Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Replace the Regulatory Transaction Fee With a Sales Value Fee, 67127-67130 [2024-18470]
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Federal Register / Vol. 89, No. 160 / Monday, August 19, 2024 / Notices
Exchange believes the proposal would
not burden, but rather promote,
intermarket competition by enabling it
to better compete with other exchanges
that offer similar pricing incentives to
market participants.
Additionally, the Commission has
repeatedly expressed its preference for
competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 14 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. SEC, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’ . . . .’’.15 Accordingly, the
Exchange does not believe its proposed
pricing changes impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
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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)(ii) of the Act 16 and Rule
19b–4(f)(2) 17 thereunder.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
14 Id.
15 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSE–2006–21)).
16 15 U.S.C. 78s(b)(3)(A)(ii).
17 17 CFR 240.19b–4(f)(2).
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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
change should be approved or
disapproved.
67127
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–MEMX–2024–30 and should be
submitted on or before September 9,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Sherry R. Haywood,
Assistant Secretary.
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:
[FR Doc. 2024–18473 Filed 8–16–24; 8:45 am]
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–
MEMX–2024–30 on the subject line.
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Replace the
Regulatory Transaction Fee With a
Sales Value Fee
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–MEMX–2024–30. 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
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 30,
2024, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100716; File No. SR–
CboeBZX–2024–072]
August 13, 2024.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) proposes to
amend its 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/
equities/regulation/rule_filings/BZX/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 89, No. 160 / Monday, August 19, 2024 / Notices
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fees Schedule to add language
concerning the application and
collection of the Sales Value Fee, as
described below.
By way of background, Section 31 of
the Securities Exchange Act of 1934 (the
‘‘Act’’) 3 requires each self-regulatory
organization (‘‘SRO’’) to pay the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) twice
annually a fee based on the aggregate
dollar amount of certain sales of
securities (i.e., ‘‘covered sales’’). A
covered sale is a ‘‘sale of a security,
other than an exempt sale or a sale of
a security future, occurring on a
national securities exchange or by or
through any member of a national
securities association otherwise than on
a national securities exchange.’’ 4
Assessing a sales fee to defray the cost
of these fees is common practice among
the national securities exchanges and
associations, including the Exchange’s
affiliate options exchanges.5 In fact, the
Exchange currently assesses a fee on its
Members 6 for covered sales on the
Exchange to recoup these amounts,
which is described in Exchange Rule
15.1(b) (Regulatory Transaction Fee) but
is not currently described on the
Exchange’s Fee Schedule. The Exchange
now proposes to amend its Fee
Schedule to include information
regarding this fee, including an
explanation and description of the fee
3 17
CFR 240.31.
CFR 240.31(a)(6).
5 See, e.g. Cboe C2 Options Fee Schedule, Sales
Value Fee; NASDAQ Equities Price List, Sales Fees
to Fund Section 31 Obligations; and NYSE Arca
Rule 2.18 (Activity Assessment Fees).
6 See Rule 1.5(n). The term ‘‘Member’’ shall mean
any registered broker or dealer that has been
admitted to membership in the Exchange. A
Member will have the status of a ‘‘member’’ of the
Exchange as that term is defined in Section 3(a)(3)
of the Act. Membership may be granted to a sole
proprietor, partnership, corporation, limited
liability company or other organization which is a
registered broker or dealer pursuant to Section 15
of the Act, and which has been approved by the
Exchange.
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and how it is collected. In conjunction
with the proposed addition to the Fee
Schedule, the exchange also proposes to
delete the applicable rule text found in
Exchange Rule 15.1(b) and proposes to
rename Rule 15.1(b) as ‘‘Reserved.’’
Specifically, the Exchange proposes to
add a section to the Fee Schedule
labeled ‘‘Sales Value Fee’’. The
proposed new section defines the Sales
Value Fee (‘‘Fee’’) as the fee assessed by
the Exchange to each Member for sales
in securities when a sale in an equity
security occurs with respect to which
the Exchange is obligated to pay a fee
to the SEC under Section 31 of the
Exchange Act or when a sell order in an
equity security is routed for execution at
a market other than the Exchange,
resulting in a covered sale on that
market and an obligation of the routing
broker providing routing services for the
Exchange, as described in Exchange
Rules 2.11 and 2.12, to pay the related
sales fee of that market. The proposed
section provides that to the extent the
Exchange may collect more from
Members under the section than is due
from the Exchange to the Commission
under Section 31 of the Act, for example
due to rounding differences, the excess
monies collected may be used by the
Exchange to fund its general operating
expenses. The Exchange may reimburse
its routing broker for all Section 31related fees incurred by the routing
broker in connection with the routing
services it provides.
