proposed fee is
consistent with the Act and the rules
thereunder. The Commission will
specifically consider, among other
things, whether the Exchange has
provided sufficient evidence to
demonstrate that the proposed fee is
reasonable and equitably allocated, is
not unfairly discriminatory, and does
not impose any burden on competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
Under the Commission’s Rules of
Practice, the ‘‘burden to demonstrate
that a proposed rule change is
consistent with the [Act] and the rules
and regulations issued thereunder . . .
is on the [SRO] that proposed the rule
change.’’ 175 The description of a
proposed rule change, its purpose and
operation, its effect, and a legal analysis
of its consistency with applicable
requirements must all be sufficiently
detailed and specific to support an
affirmative Commission finding,176 and
any failure of an SRO to provide this
information may result in the
Commission not having a sufficient
basis to make an affirmative finding that
a proposed rule change is consistent
with the Act and the applicable rules
and regulations.177
The Commission is instituting
proceedings to allow for additional
consideration and comment on the
issues raised herein, including as to
whether the proposed fee is consistent
with the Act, and specifically, with its
requirements that exchange fees be
reasonable and equitably allocated, not
be unfairly discriminatory, and not
impose any burden on competition that
U.S.C. 78f(b)(8).
175 17 CFR 201.700(b)(3).
176 See id.
177 See id.
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is not necessary or appropriate in
furtherance of the purposes of the
Act.178
V. Commission’s Solicitation of
Comments
The Commission requests written
views, data, and arguments with respect
to the concerns identified above as well
as any other relevant concerns. Such
comments should be submitted by
August 30, 2024. Rebuttal comments
should be submitted by September 13,
2024. Although there do not appear to
be any issues relevant to approval or
disapproval that would be facilitated by
an oral presentation of views, data, and
arguments, the Commission will
consider, pursuant to Rule 19b–4, any
request for an opportunity to make an
oral presentation.179
The Commission asks that
commenters address the sufficiency and
merit of the Exchange’s statements in
support of the Proposal, in addition to
any other comments they may wish to
submit about the proposed rule changes.
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–
C2–2024–010 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–C2–2024–010. This file
number should be included on the
178 See
15 U.S.C. 78f(b)(4), (5), and (8).
U.S.C. 78s(b)(2). Section 19(b)(2) of the Act
grants the Commission flexibility to determine what
type of proceeding—either oral or notice and
opportunity for written comments—is appropriate
for consideration of a particular proposal by an
SRO. See Securities Acts Amendments of 1975,
Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
179 15
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Sfmt 9990
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–C2–2024–010 and should be
submitted on or before August 30, 2024.
Rebuttal comments should be submitted
by September 13, 2024.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(3)(C) of the Act,180 that
File No. SR–C2–2024–010, be and
hereby is, temporarily suspended. In
addition, the Commission is instituting
proceedings to determine whether the
proposed rule change should be
approved or disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.181
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–17699 Filed 8–8–24; 8:45 am]
BILLING CODE 8011–01–P
180 15
181 17
E:\FR\FM\09AUN1.SGM
U.S.C. 78s(b)(3)(C).
CFR 200.30–3(a)(57).
09AUN1
]]>Agencies
[Federal Register Volume 89, Number 154 (Friday, August 9, 2024)]
[Notices]
[Pages 65432-65440]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-17699]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100652; File No. SR-C2-2024-010]
Self-Regulatory Organizations; C2 Exchange, Inc.; Suspension of
and Order Instituting Proceedings To Determine Whether To Approve or
Disapprove Proposed Rule Change To Amend the Exchange's Fee Schedule
Related to Physical Port Fees
August 5, 2024.
I. Introduction
On June 7, 2024, C2 Exchange, Inc. (the ``Exchange'' or ``C2'')
filed with the Securities and Exchange Commission (``Commission'' or
``SEC''), pursuant to Section 19(b)(1) of the Securities Exchange Act
of 1934 (``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 thereunder,\2\
a proposed rule change (File Number SR-C2-2024-010) to increase fees
for 10 gigabit (``Gb'') physical ports (``Proposal''). The proposed
rule change was immediately effective upon filing with the Commission
pursuant to Section 19(b)(3)(A) of the Act.\3\ The proposed rule change
was published for comment in the Federal Register on June 25, 2024.\4\
Pursuant to Section 19(b)(3)(C) of the Act,\5\ the Commission is
hereby: (1) temporarily suspending the proposed rule change; and (2)
instituting proceedings to determine whether to approve or disapprove
the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A). A proposed rule change may take
effect upon filing with the Commission if it is designated by the
exchange as ``establishing or changing a due, fee, or other charge
imposed by the self-regulatory organization on any person, whether
or not the person is a member of the self-regulatory organization.''
15 U.S.C. 78s(b)(3)(A)(ii).
\4\ See Securities Exchange Act Release No. 100364 (June 18,
2024), 89 FR 53134 (``Notice'').
\5\ 15 U.S.C. 78s(b)(3)(C).
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II. Background and Description of the Proposed Rule Change
The Exchange proposes to amend its fee schedule relating to
physical connectivity fees by increasing the monthly fee for 10 Gb
physical ports from $7,500 to $8,500 per port.\6\ The
[[Page 65433]]
Exchanges states that, by way of background, a physical port is
utilized by a Trading Permit Holder (``TPH'') or non-TPH to connect to
the Exchange at the data centers where the Exchange's servers are
located.\7\ Prior to this proposed rule change, the Exchange assessed
the following physical connectivity fees for TPHs and non-TPHs on a
monthly basis: $2,500 per physical port for a 1 Gb circuit and $7,500
per physical port for a 10 Gb circuit.\8\ The Exchange states the
proposed fee change better enables it to continue to maintain and
improve its market technology and services and also notes that the
proposed fee amount, even as amended, continues to be in line with, or
even lower than, amounts assessed by other exchanges for similar
connections.\9\ The Exchange also states that a single 10 Gb physical
port can be used to access the Systems of the following affiliate
exchanges: the Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc.
(options and equities platforms), Cboe EDGX Exchange, Inc. (options and
equities platforms), and Cboe EDGA Exchange, Inc., (``Affiliate
Exchanges'').\10\ The Exchange states that only one monthly fee applies
per 10 Gb physical port regardless of how many affiliated exchanges are
accessed through that one port.\11\
---------------------------------------------------------------------------
\6\ See Notice, 89 FR at 53134. The Exchange initially filed the
proposed fee changes on July 3, 2023 (SR-C2-2023-014). On September
1, 2023, the Exchange withdrew that filing and submitted SR-C2-2023-
020. On September 29, 2023, the Exchange states that the Securities
and Exchange Commission issued a Suspension of and Order Instituting
Proceedings to Determine whether to Approve or Disapprove a Proposed
Rule Change to Amend its Fees Schedule Related to Physical Port
Fees. See Notice, 89 FR at 53134 n.3. On September 29, 2023, the
Exchange filed the proposed fee change (SR-C2-2023-021). On October
13, 2023, the Exchange withdrew that filing and submitted SR-C2-
2023-022. On December 12, 2023, the Exchange withdrew that filing
and submitted SR-C2-2023-025. On February 9, 2024, the Exchange
withdrew that filing and submitted SR-C2-2024-004. On April 9, 2024,
the Exchange withdrew that filing and submitted SR-C2-2024-005. On
June 7, 2024 the Exchange withdrew that filing and submitted this
filing.
