Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Regarding Dedicated Cores, 67682-67686 [2024-18700]
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Federal Register / Vol. 89, No. 162 / Wednesday, August 21, 2024 / Notices
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:
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Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeEDGX–2024–051 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–CboeEDGX–2024–051. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
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that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–CboeEDGX–2024–051 and should be
submitted on or before September 11,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–18702 Filed 8–20–24; 8:45 am]
withdrew the Proposal (SR–ISE–2024–
14).
For the Commission, by the Division
of Trading and Markets, pursuant to
delegated authority.8
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–18703 Filed 8–20–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100735; File No. SR–
CboeBZX–2024–075]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100738; File No. SR–ISE–
2024–14]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Withdrawal of
Proposed Rule Change To Amend ISE
Options 4, Section 3 To List and Trade
Options on Units That Represent
Interests in a Trust That Holds Bitcoin
August 15, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
Nasdaq ISE, LLC (‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) a
proposed rule change to amend Options
4, Section 3(h) to allow the Exchange to
list and trade options on units that
represent interests in a trust that holds
bitcoin (‘‘Proposal’’).
On March 25, 2024, the Proposal was
published for comment in the Federal
Register.3 On April 24, 2024, the
Commission instituted proceedings
under Section 19(b)(2)(B) of the Act 4 to
determine whether to approve or
disapprove the Proposal.5 The
Commission received comments
addressing the Proposal.6
On July 19, 2024, the Commission
designated a longer time for
Commission action on the Proposal.7 On
August 13, 2024, the Exchange
22 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 99776
(Mar. 19, 2024), 89 FR 20717.
4 15 U.S.C. 78s(b)(2)(B).
5 See Securities Exchange Act Release No. 100024
(Apr. 24, 2024), 89 FR 34290 (Apr. 30, 2024).
6 Comment letters on the Proposal are available at
https://www.sec.gov/comments/sr-ise-2024-14/
srise202414.htm.
7 See Securities Exchange Act Release No. 100567
(Jul. 19, 2024), 89 FR 60482 (Jul. 25, 2024).
1 15
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Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fees Schedule Regarding Dedicated
Cores
August 15, 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 August 1,
2024, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX Equities’’)
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
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
8 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. 162 / Wednesday, August 21, 2024 / Notices
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
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1. Purpose
The Exchange proposes to amend its
fee schedule to adopt fees for Dedicated
Cores.3
By way of background, the Exchange
recently began to allow Users 4 to assign
a Single Binary Order Entry (‘‘BOE’’)
logical order entry port 5 to a single
dedicated Central Processing Unit (CPU
Core) (‘‘Dedicated Core’’). Historically,
CPU Cores had been shared by logical
order entry ports (i.e., multiple logical
ports from multiple firms may connect
to a single CPU Core). Use of Dedicated
Cores however, can provide reduced
latency, enhanced throughput, and
improved performance since a firm
using a Dedicated Core is utilizing the
full processing power of a CPU Core
instead of sharing that power with other
firms. This offering is completely
voluntary and is available to all Users
that wish to purchase Dedicated Cores.
Users may utilize BOE logical order
entry ports on shared CPU Cores, either
in lieu of, or in addition to, their use of
Dedicated Core(s). As such, Users are
able to operate across a mix of shared
and dedicated CPU Cores which the
Exchange believes provides additional
risk and capacity management. Further,
Dedicated Cores are not required nor
necessary to participate on the Exchange
and as such Users may opt not to use
Dedicated Cores at all.
The Exchange proposes to assess the
following monthly fees for Users that
wish to use Dedicated Cores and adopt
a maximum limit. First, the Exchange
3 The Exchange initially introduced pricing for
Dedicated Cores on June 10, 2024 (SR–CboeBZX–
2024–054). On August 1, 2024, the Exchange
withdrew that filing and submitted this filing.
4 A User may be either a Member or Sponsored
Participant. The term ‘‘Member’’ shall mean any
registered broker or dealer that has been admitted
to membership in the Exchange, 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. A
Sponsored Participant may be a Member or nonMember of the Exchange whose direct electronic
access to the Exchange is authorized by a
Sponsoring Member subject to certain conditions.
See Exchange Rule 11.3.
5 Users may currently connect to the Exchange
using a logical port available through an application
programming interface (‘‘API’’), such as the Binary
Order Entry (‘‘BOE’’) protocol. A BOE logical order
entry port is used for order entry.
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proposes to provide up to two Dedicated
Cores to all Users who wish to use
Dedicated Cores, at no additional cost.