The proposed section explains that
the transactions to which the Fee
applies are sales of equities. The Fee is
collected indirectly from Members
through their clearing firms by the
Depository Trust & Clearing Corporation
(‘‘DTCC’’) on behalf of the Exchange
with respect to sales in equity
securities.7 For Members who do not
have a DTCC account, the Exchange
invoices these Members directly.
The proposed section also sets forth
the formula for calculating the Fee.
Specifically, the Fee with respect to
sales in equity securities is equal to (i)
the Section 31 fee rate 8 multiplied by
(ii) the Member’s aggregate dollar
amount of covered sales resulting from
equities transactions that have a charge
date in that month.9 The Fee is
calculated and invoiced by the
7 See https://cdn.cboe.com/resources/
membership/Direct_Debit_Opt-In_Form.pdf.
8 The Section 31 fee rate is the fee rate applicable
to covered sales under section 31(b) of the Act. See
15 U.S.C. 78ee(b). The current rate applicable to
equities securities transactions is $27.80 per million
dollars. See also https://cdn.cboe.com/resources/
fee_schedule/2024/Regulatory-Transaction-FeeAdjustment-per-SEC-Section-31-Rate-ChangeEffective-May-22-2024.pdf.
9 17 CFR 240.31(c).
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Exchange on a monthly basis, but is not
paid to the Commission until the end of
the applicable billing period.10 The
billing period for Section 31-related fees
is separated into two periods: (i) January
1 through August 31; and (ii) September
1 through December 31.11 The Exchange
notes that if the SEC’s Section 31 fee
rate changes in the middle of a month,
the Exchange will perform a separate
calculation with respect to covered sales
under the new fee rate for the remaining
portion of the month.
In addition to the Exchange’s proposal
to add the Fee to its Fee Schedule, the
Exchange simultaneously proposes to
delete the rule text found in Exchange
Rule 15.1(b). Exchange Rule 15.1(b)
currently provides a description of the
Fee within the Exchange rulebook,
which would be duplicative as the Fee
will be set forth and more fully
described in the Fee Schedule. The
Exchange notes that the Fee, as
described in Exchange Rule 15.1(b), is
described only at a high-level and does
not contain specific details about how
the Exchange currently calculates and
collects the Fee. Specifically, Exchange
Rule 15.1(b) merely states that the
Exchange assesses a Regulatory
Transaction Fee to its Members in order
to help fund the Exchange’s obligations
to the Commission under Section 31.
While Exchange Rule 15.1(b) does state
how the Fee is calculated (which is
identical to the proposed calculation
described on the Fee Schedule), there is
no description of the types of
transactions that trigger the Fee or how
the fee is collected by the Exchange. The
Exchange proposes to more fully
describe its current practice of
calculating and collecting the Fee by
providing additional details on the Fee
Schedule. In conjunction with removing
the rule text in Exchange Rule 15.1(b),
the Exchange proposes to rename
Exchange Rule 15.1(b) as ‘‘Reserved.’’
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.12 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 13 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
10 17
CFR 240.31(c)(1).
CFR 240.31(a)(2).
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(5).
11 17
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Federal Register / Vol. 89, No. 160 / Monday, August 19, 2024 / Notices
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) 14 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,15 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 that the
proposed rule change is consistent with
these requirements because the
proposed amended Fee Schedule text
provides Members with detail regarding
the circumstances under which the
Exchange assesses a Sales Value Fee,
and the current process by which the
Fee is collected. The Exchange’s current
codification of the Fee in Exchange Rule
15.1(b) does not accurately depict the
Exchange’s current practice of
calculating and collecting the Fee. The
Exchange believes that amending the
description of the Fee and placing this
description on its Fee Schedule rather
than in the Exchange rulebook will
provide additional guidance to its
Members about which transactions are
subject to the Fee, how the Fee is
calculated, and how the Fee is collected.
