Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule Related to the Standard Rebate and Volume Tiers, 66473-66477 [2024-18200]

Download as PDF Federal Register / Vol. 89, No. 158 / Thursday, August 15, 2024 / Notices Electronic Comments additional, non-material amount) to execute the corresponding contract at the corresponding exchange. The Exchange believes that the proposed rule change is equitable and not unfairly discriminatory because all Members’ orders in Penny classes and Non-Penny classes routed to MIAX Sapphire will be uniformly assessed the corresponding fee. 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 not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe the proposed rule change to add MIAX Sapphire to the routing fee table will impose any burden on intramarket competition. Rather, the Exchange believes that the proposal will promote competition by increasing the available away markets to which Members can route orders to. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,12 and Rule 19b–4(f)(2) 13 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 shall institute proceedings to determine whether the proposed rule should be approved or disapproved. khammond on DSKJM1Z7X2PROD with NOTICES 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: • 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– MIAX–2024–31 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–MIAX–2024–31. 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–MIAX–2024–31 and should be submitted on or before September 5, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Vanessa A. Countryman, Secretary. [FR Doc. 2024–18202 Filed 8–14–24; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–100682; File No. SRCboeEDGA–2024–031] Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule Related to the Standard Rebate and Volume Tiers August 9, 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 EDGA Exchange, Inc. (‘‘Exchange’’ or ‘‘EDGA’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGA Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) proposes to amend its Fee Schedule. The text of the proposed rule change is provided in Exhibit 5. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ equities/regulation/rule_filings/edga/), 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. BILLING CODE 8011–01–P 12 15 U.S.C. 78s(b)(3)(A)(ii). 13 17 CFR 240.19b–4(f)(2). VerDate Sep<11>2014 17:25 Aug 14, 2024 1 15 14 17 Jkt 262001 PO 00000 CFR 200.30–3(a)(12). Frm 00132 Fmt 4703 Sfmt 4703 66473 2 17 E:\FR\FM\15AUN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 15AUN1 66474 Federal Register / Vol. 89, No. 158 / Thursday, August 15, 2024 / Notices khammond on DSKJM1Z7X2PROD with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Fee Schedule applicable to its equities trading platform (‘‘EDGA Equities’’) by: (1) modifying the standard rebate for orders that remove liquidity in securities priced at or above $1.00; (2) modifying certain Add/Remove Volume Tiers; and (3) discontinuing certain Add/Remove Volume Tiers. The Exchange proposes to implement these changes 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 16 registered equities exchanges, as well as a number of alternative trading systems and other off-exchange venues that do not have similar self-regulatory responsibilities under the Securities Exchange Act of 1934 (the ‘‘Act’’), to which market participants may direct their order flow. Based on publicly available information,3 no single registered equities exchange has more than 16% of the market share. Thus, in such a low-concentrated and highly competitive market, no single equities exchange possesses significant pricing power in the execution of order flow. The Exchange in particular operates a ‘‘Taker-Maker’’ model whereby it pays credits to members that remove liquidity and assesses fees to those that add liquidity. The Exchange’s Fee Schedule sets forth the standard rebates and rates applied per share for orders that remove and provide liquidity, respectively. Currently, for orders in securities priced at or above $1.00, the Exchange provides a standard rebate of $0.0014 per share for orders that remove liquidity and assesses a fee of $0.0030 per share for orders that add liquidity.4 For orders in securities priced below $1.00, the Exchange does not assess any fees or provide any rebates for orders that add or remove liquidity.5 Additionally, in response to the competitive environment, the Exchange also offers tiered pricing which provides Members opportunities to qualify for 3 See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date (July 29, 2024), available at https://www.cboe.com/us/equities/ market_statistics/. 4 See EDGA Equities Fee Schedule, Standard Rates. 5 Id. VerDate Sep<11>2014 17:25 Aug 14, 2024 Jkt 262001 higher rebates or reduced fees where certain volume criteria and thresholds are met. Tiered pricing provides an incremental incentive for Members to strive for higher tier levels, which provides increasingly higher benefits or discounts for satisfying increasingly more stringent criteria. Standard Rates Currently, the Exchange offers standard rebates to remove liquidity for orders appended with fee codes 6,6 BB,7 N,8 and W.9 The Exchange now proposes to revise the standard rebate associated with securities priced at or above $1.00 from $0.00140 per share to $0.00160 per share for orders appended with fee codes 6, BB, N, or W. There is no proposed change in the rebate amount provided for securities priced below $1.00. The purpose of increasing the standard rebate associated with fee codes 6, BB, N, and W in securities priced at or above $1.00 is for business and competitive reasons, as the Exchange believes that increasing such rebate as proposed has the potential to make the Exchange more competitive in attracting orders designed to remove volume. The Exchange notes that the standard rebate remains competitive and continues to be more favorable for Members than the standard rebate provided by competing exchanges.10 Add/Remove Volume Tiers Under footnote 7 of the Fee Schedule, the Exchange currently offers various Add/Remove Volume Tiers. In particular, the Exchange offers four Add/Remove Volume Tiers that each provide a reduced fee for Members’ qualifying orders yielding fee codes 3,11 4,12 B,13 V,14 and Y 15 where a Member 6 Fee code 6 is appended to orders that remove liquidity from EDGA during the pre and post market in securities listed on all tapes. 