Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fees Schedule, 66159-66161 [2024-18071]
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Federal Register / Vol. 89, No. 157 / Wednesday, August 14, 2024 / Notices
100 F Street NE, Washington, DC
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Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
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Management and Budget for extension
and approval.
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send an email to: PRA_Mailbox@
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Dated: August 9, 2024.
Vanessa A. Countryman,
Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100673; File No. SRCboeEDGX–2024–050]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend its
Fees Schedule
August 8, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on August 1,
2024, Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) proposes to
amend its Fees Schedule. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
options/regulation/rule_filings/edgx/) at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
[FR Doc. 2024–18166 Filed 8–13–24; 8:45 am]
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fees Schedule, effective August 1, 2024.
The Exchange first notes that it
operates in a highly competitive market
in which market participants can
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. More
specifically, the Exchange is only one of
17 options venues to which market
participants may direct their order flow.
Based on publicly available information,
no single options exchange has more
than 12% of the market share.3 Thus, in
such a low-concentrated and highly
competitive market, no single options
exchange possesses significant pricing
power in the execution of option order
flow. The Exchange believes that the
ever-shifting market share among the
exchanges from month to month
demonstrates that market participants
can shift order flow or discontinue to
reduce use of certain categories of
products in response to fee changes.
Accordingly, competitive forces
constrain the Exchange’s transaction
fees, and market participants can readily
trade on competing venues if they deem
pricing levels at those other venues to
be more favorable.
The Exchange assesses fees in
connection with orders routed away to
various exchanges. The Exchange notes
that its current approach to routing fees
is to set forth in a simple manner certain
sub-categories of fees that approximate
the cost of routing to other options
exchanges based on the cost of
transaction fees assessed by each venue
as well as a flat $0.15 assessment that
covers costs to the Exchange for routing
(i.e., clearing fees, connectivity and
other infrastructure costs, membership
fees, etc.) (collectively, ‘‘Routing
Costs’’). The Exchange then monitors
the fees charged as compared to the
costs of its routing services and adjusts
its routing fees and/or sub-categories to
ensure that the Exchange’s fees do
indeed result in a rough approximation
of overall Routing Costs, and are not
significantly higher or lower in any area.
The Exchange notes that another
options exchange currently assesses
routing fees in a similar manner as the
3 See Cboe Global Markets U.S. Options Monthly
Market Volume Summary (July 30, 2024), available
at https://markets.cboe.com/us/options/market_
statistics/.
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 89, No. 157 / Wednesday, August 14, 2024 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
Exchange’s current approach to
assessing approximate routing fees.
Currently, under the Fee Codes and
Associated Fees section of the Fees
Schedule, fee code RP is appended to
routed Customer orders to NYSE
American (‘‘AMEX’’), BOX Options
Exchange (‘‘BOX’’), Cboe Exchange, Inc.
(‘‘Cboe’’), MIAX Options Exchange
(‘‘MIAX’’) or Nasdaq PHLX LLC
(‘‘PHLX’’) (excluding orders in SPY
options to PHLX) and assesses a charge
of $0.25 per contract. The Exchange
proposes to amend fee code RP to add
applicable Customer orders routed to
MIAX Sapphire, LLC (‘‘SPHR’’), in
anticipation of the launch of the new
options exchange. The charge assessed
per contract for fee code RP remains the
same under the proposed rule change.
The proposed changes result in an
assessment of fees that, in anticipation
of the launch of another options
exchange, is in line with the Exchange’s
current approach to routing fees, that is,
in a manner that approximates the cost
of routing Customer orders to other
away options exchanges, based on the
general cost of transaction fees assessed
by the sub-category of away options
exchanges for such orders (as well as the
Exchange’s Routing Costs). The
Exchange notes that routing through the
Exchange is optional and that Members
will continue to be able to choose where
to route applicable Customer orders.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.4 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 5 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 6 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange also believes the
proposed rule change is consistent with
Section 6(b)(4) of the Act,7 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Members and other persons using its
facilities.