As such, the proposed changes will
increase transparency, help avoid
Member confusion and foster better
understanding of the application of the
Fee, which the Exchange believes
promotes just and equitable principles
of trade, removes impediments to and
perfects the mechanism of a free and
open market and a national market
system, and protects investors and the
public interest. Further, the Exchange
believes the proposed change is
reasonable as the Exchange is proposing
to assess the same Fee to its Members
that the Exchange must pay to the
Commission twice annually..[sic]
The Exchange believes the proposed
change represents an equitable
allocation of fees and is not unfairly
discriminatory because it applies
uniformly to all Members in that all
14 Id.
15 15
U.S.C. 78f(b)(4).
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Members submitting covered orders to
the Exchange are assessed the Fee,
which is equal to the fee that the
Exchange is required to pay to the
Commission. Furthermore, by moving
the description of the Fee from
Exchange Rule 15.1(b) to the Fee
Schedule, all Members will have
additional information about the types
of orders subject to the Fee and how the
Exchange collects the Fee from its
Members, which do not currently
appear in Exchange Rule 15.1(b). While
Exchange Rule 15.1(b) describes at a
high-level the Exchange’s ability to
assess a fee in order to help fund the
Exchange’s obligations under Section
31, it does not accurately depict the
Exchange’s current practice in regard to
calculating and collecting the Fee from
its Members. The proposed movement
of the description of the Fee from
Exchange Rule 15.1(b) to the Fee
Schedule will not change how the
Exchange calculates or collects the Fee
from its Members, but rather will
provide a more complete and accurate
description of the Fee to all Members.
All Members will be able to access a
detailed description of the Fee on the
Fee Schedule and as such, the
description of the Fee found in
Exchange Rule 15.1(b) that does not
accurately describe the Exchange’s
current practice in calculating or
collecting the Fee is no longer
necessary.
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. The
Exchange does not believe the proposed
changes will impose any burden on
intramarket competition. Particularly,
the proposed change applies uniformly
to all Members, in that the Sales Value
Fee is applied uniformly to all
Members’ applicable covered orders.
Similarly, the proposal to delete Rule
15.1(b) from the Exchange rulebook will
not impose any burden on competition
because the change applies to all
Members uniformly, in that all Members
will instead be able to access the
description of the Sales Value Fee and
how the Fee is calculated on the Fee
Schedule.
The Exchange does not believe that
the proposed rule changes will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
As noted above, assessing a sales fee to
defray the cost of fees assessed under
Section 31 of the Act is common
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67129
practice among the national securities
exchanges and associations.16
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 17 and paragraph (f) of Rule
19b–4 18 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:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeBZX–2024–072 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–CboeBZX–2024–072. 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
16 Supra
note 5.
U.S.C. 78s(b)(3)(A).
18 17 CFR 240.19b–4(f).
17 15
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Federal Register / Vol. 89, No. 160 / Monday, August 19, 2024 / Notices
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–CboeBZX–2024–072 and should be
submitted on or before September 9,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–18470 Filed 8–16–24; 8:45 am]
BILLING CODE 8011–01–P
Market participant
Maker fee
Tier 1
ddrumheller on DSK120RN23PROD with NOTICES1
Penny Symbols:
Market Maker ............
Priority Customer ......
Non-Penny Symbols:
Market Maker ............
Priority Customer ......
Self-Regulatory Organizations; Nasdaq
MRX, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Exchange’s Pricing Schedule at
Options 7, Section 3
August 13, 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 July 31,
2024, Nasdaq MRX, LLC (‘‘MRX’’ or
‘‘Exchange’’) 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
The Exchange proposes to amend the
Exchange’s Pricing Schedule at Options
7, Section 3. While these amendments
are effective upon filing, the Exchange
has designated the proposed
amendments to be operative on August
1, 2024.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
Maker fee
Tier 3
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 purpose of the proposed rule
change is to amend the Exchange’s
Pricing Schedule at Options 7, Section
3.