\7\ See Notice, 89 FR at 53134.
\8\ See Notice, 89 FR at 53134.
\9\ See Notice, 89 FR at 53134 (citing The Nasdaq Stock Market
LLC (``Nasdaq''), General 8, Connectivity to the Exchange. Nasdaq
and its affiliated exchanges charge a monthly fee of $15,000 for
each 10Gb Ultra fiber connection to the respective exchange, which
is analogous to the Exchange's 10Gb physical port. See also id.
(citing New York Stock Exchange LLC, NYSE American LLC, NYSE Arca,
Inc., NYSE Chicago Inc., NYSE National, Inc. Connectivity Fee
Schedule, which provides that 10 Gb LX LCN Circuits (which are
analogous to the Exchange's 10 Gb physical port) are assessed
$22,000 per month, per port.)).
\10\ See Notice, 89 FR at 53134. The Affiliate Exchanges are
also submitted contemporaneous substantively similar rule filings.
\11\ See Notice, 89 FR at 53134. The Exchange states that
conversely, other exchange groups charge separate port fees for
access to separate, but affiliated, exchanges. See Notice, 89 FR at
53134 n.6 (citing Securities and Exchange Release No. 99822 (March
21, 2024), 89 FR 21337 (March 27, 2024) (SR-MIAX-2024-016)).
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III. Suspension of the Proposed Rule Change
Pursuant to Section 19(b)(3)(C) of the Act,\12\ at any time within
60 days of the date of filing of an immediately effective proposed rule
change pursuant to Section 19(b)(1) of the Act,\13\ the Commission
summarily may temporarily suspend the change in the rules of a self-
regulatory organization (``SRO'') 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. A temporary suspension of the proposed rule changes is
necessary and appropriate to allow for additional analysis of the
proposed rule change's consistency with the Act and the rules
thereunder.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(C).
\13\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
A. Exchange Statements In Support of the Proposal
In support of the Proposal, the Exchange states that it 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.\14\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \15\ 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.\16\
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) requirement that the rules of an
exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.\17\ The Exchange also believes
the proposed rule change is consistent with Section 6(b)(4) of the Act,
which requires that Exchange rules provide for the equitable allocation
of reasonable dues, fees, and other charges among its TPHs and other
persons using its facilities.\18\
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\14\ See Notice, 89 FR at 53134; 15 U.S.C. 78f(b).
\15\ See Notice, 89 FR at 53134; 15 U.S.C. 78f(b)(5).
\16\ See Notice, 89 FR at 53134.
\17\ See Notice, 89 FR at 53134; 15 U.S.C. 78f(b)(5).
\18\ See Notice, 89 FR at 53134; 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange states that it operates in a highly competitive
environment.\19\ The Exchange states that on May 21, 2019, the SEC
Division of Trading and Markets issued non-rulemaking fee filing
guidance titled ``Staff Guidance on SRO Rule Filings Relating to Fees''
(``Fee Guidance''), which provided, among other things, that in
determining whether a proposed fee is constrained by significant
competitive forces, the Commission will consider whether there are
reasonable substitutes for the product or service that is the subject
of a proposed fee.\20\ As described in further detail below, the
Exchange believes substitutable products are in fact available to
market participants, including by third-party resellers of the
Exchange's physical connectivity, and the availability to trade all of
the products offered at the Exchange at one of the 16 other options
exchanges that trade options or other off-exchange trading
platforms.\21\
---------------------------------------------------------------------------
\19\ See Notice, 89 FR at 53134.
\20\ See Notice, 89 FR at 53134-35. (citing Chairman Jay
Clayton, Statement on Division of Trading and Markets Staff Fee
Guidance, June 12, 2019). The Exchange states that the Fee Guidance
also recognized that ``products need to be substantially similar but
not identical to be substitutable.'' Id.
\21\ See Notice, 89 FR at 53135. The Exchanges states that a
substitute, or substitutable good, in economics and consumer theory
refers to a product or service that consumers see as essentially the
same or similar-enough to another product. See id. at n.12 (citing
https://www.investopedia.com/terms/s/substitute.asp).
---------------------------------------------------------------------------
The Exchange states that the 2019 Fee Guidance also acknowledged
that platform competition may demonstrate a competitive environment and
therefore constrain aggregate returns, regardless of the pricing of
individual products, and that platforms often have joint products.\22\
The Exchange states that exchanges themselves are platforms.\23\
Particularly, the Exchange states that exchanges are multi-sided
platforms that facilitate interactions between multiple sides of the
market--buyers and sellers, companies and investors, and traders and
market watchers--and their value is dependent on attracting users to
the multiple sides of the platform.\24\ As described in further detail
below, the Exchange believes that competition among exchanges as
trading platforms (and between exchanges and alternative trading
venues) constrain exchanges from charging excessive fees for any
exchange products, including trading, listings, connectivity and market
data.
[[Page 65434]]
As such, fees need not be analyzed from only one side, but rather can,
and should, be considered within the larger context of the platform to
test for anti-competitive behavior.\25\ The Exchange states that
nothing in the Exchange Act requires the individual examination of
specific product fees in isolation.\26\ Rather, the Exchange states
that the Act generally requires the rules of an exchange to provide for
the ``equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using its facilities.''
\27\
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\22\ See Notice, 89 FR at 53135 (citing Fee Guidance).
\23\ See Notice, 89 FR at 53135. The Exchanges states that the
Supreme Court in Ohio v. American Express Co. recognized that, as
platforms facilitate transactions between two or more sides of a
market, their value is dependent on attracting users to both sides
of the platform (i.e., network effects). See id. at n.14 (citing
Ohio v. American Express Co. 138 S. Ct. 2274, 585 U.S. 529 (2018)).
\24\ See Notice, 89 FR at 53135.
\25\ See Notice, 89 FR at 53135.
\26\ See Notice, 89 FR at 53135.
\27\ See Notice, 89 FR at 53135 (citing 15 U.S.C. 78f(b)(4)).
---------------------------------------------------------------------------
The Exchange believes the proposed fee change is reasonable as it
reflects a moderate increase in physical connectivity fees for 10 Gb
physical ports.\28\ Further, the Exchange states that the current 10 Gb
physical port fee has remained unchanged since June 2018.\29\ The
Exchange explains that since its last increase over 6 years ago
however, there has been notable inflation.\30\ Particularly, the
Exchange states that the dollar has had an average inflation rate of
3.76% per year between 2018 and today, producing a cumulative price
increase of approximately 24.8% inflation since the fee for the 10 Gb
physical port was last modified.\31\ Moreover, the Exchange states that
it historically does not increase fees every year, notwithstanding
inflation.\32\ Accordingly, the Exchange believes the proposed fee of
$8,500 is reasonable as it only represents an approximate 13% increase
from the rate adopted six years ago, notwithstanding the cumulative
inflation rate of inflation of 24.8%.\33\ The Exchange states that were
the Exchange to adjust fully for inflation, it would be proposing a
monthly rate of $9,360, which is 10% more than the Exchange is actually
proposing.\34\ To further demonstrate, the Exchange notes that $8,500
in 2024 is equivalent to approximately $6,800 in 2018, when adjusted
for inflation.\35\ Accordingly, the Exchange believes the proposed rate
is also reasonable as it is nearly 20% lower than the rate adopted in
2018 (i.e., $7,500) when adjusted for inflation.\36\ The Exchange
states it is also unaware of any standard that suggests any fee
proposal that exceeds a certain yearly or cumulative inflation rate is
unreasonable, and in any event, in this instance the increase is well
below the cumulative rate.\37\ The Exchange also believes its offerings
are more affordable as compared to similar offerings at competitor
exchanges.\38\
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\28\ See Notice, 89 FR at 53135.