The Exchange believes the proposed
rule change to amend fee code RP to
account for SPHR’s expected assessment
of fees for Customer orders is reasonable
because it is reasonably designed to
assess routing fees in line with the
Exchange’s current approach to routing
fees. That is, the proposed rule change
is intended to include Customer orders
routed to SPHR in the most appropriate
sub-category of fees that approximates
the cost of routing to a group of away
options exchanges based on the cost of
transaction fees assessed by each venue
as well as Routing Costs to the
Exchange. As noted above, the Exchange
operates in a highly competitive market
in which market participants can
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. The
Exchange notes that routing through the
Exchange is optional and that Members
will continue to be able to choose where
to route their Customer orders in the
same sub-category group of away
exchanges as they currently may choose
to route. The proposed rule change
reflects a competitive pricing structure
designed to incentivize market
participants to direct their order flow to
the Exchange, which the Exchange
believes would enhance market quality
to the benefit of all Members. The
Exchange further notes that another
options exchange currently
approximates routing fees in a similar
manner as the Exchange’s current
approach.8 The Exchange believes that
the proposed rule change is equitable
and not unfairly discriminatory because
all Members’ applicable Customer
orders routed to SPHR will be
automatically and uniformly assessed
the applicable routing charge.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Particularly,
7 15
U.S.C. 78f(b)(4).
e.g., MIAX Options Exchange Fee Schedule,
Section 1(c), ‘‘Fees for Customer Orders Routed to
Another Options Exchange.’’
4 15
U.S.C. 78f(b).
5 15 U.S.C. 78f(b)(5).
6 Id.
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the Exchange does not believe the
proposed rule change to amend fee code
RP will impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. All Members’
applicable Customer orders routed to
SPHR will automatically yield fee code
RP and uniformly be assessed the
corresponding fee. The Exchange notes
that another options exchange
approximates routing costs in a similar
manner as the Exchange’s current
approach.9
The Exchange also does not believe
that the proposed rule changes will
impose any burden on intermarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. As previously
discussed, the Exchange operates in a
highly competitive market. Members
have numerous alternative venues that
they may participate on and direct their
order flow, including 16 other options
exchanges and off-exchange venues.
Additionally, the Exchange represents a
small percentage of the overall market.
Based on publicly available information,
no single options exchange has more
than 16% of the market share.10
Therefore, no exchange possesses
significant pricing power in the
execution of option order flow. Indeed,
participants can readily choose to send
their orders to other exchange and offexchange venues if they deem fee levels
at those other venues to be more
favorable. Moreover, the Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 11 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the broker9 See e.g., MIAX Options Exchange Fee Schedule,
Section 1(c), ‘‘Fees for Customer Orders Routed to
Another Options Exchange.’’
10 See supra note 3.
11 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
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Federal Register / Vol. 89, No. 157 / Wednesday, August 14, 2024 / Notices
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’. . . .’’.12 Accordingly, the
Exchange does not believe its proposed
fee change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 13 and paragraph (f) of Rule
19b–4 14 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
ddrumheller on DSK120RN23PROD with NOTICES1
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeEDGX–2024–050 on the subject
line.
12 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)).
13 15 U.S.C. 78s(b)(3)(A).
14 17 CFR 240.19b–4(f).
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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–CboeEDGX–2024–050. 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–CboeEDGX–2024–050, and should
be submitted on or before September 4,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–18071 Filed 8–13–24; 8:45 am]
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66161
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100678; File No. SR–
CBOE–2024–005]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Withdrawal
of Proposed Rule Change To Permit
Cboe To List and Trade Options on
ETPs That Hold Bitcoin
August 8, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
Cboe Exchange, Inc. (‘‘Cboe’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change to permit Cboe to
list and trade options on exchangetraded product shares that hold bitcoin
(‘‘Proposal’’).