Maker/Taker Pricing
Today, as set forth in Table 1 of
Options 7, Section 3, the Exchange
assesses Market Makers 3 and Priority
Customers 4 the below tiered maker/
taker fees and rebates in Penny and
Non-Penny Symbols that are based on
increasing volume requirements set
forth in Table 3 of Options 7, Section 3.5
Taker
fee/rebate
Tier 1
Maker fee
Tier 4
Taker
fee/rebate
Tier 2
Taker
fee/rebate
Tier 3
Taker
fee/rebate
Tier 4
$0.50
0.00
$0.50
0.00
$0.50
0.00
$0.50
0.00
$0.35
(0.31)
$0.35
(0.36)
$0.35
(0.41)
$0.35
(0.44)
1.25
0.00
1.25
0.00
1.25
0.00
1.25
0.00
1.10
(0.80)
1.10
(0.90)
1.10
(1.00)
1.10
(1.10)
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 A ‘‘Market Maker’’ is a market maker as defined
in Nasdaq MRX Rule Options 1, Section 1(a)(21).
4 A ‘‘Priority Customer’’ is a person or entity that
is not a broker/dealer in securities, and does not
place more than 390 orders in listed options per day
1 15
18:07 Aug 16, 2024
[Release No. 34–100721; File No. SR–MRX–
2024–30]
Maker fee
Tier 2
Additionally, for SPY, QQQ, and
IWM, the Exchange currently assesses
$0.00 per contract for Market Maker Tier
1 through Tier 4 Maker Fees and
Priority Customer Tier 1 through Tier 4
Taker Fees/Rebates in Penny Symbols.6
In other words, Market Makers can
provide liquidity in these symbols at no
VerDate Sep<11>2014
rulebook/mrx/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
SECURITIES AND EXCHANGE
COMMISSION
Jkt 262001
cost (instead of paying the $0.50 Tiers
1–4 Maker Fee in Penny Symbols), and
Priority Customers can remove liquidity
in these symbols at no cost (instead of
receiving the Tiers 1–4 Taker Rebates in
Penny Symbols ranging from $0.31–
$0.44 per contract).
The Exchange now proposes to amend
the pricing for SPY, QQQ, and IWM as
described above to begin charging $0.02
per contract for Market Maker Tier 1
through Tier 4 Maker Fees in these
symbols. Further, the Exchange
proposes to begin providing $0.02 per
contract for Priority Customer Tier 1
on average during a calendar month for its own
beneficial account(s), as defined in Nasdaq MRX
Options 1, Section 1(a)(36).
5 The tiered volume requirements are based on
Total Customer ADV. Total Customer ADV is
Priority Customer Total Consolidated Volume
divided by Customer Total Consolidated Volume,
including volume executed by Affiliated Members
or Affiliated Entities. Priority Customer Total
Consolidated Volume is a Member’s total Priority
Customer volume executed on MRX in that month,
including volume executed by Affiliated Members
or Affiliated Entities. All eligible volume from
Affiliated Members or an Affiliated Entity will be
aggregated in determining applicable tiers.
6 See note 6, Options 7, Section 3, Table 1.
PO 00000
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]]>Agencies
[Federal Register Volume 89, Number 160 (Monday, August 19, 2024)]
[Notices]
[Pages 67127-67130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-18470]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100716; File No. SR-CboeBZX-2024-072]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Replace
the Regulatory Transaction Fee With a Sales Value Fee
August 13, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 30, 2024, Cboe BZX Exchange, Inc. (the ``Exchange'') filed
with the Securities and Exchange Commission (the ``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') 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/equities/regulation/rule_filings/BZX/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
[[Page 67128]]
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fees Schedule to add language
concerning the application and collection of the Sales Value Fee, as
described below.
By way of background, Section 31 of the Securities Exchange Act of
1934 (the ``Act'') \3\ requires each self-regulatory organization
(``SRO'') to pay the Securities and Exchange Commission (``SEC'' or
``Commission'') twice annually a fee based on the aggregate dollar
amount of certain sales of securities (i.e., ``covered sales''). A
covered sale is a ``sale of a security, other than an exempt sale or a
sale of a security future, occurring on a national securities exchange
or by or through any member of a national securities association
otherwise than on a national securities exchange.'' \4\ Assessing a
sales fee to defray the cost of these fees is common practice among the
national securities exchanges and associations, including the
Exchange's affiliate options exchanges.\5\ In fact, the Exchange
currently assesses a fee on its Members \6\ for covered sales on the
Exchange to recoup these amounts, which is described in Exchange Rule
15.1(b) (Regulatory Transaction Fee) but is not currently described on
the Exchange's Fee Schedule. The Exchange now proposes to amend its Fee
Schedule to include information regarding this fee, including an
explanation and description of the fee and how it is collected. In
conjunction with the proposed addition to the Fee Schedule, the
exchange also proposes to delete the applicable rule text found in
Exchange Rule 15.1(b) and proposes to rename Rule 15.1(b) as
``Reserved.''
