Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Initiate Fees for the Distribution of BX Trade Outline, 80287-80291 [2024-22564]

Download as PDF Federal Register / Vol. 89, No. 191 / Wednesday, October 2, 2024 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Vanessa A. Countryman, Secretary. [FR Doc. 2024–22563 Filed 10–1–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–101195; File No. SR–BX– 2024–036] Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Initiate Fees for the Distribution of BX Trade Outline September 26, 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 September 13, 2024, Nasdaq BX, Inc. (‘‘BX’’ 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 initiate fees for the distribution of BX Trade Outline. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/bx/rules, 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 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. 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 18:16 Oct 01, 2024 Jkt 262001 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 initiate fees for the distribution of BX Trade Outline. Distributor fees will be $750 per month for the End of Day product, and $1,500 per month for the Intra-Day product.3 Historical data will be available through ad hoc requests for information for $500 per month of End of Day information, and $750 per month for historical information. Current Distributors 4 will also be able to purchase the most recent 36 months of historical data 5 at the discounted price of $6,000 for End of Day information, and $9,000 for Intra-Day information. Historical information will be available starting in December 2014. BX Options Trade Outline BX Options Trade Outline will provide aggregate quantity and volume information for trades on the Exchange for all series 6 during a trading session.7 Information is provided in the following categories: (i) total exchange volume for Intra-Day information and total exchange and industry volume for End of Day information for each reported series; (ii) open interest for the series; (iii) aggregate quantity of trades and aggregate trade volume effected to open a position,8 characterized by origin type 3 This proposal was initially filed on September 3, 2024, as SR–BX–2024–034. On September 13, 2024, SR–BX–2024–034 was withdrawn and replaced with the instant filing to clarify the time period for availability of historical information. 4 A ‘‘Current Distributor’’ is any firm that purchases either the End of Day Product for the current month, or the Intra-Day Product for the current month in the same month that the 36 months of historical End of Day or Intra-Day data is ordered. 5 The most recent 36 months is measured based on the date of purchase of the 36 months of data by a Current Distributor. 6 Every options series trades as a distinct symbol; the terms ‘‘series’’ and ‘‘symbol’’ are therefore synonyms. 7 See Securities Exchange Act Release No. 100792 (August 21, 2024), 89 FR 68676 (August 27, 2024) (SR–BX–2024–028). 8 This would include the aggregate number of ‘‘opening purchase transactions,’’ defined as a BX Options Transaction that creates or increases a long position in an options contract, see Options 1, Section 1(a)(35), and the aggregate number of ‘‘opening writing transactions,’’ defined as a BX Options Transaction that creates or increases a short position in an options contract. See Options 1, Section 1(a)(36). PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 80287 (Customers,9 Broker-Dealers,10 BX Options Market Makers,11 Firms,12 and Professionals 13); and (iv) aggregate quantity of trades and aggregate trade volume effected to close a position,14 characterized by origin type (Customers, Broker-Dealers, BX Options Market Makers, Firms, and Professionals).15 Information will be provided on an End of Day, Intra-Day, and historical basis. End of Day Information The BX Trade Outline End of Day file will provide opening buy, closing buy, opening sell and closing sell information, including option first trade price, option high trade price, option low trade price, and option last trade price. The End of Day file will be updated during an overnight process with additional fields 16 and will be available the following morning, providing aggregate data for the entire trading session. Intra-Day Information Intra-Day information will be released in scheduled ‘‘snapshots’’ available 9 The term ‘‘Customer’’ applies to any transaction that is identified by a Participant for clearing in the Customer range at The Options Clearing Corporation (‘‘OCC’’) which is not for the account of broker or dealer or for the account of a ‘‘Professional’’ (as that term is defined in Options 1, Section 1(a)(48)). See Options 7, Section 1(a). 10 The term ‘‘Broker-Dealer’’ applies to any transaction which is not subject to any of the other transaction fees applicable within a particular category. See Options 7, Section 1(a). 11 The term ‘‘BX Options Market Maker’’ is a Participant that has registered as a Market Maker on BX Options pursuant to Options 2, Section 1, and must also remain in good standing pursuant to Options 2, Section 9. In order to receive Market Maker pricing in all securities, the Participant must be registered as a BX Options Market Maker in at least one security. See Options 7, Section 1(a). 12 The term ‘‘Firm’’ applies to any transaction that is identified by a Participant for clearing in the Firm range at OCC. See Options 7, Section 1(a). 13 The term ‘‘Professional’’ means any person or entity that (i) is not a broker or dealer in securities, and (ii) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s) pursuant to Options 1, Section 1(a)(48). All Professional orders shall be appropriately marked by Participants. See Options 7, Section 1(a). 14 This would include the aggregate number of ‘‘closing purchase transactions’’ in the affected series, defined as a BX Options Transaction that reduces or eliminates a short position in an options contract, see Options 1, Section 1(a)(19), and the aggregate number of ‘‘closing writing transactions,’’ defined as a BX Options Transaction that reduces or eliminates a long position in an options contract. See Options 1, Section 1(a)(20). 15 These are the same types of information available on PHOTO, and the other trade outline products offered by Nasdaq exchanges. 16 The additional fields are: First Trade Price, High Trade Price, Low Trade Price, Last Trade Price, Underlying Close, Moneyness, Total Exchange volume, Total Industry Volume for the Series, and Open Interest. E:\FR\FM\02OCN1.SGM 02OCN1 80288 Federal Register / Vol. 89, No. 191 / Wednesday, October 2, 2024 / Notices every 10 minutes for all options series over the course of the trading day. These snapshots will be updated to reflect whatever activity occurred, or to indicate that no activity occurred.17 This is the same schedule currently offered on PHLX, ISE, GEMX, and Nasdaq Options Market.18 Historical Information lotter on DSK11XQN23PROD with NOTICES1 Historical data will be available through ad hoc requests for information in both End of Day and Intra-Day formats for all option series traded for every calendar month after December 2014, based on specific request.19 Historical data is useful in analyzing option trade and volume data, evaluating historical trends in the trading activity of a particular option series, and creating and testing trading models and analytical strategies. In Nasdaq’s experience, historical information is often purchased concurrently with a new subscription to a trade outline product. Patterned after PHLX Options Trade Outline ‘‘PHOTO,’’ 20 BX Trade Options Outline replicates in substance 21 PHOTO and the other trade outline products currently offered by Nasdaq ISE, LLC (‘‘ISE’’),22 Nasdaq GEMX, LLC 17 Subscribers will receive the first snapshot at 9:42 a.m. ET, representing data captured from 9:30 a.m. to 9:40 a.m., and the second calculation at 9:52 a.m., representing data from both the most recent snapshot and previous snapshots, and continuing over the course of the trading day. The final IntraDay snapshot will be distributed at 4:15 p.m. 18 See Infra, notes 21 through 23. 19 Market participants generally use historical files for model testing and research, and the period of time required by a particular market participant will depend on its unique testing and research needs as well as whether it is using End of Day or Intra-Day information. Some customers, for example, may request years of data, while others only months, or even a single month. The same principle applies to End of Day vs. Intra-Day information. 