On January 25, 2024, the Proposal was
published for comment in the Federal
Register.3 On March 6, 2024, pursuant
to Section 19(b)(2) of the Act,4 the
Commission designated a longer period
within which to approve the Proposal,
disapprove the Proposal, or institute
proceedings to determine whether to
disapprove the Proposal.5 On April 24,
2024, the Commission instituted
proceedings under Section 19(b)(2)(B) of
the Act 6 to determine whether to
approve or disapprove the Proposal.7
The Commission received comments
addressing the Proposal.8 On July 19,
2024, the Commission designated a
longer time for Commission action on
the Proposal.9 On August 2, 2024, Cboe
withdrew the Proposal (SR–CBOE–
2024–005).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–18076 Filed 8–13–24; 8:45 am]
BILLING CODE 8011–01–P
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 99395
(Jan. 19, 2024), 89 FR 5075 (SR–CBOE–2024–005).
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 99680
(Mar. 6, 2024), 89 FR 17887 (Mar. 12, 2024).
6 15 U.S.C. 78s(b)(2)(B).
7 See Securities Exchange Act Release No. 100024
(Apr. 24, 2024), 89 FR 34290 (Apr. 30, 2024).
8 Comment letters on the Proposal are available at
https://www.sec.gov/comments/sr-cboe-2024-005/
srcboe2024005.htm.
9 See Securities Exchange Act Release No. 100567
(Jul. 19, 2024), 89 FR 60482 (Jul. 25, 2024).
10 17 CFR 200.30–3(a)(12).
2 17
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]]>Agencies
[Federal Register Volume 89, Number 157 (Wednesday, August 14, 2024)]
[Notices]
[Pages 66159-66161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-18071]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100673; File No. SR-CboeEDGX-2024-050]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend its Fees Schedule
August 8, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 1, 2024, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
amend its Fees Schedule. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/options/regulation/rule_filings/edgx/) at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fees Schedule, effective August
1, 2024.
The Exchange first notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of 17 options venues to which market participants
may direct their order flow. Based on publicly available information,
no single options exchange has more than 12% of the market share.\3\
Thus, in such a low-concentrated and highly competitive market, no
single options exchange possesses significant pricing power in the
execution of option order flow. The Exchange believes that the ever-
shifting market share among the exchanges from month to month
demonstrates that market participants can shift order flow or
discontinue to reduce use of certain categories of products in response
to fee changes. Accordingly, competitive forces constrain the
Exchange's transaction fees, and market participants can readily trade
on competing venues if they deem pricing levels at those other venues
to be more favorable.
---------------------------------------------------------------------------
\3\ See Cboe Global Markets U.S. Options Monthly Market Volume
Summary (July 30, 2024), available at https://markets.cboe.com/us/options/market_statistics/.
---------------------------------------------------------------------------
The Exchange assesses fees in connection with orders routed away to
various exchanges. The Exchange notes that its current approach to
routing fees is to set forth in a simple manner certain sub-categories
of fees that approximate the cost of routing to other options exchanges
based on the cost of transaction fees assessed by each venue as well as
a flat $0.15 assessment that covers costs to the Exchange for routing
(i.e., clearing fees, connectivity and other infrastructure costs,
membership fees, etc.) (collectively, ``Routing Costs''). The Exchange
then monitors the fees charged as compared to the costs of its routing
services and adjusts its routing fees and/or sub-categories to ensure
that the Exchange's fees do indeed result in a rough approximation of
overall Routing Costs, and are not significantly higher or lower in any
area. The Exchange notes that another options exchange currently
assesses routing fees in a similar manner as the
[[Page 66160]]
Exchange's current approach to assessing approximate routing fees.
Currently, under the Fee Codes and Associated Fees section of the
Fees Schedule, fee code RP is appended to routed Customer orders to
NYSE American (``AMEX''), BOX Options Exchange (``BOX''), Cboe
Exchange, Inc. (``Cboe''), MIAX Options Exchange (``MIAX'') or Nasdaq
PHLX LLC (``PHLX'') (excluding orders in SPY options to PHLX) and
assesses a charge of $0.25 per contract. The Exchange proposes to amend
fee code RP to add applicable Customer orders routed to MIAX Sapphire,
LLC (``SPHR''), in anticipation of the launch of the new options
exchange. The charge assessed per contract for fee code RP remains the
same under the proposed rule change.