\29\ See Notice, 89 FR at 53135 (citing Securities and Exchange
Release No. 83455 (June 15, 2018), 83 FR 28892 (June 21, 2018) (SR-
C2-2018-014)).
\30\ See Notice, 89 FR at 53135.
\31\ See Notice, 89 FR at 53135 (citing https://www.officialdata.org/us/inflation/2010?amount=1).
\32\ See Notice, 89 FR at 53135.
\33\ See Notice, 89 FR at 53135.
\34\ See Notice, 89 FR at 53135.
\35\ See Notice, 89 FR at 53135.
\36\ See Notice, 89 FR at 53135.
\37\ See Notice, 89 FR at 53135.
\38\ See Notice, 89 FR at 53135. The Exchange states that Nasdaq
and its affiliated exchanges charge a monthly fee of $15,000 for
each 10Gbps Ultra fiber connection to the respective exchange, which
is analogous to the Exchange's 10Gbps physical port. Id. (citing The
Nasdaq Stock Market LLC (``Nasdaq''), General 8, Connectivity to the
Exchange). See also id. (citing New York Stock Exchange LLC, NYSE
American LLC, NYSE Arca, Inc., NYSE Chicago Inc., NYSE National,
Inc. Connectivity Fee Schedule, which provides that 10 Gbps LX LCN
Circuits (which are analogous to the Exchange's 10 Gbps physical
port) are assessed $22,000 per month, per port).
---------------------------------------------------------------------------
The Exchange also notes TPHs and non-TPHs will continue to choose
the method of connectivity based on their specific needs and no broker-
dealer is required to become a TPH of, let alone connect directly to,
the Exchange.\39\ The Exchange states that there is also no regulatory
requirement that any market participant connect to any one particular
exchange.\40\ The Exchange explains that market participants may
voluntarily choose to become a member of one or more of a number of
different exchanges, of which, the Exchange is but one choice.\41\
Additionally, the Exchange states that any Exchange member that is
dissatisfied with the proposal is free to choose not to be a member of
the Exchange and send order flow to another exchange.\42\ The Exchange
states that, moreover, direct connectivity is not a requirement to
participate on the Exchange.\43\ The Exchange also believes
substitutable products and services are available to market
participants, including, among other things, other options exchanges
that a market participant may connect to in lieu of the Exchange,
indirect connectivity to the Exchange via a third-party reseller of
connectivity, and/or trading of any options product, such as within the
Over-the-Counter (OTC) markets which do not require connectivity to the
Exchange.\44\ The Exchange states that there are currently 17
registered options exchanges that trade options (13 of which are not
affiliated with Cboe), some of which have similar or lower connectivity
fees.\45\ The Exchange states that, based on publicly available
information, no single options exchange has more than approximately 18%
of the market share.\46\ The Exchange states that further, low barriers
to entry mean that new exchanges may rapidly enter the market and offer
additional substitute platforms to further compete with the Exchange
and the products it offers.\47\ The Exchange explains that, for
example, there are 3 exchanges that have been added in the U.S. options
markets in the last 5 years (i.e., Nasdaq MRX, LLC, MIAX Pearl, LLC,
MIAX Emerald LLC, and most recently, MEMX LLC).\48\
---------------------------------------------------------------------------
\39\ See Notice, 89 FR at 53135.
\40\ See Notice, 89 FR at 53135.
\41\ See Notice, 89 FR at 53135.
\42\ See Notice, 89 FR at 53135.
\43\ See Notice, 89 FR at 53135.
\44\ See Notice, 89 FR at 53135.
\45\ See Notice, 89 FR at 53135.
\46\ See Notice, 89 FR at 53135 (citing Cboe Global Markets U.S.
Options Market Volume Summary (June 6, 2024), available at https://markets.cboe.com/us/options/market_statistics/).
\47\ See Notice, 89 FR at 53135.
\48\ See Notice, 89 FR at 53135.
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The Exchange states that there is no regulatory requirement that
any market participant connect to any one options exchange, nor that
any market participant connect at a particular connection speed or act
in a particular capacity on the Exchange, or trade any particular
product offered on an exchange.\49\ The Exchange states that moreover,
membership is not a requirement to participate on the Exchange.\50\ The
Exchange states that it is unaware of any one options exchange whose
membership includes every registered broker-dealer.\51\ The Exchange
explains, by way of example, that while the Exchange has 52 TPHs (i.e.,
members), Cboe EDGX has 51 members that trade options, and Cboe BZX has
61 members that trade options.\52\ The Exchange states that there is
also no firm that is a member of C2 Options only.\53\ The Exchange
states that further, based on publicly available information regarding
a sample of the Exchange's competitors, NYSE American Options has 71
members, and NYSE Arca Options has 69 members, MIAX Options has 46
members, and MIAX Pearl Options has 40 members.\54\
---------------------------------------------------------------------------
\49\ See Notice, 89 FR at 53135.
\50\ See Notice, 89 FR at 53135.
\51\ See Notice, 89 FR at 53135.
\52\ See Notice, 89 FR at 53135-36.
\53\ See Notice, 89 FR at 53136.
\54\ See Notice, 89 FR at 53136 (citing https://www.nyse.com/markets/american-options/membership#directory; https://www.nyse.com/markets/arca-options/membership#directory; https://www.miaxglobal.com/sites/default/files/page-files/MIAX_Options_Exchange_Members_April_2023_04282023.pdf; https://www.miaxglobal.com/sites/default/files/page-files/MIAX_Pearl_Exchange_Members_01172023_0.pdf).