20 See PHLX Rules, Options 7, Section 10; Securities Exchange Act Release No. 62887 (September 10, 2010), 75 FR 57092 (September 17, 2010) (SR–Phlx–2010–121) (introducing PHOTO on September 1, 2010). 21 The underlying information for BX Options Trade Outline will be the same as the other trade outline products offered by the Nasdaq exchanges. Presentation will differ, however, in that data will not be subdivided into categories. For example, the trade outline products offered by PHLX, ISE, GEMX and NOM subdivide the aggregate volume traded for each reported series into categories according to the quantity of contracts (less than 100, 100–199, and greater than 200). BX Options Trade Outline will not separate this information into quantitative categories, but rather will provide the same aggregate volume information as PHOTO and the other Nasdaq exchanges without separating the information into categories according to the quantity of contracts. 22 See Nasdaq ISE Rules, Options 7, Section 10(A) and (B) (Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/Close Trade Profile Intraday). VerDate Sep<11>2014 18:16 Oct 01, 2024 Jkt 262001 (‘‘GEMX’’),23 and the options market operated by the Nasdaq Stock Market LLC (‘‘Nasdaq Options Market’’ or ‘‘NOM’’).24 Similar products are also available from options markets not affiliated with Nasdaq such as Cboe Options Exchange (‘‘Cboe’’),25 NYSE American Options (‘‘NYSE American’’),26 NYSE Arca Options (‘‘NYSE Arca’’),27 BOX Options Market LLC (‘‘BOX’’),28 MIAX Pearl Options Exchange (‘‘Pearl’’),29 and others. BX Options Trade Outline, like all of these other trade outline products, provides data to help market participants understand market sentiment on the Exchange and to support the creation of trading models useful in both options and equities markets. Nasdaq’s experience is that investment banks, market makers, asset managers and other buy-side investors purchase trade outline products. In general, the relative value of these products depends on the volume of transactions included; the greater the volume of transactions, the greater the value of the data. BX Options Trade Outline will include proprietary Exchange trading data and will not disseminate any intraday trading data from any other exchange.30 The information provided, both in End of Day and Intra-Day 23 See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq GEMX Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX Open/Close Intraday Trade Profile). 24 See Nasdaq Rules, Options 7, Section 4 (Nasdaq Options Trade Outline (‘‘NOTO’’)). 25 See, e.g., Securities Exchange Act Release No. 94913 (May 13, 2022), 87 FR 30534 (May 19, 2022) (SR–Cboe–2022–023) (describing End of Day and Intra-Day Open-Close Data as a summary of trading activity on the exchange at the option level by origin, side of the market, price, and transaction type). 26 See, e.g., Securities Exchange Act Release No. 93803 (December 16, 2021, 86 FR 72647 (December 22, 2021) (SR–NYSEAMER–2021–46) (describing the NYSE Options Open-Close Volume Summary as a volume summary of trading activity on the exchange at the option level by origin, side of the market, contract volume and transaction type). 27 See, e.g., Securities Exchange Act Release No. 93132 (September 27, 2021), 86 FR 54499 (October 1, 2021) (SR–NYSEArca–2021–82) (describing the NYSE Options Open-Close Volume Summary as a volume summary of trading activity on the exchange at the option level by origin, side of the market, contract volume and transaction type). 28 See, e.g., Securities Exchange Act Release No. 97174 (March 21, 2023), 88 FR 18201 (March 27, 2023) (SR–BOX–2023–09) (describing the BOX exchange Open-Close Data report as providing volume by origin, buying/selling, and opening/ closing criteria). 29 See, e.g., Securities Exchange Act Release No. 91964 (May 21, 2021), 86 FR 28667 (May 27, 2021) (SR–PEARL–2021–24) (introducing the Open-Close Report). 30 The End of Day report includes a field that presents Total Industry Volume for the Series. PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 formats, will not be a real-time data feed. BX Options Trade Outline will be a completely voluntary product in that the Exchange is not required by any rule or regulation to make this data available and potential subscribers may purchase it only if they voluntarily choose to do so. Proposed Fees End of Day and Intra-Day Information The Exchange proposes to offer the End of Day product for $750 per month and the Intra-Day product at $1,500 per month. Historical Information The Exchange proposes to offer historical data for $500 per month for End of Day data, and $750 per month for Intra-Day information based on ad hoc requests for particular months of information. The Exchange also proposes to offer a discounted fee of $9,000 in total for the most recent 36 months 31 of historical Intra-Day data for Current Distributors,32 and a discounted fee of $6,000 in total for the most recent 36 months of End of Day data for Current Distributors. This is a substantial discount from the proposed fees for ad hoc data requests. With respect to End of Day data, ad hoc requests are $500 per month. Thirty-six months would cost a total of $18,000. The proposed discounted fee of $6,000 is two-thirds less than the standard rate. With respect to Intra-Day information, ad hoc requests are $750 per month. Thirty-six months would cost a total of $27,000. The proposed discounted fee of $9,000 for Intra-Day information is also two-thirds less than the standard rate. Eligibility for the discount will depend on the type of current subscription. A current purchaser of End of Day data would be eligible for the historical End of Day product at the reduced rate. A current purchaser of the Intra-Day product would similarly be able to purchase the historical Intra-Day product at the reduced rate. A purchaser of both the current End of Day and IntraDay products would be entitled to purchase both types of history at the reduced rate. The fees for historical data are linked to the current product because effective historical testing 31 The most recent 36 months is measured based on the date of purchase of the 36 months of data by a Current Distributor. 32 A ‘‘Current Distributor’’ is any firm that purchases either the End of Day Product for the current month, or the Intra-Day Product for the current month in the same month that the 36 months of historical End of Day or Intra-Day data is ordered. E:\FR\FM\02OCN1.SGM 02OCN1 Federal Register / Vol. 89, No. 191 / Wednesday, October 2, 2024 / Notices requires a comparison of similar licenses. Effective testing of the End of Day product, for example, requires End of Day historical data, and the same would hold true for Intra-Day data. The 36-month period will be based on the date of purchase of the 36 months of data by a Current Distributor. For example, a customer that buys the End of Day product for the first time in September 2024 would also be able to purchase historical End of Day data for the period September 2021 through September 2024 (inclusive) at the discounted rate. Similarly, a customer with an existing End of Day subscription in September 2024 would be able to purchase the historical End of Day data from September 2021 through September 2024 at the discounted rate. The same reasoning would apply to Intra-Day customers.33 Many customers use historical data to test their strategies and models, and our discussions with current and former customers and experience indicate that 36 months of data is sufficient for most customer needs, and is an effective baseline for review. For customers that request historical information outside of the three year period, end of day historical information can be purchased through ad hoc requests for monthly information for $500 per request per month, and Intra-Day information can be purchased at $750 per request per month. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,34 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,35 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. lotter on DSK11XQN23PROD with NOTICES1 Equitable Allocation of Reasonable Dues, Fees and Other Charges The proposed changes are an equitable allocation of reasonable dues, fees and other charges because: (i) the 33 A customer may use the proposed historical data discount more than once. For example, a Current Distributor that purchases 36 months of historical data at a discount, but later terminates that subscription, would be eligible to purchase another 36 months of historical data (based on the date of purchase) upon renewing that subscription. (Current Distributors that never terminate would have no need for a second purchase, as they would already possess the most recent months of historical data.). 34 15 U.S.C. 78f(b). 35 15 U.S.C. 78f(b)(4) and (5). VerDate Sep<11>2014 18:16 Oct 01, 2024 Jkt 262001 trade outline products offered by multiple exchanges are substitutes, and customers are free to choose which product they purchase; and (ii) the proposed fees are comparable to the fees charged by other exchanges, and customers are free to purchase other products if the Exchange has mistaken the value of its product. Substitution Trade outline products have been available on multiple exchanges for many years and are well known in the market and used by many market participants. PHLX Options Trade Outline, which is a model for BX Options Trade Outline, has been available for well over a decade.36 Similar products available on other Nasdaq exchanges include ISE Trade Profile,37 GEMX Trade Profile,38 and Nasdaq Options Trade Outline.39 Trade outline products are also offered by competitor exchanges such a Cboe,40 NYSE American,41 NYSE Arca,42 BOX,43 and MIAX PEARL.44 The trade outline products offered by the Nasdaqaffiliated exchanges provide exactly the same information as BX Options Trade outline, and those offered by other 36 See Securities Exchange Act Release No. 62887 (September 10, 2010), 75 FR 57092 (September 17, 2010) (SR–Phlx–2010–121) (introducing PHOTO on September 1, 2010). 37 See Nasdaq ISE Rules, Options 7, Section 10(A) and (B) (Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/Close Trade Profile Intraday). 38 See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq GEMX Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX Open/Close Intraday Trade Profile). 39 See Nasdaq Rules, Options 7, Section 4 (Nasdaq Options Trade Outline (‘‘NOTO’’)). 40 See, e.g., Securities Exchange Act Release No. 94913 (May 13, 2022), 87 FR 30534 (May 19, 2022) (SR–Cboe–2022–023) (describing End-of-Day and Intraday Open-Close Data as a summary of trading activity on the exchange at the option level by origin, side of the market, price and transaction type). 41 See, e.g., Securities Exchange Act Release No. 93803 (December 16, 2021, 86 FR 72647 (December 22, 2021) (SR–NYSEAMER–2021–46) (describing the NYSE Options Open-Close Volume Summary as a volume summary of trading activity on the exchange at the option level by origin, side of the market, contract volume and transaction type). 42 See, e.g., Securities Exchange Act Release No. 93132 (September 27, 2021), 86 FR 54499 (October 1, 2021) (SR–NYSEArca–2021–82) (describing the NYSE Options Open-Close Volume Summary as a volume summary of trading activity on the exchange at the option level by origin, side of the market, contract volume and transaction type). 43 See, e.g., Securities Exchange Act Release No. 97174 (March 21, 2023), 88 FR 18201 (March 27, 2023) (SR–BOX–2023–09) (describing the BOX exchange Open-Close Data report as providing volume by origin, buying/selling, and opening/ closing criteria). 44 See, e.g., Securities Exchange Act Release No. 91964 (May 21, 2021), 86 FR 28667 (May 27, 2021) (SR–PEARL–2021–24) (introducing the Open-Close Report). PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 80289 exchanges provide substantially the same information, including both IntraDay and End of Day data. The information provided by one exchange in its trade outline product is generally similar to that provided by other exchanges for competing products because order flow can move from one exchange to another, and market sentiment trends that appear on one exchange are likely to be similar to the sentiment trends on other exchanges. The key differentiator in the quality of the data depends on the volume of transactions on a given exchange; the greater the volume of transactions, the greater the value of the data. Customers can choose not to purchase the trade outline product of one exchange and substitute it for that of another exchange. This applies to both current and historical data. Customers can also choose not to purchase a trade outline product at all. Trade outline products are designed to help investors understand underlying market trends to improve the quality of investment decisions, but are not necessary to execute a trade. Customers may choose to forego the information from BX Options Trade Outline or any of its competitor products when making a trade. Nasdaq and its affiliates have observed that customers purchase sufficient data to provide a view of the market, but not more, as the value of data from each additional exchange yields diminishing returns. As a result, all exchanges are limited in what they will be able to charge for Trade Outline. As the Commission and courts 45 have recognized, ‘‘[i]f competitive forces are operative, the self-interest of the exchanges themselves will work powerfully to constrain unreasonable or 45 The decision of the United States Court of Appeals for the District of Columbia Circuit in NetCoalition v. SEC 615 F.3d 525 (D.C. Cir. 2010). upheld the Commission’s reliance upon competitive markets to set reasonable and equitably allocated fees for market data. ‘‘In fact, the legislative history indicates that the Congress intended that the market system evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed and that the SEC wield its regulatory power in those situations where competition may not be sufficient, such as in the creation of a consolidated transactional reporting system.’’ NetCoalition I at 535. (quoting H.R. Rep. No. 94–229, at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 321, 323) (internal quotation marks omitted). The court agreed with the Commission’s conclusion that ‘‘Congress intended that competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.’’ Id. (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74771 (December 9, 2008) (SR–NYSEArca–2006–21)). E:\FR\FM\02OCN1.SGM 02OCN1 80290 Federal Register / Vol. 89, No. 191 / Wednesday, October 2, 2024 / Notices unfair behavior.’’ 46 Accordingly, ‘‘the existence of significant competition provides a substantial basis for finding that the terms of an exchange’s fee proposal are equitable, fair, reasonable, and not unreasonably or unfairly discriminatory.’’ 47 The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, 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.’’ 48 BX Options Trade Outline is in direct competition with multiple exchanges that offer similar products in end of day and intra-day formats.49 The discounted fees for historical data, like the purchase of the end of day, Intra-Day and Derived Data licenses, is also subject to competition. Any exchange that wishes to provide discounts for historical data would be able to do so with an immediately effective fee filing in response. Comparability lotter on DSK11XQN23PROD with NOTICES1 The proposed fees are comparable to the fees charged by similarly situated exchanges. As explained above, the value of a trade outline product is determined in part by the number of underlying transactions reflected in the data. BX has a market share comparable to Cboe C2 and MIAX Emerald, in the range of approximately 2% to 4% at the time of this filing.50 For intra-day products, MIAX Emerald charges $2,000 51 and 46 See Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770 (December 9, 2008) (SR–NYSEArca–2006–21). 47 See id. 48 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). 49 These substitute products include NOTO, ISE Trade Profile, GEMX Trade Profile data; open-close data from Cboe C1, C2, BZX, and EDGX; and Open Close Reports from MIAX Options, Pearl, and Emerald. 50 See NasdaqTrader.com, ‘‘Options Market Statistics,’’ available at https:// www.nasdaqtrader.com/ Trader.aspx?id=OptionsVolumeSummary. 