7 Fee code BB is appended to orders that remove liquidity from EDGA in Tape B securities. 8 Fee code N is appended to orders that remove liquidity from EDGA in Tape C securities. 9 Fee code W is appended to orders that remove liquidity from EDGA in Tape A securities. 10 See e.g., BYX Equity Fee Schedule, Standard Rates (the standard rebate provided to orders that remove liquidity is $0.00020); Nasdaq BX Fee Schedule (orders that remove liquidity are assessed a fee of $0.0007 unless certain volume thresholds are met). 11 Fee code 3 is appended to orders that add liquidity to EDGA in the pre and post market in Tape A or Tape C securities. 12 Fee code 4 is appended to orders that add liquidity to EDGA in the pre and post market in Tape B securities. 13 Fee code B is appended to orders that add liquidity to EDGA in Tape B securities. 14 Fee code V is appended to orders that add liquidity to EDGA in Tape A securities. 15 Fee code Y is appended to orders that add liquidity to EDGA in Tape C securities. PO 00000 Frm 00133 Fmt 4703 Sfmt 4703 reaches certain add or remove volumebased criteria.16 The Exchange now proposes to modify the criteria associated with Add Volume Tier 2. The current criteria for Add Volume Tier 2 is as follows: • Add Volume Tier 2 provides a reduced fee of $0.0016 per share for securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee codes 3, 4, B, V, or Y) where a Member adds or removes an ADV 17 ≥0.50% of the TCV 18 or Members adds or removes an ADV ≥52,000,000. The proposed criteria for Add Volume Tier 2 is as follows: • Add Volume Tier 2 provides a reduced fee of $0.0016 per share for securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee codes 3, 4, B, V, or Y) where a Member adds or removes an ADV ≥0.35% of the TCV or Member adds or removes an ADV ≥35,000,000. Additionally, under footnote 7, the Exchange offers three Add/Remove Volume Tiers that each provide an enhanced rebate for Members’ qualifying orders yielding fee codes N, W, 6 and BB where a Member reaches certain add or remove volume-based criteria.19 The Exchange now proposes to modify the enhanced rebate associated with Remove Volume Tier 1. Currently, the Exchange provides an enhanced rebate of $0.0018 per share for securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee codes N, W, 6 and BB) that satisfy the criteria of Remove Volume Tier 1. The Exchange proposes to increase the enhanced rebate from $0.0018 to $0.0020 per share for securities priced at or above $1.00 to qualifying orders (i.e., orders yielding fee codes N, W, 6 and BB) that satisfy the criteria of Remove Volume Tier 1. This change is being made for business and competitive reasons, as the Exchange believes that 16 For the sake of clarity with additional proposed changes discussed infra, the Exchange will refer to the Add/Remove Volume Tiers applicable to fee codes 3, 4, B, V, and Y as the ‘‘Add Volume Tiers’’ as Members who satisfy these tiers are assessed a fee to add liquidity to the Exchange. 17 ADV means average daily volume calculated as the number of shares added to, removed from, or routed by, the Exchange, or any combination or subset thereof, per day. ADV is calculated on a monthly basis. 18 TCV means total consolidated volume calculated as the volume reported by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the month for which the fees apply. 19 For the sake of clarity with the proposed changes to the Add Volume Tiers discussed supra, the Exchange will refer to the Add/Remove Volume Tiers applicable to fee codes N, W, 6, and BB as the ‘‘Remove Volume Tiers’’ as Members who satisfy these tiers receive an enhanced rebate for adding liquidity to the Exchange. E:\FR\FM\15AUN1.SGM 15AUN1 Federal Register / Vol. 89, No. 158 / Thursday, August 15, 2024 / Notices khammond on DSKJM1Z7X2PROD with NOTICES increasing the enhanced rebate as proposed could make the Exchange more competitive in attracting orders that remove volume in a manner consistent with the Exchange’s overall pricing philosophy of encouraging added liquidity. The Exchange does not propose to modify the criteria associated with Remove Volume Tier 1. Additionally, the Exchange proposes to discontinue Remove Volume Tiers 2–3 as the Exchange no longer wishes to, nor is required to, maintain such tiers. More specifically, the proposed change removes these tiers as the Exchange would rather redirect future resources and funding into other programs and tiers intended to incentivize increased order flow. The Exchange believes that the proposed modification to Add Volume Tier 2 and the proposed increase to the enhanced rebate associated with Remove Volume Tier 1 will incentivize Members to add volume to and remove volume from the Exchange, thereby contributing to a deeper and more liquid market, which benefits all market participants and provides greater execution opportunities on the Exchange. While the proposed criteria of Add Volume Tier 2 is slightly easier to achieve than the current criteria, the Exchange believes that the criteria continues to be commensurate with the reduced fees offered by the Exchange, is a reflection of current market trends, and will continue to encourage Members to submit order flow to the Exchange. Similarly, the Exchange believes that the proposed increased enhanced rebate remains commensurate with the existing criteria for Remove Volume Tier 1 and will encourage Members to submit liquidity-removing orders to the Exchange. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.20 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 21 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 20 15 21 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate Sep<11>2014 17:25 Aug 14, 2024 Jkt 262001 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) 22 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers as well as Section 6(b)(4) 23 as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its Members and other persons using its facilities. As described above, the Exchange operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. The Exchange believes that its proposal to: (1) modify the standard rebate for orders that remove liquidity in securities priced at or above $1.00 and (2) modify certain Add/Remove Volume tiers reflects a competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange, which the Exchange believes would enhance market quality to the benefit of all Members. Specifically, the Exchange’s proposal to modify Add Volume Tier 2 is not a significant departure from existing criteria, is reasonably correlated to the reduced fees offered by the Exchange and other competing exchanges,24 and will continue to incentivize Members to submit order flow to the Exchange. The criteria proposed by the Exchange is intended to reflect current market trends while continuing to encourage Members to submit order flow to the Exchange. Further, the Exchange’s proposal to modify the enhanced rebate associated with Remove Volume Tier 1 is not a significant departure from existing enhanced rebates, is reasonably correlated to the enhanced rebates offered by the Exchange and other competing exchanges,25 and will continue to incentivize Members to submit order flow to the Exchange. Additionally, the Exchange notes that relative volume-based incentives and discounts have been widely adopted by 22 Id. 23 15 U.S.C. 78f(b)(4). NYSE National, Inc., Schedule of Fees and Rebates, Rates for Adding Liquidity (Per Share), available at https://www.nyse.com/publicdocs/nyse/ regulation/nyse/NYSE_National_Schedule_of_ Fees.pdf. 25 See Nasdaq BX Fee Schedule, Rebate to Remove Liquidity. 24 See PO 00000 Frm 00134 Fmt 4703 Sfmt 4703 66475 exchanges,26 including the Exchange,27 and are reasonable, equitable and nondiscriminatory because they are open to all Members on an equal basis and provide additional benefits or discounts that are reasonably related to (i) the value to an exchange’s market quality and (ii) associated higher levels of market activity, such as higher levels of liquidity provision and/or growth patterns. Competing equity exchanges offer similar tiered pricing structures, including schedules of rebates and fees that apply based upon members achieving certain volume and/or growth thresholds, as well as assess similar fees or rebates for similar types of orders, to that of the Exchange. In particular, the Exchange believes its proposal to modify Add Volume Tier 2 and Remove Volume Tier 1 is reasonable because the tiers will be available to all Members and provide all Members with an opportunity to receive a reduced fee or increased enhanced rebate. The Exchange further believes that modified Add Volume Tier 2 and Remove Volume Tier 1 will provide a reasonable means to encourage adding liquidity to and removing liquidity from the Exchange and to incentivize Members to continue to provide volume to the Exchange by offering them an additional opportunity to receive a reduced fee or increased enhanced rebate on qualifying orders. An overall increase in activity would deepen the Exchange’s liquidity pool, offers additional cost savings, support the quality of price discovery, promote market transparency and improve market quality, for all investors. Further, the Exchange believes that its proposal to modify the standard rebate associated with securities priced at or above $1.00 is reasonable, equitable, and consistent with the Act because such change is designed to make the Exchange more competitive in attracting orders that remove liquidity. The proposed increased standard rebate of $0.00160 per share is reasonable and appropriate because it remains competitive with the standard rebate offered by other exchanges.28 The Exchange further believes that the proposed increase to the standard rebate associated with securities priced at or above $1.00 is not unfairly discriminatory because it applies to all Members equally, in that all Members will receive the higher standard rebate 26 See e.g., BYX Equities Fee Schedule, Footnote 1, Add/Remove Volume Tiers. 27 See e.g., EDGA Equities Fee Schedule, Footnote 7, Add/Remove Volume Tiers. 28 Supra note 10. E:\FR\FM\15AUN1.SGM 15AUN1 66476 Federal Register / Vol. 89, No. 158 / Thursday, August 15, 2024 / Notices khammond on DSKJM1Z7X2PROD with NOTICES upon submitting orders appended with fee codes 6, BB, N, or W. The Exchange believes that its proposal to eliminate current Remove Volume Tiers 2–3 is reasonable because the Exchange is not required to maintain these tiers nor is it required to provide Members an opportunity to receive enhanced rebates. The Exchange believes its proposal to eliminate these tiers is also equitable and not unfairly discriminatory because it applies to all Members (i.e., the tiers will not be available for any Member). The Exchange also notes that the proposed rule change to remove these tiers merely results in Members not receiving an enhanced rebate, which, as noted above, the Exchange is not required to offer or maintain. Furthermore, the proposed rule change to eliminate current Remove Volume Tiers 2–3 enables the Exchange to redirect resources and funding into other programs and tiers intended to incentivize increased order flow. The Exchange believes the proposed modified Add Volume Tier 2 is reasonable as it does not represent a significant departure from the criteria currently offered in the fee schedule. The Exchange also believes that the proposal represents an equitable allocation of fees and rebates and is not unfairly discriminatory because all Members will be eligible for the revised tier and have the opportunity to meet the tier’s criteria and receive the corresponding reduced fee if such criteria are met. Without having a view of activity on other markets and offexchange venues, the Exchange has no way of knowing whether these proposed rule changes would definitely result in any Members qualifying for the new proposed tiers. While the Exchange has no way of predicting with certainty how the proposed changes will impact Member activity, based on the prior month’s volume, the Exchange does not anticipate that at any Member will be able to satisfy proposed Add Volume Tier 2. The Exchange also notes that the proposed changes will not adversely impact any Member’s ability to qualify for reduced fees or enhanced rebates offered under other tiers. Should a Member not meet the proposed new criteria, the Member will merely not receive that corresponding reduced fee. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, as discussed above, the Exchange believes that the proposed changes would VerDate Sep<11>2014 17:25 Aug 14, 2024 Jkt 262001 encourage the submission of additional order flow to a public exchange, thereby promoting market depth, execution incentives and enhanced execution opportunities, as well as price discovery and transparency for all Members. As a result, the Exchange believes that the proposed changes further the Commission’s goal in adopting Regulation NMS of fostering competition among orders, which promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ The Exchange believes the proposed rule changes do not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Particularly, the proposed change to Add Volume Tier 2 and proposed increase to the enhanced rebate of Remove Volume Tier 1 will apply to all Members equally in that all Members are eligible for the tiers, have a reasonable opportunity to meet the tiers’ criteria and will receive the reduced fee or increased enhanced rebate on their qualifying orders if such criteria are met. The Exchange does not believe the proposed change burdens competition, but rather, enhances competition as it is intended to increase the competitiveness of EDGA by amending existing pricing incentives in order to attract order flow and incentivize participants to increase their participation on the Exchange, providing for additional execution opportunities for market participants and improved price transparency. Greater overall order flow, trading opportunities, and pricing transparency benefits all market participants on the Exchange by enhancing market quality and continuing to encourage Members to send orders, thereby contributing towards a robust and well-balanced market ecosystem. The Exchange believes the proposed elimination of Remove Volume Tiers 2– 3 do not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Particularly, the proposed change to eliminate the Remove Volume Tiers 2–3 will not impose any burden on intramarket competition because the changes apply to all Members uniformly, as the tiers will no longer be available to any Member. Further, the Exchange believes the proposed increased standard rebate associated with orders that remove liquidity in securities priced at or above $1.00 does not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The PO 00000 Frm 00135 Fmt 4703 Sfmt 4703 proposed rebate associated with orders that remove liquidity in securities priced at or above $1.00 would apply to all Members equally in that all Members are eligible for the revised standard rebate and all Members would be subject to the same associated rebate for removing liquidity from the Exchange in securities priced at or above $1.00. As a result, any Member can decide to remove liquidity (or not remove liquidity) based on the associated rebate that the Exchange proposes to amend. Additionally, the increased rebate is designed to make the Exchange more competitive by offering an increased rebate to orders that remove liquidity from the Exchange. Next, the Exchange believes the proposed rule changes do not impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. As previously discussed, the Exchange operates in a highly competitive market. Members have numerous alternative venues that they may participate on and direct their order flow, including other equities exchanges, off-exchange venues, and alternative trading systems. Additionally, the Exchange represents a small percentage of the overall market. Based on publicly available information, no single equities exchange has more than 17% of the market share.29 Therefore, no exchange possesses significant pricing power in the execution of order flow. Indeed, participants can readily choose to send their orders to other exchange and 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.’’ 30 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 29 Supra note 3. Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 30 See E:\FR\FM\15AUN1.SGM 15AUN1 Federal Register / Vol. 89, No. 158 / Thursday, August 15, 2024 / Notices and sellers of securities, and the brokerdealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution’; [and] ‘no exchange can afford to take its market share percentages for granted’ because ‘no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers’ . . . .’’.31 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 32 and paragraph (f) of Rule 19b–4 33 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: khammond on DSKJM1Z7X2PROD with NOTICES 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–2024–031 on the subject line. 31 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)). 32 15 U.S.C. 78s(b)(3)(A). 33 17 CFR 240.19b–4(f). VerDate Sep<11>2014 17:25 Aug 14, 2024 Jkt 262001 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–2024–031. 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–CboeEDGA–2024–031 and should be submitted on or before September 5, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.34 Vanessa A. Countryman, Secretary. [FR Doc. 2024–18200 Filed 8–14–24; 8:45 am] BILLING CODE 8011–01–P 34 17 PO 00000 CFR 200.30–3(a)(12). Frm 00136 Fmt 4703 Sfmt 4703 66477 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–100690; File No. SR– CboeBYX–2024–004] Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Withdrawal of a Proposed Rule Change To Amend the Definition of Retail Order, and Codify Interpretations and Policies Regarding Permissible Uses of Algorithms by RMOs August 9, 2024. On January 25, 2024, Cboe BYX Exchange, Inc. (‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 a proposed rule change to amend the definition of Retail Order,3 and codify interpretations and policies regarding permissible uses of algorithms by Retail Member Organizations.4 The proposed rule change was published for comment in the Federal Register on February 13, 2024.5 On March 21, 2024, pursuant to Section 19(b)(2) of the Act,6 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.7 On May 13, 2024, the Commission instituted proceedings under Section 19(b)(2)(B) of the Act 8 to determine whether to approve or disapprove the proposed rule change.9 On July 10, 2024, the Exchange submitted Amendment No. 1 to the proposed rule change, which replaced and superseded the proposed rule change as originally filed. On July 17, 2024, the Exchange withdrew Amendment No. 1. On August 7, 2024, the Exchange withdrew the proposed rule change (SR–CboeBYX–2024–004). 