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\3\ 17 CFR 240.31.
\4\ 17 CFR 240.31(a)(6).
\5\ See, e.g. Cboe C2 Options Fee Schedule, Sales Value Fee;
NASDAQ Equities Price List, Sales Fees to Fund Section 31
Obligations; and NYSE Arca Rule 2.18 (Activity Assessment Fees).
\6\ See Rule 1.5(n). The term ``Member'' shall mean any
registered broker or dealer that has been admitted to membership in
the Exchange. A Member will have the status of a ``member'' of the
Exchange as that term is defined in Section 3(a)(3) of the Act.
Membership may be granted to a sole proprietor, partnership,
corporation, limited liability company or other organization which
is a registered broker or dealer pursuant to Section 15 of the Act,
and which has been approved by the Exchange.
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Specifically, the Exchange proposes to add a section to the Fee
Schedule labeled ``Sales Value Fee''. The proposed new section defines
the Sales Value Fee (``Fee'') as the fee assessed by the Exchange to
each Member for sales in securities when a sale in an equity security
occurs with respect to which the Exchange is obligated to pay a fee to
the SEC under Section 31 of the Exchange Act or when a sell order in an
equity security is routed for execution at a market other than the
Exchange, resulting in a covered sale on that market and an obligation
of the routing broker providing routing services for the Exchange, as
described in Exchange Rules 2.11 and 2.12, to pay the related sales fee
of that market. The proposed section provides that to the extent the
Exchange may collect more from Members under the section than is due
from the Exchange to the Commission under Section 31 of the Act, for
example due to rounding differences, the excess monies collected may be
used by the Exchange to fund its general operating expenses. The
Exchange may reimburse its routing broker for all Section 31-related
fees incurred by the routing broker in connection with the routing
services it provides.
The proposed section explains that the transactions to which the
Fee applies are sales of equities. The Fee is collected indirectly from
Members through their clearing firms by the Depository Trust & Clearing
Corporation (``DTCC'') on behalf of the Exchange with respect to sales
in equity securities.\7\ For Members who do not have a DTCC account,
the Exchange invoices these Members directly.
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\7\ See https://cdn.cboe.com/resources/membership/Direct_Debit_Opt-In_Form.pdf.
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The proposed section also sets forth the formula for calculating
the Fee. Specifically, the Fee with respect to sales in equity
securities is equal to (i) the Section 31 fee rate \8\ multiplied by
(ii) the Member's aggregate dollar amount of covered sales resulting
from equities transactions that have a charge date in that month.\9\
The Fee is calculated and invoiced by the Exchange on a monthly basis,
but is not paid to the Commission until the end of the applicable
billing period.\10\ The billing period for Section 31-related fees is
separated into two periods: (i) January 1 through August 31; and (ii)
September 1 through December 31.\11\ The Exchange notes that if the
SEC's Section 31 fee rate changes in the middle of a month, the
Exchange will perform a separate calculation with respect to covered
sales under the new fee rate for the remaining portion of the month.
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\8\ The Section 31 fee rate is the fee rate applicable to
covered sales under section 31(b) of the Act. See 15 U.S.C. 78ee(b).
The current rate applicable to equities securities transactions is
$27.80 per million dollars. See also https://cdn.cboe.com/resources/fee_schedule/2024/Regulatory-Transaction-Fee-Adjustment-per-SEC-Section-31-Rate-Change-Effective-May-22-2024.pdf.
\9\ 17 CFR 240.31(c).
\10\ 17 CFR 240.31(c)(1).
\11\ 17 CFR 240.31(a)(2).