51 See MIAX Emerald Options Exchange Fee Schedule as of April 18, 2024,’’ available at https:// www.miaxglobal.com/sites/default/files/fee_ schedule-files/MIAX_Emerald_Fee_Schedule_ 04182024.pdf. VerDate Sep<11>2014 18:16 Oct 01, 2024 Jkt 262001 Cboe C2 charges $1,000.52 The proposed fee of $1,500 is within that range and comparable to those fees. For End of Day products, MIAX Emerald charges $600,53 and Cboe C2 charges $500.54 Although the proposed fees of $750 are above that range, BX believes that the relative value of IntraDay and End of Day fees should be in the ratio of 2:1, and therefore MIAX Emerald and Cboe C2 have somewhat undervalued their end of day products. If Nasdaq is incorrect in that assessment, customers will purchase the products of its competitors. Nasdaq is not aware of another exchange that provides a discount for historical data other than its own affiliates. Volume on BX is comparable to volume on MRX and GEMX. The proposed discounted prices of $6,000 for 36 months of historical End of Day data and $9,000 for 36 months of historical Intra-Day data for BX are identical to the proposed discounts for the MRX exchange, submitted congruently with this filing. The proposed discounted prices for IntraDay data for BX and MRX are also identical to that of GEMX. Although proposed fees for 36 months of End of Day data for BX and MRX ($6,000) are higher than those for GEMX ($4,800), the overall pricing methodology of offering three years of historical data for the price of one year of ad hoc requests for information is consistent across all of these exchanges, and therefore comparable.55 With respect to ad hoc requests for information, BX provides a discount from current requests. Current End of Day information is available for $750 per month, while ad hoc requests for historical End of Day information is available for $500 per month. Similarly, Current Intra-Day information is available for $1,500 per month, while ad hoc requests for historical Intra-Day information is available for $750 per month. This is identical to the fee structure proposed for the MRX exchange, and comparable to the fee 52 See Cboe DataShop, ‘‘Cboe Open-Close Volume Summary,’’ available at https://datashop.cboe.com/ cboe-options-open-close-volume-summary. 53 See MIAX Emerald Options Exchange Fee Schedule as of April 18, 2024,’’ available at https:// www.miaxglobal.com/sites/default/files/fee_ schedule-files/MIAX_Emerald_Fee_Schedule_ 04182024.pdf. 54 See Cboe DataShop, ‘‘Cboe Open-Close Volume Summary,’’ available at https://datashop.cboe.com/ cboe-options-open-close-volume-summary. 55 The fee for an ad hoc request for one month of End of Day data on the GEMX exchange is $400, and the discounted fee for 12 months of data is $400 × 12, or $4,800. The fee for an ad hoc request for one month of End of Day data on the BX and MRX exchanges is $500, and the discounted fee for 12 months of data is $500 × 12, or $6,000. PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 structure for the GEMX exchange (which offers current End of Day data for $575 per month and historical End of Day data for $400 per month; current Intra-Day data is offered for $1,500 per month, and historical Intra-Day data is offered for $750 per month). If the Exchange is incorrect in its assessments for any of these fees, current and prospective customers will elect not to purchase Trade Outline. The Proposal Does Not Permit Unfair Discrimination Nothing in the proposal treats any category of market participant any differently from any other category of market participant. The proposed fees, including both current and historical information, apply equally to all current and potential distributors. Trade Outline is available to all market participants, including members and non-members, and all market participants receive the same information. It is not unfair discrimination to provide a discount for 36 months of historical data to Current Distributors, but not former distributors or firms that have never purchased the product. Any firm would be able to become a Current Distributor at any time by subscribing to Trade Outline, and would be able to cancel the subscription at any time after receiving the 36 months of historical data for the proposed discounted fee. More specifically, a firm that is not a Current Distributor may obtain access to the 36 months of historical data at a discount by becoming a Current Distributor for a limited time and then terminating the subscription. It is not unfair discrimination to limit the discount for 36 months of historical data to Current Distributors. Historical information is generally used by Current Distributors to test their strategies and trading models, and Current Distributors are therefore in the best position to benefit from the historical data. Outside of the 36 month period, all firms will have the opportunity to purchase historical data on an ad hoc basis. For all of these reasons, the proposal does not permit unfair discrimination. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a E:\FR\FM\02OCN1.SGM 02OCN1 Federal Register / Vol. 89, No. 191 / Wednesday, October 2, 2024 / Notices particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. Intermarket Competition Nothing in the proposal burdens inter-market competition (the competition among self-regulatory organizations). As discussed above, Trade Outline is subject to direct competition from other options exchanges that offer substitutes. Any of these exchanges can replicate this proposal in full or in part, and nothing in the proposal would interfere with the ability of any exchange to do so. Intra-Market Competition lotter on DSK11XQN23PROD with NOTICES1 Nothing in the proposal burdens intra-market competition (the competition among consumers of exchange data). Trade Outline is available to any customer under the same fee schedule as any other customer, and any market participant that wishes to purchase these products can do so on a non-discriminatory basis. Offering the 36 months of historical data to Current Distributors, but not former distributors or firms that have never purchased the product, will not burden competition because nonsubscribers are free to purchase a current subscription. Moreover, a firm that is not a Current Distributor may become a Current Distributor and then cancel the product after receiving the historical discount. As such, firms that are not Current Distributors will have an opportunity to pay the same fees for the most recent 36 months of historical data as Current Distributors. Outside of the 36 month period, all firms will have the opportunity to purchase historical data on an ad hoc basis. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. VerDate Sep<11>2014 18:16 Oct 01, 2024 Jkt 262001 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.56 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: (i) necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. 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–BX–2024–036 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–BX–2024–036. 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, 56 15 PO 00000 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–BX–2024–036 and should be submitted on or before October 23, 2024 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.57 Vanessa A. Countryman, Secretary. [FR Doc. 2024–22564 Filed 10–1–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–101197; File No. SR– CBOE–2024–034] Self-Regulatory Organizations; CBOE Exchange, Inc.; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Adopt Rules To List P.M.-Settled Russell 2000 Index Options With Expirations on the Third Friday-of-the-Month September 26, 2024. I. Introduction On August 2, 2024, Cboe Exchange, Inc. (‘‘Exchange’’ or ‘‘Cboe Options’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list p.m.-settled broad-based Index options with expirations on the third Friday-of-the-month. The proposed rule change was published for comment in the Federal Register on August 14, 2024.3 On September 13, 2024, the Exchange filed Amendment No. 1 to the proposed rule change, described in Item II below, which Item has been prepared by the Exchange.4 57 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. 100671 (August 8, 2024), 89 FR 66163. The Commission has not received any comments. 4 The full text of Amendment No. 1 is available on the Commission’s website at: https:// 1 15 U.S.C. 78s(b)(3)(A)(ii). Frm 00100 Fmt 4703 Sfmt 4703 80291 Continued E:\FR\FM\02OCN1.SGM 02OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 89, Number 191 (Wednesday, October 2, 2024)]
[Notices]
[Pages 80287-80291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-22564]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101195; File No. SR-BX-2024-036]


Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Initiate Fees 
for the Distribution of BX Trade Outline

September 26, 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 September 13, 2024, Nasdaq BX, Inc. (``BX'' 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.
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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

    The Exchange proposes to initiate fees for the distribution of BX 
Trade Outline.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/bx/rules, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The purpose of the proposed rule change is to initiate fees for the 
distribution of BX Trade Outline. Distributor fees will be $750 per 
month for the End of Day product, and $1,500 per month for the Intra-
Day product.\3\
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    \3\ This proposal was initially filed on September 3, 2024, as 
SR-BX-2024-034. On September 13, 2024, SR-BX-2024-034 was withdrawn 
and replaced with the instant filing to clarify the time period for 
availability of historical information.
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    Historical data will be available through ad hoc requests for 
information for $500 per month of End of Day information, and $750 per 
month for historical information. Current Distributors \4\ will also be 
able to purchase the most recent 36 months of historical data \5\ at 
the discounted price of $6,000 for End of Day information, and $9,000 
for Intra-Day information. Historical information will be available 
starting in December 2014.
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    \4\ A ``Current Distributor'' is any firm that purchases either 
the End of Day Product for the current month, or the Intra-Day 
Product for the current month in the same month that the 36 months 
of historical End of Day or Intra-Day data is ordered.
    \5\ The most recent 36 months is measured based on the date of 
purchase of the 36 months of data by a Current Distributor.
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BX Options Trade Outline
    BX Options Trade Outline will provide aggregate quantity and volume 
information for trades on the Exchange for all series \6\ during a 
trading session.\7\ Information is provided in the following 
categories: (i) total exchange volume for Intra-Day information and 
total exchange and industry volume for End of Day information for each 
reported series; (ii) open interest for the series; (iii) aggregate 
quantity of trades and aggregate trade volume effected to open a 
position,\8\ characterized by origin type (Customers,\9\ Broker-
Dealers,\10\ BX Options Market Makers,\11\ Firms,\12\ and Professionals 
\13\); and (iv) aggregate quantity of trades and aggregate trade volume 
effected to close a position,\14\ characterized by origin type 
(Customers, Broker-Dealers, BX Options Market Makers, Firms, and 
Professionals).\15\
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    \6\ Every options series trades as a distinct symbol; the terms 
``series'' and ``symbol'' are therefore synonyms.
    \7\ See Securities Exchange Act Release No. 100792 (August 21, 
2024), 89 FR 68676 (August 27, 2024) (SR-BX-2024-028).
    \8\ This would include the aggregate number of ``opening 
purchase transactions,'' defined as a BX Options Transaction that 
creates or increases a long position in an options contract, see 
Options 1, Section 1(a)(35), and the aggregate number of ``opening 
writing transactions,'' defined as a BX Options Transaction that 
creates or increases a short position in an options contract. See 
Options 1, Section 1(a)(36).
    \9\ The term ``Customer'' applies to any transaction that is 
identified by a Participant for clearing in the Customer range at 
The Options Clearing Corporation (``OCC'') which is not for the 
account of broker or dealer or for the account of a ``Professional'' 
(as that term is defined in Options 1, Section 1(a)(48)). See 
Options 7, Section 1(a).
    \10\ The term ``Broker-Dealer'' applies to any transaction which 
is not subject to any of the other transaction fees applicable 
within a particular category. See Options 7, Section 1(a).
    \11\ The term ``BX Options Market Maker'' is a Participant that 
has registered as a Market Maker on BX Options pursuant to Options 
2, Section 1, and must also remain in good standing pursuant to 
Options 2, Section 9. In order to receive Market Maker pricing in 
all securities, the Participant must be registered as a BX Options 
Market Maker in at least one security. See Options 7, Section 1(a).
    \12\ The term ``Firm'' applies to any transaction that is 
identified by a Participant for clearing in the Firm range at OCC. 
See Options 7, Section 1(a).
    \13\ The term ``Professional'' means any person or entity that 
(i) is not a broker or dealer in securities, and (ii) places more 
than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s) pursuant to Options 
1, Section 1(a)(48). All Professional orders shall be appropriately 
marked by Participants. See Options 7, Section 1(a).
    \14\ This would include the aggregate number of ``closing 
purchase transactions'' in the affected series, defined as a BX 
Options Transaction that reduces or eliminates a short position in 
an options contract, see Options 1, Section 1(a)(19), and the 
aggregate number of ``closing writing transactions,'' defined as a 
BX Options Transaction that reduces or eliminates a long position in 
an options contract. See Options 1, Section 1(a)(20).
    \15\ These are the same types of information available on PHOTO, 
and the other trade outline products offered by Nasdaq exchanges.
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    Information will be provided on an End of Day, Intra-Day, and 
historical basis.
End of Day Information
    The BX Trade Outline End of Day file will provide opening buy, 
closing buy, opening sell and closing sell information, including 
option first trade price, option high trade price, option low trade 
price, and option last trade price.
    The End of Day file will be updated during an overnight process 
with additional fields \16\ and will be available the following 
morning, providing aggregate data for the entire trading session.
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    \16\ The additional fields are: First Trade Price, High Trade 
Price, Low Trade Price, Last Trade Price, Underlying Close, 
Moneyness, Total Exchange volume, Total Industry Volume for the 
Series, and Open Interest.
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Intra-Day Information
    Intra-Day information will be released in scheduled ``snapshots'' 
available

[[Page 80288]]