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The Exchange states that a market participant may also submit
orders to
[[Page 65435]]
the Exchange via a TPH broker or a third-party reseller of
connectivity.\55\ The Exchange notes that third-party non-TPHs also
resell exchange connectivity.\56\ The Exchange explains that this
indirect connectivity is another viable alternative for market
participants to trade on the Exchange without connecting directly to
the Exchange (and thus not pay the Exchange connectivity fees), which
alternative is already being used by non-TPHs and further constrains
the price that the Exchange is able to charge for connectivity to its
Exchange.\57\ The Exchange notes that it could, but chooses not to,
preclude market participants from reselling its connectivity.\58\
Unlike other exchanges, the Exchange states that it also chooses not to
adopt fees that would be assessed to third-party resellers on a per
customer basis (i.e., fee based on number of TPHs that connect to the
Exchange indirectly via the third-party).\59\ The Exchange states that
these third-party resellers may purchase the Exchange's physical ports
and resell access to such ports either alone or as part of a package of
services.\60\ The Exchange notes that multiple TPHss are able to share
a single physical port (and corresponding bandwidth) with other non-
affiliated TPHs if purchased through a third-party re-seller.\61\ The
Exchange explains that this allows resellers to mutualize the costs of
the ports for market participants and provide such ports at a price
that may be lower than the Exchange charges due to this mutualized
connectivity.\62\ The Exchange states that these third-party sellers
may also provide an additional value to market participants in addition
to the physical port itself as they may also manage and monitor these
connections, and clients of these third-parties may also be able to
connect from the same colocation facility either from their own racks
or using the third-party's managed racks and infrastructure which may
provide further cost-savings.\63\ The Exchange believes such third-
party resellers may also use the Exchange's connectivity as an
incentive for market participants to purchase further services such as
hosting services.\64\ That is, the Exchange states, that even firms
that wish to utilize a single, dedicated 10 Gb port (i.e., use one
single 10 Gb port themselves instead of sharing a port with other
firms), may still realize cost savings via a third-party reseller as it
relates to a physical port because such reseller may be providing a
discount on the physical port to incentivize the purchase of additional
services and infrastructure support alongside the physical port
offering (e.g., providing space, hosting, power, and other long-haul
connectivity options).\65\ The Exchange explains that this is similar
to cell phone carriers offering a new iPhone at a discount (or even at
no cost) if purchased in connection with a new monthly phone plan.\66\
The Exchange states that these services may reevaluate reselling or
offering Cboe's direct connectivity if they deem the fees to be
excessive.\67\ Further, as noted above, the Exchange does not receive
any connectivity revenue when connectivity is resold by a third-party,
which often is resold to multiple customers, some of whom are agency
broker-dealers that have numerous customers of their own.\68\ The
Exchange states, for example, there are approximately 12 third parties
who resell Exchange connectivity across the 7 Affiliated Exchanges,
which are all accessible on the same network.\69\ The Exchange explains
that these third-party resellers collectively maintain approximately 48
physical ports from the Exchange, but have collectively almost 200
unique customers downstream, connected through these multi-Exchange
ports.\70\ The Exchange states that therefore, given the availability
of third-party providers that also offer connectivity solutions, the
Exchange believes participation on the Exchange remains affordable
(notwithstanding the proposed fee change) for all market participants,
including trading firms that may be able to take advantage of lower
costs that result from mutualized connectivity and/or from other
services provided alongside the physical port offerings.\71\ The
Exchange states that because third-party resellers also act as a viable
alternative to direct connectivity to the Exchange, the price that the
Exchange is able to charge for direct connectivity to its Exchange is
constrained.\72\ The Exchange states that moreover, if the Exchange
were to assess supracompetitve rates, members and non-members (such as
third-party resellers) alike, may decide not to purchase, or to reduce
its use of, the Exchange's direct connectivity.\73\ The Exchange
explains that disincentivizing market participants from purchasing
Exchange connectivity would only serve to discourage participation on
the Exchange which ultimately does not benefit the Exchange.\74\
Further, the Exchange believes its offerings are more affordable as
compared to similar offerings at competitor exchanges.\75\
---------------------------------------------------------------------------
\55\ See Notice, 89 FR at 53136.
\56\ See Notice, 89 FR at 53136.
\57\ See Notice, 89 FR at 53136. The Exchange states that third-
party resellers of connectivity play an important role in the
capital markets infrastructure ecosystem. For example, according to
the Exchange, third-party resellers can help unify access for
customers who want exposure to multiple financial markets that are
geographically dispersed by establishing connectivity to all of the
different exchanges, so the customers themselves do not have to. The
Exchange further states that many of the third-party connectivity
resellers also act as distribution agents for all of the market data
generated by the exchanges as they can use their established
connectivity to subscribe to, and redistribute, data over their
networks. The Exchange explains that this may remove barriers that
infrastructure requirements may otherwise pose for customers looking
to access multiple markets and real-time data feeds. The Exchange
further explains that this facilitation of overall access to the
marketplace is ultimately beneficial for the entire capital markets
ecosystem, including the Exchange, on which such firms transact
business. See id. at n.25.
\58\ See Notice, 89 FR at 53136.
\59\ See Notice, 89 FR at 53136 (citing Nasdaq Price List--U.S.
Direct Connection and Extranet Fees, available at, US Direct-
Extranet Connection (nasdaqtrader.com); and Securities Exchange Act
Release Nos. 74077 (January 16, 2022), 80 FR 3683 (January 23, 2022)
(SR-NASDAQ-2015-002); and 82037 (November 8, 2022), 82 FR 52953
(November 15, 2022) (SR-NASDAQ-2017-114)).
\60\ See Notice, 89 FR at 53136.
\61\ See Notice, 89 FR at 53136. The Exchange states that for
example, a third-party reseller may purchase one 10 Gb physical port
from the Exchange and resell that connectivity to three different
market participants who may only need 3 Gb each and leverage the
same single port. Id. at n.27.
\62\ See Notice, 89 FR at 53136.
\63\ See Notice, 89 FR at 53136.
\64\ See Notice, 89 FR at 53136.
\65\ See Notice, 89 FR at 53136.
\66\ See Notice, 89 FR at 53136.
\67\ See Notice, 89 FR at 53136.
\68\ See Notice, 89 FR at 53136.
\69\ See Notice, 89 FR at 53136.
\70\ See Notice, 89 FR at 53136.
\71\ See Notice, 89 FR at 53136.
\72\ See Notice, 89 FR at 53136.
\73\ See Notice, 89 FR at 53136.
\74\ See Notice, 89 FR at 53136.
\75\ See Notice, 89 FR at 53136 (citing The Nasdaq Stock Market
LLC (``Nasdaq''), General 8, Connectivity to the Exchange. Nasdaq
and its affiliated exchanges charge a monthly fee of $15,000 for
each 10Gbps Ultra fiber connection to the respective exchange, which
is analogous to the Exchange's 10Gbps physical port. See also id.
(citing New York Stock Exchange LLC, NYSE American LLC, NYSE Arca,
Inc., NYSE Chicago Inc., NYSE National, Inc. Connectivity Fee
Schedule, which provides that 10 Gbps LX LCN Circuits (which are
analogous to the Exchange's 10 Gbps physical port) are assessed
$22,000 per month, per port.)).
---------------------------------------------------------------------------
Accordingly, the Exchange states that vigorous competition among
national securities exchanges provides many alternatives for firms to
voluntarily decide whether direct connectivity to the Exchange is
appropriate and worthwhile, and as noted above, no broker-dealer is
required to become a TPH of the Exchange, let alone connect directly to
it.\76\ The Exchange explains
[[Page 65436]]
that in the event that a market participant views the Exchange's
proposed fee change as more or less attractive than the competition,
that market participant can choose to connect to the Exchange
indirectly or may choose not to connect to that exchange and connect
instead to one or more of the other 13 non-Cboe affiliated options
markets.\77\ The Exchange states that market participants are free to
choose which exchange to use to satisfy their business needs.\78\ The
Exchange states that, moreover, if the Exchange were to assess
supracompetitve rates, members and non-members alike, may decide not to
purchase, or to reduce their use of, the Exchange's direct
connectivity.\79\ The Exchange states that disincentivizing market
participants from purchasing Exchange connectivity would only serve to
discourage participation on the Exchange which ultimately does not
benefit the Exchange.\80\ The Exchange states that, for example, if the
Exchange charges excessive fees, it may stand to lose not only
connectivity revenues but also revenues associated with the execution
of orders routed to it, and, to the extent applicable, market data
revenues.\81\ The Exchange believes that this competitive dynamic
imposes powerful restraints on the ability of any exchange to charge
unreasonable fees for connectivity.\82\ Notwithstanding the foregoing,
the Exchange still believes that the proposed fee increase is
reasonable, equitably allocated and not unfairly discriminatory, even
for market participants that determine to connect directly to the
Exchange for business purposes, as those business reasons should
presumably result in revenue capable of covering the proposed fee.\83\
---------------------------------------------------------------------------
\76\ See Notice, 89 FR at 53136.