For the use of more than two Dedicated
Cores, the Exchange proposes to assess
the following fees: $650 per Dedicated
Core for 3–15 Dedicated Cores; $850 per
Dedicated Core for 16—30 Dedicated
Cores; and $1,050 per Dedicated Core
for 31 or more Dedicated Cores. The
proposed fees are progressive and the
Exchange proposes to include the
following example in the Fees Schedule
to provide clarity as to how the fees will
be applied. Particularly, the Exchange
will provide the following example: if a
User were to purchase 16 Dedicated
Cores, it will be charged a total of
$9,300 per month ($0 * 2 + $650 * 13
+ $850 * 1). The Exchange also proposes
to make clear in the Fees Schedule that
the monthly fees are assessed and
applied in their entirety and are not
prorated. The Exchange notes the
current standard fees assessed for BOE
Logical Ports, whether used with
Dedicated or shared CPU cores, will
remain applicable and unchanged.6
Since the Exchange currently has a
finite amount of physical space in its
data centers in which its servers (and
therefore corresponding CPU Cores) are
located, the Exchange also proposes to
prescribe a maximum limit on the
number of Dedicated Cores that Users
may purchase each month. The purpose
of establishing these limits is to manage
the allotment of Dedicated Cores in a
fair manner and to prevent the Exchange
from being required to expend large
amounts of resources in order to provide
an unlimited number of Dedicated
Cores. The Exchange previously
established a limit for Members of a
maximum number of 60 Dedicated
Cores and Sponsoring Members a limit
of maximum number of 25 Dedicated
Cores for each of their Sponsored
Access relationship.7 The Exchange has
since been able to procure additional
physical space in its third-party data
century as well as additional servers
with CPU Cores. The Exchange also has
a better understanding of User demand
relative to its available space and
available Dedicated Cores since the
initial maximum was adopted. As such,
the Exchange proposes to increase the
cap and provide that Members will be
limited to a maximum number of 80
6 The Exchange currently assesses $550 per port
per month. Port fees will also continue to be
assessed on the first two Dedicated Cores that Users
receive at no additional cost. See Cboe BZX Equities
Fee Schedule.
7 See Securities Exchange Act Release No. 100395
(June 21, 2024) 89 FR 53687 (June 27, 2024) (SR–
CboeBZX–2024–054).
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67683
Dedicated Cores 8 and Sponsoring
Members will be limited to a maximum
number of 35 Dedicated Cores for each
of their Sponsored Access
relationships.9 The Exchange notes that
it will continue monitoring Dedicated
Core interest by all Users and allotment
availability with the goal of increasing
these limits to meet Users’ needs if and
when the demand is there and the
Exchange is able to accommodate
additional Dedicated Cores.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.10 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 11 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
8 The prescribed maximum quantity of Dedicated
Cores for Members applies regardless of whether
that Member purchases the Dedicated Cores directly
from the Exchange and/or through a Service
Bureau. In a Service Bureau relationship, a
customer allows its MPID to be used on the ports
of a technology provider, or Service Bureau. One
MPID may be allowed on several different Service
Bureaus.
9 The fee tier(s) applicable to Sponsoring
Members are determined on a per Sponsored
Access relationship basis and not on the combined
total of Dedicated Cores across Sponsored Users.
For example, under the proposed changes, a
Sponsoring Member that has three Sponsored
Access relationships is entitled to a total of 105
Dedicated Cores for those 3 Sponsored Access
relationships but would be assessed fees separately
based on the 35 Dedicated Cores for each Sponsored
User (instead of combined total of 105 Dedicated
Cores). For example, a Sponsoring Member with 3
Sponsored Access relationships would pay $25,450
per month if each Sponsored Access relationship
purchased the maximum 25 Dedicated Cores. More
specifically, the Sponsoring Member would be
provided 2 Dedicated Cores at no additional cost for
each Sponsored User under Tier 1 (total of 6
Dedicated Cores at no additional cost) and provided
an additional 13 Dedicated Cores at $650 each for
each Sponsored User, 20 Dedicated Cores at $850
each for each Sponsored User (combined total of 99
additional Dedicated Cores).
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
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the Section 6(b)(5) 12 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) 13 of the Act, which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Members and other persons using its
facilities.
The Exchange believes the proposal is
reasonable because the Exchange is
offering any User who wishes to utilize
Dedicated Cores up to two Dedicated
Cores at no additional cost.14 For
example, of the Users that currently
maintain Dedicated Cores,
approximately 45% maintain only 1 or
2 Dedicated Cores and therefore pay no
additional fees. The Exchange believes
the proposed fees are reasonable
because Dedicated Cores provide a
valuable service in that it can provide
reduced latency, enhanced throughput,
and improved performance compared to
use of a shared CPU Core since a firm
using a Dedicated Core is utilizing the
full processing power of a CPU Core.