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 The term ‘‘Retail Order’’ is defined in Exchange Rule 11.24(a)(2). 4 The term ‘‘Retail Member Organization’’ (or ‘‘RMO’’) is defined in Exchange Rule 11.24(a)(1) to mean a member of the Exchange (or a division thereof) that has been approved by the Exchange under Exchange Rule 11.24 to submit Retail Orders. 5 See Securities Exchange Act Release No. 99489 (February 7, 2024), 89 FR 10138 (‘‘Notice’’). The Commission has not received any comments on the proposed rule change. 6 15 U.S.C. 78s(b)(2). 7 See Securities Exchange Act Release No. 99819, 89 FR 21294 (March 27, 2024). 8 15 U.S.C. 78s(b)(2)(B). 9 See Securities Exchange Act Release No. 100113 (May 13, 2024), 89 FR 43488 (May 17, 2024). 2 17 E:\FR\FM\15AUN1.SGM 15AUN1

Agencies

[Federal Register Volume 89, Number 158 (Thursday, August 15, 2024)]
[Notices]
[Pages 66473-66477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-18200]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100682; File No. SR-CboeEDGA-2024-031]


Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Its Fee Schedule Related to the Standard Rebate and Volume Tiers

August 9, 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 EDGA Exchange, Inc. (``Exchange'' or ``EDGA'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe EDGA Exchange, Inc. (the ``Exchange'' or ``EDGA'') proposes to 
amend its Fee Schedule. The text of the proposed rule change is 
provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/edga/), 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.

[[Page 66474]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule applicable to its 
equities trading platform (``EDGA Equities'') by: (1) modifying the 
standard rebate for orders that remove liquidity in securities priced 
at or above $1.00; (2) modifying certain Add/Remove Volume Tiers; and 
(3) discontinuing certain Add/Remove Volume Tiers. The Exchange 
proposes to implement these changes 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 16 registered equities exchanges, as well as a 
number of alternative trading systems and other off-exchange venues 
that do not have similar self-regulatory responsibilities under the 
Securities Exchange Act of 1934 (the ``Act''), to which market 
participants may direct their order flow. Based on publicly available 
information,\3\ no single registered equities exchange has more than 
16% of the market share. Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow. The Exchange in 
particular operates a ``Taker-Maker'' model whereby it pays credits to 
members that remove liquidity and assesses fees to those that add 
liquidity. The Exchange's Fee Schedule sets forth the standard rebates 
and rates applied per share for orders that remove and provide 
liquidity, respectively. Currently, for orders in securities priced at 
or above $1.00, the Exchange provides a standard rebate of $0.0014 per 
share for orders that remove liquidity and assesses a fee of $0.0030 
per share for orders that add liquidity.\4\ For orders in securities 
priced below $1.00, the Exchange does not assess any fees or provide 
any rebates for orders that add or remove liquidity.\5\ Additionally, 
in response to the competitive environment, the Exchange also offers 
tiered pricing which provides Members opportunities to qualify for 
higher rebates or reduced fees where certain volume criteria and 
thresholds are met. Tiered pricing provides an incremental incentive 
for Members to strive for higher tier levels, which provides 
increasingly higher benefits or discounts for satisfying increasingly 
more stringent criteria.
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    \3\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (July 29, 2024), available at https://www.cboe.com/us/equities/market_statistics/.
    \4\ See EDGA Equities Fee Schedule, Standard Rates.
    \5\ Id.
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Standard Rates
    Currently, the Exchange offers standard rebates to remove liquidity 
for orders appended with fee codes 6,\6\ BB,\7\ N,\8\ and W.\9\ The 
Exchange now proposes to revise the standard rebate associated with 
securities priced at or above $1.00 from $0.00140 per share to $0.00160 
per share for orders appended with fee codes 6, BB, N, or W. There is 
no proposed change in the rebate amount provided for securities priced 
below $1.00. The purpose of increasing the standard rebate associated 
with fee codes 6, BB, N, and W in securities priced at or above $1.00 
is for business and competitive reasons, as the Exchange believes that 
increasing such rebate as proposed has the potential to make the 
Exchange more competitive in attracting orders designed to remove 
volume. The Exchange notes that the standard rebate remains competitive 
and continues to be more favorable for Members than the standard rebate 
provided by competing exchanges.\10\
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    \6\ Fee code 6 is appended to orders that remove liquidity from 
EDGA during the pre and post market in securities listed on all 
tapes.
    \7\ Fee code BB is appended to orders that remove liquidity from 
EDGA in Tape B securities.
    \8\ Fee code N is appended to orders that remove liquidity from 
EDGA in Tape C securities.
    \9\ Fee code W is appended to orders that remove liquidity from 
EDGA in Tape A securities.