every 10 minutes for all options series over the course of the trading 
day. These snapshots will be updated to reflect whatever activity 
occurred, or to indicate that no activity occurred.\17\ This is the 
same schedule currently offered on PHLX, ISE, GEMX, and Nasdaq Options 
Market.\18\
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    \17\ Subscribers will receive the first snapshot at 9:42 a.m. 
ET, representing data captured from 9:30 a.m. to 9:40 a.m., and the 
second calculation at 9:52 a.m., representing data from both the 
most recent snapshot and previous snapshots, and continuing over the 
course of the trading day. The final Intra-Day snapshot will be 
distributed at 4:15 p.m.
    \18\ See Infra, notes 21 through 23.
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Historical Information
    Historical data will be available through ad hoc requests for 
information in both End of Day and Intra-Day formats for all option 
series traded for every calendar month after December 2014, based on 
specific request.\19\ Historical data is useful in analyzing option 
trade and volume data, evaluating historical trends in the trading 
activity of a particular option series, and creating and testing 
trading models and analytical strategies. In Nasdaq's experience, 
historical information is often purchased concurrently with a new 
subscription to a trade outline product.
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    \19\ Market participants generally use historical files for 
model testing and research, and the period of time required by a 
particular market participant will depend on its unique testing and 
research needs as well as whether it is using End of Day or Intra-
Day information. Some customers, for example, may request years of 
data, while others only months, or even a single month. The same 
principle applies to End of Day vs. Intra-Day information.
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    Patterned after PHLX Options Trade Outline ``PHOTO,'' \20\ BX Trade 
Options Outline replicates in substance \21\ PHOTO and the other trade 
outline products currently offered by Nasdaq ISE, LLC (``ISE''),\22\ 
Nasdaq GEMX, LLC (``GEMX''),\23\ and the options market operated by the 
Nasdaq Stock Market LLC (``Nasdaq Options Market'' or ``NOM'').\24\ 
Similar products are also available from options markets not affiliated 
with Nasdaq such as Cboe Options Exchange (``Cboe''),\25\ NYSE American 
Options (``NYSE American''),\26\ NYSE Arca Options (``NYSE Arca''),\27\ 
BOX Options Market LLC (``BOX''),\28\ MIAX Pearl Options Exchange 
(``Pearl''),\29\ and others. BX Options Trade Outline, like all of 
these other trade outline products, provides data to help market 
participants understand market sentiment on the Exchange and to support 
the creation of trading models useful in both options and equities 
markets.
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    \20\ See PHLX Rules, Options 7, Section 10; Securities Exchange 
Act Release No. 62887 (September 10, 2010), 75 FR 57092 (September 
17, 2010) (SR-Phlx-2010-121) (introducing PHOTO on September 1, 
2010).
    \21\ The underlying information for BX Options Trade Outline 
will be the same as the other trade outline products offered by the 
Nasdaq exchanges. Presentation will differ, however, in that data 
will not be subdivided into categories. For example, the trade 
outline products offered by PHLX, ISE, GEMX and NOM subdivide the 
aggregate volume traded for each reported series into categories 
according to the quantity of contracts (less than 100, 100-199, and 
greater than 200). BX Options Trade Outline will not separate this 
information into quantitative categories, but rather will provide 
the same aggregate volume information as PHOTO and the other Nasdaq 
exchanges without separating the information into categories 
according to the quantity of contracts.
    \22\ See Nasdaq ISE Rules, Options 7, Section 10(A) and (B) 
(Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/
Close Trade Profile Intraday).
    \23\ See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq 
GEMX Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX 
Open/Close Intraday Trade Profile).
    \24\ See Nasdaq Rules, Options 7, Section 4 (Nasdaq Options 
Trade Outline (``NOTO'')).
    \25\ See, e.g., Securities Exchange Act Release No. 94913 (May 
13, 2022), 87 FR 30534 (May 19, 2022) (SR-Cboe-2022-023) (describing 
End of Day and Intra-Day Open-Close Data as a summary of trading 
activity on the exchange at the option level by origin, side of the 
market, price, and transaction type).
    \26\ See, e.g., Securities Exchange Act Release No. 93803 
(December 16, 2021, 86 FR 72647 (December 22, 2021) (SR-NYSEAMER-
2021-46) (describing the NYSE Options Open-Close Volume Summary as a 
volume summary of trading activity on the exchange at the option 
level by origin, side of the market, contract volume and transaction 
type).
    \27\ See, e.g., Securities Exchange Act Release No. 93132 
(September 27, 2021), 86 FR 54499 (October 1, 2021) (SR-NYSEArca-
2021-82) (describing the NYSE Options Open-Close Volume Summary as a 
volume summary of trading activity on the exchange at the option 
level by origin, side of the market, contract volume and transaction 
type).
    \28\ See, e.g., Securities Exchange Act Release No. 97174 (March 
21, 2023), 88 FR 18201 (March 27, 2023) (SR-BOX-2023-09) (describing 
the BOX exchange Open-Close Data report as providing volume by 
origin, buying/selling, and opening/closing criteria).
    \29\ See, e.g., Securities Exchange Act Release No. 91964 (May 
21, 2021), 86 FR 28667 (May 27, 2021) (SR-PEARL-2021-24) 
(introducing the Open-Close Report).
---------------------------------------------------------------------------

    Nasdaq's experience is that investment banks, market makers, asset 
managers and other buy-side investors purchase trade outline products. 
In general, the relative value of these products depends on the volume 
of transactions included; the greater the volume of transactions, the 
greater the value of the data.
    BX Options Trade Outline will include proprietary Exchange trading 
data and will not disseminate any intra-day trading data from any other 
exchange.\30\ The information provided, both in End of Day and Intra-
Day formats, will not be a real-time data feed.
---------------------------------------------------------------------------

    \30\ The End of Day report includes a field that presents Total 
Industry Volume for the Series.
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    BX Options Trade Outline will be a completely voluntary product in 
that the Exchange is not required by any rule or regulation to make 
this data available and potential subscribers may purchase it only if 
they voluntarily choose to do so.
Proposed Fees
End of Day and Intra-Day Information
    The Exchange proposes to offer the End of Day product for $750 per 
month and the Intra-Day product at $1,500 per month.
Historical Information
    The Exchange proposes to offer historical data for $500 per month 
for End of Day data, and $750 per month for Intra-Day information based 
on ad hoc requests for particular months of information.
    The Exchange also proposes to offer a discounted fee of $9,000 in 
total for the most recent 36 months \31\ of historical Intra-Day data 
for Current Distributors,\32\ and a discounted fee of $6,000 in total 
for the most recent 36 months of End of Day data for Current 
Distributors.
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    \31\ The most recent 36 months is measured based on the date of 
purchase of the 36 months of data by a Current Distributor.
    \32\ A ``Current Distributor'' is any firm that purchases either 
the End of Day Product for the current month, or the Intra-Day 
Product for the current month in the same month that the 36 months 
of historical End of Day or Intra-Day data is ordered.
---------------------------------------------------------------------------

    This is a substantial discount from the proposed fees for ad hoc 
data requests. With respect to End of Day data, ad hoc requests are 
$500 per month. Thirty-six months would cost a total of $18,000. The 
proposed discounted fee of $6,000 is two-thirds less than the standard 
rate. With respect to Intra-Day information, ad hoc requests are $750 
per month. Thirty-six months would cost a total of $27,000. The 
proposed discounted fee of $9,000 for Intra-Day information is also 
two-thirds less than the standard rate.
    Eligibility for the discount will depend on the type of current 
subscription. A current purchaser of End of Day data would be eligible 
for the historical End of Day product at the reduced rate. A current 
purchaser of the Intra-Day product would similarly be able to purchase 
the historical Intra-Day product at the reduced rate. A purchaser of 
both the current End of Day and Intra-Day products would be entitled to 
purchase both types of history at the reduced rate. The fees for 
historical data are linked to the current product because effective 
historical testing

[[Page 80289]]

requires a comparison of similar licenses. Effective testing of the End 
of Day product, for example, requires End of Day historical data, and 
the same would hold true for Intra-Day data.
    The 36-month period will be based on the date of purchase of the 36 
months of data by a Current Distributor. For example, a customer that 
buys the End of Day product for the first time in September 2024 would 
also be able to purchase historical End of Day data for the period 
September 2021 through September 2024 (inclusive) at the discounted 
rate. Similarly, a customer with an existing End of Day subscription in 
September 2024 would be able to purchase the historical End of Day data 
from September 2021 through September 2024 at the discounted rate. The 
same reasoning would apply to Intra-Day customers.\33\
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    \33\ A customer may use the proposed historical data discount 
more than once. For example, a Current Distributor that purchases 36 
months of historical data at a discount, but later terminates that 
subscription, would be eligible to purchase another 36 months of 
historical data (based on the date of purchase) upon renewing that 
subscription. (Current Distributors that never terminate would have 
no need for a second purchase, as they would already possess the 
most recent months of historical data.).
---------------------------------------------------------------------------