The Exchange also emphasizes however,
that the use of Dedicated Cores is not
necessary for trading and as noted
above, is entirely optional. Users can
also continue to access the Exchange
through shared CPU Cores at no
additional cost. Indeed, only
approximately 22% of the Exchange’s
Members currently use Dedicated Cores
and as noted above, of that 22%, nearly
half take 1 or 2 Dedicated Cores at no
additional cost. Depending on a firm’s
specific business needs, the proposal
enables Users to choose to use
Dedicated Cores in lieu of, or in
addition to, shared CPU Cores (or as
emphasized, not use Dedicated Cores at
all). If a User finds little benefit in
having Dedicated Cores based on its
business model and trading strategies,
or determines Dedicated Cores are not
cost-efficient for its needs or does not
provide sufficient value to the firm,
such User may continue its use of the
shared CPU Cores, unchanged. The
Exchange also has no plans to eliminate
shared CPU Cores nor to require Users
to purchase Dedicated Cores.
The Exchange believes the proposed
fees are also reasonable to offset costs
incurred in order to make Dedicated
Cores available. For example, the
Exchange incurred significant costs
12 Id.
13 15
U.S.C. 78f(b)(4).
the Users that currently maintain Dedicated
Cores, approximately 35% maintain 1 or 2
Dedicated Cores and therefore pay no additional
fees.
associated with acquiring additional
cabinet space in its third-party data
centers, as well as costs associated with
the purchase of additional and upgraded
servers hosting the Dedicated Cores.
The Exchange also believes that the
proposed Dedicated Core fees are
equitable and not unfairly
discriminatory because they continue to
be assessed uniformly to similarly
situated users in that all Users who
choose to purchase Dedicated Cores will
be subject to the same proposed tiered
fee schedule. Further, all Users are
entitled to up to 2 Dedicated Cores at no
additional cost. The Exchange believes
the proposed ascending fee structure is
also reasonable, equitable and not
unfairly discriminatory as it is designed
so that firms that use a higher allotment
of the Exchange’s finite number of
Dedicated Cores pay higher rates, rather
than placing that burden on market
participants that have more modest
needs who will have the flexibility of
obtaining Dedicated Cores at lower price
points in the lower tiers. As such, the
proposed fees do not favor certain
categories of market participants in a
manner that would impose a burden on
competition; rather, the ascending fee
structure reflects the (finite) resources
consumed by the various needs of
market participants—that is, the lowest
Dedicated Core consuming Users pay
the least, and highest Dedicated Core
consuming Users pay the most. Other
exchanges similarly assess higher fees to
those that consume more Exchange
resources.15 Moreover, those consuming
more Dedicated Cores do so if they find
a benefit and sufficient value in having
higher quantities of Dedicated Cores
based on their respective business
needs. The proposed tier structure is
also designed to encourage firms to
manage their needs in a fair manner and
to prevent the Exchange from being
required to expend large amounts of
resources in order to provide an
additional number of Dedicated Cores.
Moreover, as discussed above and in
more detail below, the Exchange cannot
currently offer an unlimited number of
Dedicated Cores due in part to physical
space constraints in the third-party data
center. The Exchange believes the
proposed ascending fee structure is
therefore another appropriate means, in
conjunction with an established cap, to
manage this finite resource and ensure
the resource is apportioned more fairly.
The Exchange believes it is reasonable
to limit the number of Dedicated Cores
Users can purchase because the
14 Of
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15 See also Cboe U.S. Options Fees Schedule, BZX
Options, Options Logical Port Fees, Ports with Bulk
Quoting Capabilities.
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Exchange has a finite amount of space
in its third-party data centers to
accommodate CPU cores, including
Dedicated Cores. The Exchange must
also take into account timing and cost
considerations in procuring additional
Dedicated Cores and related hardware
such as servers, switches, optics and
cables, as well as the readiness of the
Exchange’s data center to accommodate
additional Dedicated Cores in the
Exchange’s respective Order Handler
Cabinets. The Exchange has, and will
continue to, monitor market participant
demand and space availability and
endeavor to adjust the limit if and when
the Exchange is able to acquire
additional space and power within the
third-party data centers and/or
additional CPU Cores to accommodate
additional Dedicated Cores.16 The
Exchange monitors its capacity and data
center space and thus is in the best
place to determine these limits and
modify them as appropriate in response
to changes to this capacity and space, as
well as market demand. For example,
the Exchange’s affiliate Cboe EDGA
Exchange, Inc. has increased the
prescribed maximum limit twice since
the launch of Dedicated Cores on its
exchange on February 26, 2024 as a
result of evaluating the demand relative
to Dedicated Cores availability and
intends to raise the maximum again
effective August 1, 2024.17 The
proposed limits continue to apply
uniformly to similarly situated market
participants (i.e., all Members are
subject to the same limit and all
Sponsored Participants are subject to
the same limit, respectively). The
Exchange believes it’s not unfairly
discriminatory to provide for different
limits for different types of Users. For
example, the Exchange believes it’s not
unfairly discriminatory to provide for an
initial lower limit to be allocated for
Sponsored Participants because unlike
Members, Sponsored Participants are
able to access the Exchange without
paying a Membership Fee. Members
also have more regulatory obligations
and risk that Sponsored Participants do
not. For example, while Sponsored
Participants must agree to comply with
the Rules of the Exchange, it is the
Sponsoring Member of that Sponsored
Participant that remains ultimately
responsible for all orders entered on or
through the Exchange by that Sponsored
16 The Exchange notes that approximately 11% of
Users that have Dedicated Cores currently are at or
near the maximum limits.