\77\ See Notice, 89 FR at 53136.
\78\ See Notice, 89 FR at 53136.
\79\ See Notice, 89 FR at 53136-37.
\80\ See Notice, 89 FR at 53137.
\81\ See Notice, 89 FR at 53137.
\82\ See Notice, 89 FR at 53137.
\83\ See Notice, 89 FR at 53137.
---------------------------------------------------------------------------
The Exchange states that additionally, in connection with a
proposed amendment to the National Market System Plan Governing the
Consolidated Audit Trail (``CAT NMS Plan'') the Commission again
discussed the existence of competition in the marketplace generally,
and particularly for exchanges with unique business models.\84\ The
Exchange states that the Commission recognized that while some
exchanges may have a unique business model that is not currently
offered by competitors, a competitor could create similar business
models if demand were adequate, and if a competitor did not do so, the
Commission believes it would be likely that new entrants would do so if
the exchange with that unique business model was otherwise
profitable.\85\
---------------------------------------------------------------------------
\84\ See Notice, 89 FR at 53137 (citing Securities Exchange Act
Release No. 86901 (September 9, 2019), 84 FR 48458 (September 13,
2019) (File No. S7-13-19)).
\85\ See Notice, 89 FR at 53137 (citing Securities Exchange Act
Release No. 86901 (September 9, 2019), 84 FR 48458 (September 13,
2019) (File No. S7-13-19)).
---------------------------------------------------------------------------
The Exchange states that, as noted above, exchanges also compete as
platforms.\86\ The Exchange explains that in the context of the
competition among platforms, different exchanges operate a variety of
different business models.\87\ The Exchange further explains that, in
fact, there are a number of ways an exchange can differentiate itself,
such as by pricing structure, technology and functionality offerings,
and products.\88\ The Exchange states that market participants can
access the exchange without purchasing anything from an exchange,
instead using third-party routers and data.\89\ The Exchange explains
that for those whose business models necessitate the purchase of some
mix of trading, connectivity, and data services, there are a variety of
options at different price points, allowing market participants to
exercise choice, and forcing exchanges to compete on their offerings
and prices.\90\ The Exchange states that further, all elements of the
platform--trade executions, market data, connectivity, membership, and
listings--operate in concert.\91\ The Exchange explains that, for
example, trade executions increase the value of market data; market
data functions as an advertisement for on-exchange trading; listings
increase the value of trade executions and market data; and greater
liquidity on the exchange enhances the value of ports and connectivity
services.\92\ As such, the Exchange states that demand for one set of
platform services depends on the demand for other services and
therefore to make its platform attractive to multiple constituencies,
an exchange must consider inter-side externalities.\93\ The Exchange
explains that in assessing competition for exchange services, exchanges
must also consider not only explicit costs, such as fees for trading,
market data, and connectivity, but the implicit costs, such as realized
spreads, of trading on an exchange.\94\ The Exchange states that, when
accounting for explicit and implicit costs, research has found that
competition has largely equalized all-in trading costs to users across
exchanges.\95\ The Exchange states that, for example, data has shown
that venues with the highest explicit costs (typically inverted and
fee-fee venues) have the lowest implicit costs from markouts \96\ and
vice versa.\97\ The Exchange states that implicit costs explain how
venues with higher explicit costs manage to compete with seemingly much
cheaper venues (and conversely, how exchanges with higher implicit
costs use lower fees to compete).\98\ The Exchange further states that
additional research also confirms that market participants route trades
in a way that not only accounts for explicit and implicit costs--but
also very efficiently values opportunity costs, like lower odds of
getting a fill on inverted venues.\99\ As such, the Exchange believes
the proposed fee change is reasonable as exchanges are constrained from
charging excessive fees for any exchange product, including physical
connectivity.\100\
---------------------------------------------------------------------------
\86\ See Notice, 89 FR at 53137.
\87\ See Notice, 89 FR at 53137.
\88\ See Notice, 89 FR at 53137.
\89\ See Notice, 89 FR at 53137.
\90\ See Notice, 89 FR at 53137.
\91\ See Notice, 89 FR at 53137.
\92\ See Notice, 89 FR at 53137.
\93\ See Notice, 89 FR at 53137.
\94\ See Notice, 89 FR at 53137.
\95\ See Notice, 89 FR at 53137 (citing Mackintosh, Phil &
Normyle, Michael. ``How Exchanges Compete: An Economic Analysis of
Platform Competition.'' Nasdaq, March 2024, https://www.nasdaq.com/How-Exchanges-Compete-An-Economic-Analysis-of-Platform-Competition
(``Mackintosh and Normyle'')).
\96\ The Exchange explains that per-trade markout is a measure
of theoretical profitability from the perspective of a liquidity
provider. See Notice, 89 FR at 53137 n.32.
\97\ See Notice, 89 FR at 53137 (citing Mackintosh and Normyle).
\98\ See Notice, 89 FR at 53137. The Exchange states that, for
example, research by Nasdaq found that it is over 60% more expensive
to trade on the costliest exchange than on the cheapest. According
to the Exchange, such a sizeable disparity suggests that there is
another factor that keeps these exchanges in competition.
Specifically, the Exchange states that when implicit costs are
considered, the difference in cost to trade is minimized. See id.
\99\ See Notice, 89 FR at 53137 (citing Bershova, Nataliya &
Jaquet, Paul. (2019). Execution Quality and Fee Structure: Passive
Lit Executions. Bernstein Electronic Trading, Execution Research).
\100\ See Notice, 89 FR at 53137.
---------------------------------------------------------------------------
The Exchange also believes the proposed fee increase is reasonable
in light of recent and anticipated connectivity-related upgrades and
changes.\101\ The Exchange states that it and its affiliated exchanges
recently launched a multi-year initiative to improve Cboe Exchange
Platform performance and capacity requirements to increase
competitiveness, support growth and advance a consistent world class
platform.\102\ The Exchange
[[Page 65437]]
explains that the goal of the project, among other things, is to
provide faster and more consistent order handling and matching
performance for options, while ensuring quicker processing time and
supporting increasing volumes and capacity needs.\103\ The Exchange
states that, for example, the Exchange recently performed switch
hardware upgrades.\104\ The Exchange explains that, particularly, the
Exchange replaced existing customer access switches with newer models,
which the Exchange believes resulted in increased determinism, and the
recent switch upgrades also increased the Exchange's capacity to
accommodate more physical ports by nearly 50%.\105\ The Exchange states
that network bandwidth was also increased nearly two-fold as a result
of the upgrades, which among other things, can lead to reduce message
queuing.\106\ The Exchange also believes these newer models result in
less natural variance in the processing of messages.\107\ The Exchange
notes that it incurred costs associated with purchasing and upgrading
to these newer models, of which the Exchange has not otherwise passed
through or offset.\108\
---------------------------------------------------------------------------
\101\ See Notice, 89 FR at 53137.
\102\ See Notice, 89 FR at 53137.
\103\ See Notice, 89 FR at 53137.
\104\ See Notice, 89 FR at 53137.
\105\ See Notice, 89 FR at 53137.
\106\ See Notice, 89 FR at 53137.
\107\ See Notice, 89 FR at 53137.
\108\ See Notice, 89 FR at 53137.