    \10\ See e.g., BYX Equity Fee Schedule, Standard Rates (the 
standard rebate provided to orders that remove liquidity is 
$0.00020); Nasdaq BX Fee Schedule (orders that remove liquidity are 
assessed a fee of $0.0007 unless certain volume thresholds are met).
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Add/Remove Volume Tiers
    Under footnote 7 of the Fee Schedule, the Exchange currently offers 
various Add/Remove Volume Tiers. In particular, the Exchange offers 
four Add/Remove Volume Tiers that each provide a reduced fee for 
Members' qualifying orders yielding fee codes 3,\11\ 4,\12\ B,\13\ 
V,\14\ and Y \15\ where a Member reaches certain add or remove volume-
based criteria.\16\ The Exchange now proposes to modify the criteria 
associated with Add Volume Tier 2. The current criteria for Add Volume 
Tier 2 is as follows:
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    \11\ Fee code 3 is appended to orders that add liquidity to EDGA 
in the pre and post market in Tape A or Tape C securities.
    \12\ Fee code 4 is appended to orders that add liquidity to EDGA 
in the pre and post market in Tape B securities.
    \13\ Fee code B is appended to orders that add liquidity to EDGA 
in Tape B securities.
    \14\ Fee code V is appended to orders that add liquidity to EDGA 
in Tape A securities.
    \15\ Fee code Y is appended to orders that add liquidity to EDGA 
in Tape C securities.
    \16\ For the sake of clarity with additional proposed changes 
discussed infra, the Exchange will refer to the Add/Remove Volume 
Tiers applicable to fee codes 3, 4, B, V, and Y as the ``Add Volume 
Tiers'' as Members who satisfy these tiers are assessed a fee to add 
liquidity to the Exchange.
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     Add Volume Tier 2 provides a reduced fee of $0.0016 per 
share for securities priced at or above $1.00 to qualifying orders 
(i.e., orders yielding fee codes 3, 4, B, V, or Y) where a Member adds 
or removes an ADV \17\ >=0.50% of the TCV \18\ or Members adds or 
removes an ADV >=52,000,000.
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    \17\ ADV means average daily volume calculated as the number of 
shares added to, removed from, or routed by, the Exchange, or any 
combination or subset thereof, per day. ADV is calculated on a 
monthly basis.
    \18\ TCV means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply.
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    The proposed criteria for Add Volume Tier 2 is as follows:
     Add Volume Tier 2 provides a reduced fee of $0.0016 per 
share for securities priced at or above $1.00 to qualifying orders 
(i.e., orders yielding fee codes 3, 4, B, V, or Y) where a Member adds 
or removes an ADV >=0.35% of the TCV or Member adds or removes an ADV 
>=35,000,000.
    Additionally, under footnote 7, the Exchange offers three Add/
Remove Volume Tiers that each provide an enhanced rebate for Members' 
qualifying orders yielding fee codes N, W, 6 and BB where a Member 
reaches certain add or remove volume-based criteria.\19\ The Exchange 
now proposes to modify the enhanced rebate associated with Remove 
Volume Tier 1. Currently, the Exchange provides an enhanced rebate of 
$0.0018 per share for securities priced at or above $1.00 to qualifying 
orders (i.e., orders yielding fee codes N, W, 6 and BB) that satisfy 
the criteria of Remove Volume Tier 1. The Exchange proposes to increase 
the enhanced rebate from $0.0018 to $0.0020 per share for securities 
priced at or above $1.00 to qualifying orders (i.e., orders yielding 
fee codes N, W, 6 and BB) that satisfy the criteria of Remove Volume 
Tier 1. This change is being made for business and competitive reasons, 
as the Exchange believes that

[[Page 66475]]

increasing the enhanced rebate as proposed could make the Exchange more 
competitive in attracting orders that remove volume in a manner 
consistent with the Exchange's overall pricing philosophy of 
encouraging added liquidity. The Exchange does not propose to modify 
the criteria associated with Remove Volume Tier 1. Additionally, the 
Exchange proposes to discontinue Remove Volume Tiers 2-3 as the 
Exchange no longer wishes to, nor is required to, maintain such tiers. 
More specifically, the proposed change removes these tiers as the 
Exchange would rather redirect future resources and funding into other 
programs and tiers intended to incentivize increased order flow.
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    \19\ For the sake of clarity with the proposed changes to the 
Add Volume Tiers discussed supra, the Exchange will refer to the 
Add/Remove Volume Tiers applicable to fee codes N, W, 6, and BB as 
the ``Remove Volume Tiers'' as Members who satisfy these tiers 
receive an enhanced rebate for adding liquidity to the Exchange.
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    The Exchange believes that the proposed modification to Add Volume 
Tier 2 and the proposed increase to the enhanced rebate associated with 
Remove Volume Tier 1 will incentivize Members to add volume to and 
remove volume from the Exchange, thereby contributing to a deeper and 
more liquid market, which benefits all market participants and provides 
greater execution opportunities on the Exchange. While the proposed 
criteria of Add Volume Tier 2 is slightly easier to achieve than the 
current criteria, the Exchange believes that the criteria continues to 
be commensurate with the reduced fees offered by the Exchange, is a 
reflection of current market trends, and will continue to encourage 
Members to submit order flow to the Exchange. Similarly, the Exchange 
believes that the proposed increased enhanced rebate remains 
commensurate with the existing criteria for Remove Volume Tier 1 and 
will encourage Members to submit liquidity-removing orders to the 
Exchange.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\20\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \21\ 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) \22\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \23\ 
as it is designed to provide for the equitable allocation of reasonable 
dues, fees and other charges among its Members and other persons using 
its facilities.