17 See Securities Exchange Act Release No. 99983
(April 17, 2024) 89 FR 30418 (April 23, 2024) (SR–
CboeEDGA–2024–014) and Securities Exchange Act
Release No. 100300 (June 10, 2024) 89 FR 50653
(June 14, 2024) (SR–CboeEDGA–2024–020).
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Participant. The industry also has a
history of applying fees differently to
Members as compared to Sponsored
Participants.18 Lastly, the Exchange
believes its proposed maximum limits,
and distinction between Members and
Sponsored Users, is another appropriate
means to help the Exchange manage its
allotment of Dedicated Cores and better
ensure this finite resource is
apportioned fairly.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on intramarket competition
that is not necessary in furtherance of
the purposes of the Act because the
proposed tiered fee structure will apply
equally to all similarly situated Users
that choose to use Dedicated Cores. As
discussed above, Dedicated Cores are
optional and Users may choose to
utilize Dedicated Cores, or not, based on
their views of the additional benefits
and added value provided by utilizing
a Dedicated Core. The Exchange
believes the proposed fees will be
assessed proportionately to the potential
value or benefit received by Users with
a greater number of Dedicated Cores and
notes that Users may determine at any
time to cease using Dedicated Cores. As
discussed, Users can also continue to
access the Exchange through shared
CPU Cores at no additional cost. Finally,
all Users will be entitled to two
Dedicated Cores at no additional cost.
Next, the Exchange believes the
proposed rule change does 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,
including competition for exchange
memberships. Market Participants have
numerous alternative venues that they
may participate on, including 15 other
equities exchanges, as well as offexchange venues, where competitive
products are available for trading.
Indeed, participants can readily choose
to submit their order flow 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
18 See e.g., Securities Exchange Act Release No.
68342 (December 3, 2012) 77 FR 73096 (December
7, 2012) (SR–CBOE–2012–114) and Securities
Exchange Act Release No. 66082 (January 3, 2012)
77 FR 1101 (January 9, 2012) (SR–C2–2011–041).
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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.’’ 19 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’.20 Accordingly, the
Exchange does not believe its proposed
change imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
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 21 and paragraph (f) of Rule
19b–4 22 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.
19 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
20 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)).
21 15 U.S.C. 78s(b)(3)(A).
22 17 CFR 240.19b–4(f).
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67685
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–2024–075 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–2024–075. 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–CboeBZX–2024–075 and should be
submitted on or before September 11,
2024.
E:\FR\FM\21AUN1.SGM
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67686
Federal Register / Vol. 89, No. 162 / Wednesday, August 21, 2024 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Sherry R. Haywood,
Assistant Secretary.
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 parts of such
statements.
[FR Doc. 2024–18700 Filed 8–20–24; 8:45 am]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
1. Purpose
[Release No. 34–100731; File No. SR–NYSE–
2024–45]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Its
Price List
August 15, 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 8,
2024, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘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 its
Price List to revise the requirements for
Supplemental Liquidity Providers
(‘‘SLPs’’) that are also Designated
Market Makers (‘‘DMM’’) to qualify for
SLP Adding Tiers 1–5. The Exchange
proposes to implement the fee changes
effective August 8, 2024. The proposed
rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
lotter on DSK11XQN23PROD with NOTICES1
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
self-regulatory organization 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 those statements may be examined at
23 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
17:17 Aug 20, 2024
Jkt 262001
The Exchange proposes to amend its
Price List to revise the requirements for
SLPs that are also DMMs to qualify for
SLP Adding Tiers 1–5. Specifically, the
Exchange proposes to lower the
required adding as a percentage of
NYSE consolidated average daily
volume (‘‘CADV’’) in order for SLPs that
are also DMMs with a specific number
of DMM registrations to qualify for each
tier.