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In addition to the Exchange's proposal to add the Fee to its Fee
Schedule, the Exchange simultaneously proposes to delete the rule text
found in Exchange Rule 15.1(b). Exchange Rule 15.1(b) currently
provides a description of the Fee within the Exchange rulebook, which
would be duplicative as the Fee will be set forth and more fully
described in the Fee Schedule. The Exchange notes that the Fee, as
described in Exchange Rule 15.1(b), is described only at a high-level
and does not contain specific details about how the Exchange currently
calculates and collects the Fee. Specifically, Exchange Rule 15.1(b)
merely states that the Exchange assesses a Regulatory Transaction Fee
to its Members in order to help fund the Exchange's obligations to the
Commission under Section 31. While Exchange Rule 15.1(b) does state how
the Fee is calculated (which is identical to the proposed calculation
described on the Fee Schedule), there is no description of the types of
transactions that trigger the Fee or how the fee is collected by the
Exchange. The Exchange proposes to more fully describe its current
practice of calculating and collecting the Fee by providing additional
details on the Fee Schedule. In conjunction with removing the rule text
in Exchange Rule 15.1(b), the Exchange proposes to rename Exchange Rule
15.1(b) as ``Reserved.''
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.\12\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \13\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable
[[Page 67129]]
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) \14\ 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,\15\ which requires that
Exchange rules provide for the equitable allocation of reasonable dues,
fees, and other charges among its Members and other persons using its
facilities.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ Id.
\15\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed rule change is consistent
with these requirements because the proposed amended Fee Schedule text
provides Members with detail regarding the circumstances under which
the Exchange assesses a Sales Value Fee, and the current process by
which the Fee is collected. The Exchange's current codification of the
Fee in Exchange Rule 15.1(b) does not accurately depict the Exchange's
current practice of calculating and collecting the Fee. The Exchange
believes that amending the description of the Fee and placing this
description on its Fee Schedule rather than in the Exchange rulebook
will provide additional guidance to its Members about which
transactions are subject to the Fee, how the Fee is calculated, and how
the Fee is collected. As such, the proposed changes will increase
transparency, help avoid Member confusion and foster better
understanding of the application of the Fee, which the Exchange
believes promotes just and equitable principles of trade, removes
impediments to and perfects the mechanism of a free and open market and
a national market system, and protects investors and the public
interest. Further, the Exchange believes the proposed change is
reasonable as the Exchange is proposing to assess the same Fee to its
Members that the Exchange must pay to the Commission twice
annually..[sic]
The Exchange believes the proposed change represents an equitable
allocation of fees and is not unfairly discriminatory because it
applies uniformly to all Members in that all Members submitting covered
orders to the Exchange are assessed the Fee, which is equal to the fee
that the Exchange is required to pay to the Commission. Furthermore, by
moving the description of the Fee from Exchange Rule 15.1(b) to the Fee
Schedule, all Members will have additional information about the types
of orders subject to the Fee and how the Exchange collects the Fee from
its Members, which do not currently appear in Exchange Rule 15.1(b).
While Exchange Rule 15.1(b) describes at a high-level the Exchange's
ability to assess a fee in order to help fund the Exchange's
obligations under Section 31, it does not accurately depict the
Exchange's current practice in regard to calculating and collecting the
Fee from its Members. The proposed movement of the description of the
Fee from Exchange Rule 15.1(b) to the Fee Schedule will not change how
the Exchange calculates or collects the Fee from its Members, but
rather will provide a more complete and accurate description of the Fee
to all Members. All Members will be able to access a detailed
description of the Fee on the Fee Schedule and as such, the description
of the Fee found in Exchange Rule 15.1(b) that does not accurately
describe the Exchange's current practice in calculating or collecting
the Fee is no longer necessary.
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. The Exchange does not
believe the proposed changes will impose any burden on intramarket
competition. Particularly, the proposed change applies uniformly to all
Members, in that the Sales Value Fee is applied uniformly to all
Members' applicable covered orders. Similarly, the proposal to delete
Rule 15.1(b) from the Exchange rulebook will not impose any burden on
competition because the change applies to all Members uniformly, in
that all Members will instead be able to access the description of the
Sales Value Fee and how the Fee is calculated on the Fee Schedule.
The Exchange does not believe that the proposed rule changes will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As noted above,
assessing a sales fee to defray the cost of fees assessed under Section
31 of the Act is common practice among the national securities
exchanges and associations.\16\
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\16\ Supra note 5.
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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 \17\ and paragraph (f) of Rule 19b-4 \18\
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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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 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-CboeBZX-2024-072 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-CboeBZX-2024-072. 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
[[Page 67130]]
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-CboeBZX-2024-072 and should be submitted on or before September 9,
2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-18470 Filed 8-16-24; 8:45 am]
BILLING CODE 8011-01-P