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    \20\ 15 U.S.C. 78f(b).
    \21\ 15 U.S.C. 78f(b)(5).
    \22\ Id.
    \23\ 15 U.S.C. 78f(b)(4).
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    As described above, the Exchange operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. The Exchange believes that 
its proposal to: (1) modify the standard rebate for orders that remove 
liquidity in securities priced at or above $1.00 and (2) modify certain 
Add/Remove Volume tiers reflects a competitive pricing structure 
designed to incentivize market participants to direct their order flow 
to the Exchange, which the Exchange believes would enhance market 
quality to the benefit of all Members.
    Specifically, the Exchange's proposal to modify Add Volume Tier 2 
is not a significant departure from existing criteria, is reasonably 
correlated to the reduced fees offered by the Exchange and other 
competing exchanges,\24\ and will continue to incentivize Members to 
submit order flow to the Exchange. The criteria proposed by the 
Exchange is intended to reflect current market trends while continuing 
to encourage Members to submit order flow to the Exchange. Further, the 
Exchange's proposal to modify the enhanced rebate associated with 
Remove Volume Tier 1 is not a significant departure from existing 
enhanced rebates, is reasonably correlated to the enhanced rebates 
offered by the Exchange and other competing exchanges,\25\ and will 
continue to incentivize Members to submit order flow to the Exchange. 
Additionally, the Exchange notes that relative volume-based incentives 
and discounts have been widely adopted by exchanges,\26\ including the 
Exchange,\27\ and are reasonable, equitable and non-discriminatory 
because they are open to all Members on an equal basis and provide 
additional benefits or discounts that are reasonably related to (i) the 
value to an exchange's market quality and (ii) associated higher levels 
of market activity, such as higher levels of liquidity provision and/or 
growth patterns. Competing equity exchanges offer similar tiered 
pricing structures, including schedules of rebates and fees that apply 
based upon members achieving certain volume and/or growth thresholds, 
as well as assess similar fees or rebates for similar types of orders, 
to that of the Exchange.
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    \24\ See NYSE National, Inc., Schedule of Fees and Rebates, 
Rates for Adding Liquidity (Per Share), available at https://www.nyse.com/publicdocs/nyse/regulation/nyse/NYSE_National_Schedule_of_Fees.pdf.
    \25\ See Nasdaq BX Fee Schedule, Rebate to Remove Liquidity.
    \26\ See e.g., BYX Equities Fee Schedule, Footnote 1, Add/Remove 
Volume Tiers.
    \27\ See e.g., EDGA Equities Fee Schedule, Footnote 7, Add/
Remove Volume Tiers.
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    In particular, the Exchange believes its proposal to modify Add 
Volume Tier 2 and Remove Volume Tier 1 is reasonable because the tiers 
will be available to all Members and provide all Members with an 
opportunity to receive a reduced fee or increased enhanced rebate. The 
Exchange further believes that modified Add Volume Tier 2 and Remove 
Volume Tier 1 will provide a reasonable means to encourage adding 
liquidity to and removing liquidity from the Exchange and to 
incentivize Members to continue to provide volume to the Exchange by 
offering them an additional opportunity to receive a reduced fee or 
increased enhanced rebate on qualifying orders. An overall increase in 
activity would deepen the Exchange's liquidity pool, offers additional 
cost savings, support the quality of price discovery, promote market 
transparency and improve market quality, for all investors.
    Further, the Exchange believes that its proposal to modify the 
standard rebate associated with securities priced at or above $1.00 is 
reasonable, equitable, and consistent with the Act because such change 
is designed to make the Exchange more competitive in attracting orders 
that remove liquidity. The proposed increased standard rebate of 
$0.00160 per share is reasonable and appropriate because it remains 
competitive with the standard rebate offered by other exchanges.\28\ 
The Exchange further believes that the proposed increase to the 
standard rebate associated with securities priced at or above $1.00 is 
not unfairly discriminatory because it applies to all Members equally, 
in that all Members will receive the higher standard rebate

[[Page 66476]]

upon submitting orders appended with fee codes 6, BB, N, or W.
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    \28\ Supra note 10.
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    The Exchange believes that its proposal to eliminate current Remove 
Volume Tiers 2-3 is reasonable because the Exchange is not required to 
maintain these tiers nor is it required to provide Members an 
opportunity to receive enhanced rebates. The Exchange believes its 
proposal to eliminate these tiers is also equitable and not unfairly 
discriminatory because it applies to all Members (i.e., the tiers will 
not be available for any Member). The Exchange also notes that the 
proposed rule change to remove these tiers merely results in Members 
not receiving an enhanced rebate, which, as noted above, the Exchange 
is not required to offer or maintain. Furthermore, the proposed rule 
change to eliminate current Remove Volume Tiers 2-3 enables the 
Exchange to redirect resources and funding into other programs and 
tiers intended to incentivize increased order flow.