The proposed changes respond to the
current competitive environment where
order flow providers have a choice of
where to direct liquidity-providing
orders by modifying the requirements
for member organizations to send
additional displayed liquidity to the
Exchange.
The Exchange proposes to implement
the fee changes effective August 8,
2024.3
Background
Current Market and Competitive
Environment
The Exchange operates in a highly
competitive market. The Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. 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.’’ 4
While Regulation NMS has enhanced
competition, it has also fostered a
‘‘fragmented’’ market structure where
trading in a single stock can occur
across multiple trading centers. When
multiple trading centers compete for
order flow in the same stock, the
Commission has recognized that ‘‘such
3 The Exchange originally filed to amend the
Price List on August 1, 2024 (SR–NYSE–2024–43).
SR–NYSE–2024–43 was withdrawn on August 8,
2024 and replaced by this filing.
4 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(File No. S7–10–04) (Final Rule) (‘‘Regulation
NMS’’).
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
competition can lead to the
fragmentation of order flow in that
stock.’’ 5 Indeed, cash equity trading is
currently dispersed across 16
exchanges,6 numerous alternative
trading systems,7 and broker-dealer
internalizers and wholesalers, all
competing for order flow. Based on
publicly-available information, no
single exchange currently has more than
20% market share.8 Therefore, no
exchange possesses significant pricing
power in the execution of cash equity
order flow. More specifically, the
Exchange’s share of executed volume of
equity trades in Tapes A, B and C
securities is less than 12%.9
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can move order flow, or discontinue or
reduce use of certain categories of
products. While it is not possible to
know a firm’s reason for shifting order
flow, the Exchange believes that one
such reason is because of fee changes at
any of the registered exchanges or nonexchange venues to which the firm
routes order flow. Accordingly,
competitive forces compel the Exchange
to use exchange transaction fees and
credits because market participants can
readily trade on competing venues if
they deem pricing levels at those other
venues to be more favorable.
In response to this competitive
environment, the Exchange has
established incentives for its member
organizations who submit orders that
provide liquidity on the Exchange. The
proposed changes are designed to
continue to attract additional order flow
to the Exchange by revising the
requirements for SLPs that are also
DMMs in SLP Adding Tiers 1–5 in order
to further incentivize member
organizations to submit additional
displayed liquidity to, and quote
aggressively in support of the price
discovery process on, the Exchange.
5 See Securities Exchange Act Release No. 61358,
75 FR 3594, 3597 (January 21, 2010) (File No. S7–
02–10) (Concept Release on Equity Market
Structure).
6 See Cboe U.S Equities Market Volume
Summary, available at https://markets.cboe.com/us/
equities/market_share. See generally https://
www.sec.gov/fast-answers/divisionsmarketregmr
exchangesshtml.html.
7 See FINRA ATS Transparency Data, available at
https://otctransparency.finra.org/otctransparency/
AtsIssueData. A list of alternative trading systems
registered with the Commission is available at
https://www.sec.gov/foia/docs/atslist.htm.
8 See Cboe Global Markets U.S. Equities Market
Volume Summary, available at https://
markets.cboe.com/us/equities/market_share/.
9 See id.
E:\FR\FM\21AUN1.SGM
21AUN1
]]>Agencies
[Federal Register Volume 89, Number 162 (Wednesday, August 21, 2024)]
[Notices]
[Pages 67682-67686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-18700]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100735; File No. SR-CboeBZX-2024-075]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule Regarding Dedicated Cores
August 15, 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 August 1, 2024, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX Equities'')
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
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
[[Page 67683]]
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 fee schedule to adopt fees for
Dedicated Cores.\3\
---------------------------------------------------------------------------
\3\ The Exchange initially introduced pricing for Dedicated
Cores on June 10, 2024 (SR-CboeBZX-2024-054). On August 1, 2024, the
Exchange withdrew that filing and submitted this filing.
---------------------------------------------------------------------------
By way of background, the Exchange recently began to allow Users
\4\ to assign a Single Binary Order Entry (``BOE'') logical order entry
port \5\ to a single dedicated Central Processing Unit (CPU Core)
(``Dedicated Core''). Historically, CPU Cores had been shared by
logical order entry ports (i.e., multiple logical ports from multiple
firms may connect to a single CPU Core). Use of Dedicated Cores
however, can provide reduced latency, enhanced throughput, and improved
performance since a firm using a Dedicated Core is utilizing the full
processing power of a CPU Core instead of sharing that power with other
firms. This offering is completely voluntary and is available to all
Users that wish to purchase Dedicated Cores. Users may utilize BOE
logical order entry ports on shared CPU Cores, either in lieu of, or in
addition to, their use of Dedicated Core(s). As such, Users are able to
operate across a mix of shared and dedicated CPU Cores which the
Exchange believes provides additional risk and capacity management.