    Many customers use historical data to test their strategies and 
models, and our discussions with current and former customers and 
experience indicate that 36 months of data is sufficient for most 
customer needs, and is an effective baseline for review.
    For customers that request historical information outside of the 
three year period, end of day historical information can be purchased 
through ad hoc requests for monthly information for $500 per request 
per month, and Intra-Day information can be purchased at $750 per 
request per month.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\34\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\35\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \34\ 15 U.S.C. 78f(b).
    \35\ 15 U.S.C. 78f(b)(4) and (5).
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Equitable Allocation of Reasonable Dues, Fees and Other Charges
    The proposed changes are an equitable allocation of reasonable 
dues, fees and other charges because: (i) the trade outline products 
offered by multiple exchanges are substitutes, and customers are free 
to choose which product they purchase; and (ii) the proposed fees are 
comparable to the fees charged by other exchanges, and customers are 
free to purchase other products if the Exchange has mistaken the value 
of its product.
Substitution
    Trade outline products have been available on multiple exchanges 
for many years and are well known in the market and used by many market 
participants. PHLX Options Trade Outline, which is a model for BX 
Options Trade Outline, has been available for well over a decade.\36\ 
Similar products available on other Nasdaq exchanges include ISE Trade 
Profile,\37\ GEMX Trade Profile,\38\ and Nasdaq Options Trade 
Outline.\39\ Trade outline products are also offered by competitor 
exchanges such a Cboe,\40\ NYSE American,\41\ NYSE Arca,\42\ BOX,\43\ 
and MIAX PEARL.\44\ The trade outline products offered by the Nasdaq-
affiliated exchanges provide exactly the same information as BX Options 
Trade outline, and those offered by other exchanges provide 
substantially the same information, including both Intra-Day and End of 
Day data.
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    \36\ See Securities Exchange Act Release No. 62887 (September 
10, 2010), 75 FR 57092 (September 17, 2010) (SR-Phlx-2010-121) 
(introducing PHOTO on September 1, 2010).
    \37\ See Nasdaq ISE Rules, Options 7, Section 10(A) and (B) 
(Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/
Close Trade Profile Intraday).
    \38\ See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq 
GEMX Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX 
Open/Close Intraday Trade Profile).
    \39\ See Nasdaq Rules, Options 7, Section 4 (Nasdaq Options 
Trade Outline (``NOTO'')).
    \40\ See, e.g., Securities Exchange Act Release No. 94913 (May 
13, 2022), 87 FR 30534 (May 19, 2022) (SR-Cboe-2022-023) (describing 
End-of-Day and Intraday Open-Close Data as a summary of trading 
activity on the exchange at the option level by origin, side of the 
market, price and transaction type).
    \41\ See, e.g., Securities Exchange Act Release No. 93803 
(December 16, 2021, 86 FR 72647 (December 22, 2021) (SR-NYSEAMER-
2021-46) (describing the NYSE Options Open-Close Volume Summary as a 
volume summary of trading activity on the exchange at the option 
level by origin, side of the market, contract volume and transaction 
type).
    \42\ See, e.g., Securities Exchange Act Release No. 93132 
(September 27, 2021), 86 FR 54499 (October 1, 2021) (SR-NYSEArca-
2021-82) (describing the NYSE Options Open-Close Volume Summary as a 
volume summary of trading activity on the exchange at the option 
level by origin, side of the market, contract volume and transaction 
type).
    \43\ See, e.g., Securities Exchange Act Release No. 97174 (March 
21, 2023), 88 FR 18201 (March 27, 2023) (SR-BOX-2023-09) (describing 
the BOX exchange Open-Close Data report as providing volume by 
origin, buying/selling, and opening/closing criteria).
    \44\ See, e.g., Securities Exchange Act Release No. 91964 (May 
21, 2021), 86 FR 28667 (May 27, 2021) (SR-PEARL-2021-24) 
(introducing the Open-Close Report).
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    The information provided by one exchange in its trade outline 
product is generally similar to that provided by other exchanges for 
competing products because order flow can move from one exchange to 
another, and market sentiment trends that appear on one exchange are 
likely to be similar to the sentiment trends on other exchanges. The 
key differentiator in the quality of the data depends on the volume of 
transactions on a given exchange; the greater the volume of 
transactions, the greater the value of the data. Customers can choose 
not to purchase the trade outline product of one exchange and 
substitute it for that of another exchange. This applies to both 
current and historical data.
    Customers can also choose not to purchase a trade outline product 
at all. Trade outline products are designed to help investors 
understand underlying market trends to improve the quality of 
investment decisions, but are not necessary to execute a trade. 
Customers may choose to forego the information from BX Options Trade 
Outline or any of its competitor products when making a trade.
    Nasdaq and its affiliates have observed that customers purchase 
sufficient data to provide a view of the market, but not more, as the 
value of data from each additional exchange yields diminishing returns. 
As a result, all exchanges are limited in what they will be able to 
charge for Trade Outline.
    As the Commission and courts \45\ have recognized, ``[i]f 
competitive forces are operative, the self-interest of the exchanges 
themselves will work powerfully to constrain unreasonable or

[[Page 80290]]