    The Exchange believes the proposed modified Add Volume Tier 2 is 
reasonable as it does not represent a significant departure from the 
criteria currently offered in the fee schedule. The Exchange also 
believes that the proposal represents an equitable allocation of fees 
and rebates and is not unfairly discriminatory because all Members will 
be eligible for the revised tier and have the opportunity to meet the 
tier's criteria and receive the corresponding reduced fee if such 
criteria are met. Without having a view of activity on other markets 
and off-exchange venues, the Exchange has no way of knowing whether 
these proposed rule changes would definitely result in any Members 
qualifying for the new proposed tiers. While the Exchange has no way of 
predicting with certainty how the proposed changes will impact Member 
activity, based on the prior month's volume, the Exchange does not 
anticipate that at any Member will be able to satisfy proposed Add 
Volume Tier 2. The Exchange also notes that the proposed changes will 
not adversely impact any Member's ability to qualify for reduced fees 
or enhanced rebates offered under other tiers. Should a Member not meet 
the proposed new criteria, the Member will merely not receive that 
corresponding reduced fee.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Rather, as discussed above, 
the Exchange believes that the proposed changes would encourage the 
submission of additional order flow to a public exchange, thereby 
promoting market depth, execution incentives and enhanced execution 
opportunities, as well as price discovery and transparency for all 
Members. As a result, the Exchange believes that the proposed changes 
further the Commission's goal in adopting Regulation NMS of fostering 
competition among orders, which promotes ``more efficient pricing of 
individual stocks for all types of orders, large and small.''
    The Exchange believes the proposed rule changes do not impose any 
burden on intramarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Particularly, the proposed 
change to Add Volume Tier 2 and proposed increase to the enhanced 
rebate of Remove Volume Tier 1 will apply to all Members equally in 
that all Members are eligible for the tiers, have a reasonable 
opportunity to meet the tiers' criteria and will receive the reduced 
fee or increased enhanced rebate on their qualifying orders if such 
criteria are met. The Exchange does not believe the proposed change 
burdens competition, but rather, enhances competition as it is intended 
to increase the competitiveness of EDGA by amending existing pricing 
incentives in order to attract order flow and incentivize participants 
to increase their participation on the Exchange, providing for 
additional execution opportunities for market participants and improved 
price transparency. Greater overall order flow, trading opportunities, 
and pricing transparency benefits all market participants on the 
Exchange by enhancing market quality and continuing to encourage 
Members to send orders, thereby contributing towards a robust and well-
balanced market ecosystem.
    The Exchange believes the proposed elimination of Remove Volume 
Tiers 2-3 do not impose any burden on intramarket competition that is 
not necessary or appropriate in furtherance of the purposes of the Act. 
Particularly, the proposed change to eliminate the Remove Volume Tiers 
2-3 will not impose any burden on intramarket competition because the 
changes apply to all Members uniformly, as the tiers will no longer be 
available to any Member.
    Further, the Exchange believes the proposed increased standard 
rebate associated with orders that remove liquidity in securities 
priced at or above $1.00 does not impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The proposed rebate associated with orders that 
remove liquidity in securities priced at or above $1.00 would apply to 
all Members equally in that all Members are eligible for the revised 
standard rebate and all Members would be subject to the same associated 
rebate for removing liquidity from the Exchange in securities priced at 
or above $1.00. As a result, any Member can decide to remove liquidity 
(or not remove liquidity) based on the associated rebate that the 
Exchange proposes to amend. Additionally, the increased rebate is 
designed to make the Exchange more competitive by offering an increased 
rebate to orders that remove liquidity from the Exchange.
    Next, the Exchange believes the proposed rule changes do not impose 
any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. As previously 
discussed, the Exchange operates in a highly competitive market. 
Members have numerous alternative venues that they may participate on 
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the 
Exchange represents a small percentage of the overall market. Based on 
publicly available information, no single equities exchange has more 
than 17% of the market share.\29\ Therefore, no exchange possesses 
significant pricing power in the execution of order flow. Indeed, 
participants can readily choose to send their orders to other exchange 
and off-exchange venues if they deem fee levels at those other venues 
to be more favorable. Moreover, the Commission has repeatedly expressed 
its preference for competition over regulatory intervention in 
determining prices, products, and services in the securities markets. 
Specifically, in Regulation NMS, the Commission highlighted the 
importance of market forces in determining prices and SRO revenues and, 
also, recognized that current regulation of the market system ``has 
been remarkably successful in promoting market competition in its 
broader forms that are most important to investors and listed 
companies.'' \30\ 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

[[Page 66477]]

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' . . . .''.\31\ 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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    \29\ Supra note 3.
    \30\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \31\ 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 \32\ and paragraph (f) of Rule 19b-4 \33\ 
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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    \32\ 15 U.S.C. 78s(b)(3)(A).
    \33\ 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-CboeEDGA-2024-031 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-CboeEDGA-2024-031. 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-CboeEDGA-2024-031 and should 
be submitted on or before September 5, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\34\
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    \34\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-18200 Filed 8-14-24; 8:45 am]
BILLING CODE 8011-01-P
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