Further, Dedicated Cores are not required nor necessary to participate
on the Exchange and as such Users may opt not to use Dedicated Cores at
all.
---------------------------------------------------------------------------
\4\ A User may be either a Member or Sponsored Participant. The
term ``Member'' shall mean any registered broker or dealer that has
been admitted to membership in the Exchange, 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. A Sponsored Participant may be a Member or non-Member
of the Exchange whose direct electronic access to the Exchange is
authorized by a Sponsoring Member subject to certain conditions. See
Exchange Rule 11.3.
\5\ Users may currently connect to the Exchange using a logical
port available through an application programming interface
(``API''), such as the Binary Order Entry (``BOE'') protocol. A BOE
logical order entry port is used for order entry.
---------------------------------------------------------------------------
The Exchange proposes to assess the following monthly fees for
Users that wish to use Dedicated Cores and adopt a maximum limit.
First, the Exchange proposes to provide up to two Dedicated Cores to
all Users who wish to use Dedicated Cores, at no additional cost. For
the use of more than two Dedicated Cores, the Exchange proposes to
assess the following fees: $650 per Dedicated Core for 3-15 Dedicated
Cores; $850 per Dedicated Core for 16--30 Dedicated Cores; and $1,050
per Dedicated Core for 31 or more Dedicated Cores. The proposed fees
are progressive and the Exchange proposes to include the following
example in the Fees Schedule to provide clarity as to how the fees will
be applied. Particularly, the Exchange will provide the following
example: if a User were to purchase 16 Dedicated Cores, it will be
charged a total of $9,300 per month ($0 * 2 + $650 * 13 + $850 * 1).
The Exchange also proposes to make clear in the Fees Schedule that the
monthly fees are assessed and applied in their entirety and are not
prorated. The Exchange notes the current standard fees assessed for BOE
Logical Ports, whether used with Dedicated or shared CPU cores, will
remain applicable and unchanged.\6\
---------------------------------------------------------------------------
\6\ The Exchange currently assesses $550 per port per month.
Port fees will also continue to be assessed on the first two
Dedicated Cores that Users receive at no additional cost. See Cboe
BZX Equities Fee Schedule.
---------------------------------------------------------------------------
Since the Exchange currently has a finite amount of physical space
in its data centers in which its servers (and therefore corresponding
CPU Cores) are located, the Exchange also proposes to prescribe a
maximum limit on the number of Dedicated Cores that Users may purchase
each month. The purpose of establishing these limits is to manage the
allotment of Dedicated Cores in a fair manner and to prevent the
Exchange from being required to expend large amounts of resources in
order to provide an unlimited number of Dedicated Cores. The Exchange
previously established a limit for Members of a maximum number of 60
Dedicated Cores and Sponsoring Members a limit of maximum number of 25
Dedicated Cores for each of their Sponsored Access relationship.\7\ The
Exchange has since been able to procure additional physical space in
its third-party data century as well as additional servers with CPU
Cores. The Exchange also has a better understanding of User demand
relative to its available space and available Dedicated Cores since the
initial maximum was adopted. As such, the Exchange proposes to increase
the cap and provide that Members will be limited to a maximum number of
80 Dedicated Cores \8\ and Sponsoring Members will be limited to a
maximum number of 35 Dedicated Cores for each of their Sponsored Access
relationships.\9\ The Exchange notes that it will continue monitoring
Dedicated Core interest by all Users and allotment availability with
the goal of increasing these limits to meet Users' needs if and when
the demand is there and the Exchange is able to accommodate additional
Dedicated Cores.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 100395 (June 21,
2024) 89 FR 53687 (June 27, 2024) (SR-CboeBZX-2024-054).
\8\ The prescribed maximum quantity of Dedicated Cores for
Members applies regardless of whether that Member purchases the
Dedicated Cores directly from the Exchange and/or through a Service
Bureau. In a Service Bureau relationship, a customer allows its MPID
to be used on the ports of a technology provider, or Service Bureau.
One MPID may be allowed on several different Service Bureaus.
\9\ The fee tier(s) applicable to Sponsoring Members are
determined on a per Sponsored Access relationship basis and not on
the combined total of Dedicated Cores across Sponsored Users. For
example, under the proposed changes, a Sponsoring Member that has
three Sponsored Access relationships is entitled to a total of 105
Dedicated Cores for those 3 Sponsored Access relationships but would
be assessed fees separately based on the 35 Dedicated Cores for each
Sponsored User (instead of combined total of 105 Dedicated Cores).