unfair behavior.'' \46\ Accordingly, ``the existence of significant 
competition provides a substantial basis for finding that the terms of 
an exchange's fee proposal are equitable, fair, reasonable, and not 
unreasonably or unfairly discriminatory.'' \47\ The Commission and the 
courts have repeatedly expressed their preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, while adopting a series 
of steps to improve the current market model, 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.'' \48\ BX Options Trade Outline is in direct competition 
with multiple exchanges that offer similar products in end of day and 
intra-day formats.\49\
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    \45\ The decision of the United States Court of Appeals for the 
District of Columbia Circuit in NetCoalition v. SEC 615 F.3d 525 
(D.C. Cir. 2010). upheld the Commission's reliance upon competitive 
markets to set reasonable and equitably allocated fees for market 
data. ``In fact, the legislative history indicates that the Congress 
intended that the market system evolve through the interplay of 
competitive forces as unnecessary regulatory restrictions are 
removed and that the SEC wield its regulatory power in those 
situations where competition may not be sufficient, such as in the 
creation of a consolidated transactional reporting system.'' 
NetCoalition I at 535. (quoting H.R. Rep. No. 94-229, at 92 (1975), 
as reprinted in 1975 U.S.C.C.A.N. 321, 323) (internal quotation 
marks omitted). The court agreed with the Commission's conclusion 
that ``Congress intended that competitive forces should dictate the 
services and practices that constitute the U.S. national market 
system for trading equity securities.'' Id. (quoting Securities 
Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 
74771 (December 9, 2008) (SR-NYSEArca-2006-21)).
    \46\ See Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
    \47\ See id.
    \48\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
    \49\ These substitute products include NOTO, ISE Trade Profile, 
GEMX Trade Profile data; open-close data from Cboe C1, C2, BZX, and 
EDGX; and Open Close Reports from MIAX Options, Pearl, and Emerald.
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    The discounted fees for historical data, like the purchase of the 
end of day, Intra-Day and Derived Data licenses, is also subject to 
competition. Any exchange that wishes to provide discounts for 
historical data would be able to do so with an immediately effective 
fee filing in response.
Comparability
    The proposed fees are comparable to the fees charged by similarly 
situated exchanges.
    As explained above, the value of a trade outline product is 
determined in part by the number of underlying transactions reflected 
in the data. BX has a market share comparable to Cboe C2 and MIAX 
Emerald, in the range of approximately 2% to 4% at the time of this 
filing.\50\ For intra-day products, MIAX Emerald charges $2,000 \51\ 
and Cboe C2 charges $1,000.\52\ The proposed fee of $1,500 is within 
that range and comparable to those fees.
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    \50\ See NasdaqTrader.com, ``Options Market Statistics,'' 
available at https://www.nasdaqtrader.com/Trader.aspx?id=OptionsVolumeSummary.
    \51\ See MIAX Emerald Options Exchange Fee Schedule as of April 
18, 2024,'' available at https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Emerald_Fee_Schedule_04182024.pdf.
    \52\ See Cboe DataShop, ``Cboe Open-Close Volume Summary,'' 
available at https://datashop.cboe.com/cboe-options-open-close-volume-summary.
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    For End of Day products, MIAX Emerald charges $600,\53\ and Cboe C2 
charges $500.\54\ Although the proposed fees of $750 are above that 
range, BX believes that the relative value of Intra-Day and End of Day 
fees should be in the ratio of 2:1, and therefore MIAX Emerald and Cboe 
C2 have somewhat undervalued their end of day products. If Nasdaq is 
incorrect in that assessment, customers will purchase the products of 
its competitors.
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    \53\ See MIAX Emerald Options Exchange Fee Schedule as of April 
18, 2024,'' available at https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Emerald_Fee_Schedule_04182024.pdf.
    \54\ See Cboe DataShop, ``Cboe Open-Close Volume Summary,'' 
available at https://datashop.cboe.com/cboe-options-open-close-volume-summary.
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    Nasdaq is not aware of another exchange that provides a discount 
for historical data other than its own affiliates. Volume on BX is 
comparable to volume on MRX and GEMX. The proposed discounted prices of 
$6,000 for 36 months of historical End of Day data and $9,000 for 36 
months of historical Intra-Day data for BX are identical to the 
proposed discounts for the MRX exchange, submitted congruently with 
this filing. The proposed discounted prices for Intra-Day data for BX 
and MRX are also identical to that of GEMX. Although proposed fees for 
36 months of End of Day data for BX and MRX ($6,000) are higher than 
those for GEMX ($4,800), the overall pricing methodology of offering 
three years of historical data for the price of one year of ad hoc 
requests for information is consistent across all of these exchanges, 
and therefore comparable.\55\
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    \55\ The fee for an ad hoc request for one month of End of Day 
data on the GEMX exchange is $400, and the discounted fee for 12 
months of data is $400 x 12, or $4,800. The fee for an ad hoc 
request for one month of End of Day data on the BX and MRX exchanges 
is $500, and the discounted fee for 12 months of data is $500 x 12, 
or $6,000.
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    With respect to ad hoc requests for information, BX provides a 
discount from current requests. Current End of Day information is 
available for $750 per month, while ad hoc requests for historical End 
of Day information is available for $500 per month. Similarly, Current 
Intra-Day information is available for $1,500 per month, while ad hoc 
requests for historical Intra-Day information is available for $750 per 
month. This is identical to the fee structure proposed for the MRX 
exchange, and comparable to the fee structure for the GEMX exchange 
(which offers current End of Day data for $575 per month and historical 
End of Day data for $400 per month; current Intra-Day data is offered 
for $1,500 per month, and historical Intra-Day data is offered for $750 
per month).
    If the Exchange is incorrect in its assessments for any of these 
fees, current and prospective customers will elect not to purchase 
Trade Outline.
The Proposal Does Not Permit Unfair Discrimination
    Nothing in the proposal treats any category of market participant 
any differently from any other category of market participant.
    The proposed fees, including both current and historical 
information, apply equally to all current and potential distributors. 
Trade Outline is available to all market participants, including 
members and non-members, and all market participants receive the same 
information.
    It is not unfair discrimination to provide a discount for 36 months 
of historical data to Current Distributors, but not former distributors 
or firms that have never purchased the product. Any firm would be able 
to become a Current Distributor at any time by subscribing to Trade 
Outline, and would be able to cancel the subscription at any time after 
receiving the 36 months of historical data for the proposed discounted 
fee. More specifically, a firm that is not a Current Distributor may 
obtain access to the 36 months of historical data at a discount by 
becoming a Current Distributor for a limited time and then terminating 
the subscription.
    It is not unfair discrimination to limit the discount for 36 months 
of historical data to Current Distributors. Historical information is 
generally used by Current Distributors to test their strategies and 
trading models, and Current Distributors are therefore in the best 
position to benefit from the historical data. Outside of the 36 month 
period, all firms will have the opportunity to purchase historical data 
on an ad hoc basis.
    For all of these reasons, the proposal does not permit unfair 
discrimination.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. In terms of inter-market 
competition, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a

[[Page 80291]]

particular venue to be excessive, or rebate opportunities available at 
other venues to be more favorable. In such an environment, the Exchange 
must continually adjust its fees to remain competitive with other 
exchanges and with alternative trading systems that have been exempted 
from compliance with the statutory standards applicable to exchanges. 
Because competitors are free to modify their own fees in response, and 
because market participants may readily adjust their order routing 
practices, the Exchange believes that the degree to which fee changes 
in this market may impose any burden on competition is extremely 
limited.
Intermarket Competition
    Nothing in the proposal burdens inter-market competition (the 
competition among self-regulatory organizations).
    As discussed above, Trade Outline is subject to direct competition 
from other options exchanges that offer substitutes. Any of these 
exchanges can replicate this proposal in full or in part, and nothing 
in the proposal would interfere with the ability of any exchange to do 
so.
Intra-Market Competition
    Nothing in the proposal burdens intra-market competition (the 
competition among consumers of exchange data). Trade Outline is 
available to any customer under the same fee schedule as any other 
customer, and any market participant that wishes to purchase these 
products can do so on a non-discriminatory basis.
    Offering the 36 months of historical data to Current Distributors, 
but not former distributors or firms that have never purchased the 
product, will not burden competition because non-subscribers are free 
to purchase a current subscription. Moreover, a firm that is not a 
Current Distributor may become a Current Distributor and then cancel 
the product after receiving the historical discount. As such, firms 
that are not Current Distributors will have an opportunity to pay the 
same fees for the most recent 36 months of historical data as Current 
Distributors. Outside of the 36 month period, all firms will have the 
opportunity to purchase historical data on an ad hoc basis.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\56\
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    \56\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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: (i) 
necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

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-BX-2024-036 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-BX-2024-036. 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-BX-2024-036 and should be 
submitted on or before October 23, 2024

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\57\
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    \57\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-22564 Filed 10-1-24; 8:45 am]
BILLING CODE 8011-01-P

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