---------------------------------------------------------------------------
The Exchange states that as of April 1, 2024, market participants
also having the option of connecting to a new data center (i.e.,
Secaucus NY6 Data Center (``NY6'')), in addition to the current data
centers at NY4 and NY5.\109\ The Exchange states that it made NY6
available in response to customer requests in connection with their
need for additional space and capacity.\110\ The Exchange explains that
in order to make this space available, the Exchange expended
significant resources to prepare this space, and will also incur
ongoing costs with respect to maintaining this offering, including
costs related to power, space, fiber, cabinets, panels, labor and
maintenance of racks.\111\ The Exchange states it also incurred a large
cost with respect to ensuring NY6 would be latency equalized, as it is
for NY4 and NY5.\112\
---------------------------------------------------------------------------
\109\ See Notice, 89 FR at 53137.
\110\ See Notice, 89 FR at 53137.
\111\ See Notice, 89 FR at 53137.
\112\ See Notice, 89 FR at 53137-38.
---------------------------------------------------------------------------
The Exchange states that it also has made various other
improvements since the current physical port rates were adopted in
2018.\113\ The Exchanges states that, for example, the Exchange has
updated its customer portal to provide more transparency with respect
to firms' respective connectivity subscriptions, enabling them to
better monitor, evaluate and adjust their connections based on their
evolving business needs.\114\ The Exchange explains that it also
performs proactive audits on a weekly basis to ensure that all customer
cross connects continue to fall within allowable tolerances for Latency
Equalized connections.\115\ Accordingly, the Exchange states that it
has expended, and will continue to expend, resources to innovate and
modernize technology so that it may benefit its TPHs and continue to
compete among other options markets.\116\ The Exchange explains that
its ability to continue to innovate with technology and offer new
products to market participants allows the Exchange to remain
competitive in the options space which currently has 17 options markets
and potential new entrants.\117\ The Exchange states that if the
Exchange were not able to assess incrementally higher fees for its
connectivity, it would effectively impact how the Exchange manages its
technology and hamper the Exchange's ability to continue to invest in
and fund access services in a manner that allows it to meet existing
and anticipated access demands of market participants.\118\ The
Exchange explains that disapproval of fee changes such as the proposal
herein, could also have the adverse effect of discouraging an exchange
from improving its operations and implementing innovative technology to
the benefit of market participants if it believes the Commission would
later prevent that exchange from recouping costs and monetizing its
operational enhancements, thus adversely impacting competition.\119\
---------------------------------------------------------------------------
\113\ See Notice, 89 FR at 53138.
\114\ See Notice, 89 FR at 53138.
\115\ See Notice, 89 FR at 53138.
\116\ See Notice, 89 FR at 53138.
\117\ See Notice, 89 FR at 53138.
\118\ See Notice, 89 FR at 53138.
\119\ See Notice, 89 FR at 53138.
---------------------------------------------------------------------------
The Exchange also believes the proposed fee is reasonable as it is
still in line with, or even lower than, amounts assessed by other
exchanges for similar connections.\120\ Indeed, the Exchange believes
assessing fees at a lower rate than fees assessed by other exchanges
for analogous connectivity (which were similarly adopted via the rule
filing process and filed with the Commission) is reasonable.\121\ The
Exchange states that the proposed fee is also the same as is
concurrently being proposed for its Affiliate Exchanges.\122\ Further,
the Exchange states that TPHs are able to utilize a single port to
connect to all of its Affiliate Exchanges and will only be charged one
single fee (i.e., a market participant will only be assessed the
proposed $8,500 even if it uses that physical port to connect to the
Exchange and another (or even all 6) of its Affiliate Exchanges).\123\
Particularly, the Exchange believes the proposed monthly per port fee
is reasonable, equitable and not unfairly discriminatory since as the
Exchange has determined to not charge multiple fees for the same
port.\124\ Indeed, the Exchange notes that several ports are in fact
purchased and utilized across one or more of the Exchange's affiliated
Exchanges (and charged only once).\125\
---------------------------------------------------------------------------
\120\ See Notice, 89 FR at 53138 (citing The Nasdaq Stock Market
LLC (``Nasdaq''), General 8, Connectivity to the Exchange. Nasdaq
and its affiliated exchanges charge a monthly fee of $15,000 for
each 10Gb Ultra fiber connection to the respective exchange, which
is analogous to the Exchange's 10Gb physical port. See also id.
(citing New York Stock Exchange LLC, NYSE American LLC, NYSE Arca,
Inc., NYSE Chicago Inc., NYSE National, Inc. Connectivity Fee
Schedule, which provides that 10 Gb LX LCN Circuits (which are
analogous to the Exchange's 10 Gb physical port) are assessed
$22,000 per month, per port.)).
\121\ See Notice, 89 FR at 53138.
\122\ See Notice, 89 FR at 53138.
\123\ See Notice, 89 FR at 53138.
\124\ See Notice, 89 FR at 53138.
\125\ See Notice, 89 FR at 53138.
---------------------------------------------------------------------------
The Exchange also believes that the proposed fee change is not
unfairly discriminatory because it would be assessed uniformly across
all market participants that purchase the physical ports.\126\ The
Exchange believes increasing the fee for 10 Gb physical ports and
charging a higher fee as compared to the 1 Gb physical port is
equitable as the 1 Gb physical port is 1/10th the size of the 10 Gb
physical port and therefore does not offer access to many of the
products and services offered by the Exchange (e.g., ability to receive
certain market data products).\127\ The Exchange explains that, thus,
the value of the 1 Gb alternative is lower than the value of the 10 Gb
alternative, when measured based on the type of Exchange access it
offers.\128\ The Exchange states that, moreover, market participants
that purchase 10 Gb physical ports utilize the most bandwidth and
therefore consume the most resources from the network.\129\ The
Exchange also anticipates that firms that utilize 10 Gb ports will
benefit the most from the Exchange's investment in offering NY6 as the
Exchange anticipates there will be much higher quantities of 10 Gb
physical ports
[[Page 65438]]
connecting from NY6 as compared to 1 Gb ports.\130\ Indeed, the
Exchange notes that 10 Gb physical ports account for approximately 90%
of physical ports across the NY4, NY5, and NY6 data centers, and to
date, 80% of new port connections in NY6 are 10 Gb ports.\131\ As such,
the Exchange believes the proposed fee change for 10 Gb physical ports
is reasonably and appropriately allocated.\132\
---------------------------------------------------------------------------
\126\ See Notice, 89 FR at 53138.
\127\ See Notice, 89 FR at 53138.
\128\ See Notice, 89 FR at 53138.
\129\ See Notice, 89 FR at 53138.
\130\ See Notice, 89 FR at 53138.
\131\ See Notice, 89 FR at 53138.
\132\ See Notice, 89 FR at 53138.