For example, a Sponsoring Member with 3 Sponsored Access
relationships would pay $25,450 per month if each Sponsored Access
relationship purchased the maximum 25 Dedicated Cores. More
specifically, the Sponsoring Member would be provided 2 Dedicated
Cores at no additional cost for each Sponsored User under Tier 1
(total of 6 Dedicated Cores at no additional cost) and provided an
additional 13 Dedicated Cores at $650 each for each Sponsored User,
20 Dedicated Cores at $850 each for each Sponsored User (combined
total of 99 additional Dedicated Cores).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with
[[Page 67684]]
the Section 6(b)(5) \12\ 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) \13\ of the Act, 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.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ Id.
\13\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes the proposal is reasonable because the
Exchange is offering any User who wishes to utilize Dedicated Cores up
to two Dedicated Cores at no additional cost.\14\ For example, of the
Users that currently maintain Dedicated Cores, approximately 45%
maintain only 1 or 2 Dedicated Cores and therefore pay no additional
fees. The Exchange believes the proposed fees are reasonable because
Dedicated Cores provide a valuable service in that it can provide
reduced latency, enhanced throughput, and improved performance compared
to use of a shared CPU Core since a firm using a Dedicated Core is
utilizing the full processing power of a CPU Core. The Exchange also
emphasizes however, that the use of Dedicated Cores is not necessary
for trading and as noted above, is entirely optional. Users can also
continue to access the Exchange through shared CPU Cores at no
additional cost. Indeed, only approximately 22% of the Exchange's
Members currently use Dedicated Cores and as noted above, of that 22%,
nearly half take 1 or 2 Dedicated Cores at no additional cost.
Depending on a firm's specific business needs, the proposal enables
Users to choose to use Dedicated Cores in lieu of, or in addition to,
shared CPU Cores (or as emphasized, not use Dedicated Cores at all). If
a User finds little benefit in having Dedicated Cores based on its
business model and trading strategies, or determines Dedicated Cores
are not cost-efficient for its needs or does not provide sufficient
value to the firm, such User may continue its use of the shared CPU
Cores, unchanged. The Exchange also has no plans to eliminate shared
CPU Cores nor to require Users to purchase Dedicated Cores.
---------------------------------------------------------------------------
\14\ Of the Users that currently maintain Dedicated Cores,
approximately 35% maintain 1 or 2 Dedicated Cores and therefore pay
no additional fees.
---------------------------------------------------------------------------
The Exchange believes the proposed fees are also reasonable to
offset costs incurred in order to make Dedicated Cores available. For
example, the Exchange incurred significant costs associated with
acquiring additional cabinet space in its third-party data centers, as
well as costs associated with the purchase of additional and upgraded
servers hosting the Dedicated Cores.
The Exchange also believes that the proposed Dedicated Core fees
are equitable and not unfairly discriminatory because they continue to
be assessed uniformly to similarly situated users in that all Users who
choose to purchase Dedicated Cores will be subject to the same proposed
tiered fee schedule. Further, all Users are entitled to up to 2
Dedicated Cores at no additional cost. The Exchange believes the
proposed ascending fee structure is also reasonable, equitable and not
unfairly discriminatory as it is designed so that firms that use a
higher allotment of the Exchange's finite number of Dedicated Cores pay
higher rates, rather than placing that burden on market participants
that have more modest needs who will have the flexibility of obtaining
Dedicated Cores at lower price points in the lower tiers. As such, the
proposed fees do not favor certain categories of market participants in
a manner that would impose a burden on competition; rather, the
ascending fee structure reflects the (finite) resources consumed by the
various needs of market participants--that is, the lowest Dedicated
Core consuming Users pay the least, and highest Dedicated Core
consuming Users pay the most. Other exchanges similarly assess higher
fees to those that consume more Exchange resources.\15\ Moreover, those
consuming more Dedicated Cores do so if they find a benefit and
sufficient value in having higher quantities of Dedicated Cores based
on their respective business needs. The proposed tier structure is also
designed to encourage firms to manage their needs in a fair manner and
to prevent the Exchange from being required to expend large amounts of
resources in order to provide an additional number of Dedicated Cores.
Moreover, as discussed above and in more detail below, the Exchange
cannot currently offer an unlimited number of Dedicated Cores due in
part to physical space constraints in the third-party data center. The
Exchange believes the proposed ascending fee structure is therefore
another appropriate means, in conjunction with an established cap, to
manage this finite resource and ensure the resource is apportioned more
fairly.
---------------------------------------------------------------------------
\15\ See also Cboe U.S. Options Fees Schedule, BZX Options,
Options Logical Port Fees, Ports with Bulk Quoting Capabilities.