The proposed changes result in an assessment of fees that, in
anticipation of the launch of another options exchange, is in line with
the Exchange's current approach to routing fees, that is, in a manner
that approximates the cost of routing Customer orders to other away
options exchanges, based on the general cost of transaction fees
assessed by the sub-category of away options exchanges for such orders
(as well as the Exchange's Routing Costs). The Exchange notes that
routing through the Exchange is optional and that Members will continue
to be able to choose where to route applicable Customer orders.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\4\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \5\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \6\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange also believes the proposed rule
change is consistent with Section 6(b)(4) of the Act,\7\ which requires
that Exchange rules provide for the equitable allocation of reasonable
dues, fees, and other charges among its Members and other persons using
its facilities.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
\6\ Id.
\7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes the proposed rule change to amend fee code RP
to account for SPHR's expected assessment of fees for Customer orders
is reasonable because it is reasonably designed to assess routing fees
in line with the Exchange's current approach to routing fees. That is,
the proposed rule change is intended to include Customer orders routed
to SPHR in the most appropriate sub-category of fees that approximates
the cost of routing to a group of away options exchanges based on the
cost of transaction fees assessed by each venue as well as Routing
Costs to the Exchange. As noted above, the Exchange operates in a
highly competitive market in which market participants can readily
direct order flow to competing venues if they deem fee levels at a
particular venue to be excessive or incentives to be insufficient. The
Exchange notes that routing through the Exchange is optional and that
Members will continue to be able to choose where to route their
Customer orders in the same sub-category group of away exchanges as
they currently may choose to route. The proposed rule change reflects a
competitive pricing structure designed to incentivize market
participants to direct their order flow to the Exchange, which the
Exchange believes would enhance market quality to the benefit of all
Members. The Exchange further notes that another options exchange
currently approximates routing fees in a similar manner as the
Exchange's current approach.\8\ The Exchange believes that the proposed
rule change is equitable and not unfairly discriminatory because all
Members' applicable Customer orders routed to SPHR will be
automatically and uniformly assessed the applicable routing charge.
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\8\ See e.g., MIAX Options Exchange Fee Schedule, Section 1(c),
``Fees for Customer Orders Routed to Another Options Exchange.''
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Particularly, the Exchange
does not believe the proposed rule change to amend fee code RP will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. All Members'
applicable Customer orders routed to SPHR will automatically yield fee
code RP and uniformly be assessed the corresponding fee. The Exchange
notes that another options exchange approximates routing costs in a
similar manner as the Exchange's current approach.\9\
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\9\ See e.g., MIAX Options Exchange Fee Schedule, Section 1(c),
``Fees for Customer Orders Routed to Another Options Exchange.''
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The Exchange also does not believe that the proposed rule changes
will impose any burden on intermarket competition that is not necessary
or appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on
and direct their order flow, including 16 other options exchanges and
off-exchange venues. Additionally, the Exchange represents a small
percentage of the overall market. Based on publicly available
information, no single options exchange has more than 16% of the market
share.\10\ Therefore, no exchange possesses significant pricing power
in the execution of option order flow. Indeed, participants can readily
choose to send their orders to other exchange and off-exchange venues
if they deem fee levels at those other venues to be more favorable.
Moreover, the Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. Specifically, in
Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \11\ The fact
that this market is competitive has also long been recognized by the
courts. In NetCoalition v. Securities and Exchange Commission, the D.C.
Circuit stated as follows: ``[n]o one disputes that competition for
order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S.
national market system, buyers and sellers of securities, and the
broker-
[[Page 66161]]
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'. . . .''.\12\ Accordingly,
the Exchange does not believe its proposed fee change imposes any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
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\10\ See supra note 3.
\11\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\12\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \13\ and paragraph (f) of Rule 19b-4 \14\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-CboeEDGX-2024-050 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-CboeEDGX-2024-050. 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-CboeEDGX-2024-050, and
should be submitted on or before September 4, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-18071 Filed 8-13-24; 8:45 am]
BILLING CODE 8011-01-P