---------------------------------------------------------------------------
The Exchange states that it is not required by the Exchange Act,
nor any other rule or regulation, to undertake a cost-of-service or
rate-making approach with respect to fee proposals.\133\ The Exchange
states that, moreover, Congress's intent in enacting the 1975
Amendments to the Act was to enable competition--rather than government
order--to determine prices.\134\ The Exchange explains that the
principal purpose of the amendments was to facilitate the creation of a
national market system for the trading of securities.\135\ The Exchange
states that Congress intended that this ``national market system evolve
through the interplay of competitive forces as unnecessary regulatory
restrictions are removed,'' and that other provisions of the Act
confirm that intent.\136\ The Exchange states that, for example, the
Act provides that an exchange must design its rules ``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.'' \137\ The Exchange further states that, likewise,
the Act grants the Commission authority to amend or repeal ``[t]he
rules of [an] exchange [that] impose any burden on competition not
necessary or appropriate in furtherance of the purposes of this
chapter.'' \138\ The Exchange explains that, in short, the promotion of
free and open competition was a core congressional objective in
creating the national market system.\139\ The Exchange states that,
indeed, the Commission has historically interpreted that mandate to
promote competitive forces to determine prices whenever compatible with
a national market system.\140\ Accordingly, the Exchange believes it
has met its burden to demonstrate that its proposed fee change is
reasonable and consistent with the immediate filing process chosen by
Congress, which created a system whereby market forces determine access
fees in the vast majority of cases, subject to oversight only in
particular cases of abuse or market failure.\141\ The Exchange believes
that, finally, and importantly, that, even if it were possible as a
matter of economic theory, cost-based pricing for the proposed fee
would be so complicated that it could not be done practically.\142\
Indeed, the Exchange believes that classification of costs could likely
not be done without on-going debate over formulas for allocation,\143\
continual auditing, and considerable expense.\144\ The Exchange also
believes cost-based analysis could create disincentives to reduce costs
through efficient operation or innovation.\145\ Moreover, the Exchange
believes that the industry could experience frequent rate increases
based on escalating expense levels.\146\ The Exchange lastly cautions
that as disputes arise regarding the appropriate measure and
calculation of relevant costs and allocation of common costs, the
Commission could find itself engaging in the kind of rigid ratemaking
not contemplated by Section 11A of the Exchange Act and which,
according to the Exchange, the Commission has historically sought to
avoid.\147\
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\133\ See Notice, 89 FR at 53138.
\134\ See Notice, 89 FR at 53138.
\135\ See Notice, 89 FR at 53138.
\136\ See Notice, 89 FR at 53138 (citing H.R. Rep. No. 94-229,
at 92 (1975) (Conf. Rep.) (emphasis added)).
\137\ See Notice, 89 FR at 53138 (citing 15 U.S.C. 78f(b)(5)).
\138\ See Notice, 89 FR at 53138 (citing 15 U.S.C. 78f(8)).
\139\ See Notice, 89 FR at 53138 (citing 15 U.S.C. 78k-
l(a)(1)(C)(ii) (purposes of Exchange Act include to promote ``fair
competition among brokers and dealers, among exchange markets, and
between exchange markets and markets other than exchange markets'');
Order, 73 FR at 74781 (``The Exchange Act and its legislative
history strongly support the Commission's reliance on competition,
whenever possible, in meeting its regulatory responsibilities for
overseeing the SROs and the national market system.'')).
\140\ See Notice, 89 FR at 53138.
\141\ See Notice, 89 FR at 53138.
\142\ See Notice, 89 FR at 53138.
\143\ See Notice, 89 FR at 53138-39, n.41 (citing letter from
Brian Sopinsky, General Counsel, Susquehanna International Group,
LLP (``SIG''), to Vanessa Countryman, Secretary, Commission, dated
February 7, 2023, letters from Gerald D. O'Connell, SIG, to Vanessa
Countryman, Secretary, Commission, dated March 21, 2023, May 24,
2023, July 24, 2023 and September 18, 2023, and letters from John C.
Pickford, SIG, to Vanessa Countryman, Secretary, Commission, dated
January 4, 2024, and March 1, 2024 and letters from Thomas M.
Merritt, Deputy General Counsel, Virtu Financial, Inc., to Vanessa
Countryman, Secretary, Commission, dated November 8, 2023 and
January 2, 2024. See also Securities Exchange Act Release No. 93883
(December 30, 2021), 87 FR 523 (January 5, 2022) (SR-IEX-2021-14)
(Suspension of and Order Instituting Proceedings To Determine
Whether To Approve or Disapprove a Proposed Rule Change To Amend Its
Fee Schedule for Market Data Fees) and Securities Exchange Act
Release No. 94888 (May 11, 2022), 87 FR 29892 (May 17, 2022) (SR-
PEARL-2022-18) (Notice of Filing of a Proposed Rule Change To Amend
the MIAX PEARL Options Fee Schedule To Increase Certain Connectivity
Fees and To Increase the Monthly Fees for MIAX Express Network Full
Service Port; Suspension of and Order Instituting Proceedings To
Determine Whether To Approve or Disapprove the Proposed Rule
Change)).
\144\ See Notice, 89 FR at 53138-39.
\145\ See Notice, 89 FR at 53139.
\146\ See Notice, 89 FR at 53139.
\147\ See Notice, 89 FR at 53139.
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The Exchange also 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.\148\ The
Exchange states that the proposed fee change will not impact
intramarket competition because it will apply to all similarly situated
TPHs equally (i.e., all market participants that choose to purchase the
10 Gb physical port).\149\ Additionally, the Exchange does not believe
its proposed pricing will impose a barrier to entry to smaller
participants and notes that its proposed connectivity pricing is
associated with relative usage of the various market participants.\150\
For example, the Exchange states that market participants with modest
capacity needs can continue to buy the less expensive 1 Gb physical
port (which cost is not changing) or may choose to obtain access via a
third-party re-seller.\151\ The Exchange states that while pricing may
be increased for the larger capacity physical ports, such options
provide far more capacity and are purchased by those that consume more
resources from the network.\152\ Accordingly, the Exchange states that
the proposed connectivity fees do not favor certain categories of
market participants in a manner that would impose a burden on
competition; rather, the allocation reflects the network resources
consumed by the various size of market participants--lowest bandwidth
consuming members pay the least, and highest bandwidth consuming
members pays the most.\153\
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\148\ See Notice, 89 FR at 53139.
\149\ See Notice, 89 FR at 53139.
\150\ See Notice, 89 FR at 53139.
\151\ See Notice, 89 FR at 53139.
\152\ See Notice, 89 FR at 53139.
\153\ See Notice, 89 FR at 53139.
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The Exchange states that the proposed fee is also still lower than
some fees for similar connectivity on other exchanges and therefore may
stimulate intermarket competition by attracting additional firms to
connect to the Exchange or at least should not deter interested
participants from connecting directly to the Exchange.\154\ Further, if
the changes proposed herein are unattractive to market participants,
the Exchange states
[[Page 65439]]
that it can, and likely will, see a decline in connectivity via 10 Gb
physical ports as a result.\155\ The Exchange states that it operates
in a highly competitive market in which market participants can
determine whether or not to connect directly to the Exchange based on
the value received compared to the cost of doing so.\156\ The Exchange
states that market participants have numerous alternative venues that
they may participate on and direct their order flow, including 13 non-
Cboe affiliated options markets, as well as off-exchange venues, where
competitive products are available for trading.\157\ Moreover, the
Exchange states that the Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets.\158\
Specifically, the Exchange states that 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.'' \159\ The Exchange states that the
fact that this market is competitive has also long been recognized by
the courts.\160\ Accordingly, the Exchange does not believe its
proposed change imposes any burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Act.\161\
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\154\ See Notice, 89 FR at 53139.
\155\ See Notice, 89 FR at 53139.
\156\ See Notice, 89 FR at 53139.
\157\ See Notice, 89 FR at 53139.
\158\ See Notice, 89 FR at 53139.
\159\ See Notice, 89 FR at 53139 (citing Securities Exchange Act
Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29,
2005)).
\160\ See Notice, 89 FR at 53139. The Exchange states that 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'. . .
.'' (citing 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))).
\161\ See Notice, 89 FR at 53139.