---------------------------------------------------------------------------
The Exchange believes it is reasonable to limit the number of
Dedicated Cores Users can purchase because the Exchange has a finite
amount of space in its third-party data centers to accommodate CPU
cores, including Dedicated Cores. The Exchange must also take into
account timing and cost considerations in procuring additional
Dedicated Cores and related hardware such as servers, switches, optics
and cables, as well as the readiness of the Exchange's data center to
accommodate additional Dedicated Cores in the Exchange's respective
Order Handler Cabinets. The Exchange has, and will continue to, monitor
market participant demand and space availability and endeavor to adjust
the limit if and when the Exchange is able to acquire additional space
and power within the third-party data centers and/or additional CPU
Cores to accommodate additional Dedicated Cores.\16\ The Exchange
monitors its capacity and data center space and thus is in the best
place to determine these limits and modify them as appropriate in
response to changes to this capacity and space, as well as market
demand. For example, the Exchange's affiliate Cboe EDGA Exchange, Inc.
has increased the prescribed maximum limit twice since the launch of
Dedicated Cores on its exchange on February 26, 2024 as a result of
evaluating the demand relative to Dedicated Cores availability and
intends to raise the maximum again effective August 1, 2024.\17\ The
proposed limits continue to apply uniformly to similarly situated
market participants (i.e., all Members are subject to the same limit
and all Sponsored Participants are subject to the same limit,
respectively). The Exchange believes it's not unfairly discriminatory
to provide for different limits for different types of Users. For
example, the Exchange believes it's not unfairly discriminatory to
provide for an initial lower limit to be allocated for Sponsored
Participants because unlike Members, Sponsored Participants are able to
access the Exchange without paying a Membership Fee. Members also have
more regulatory obligations and risk that Sponsored Participants do
not. For example, while Sponsored Participants must agree to comply
with the Rules of the Exchange, it is the Sponsoring Member of that
Sponsored Participant that remains ultimately responsible for all
orders entered on or through the Exchange by that Sponsored
[[Page 67685]]
Participant. The industry also has a history of applying fees
differently to Members as compared to Sponsored Participants.\18\
Lastly, the Exchange believes its proposed maximum limits, and
distinction between Members and Sponsored Users, is another appropriate
means to help the Exchange manage its allotment of Dedicated Cores and
better ensure this finite resource is apportioned fairly.
---------------------------------------------------------------------------
\16\ The Exchange notes that approximately 11% of Users that
have Dedicated Cores currently are at or near the maximum limits.
\17\ See Securities Exchange Act Release No. 99983 (April 17,
2024) 89 FR 30418 (April 23, 2024) (SR-CboeEDGA-2024-014) and
Securities Exchange Act Release No. 100300 (June 10, 2024) 89 FR
50653 (June 14, 2024) (SR-CboeEDGA-2024-020).
\18\ See e.g., Securities Exchange Act Release No. 68342
(December 3, 2012) 77 FR 73096 (December 7, 2012) (SR-CBOE-2012-114)
and Securities Exchange Act Release No. 66082 (January 3, 2012) 77
FR 1101 (January 9, 2012) (SR-C2-2011-041).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition that is not necessary in
furtherance of the purposes of the Act because the proposed tiered fee
structure will apply equally to all similarly situated Users that
choose to use Dedicated Cores. As discussed above, Dedicated Cores are
optional and Users may choose to utilize Dedicated Cores, or not, based
on their views of the additional benefits and added value provided by
utilizing a Dedicated Core. The Exchange believes the proposed fees
will be assessed proportionately to the potential value or benefit
received by Users with a greater number of Dedicated Cores and notes
that Users may determine at any time to cease using Dedicated Cores. As
discussed, Users can also continue to access the Exchange through
shared CPU Cores at no additional cost. Finally, all Users will be
entitled to two Dedicated Cores at no additional cost.
Next, the Exchange believes the proposed rule change does 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,
including competition for exchange memberships. Market Participants
have numerous alternative venues that they may participate on,
including 15 other equities exchanges, as well as off-exchange venues,
where competitive products are available for trading. Indeed,
participants can readily choose to submit their order flow 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.'' \19\ The fact that this market is competitive has also
long been recognized by the courts. In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .''.\20\ Accordingly, the Exchange does not believe its
proposed change imposes any burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Act.
---------------------------------------------------------------------------
\19\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\20\ 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)).
---------------------------------------------------------------------------
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 \21\ and paragraph (f) of Rule 19b-4 \22\
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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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 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-2024-075 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-2024-075. 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-CboeBZX-2024-075 and should
be submitted on or before September 11, 2024.
[[Page 67686]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-18700 Filed 8-20-24; 8:45 am]
BILLING CODE 8011-01-P