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B. Suspension
When exchanges file their proposed rule changes with the
Commission, including fee filings like the Exchange's present proposal,
they are required to provide a statement supporting the proposal's
basis under the Act and the rules and regulations thereunder applicable
to the exchange.\162\ The instructions to Form 19b-4, on which
exchanges file their proposed rule changes, specify that such statement
``should be sufficiently detailed and specific to support a finding
that the proposed rule change is consistent with [those]
requirements.'' \163\
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\162\ See 17 CFR 240.19b-4 (Item 3 entitled ``Self-Regulatory
Organization's Statement of the Purpose of, and Statutory Basis for,
the Proposed Rule Change''). To date, the Commission has received
one comment letter on proposed rule change, which does not appear to
be relevant to the instant filing. See Ross Letter.
\163\ See id.
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Section 6 of the Act, including Sections 6(b)(4), (5), and (8),
requires the rules of an exchange to: (1) provide for the equitable
allocation of reasonable fees among members, issuers, and other persons
using the exchange's facilities; \164\ (2) perfect the mechanism of a
free and open market and a national market system, protect investors
and the public interest, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers; \165\
and (3) not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.\166\
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\164\ 15 U.S.C. 78f(b)(4).
\165\ 15 U.S.C. 78f(b)(5).
\166\ 15 U.S.C. 78f(b)(8).
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In temporarily suspending the Exchange's proposed rule change, the
Commission intends to further consider whether the Proposal to increase
its 10 Gb physical port connectivity fee is consistent with the
statutory requirements applicable to a national securities exchange
under the Act. The Commission will consider, among other things,
whether the Exchange has provided sufficient information to demonstrate
that the Exchange is subject to significant competitive forces when
setting the proposed port connectivity fees. In particular, the
Commission will consider whether the proposed rule change satisfies the
standards under the Act and the rules thereunder requiring, among other
things, that an exchange's rules provide for the equitable allocation
of reasonable fees among members, issuers, and other persons using its
facilities; not permit unfair discrimination between customers,
issuers, brokers or dealers; and do not impose any burden on
competition not necessary or appropriate in furtherance of the purposes
of the Act.\167\
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\167\ See 15 U.S.C. 78f(b)(4), (5), and (8), respectively.
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Therefore, the Commission finds that it is appropriate in the
public interest, for the protection of investors, and otherwise in
furtherance of the purposes of the Act, to temporarily suspend the
proposed rule change.\168\
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\168\ For purposes of temporarily suspending the 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).
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IV. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Changes
In addition to temporarily suspending the Proposal, the Commission
also hereby institutes proceedings pursuant to Sections 19(b)(3)(C)
\169\ and 19(b)(2)(B) of the Act \170\ to determine whether the
Exchange's proposed rule change should be approved or disapproved.
Institution of proceedings does not indicate that the Commission has
reached any conclusions with respect to any of the issues involved.
Rather, the Commission seeks and encourages interested persons to
provide additional comment on the proposed rule change to inform the
Commission's analysis of whether to approve or disapprove the proposed
rule change.
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\169\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily
suspends a proposed rule change, Section 19(b)(3)(C) of the Act
requires that the Commission institute proceedings under Section
19(b)(2)(B) to determine whether a proposed rule change should be
approved or disapproved.
\170\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\171\ the Commission is
providing notice of the grounds for possible disapproval under
consideration:
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\171\ Id. Section 19(b)(2)(B) of the Act also provides that
proceedings to determine whether to disapprove a proposed rule
change must be concluded within 180 days of the date of publication
of notice of the filing of the proposed rule change. See id. The
time for conclusion of the proceedings may be extended for up to 60
days if the Commission finds good cause for such extension and
publishes its reasons for so finding, or if the exchange consents to
the longer period. See id.
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Whether the Exchange has demonstrated how the proposed fee
is consistent with Section 6(b)(4) of the Act, which requires that the
rules of a national securities exchange ``provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and issuers and other persons using its facilities''; \172\
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\172\ 15 U.S.C. 78f(b)(4).
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Whether the Exchange has demonstrated how the proposed fee
is consistent with Section 6(b)(5) of the Act, which requires, among
other things, that the rules of a national securities exchange not be
``designed to permit unfair discrimination between customers, issuers,
brokers, or dealers''; \173\ and
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\173\ 15 U.S.C. 78f(b)(5).
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[[Page 65440]]
Whether the Exchange has demonstrated how the proposed fee
is consistent with Section 6(b)(8) of the Act, which requires that the
rules of a national securities exchange ``not impose any burden on
competition not necessary or appropriate in furtherance of the purposes
of [the Act].'' \174\
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\174\ 15 U.S.C. 78f(b)(8).
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As discussed in Section III above, the Exchange made various
arguments in support of the Proposal. There are questions as to whether
the Exchange has provided sufficient information to demonstrate that
the proposed fee is consistent with the Act and the rules thereunder.
The Commission will specifically consider, among other things, whether
the Exchange has provided sufficient evidence to demonstrate that the
proposed fee is reasonable and equitably allocated, is not unfairly
discriminatory, and does not impose any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the Act.
Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the [Act]
and the rules and regulations issued thereunder . . . is on the [SRO]
that proposed the rule change.'' \175\ The description of a proposed
rule change, its purpose and operation, its effect, and a legal
analysis of its consistency with applicable requirements must all be
sufficiently detailed and specific to support an affirmative Commission
finding,\176\ and any failure of an SRO to provide this information may
result in the Commission not having a sufficient basis to make an
affirmative finding that a proposed rule change is consistent with the
Act and the applicable rules and regulations.\177\
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\175\ 17 CFR 201.700(b)(3).
\176\ See id.
\177\ See id.
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The Commission is instituting proceedings to allow for additional
consideration and comment on the issues raised herein, including as to
whether the proposed fee is consistent with the Act, and specifically,
with its requirements that exchange fees be reasonable and equitably
allocated, not be unfairly discriminatory, and not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.\178\
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\178\ See 15 U.S.C. 78f(b)(4), (5), and (8).
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V. Commission's Solicitation of Comments
The Commission requests written views, data, and arguments with
respect to the concerns identified above as well as any other relevant
concerns. Such comments should be submitted by August 30, 2024.
Rebuttal comments should be submitted by September 13, 2024. Although
there do not appear to be any issues relevant to approval or
disapproval that would be facilitated by an oral presentation of views,
data, and arguments, the Commission will consider, pursuant to Rule
19b-4, any request for an opportunity to make an oral
presentation.\179\
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\179\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants
the Commission flexibility to determine what type of proceeding--
either oral or notice and opportunity for written comments--is
appropriate for consideration of a particular proposal by an SRO.
See Securities Acts Amendments of 1975, Report of the Senate
Committee on Banking, Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
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The Commission asks that commenters address the sufficiency and
merit of the Exchange's statements in support of the Proposal, in
addition to any other comments they may wish to submit about the
proposed rule changes.
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-C2-2024-010 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-C2-2024-010. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-C2-2024-010 and should be
submitted on or before August 30, 2024. Rebuttal comments should be
submitted by September 13, 2024.
VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(3)(C) of the
Act,\180\ that File No. SR-C2-2024-010, be and hereby is, temporarily
suspended. In addition, the Commission is instituting proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\180\ 15 U.S.C. 78s(b)(3)(C).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\181\
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\181\ 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-17699 Filed 8-8-24; 8:45 am]
BILLING CODE 8011-01-P
