Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Regarding Dedicated Cores, 83748-83752 [2024-23903]
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Federal Register / Vol. 89, No. 201 / Thursday, October 17, 2024 / Notices
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–BX–2024–038. 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–2024–038 and should be
submitted on or before November 7,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–23900 Filed 10–16–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
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[Investment Company Act Release No.
35358; File No. 813–00403]
Edgar Street Capital, LLC, Elizabeth
Street Capital, LLC and Jane Street
Group, LLC
October 11, 2024.
Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’).
ACTION: Notice.
AGENCY:
27 17
CFR 200.30–3(a)(12).
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Notice of application for an order
under sections 6(b) and 6(e) of the
Investment Company Act of 1940 (the
‘‘Act’’) granting an exemption from all
provisions of the Act, except sections 9,
17, 30, 36 through 53 and the rules and
regulations under the Act. With respect
to sections 17(a), (d), (e), (f), (g) and (j)
of the Act, sections 30(a), (b), (e), and (h)
of the Act and the Rules and
Regulations and rule 38a–1 under the
Act, Applicants (as defined below)
request a limited exemption as set forth
in the application.
SUMMARY OF APPLICATION: The requested
exemption would permit Applicants to
enter an order to exempt certain limited
liability companies, partnerships,
business trusts, or other entities
(‘‘Funds’’) formed for the benefit of
eligible employees of Jane Street Group,
LLC and its affiliates from certain
provisions of the Act. Each Fund will be
an ‘‘employees’ securities company’’
within the meaning of section 2(a)(13) of
the Act.
APPLICANTS: Jane Street Group, LLC;
Edgar Street Capital, LLC and Elizabeth
Street Capital, LLC.
FILING DATES: The application was filed
on December 28, 2021, and amended on
June 13, 2022, October 19, 2022, March
30, 2023, and July 17, 2024.
HEARING OR NOTIFICATION OF HEARING:
An order granting the requested relief
will be issued unless the Commission
orders a hearing. Interested persons may
request a hearing on any application by
emailing the Commission’s Secretary at
Secretarys-Office@sec.gov and serving
the Applicants with a copy of the
request by email, if an email address is
listed for the relevant Applicant below,
or personally or by mail, if a physical
address is listed for the relevant
Applicant below. Hearing requests
should be received by the Commission
by 5:30 p.m. on November 5, 2024, and
should be accompanied by proof of
service on the Applicants, in the form
of an affidavit, or, for lawyers, a
certificate of service. Pursuant to rule 0–
5 under the Act, hearing requests should
state the nature of the writer’s interest,
any facts bearing upon the desirability
of a hearing on the matter, the reason for
the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary at
Secretarys-Office@sec.gov.
ADDRESSES:
The Commission: Secretarys-Office@
sec.gov.
Applicants: James Dieterich, Jane
Street Group, LLC: 250 Vesey Street,
New York, NY 10281; John J. Mahon,
Esq., Proskauer Rose LLP: 1001
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Pennsylvania Avenue, Suite 600,
Washington, DC 20004.
FOR FURTHER INFORMATION CONTACT:
Toyin Momoh, Senior Counsel, or Lisa
Reid Ragen, Branch Chief, at (202) 551–
5325 (Division of Investment
Management, Chief Counsel’s Office).
For
Applicants’ representations, legal
analysis, and conditions, please refer to
Applicants’ fourth amended and
restated application, dated July 17,
2024, which may be obtained via the
Commission’s website by searching for
the file number at the top of this
document, or for an Applicant using the
Company name search field, on the
SEC’s EDGAR system.
The SEC’s EDGAR system may be
searched at https://www.sec.gov/edgar/
searchedgar/legacy/
companysearch.html. You may also call
the SEC’s Public Reference Room at
(202) 551–8090.
SUPPLEMENTARY INFORMATION:
For the Commission, by the Division of
Investment Management, under delegated
authority.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–23980 Filed 10–16–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101304; File No. SR–
CboeEDGA–2024–039]
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fees Schedule Regarding Dedicated
Cores
October 10, 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 30, 2024, Cboe EDGA
Exchange, Inc. (the ‘‘Exchange’’ or
‘‘EDGA’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 89, No. 201 / Thursday, October 17, 2024 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA 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/edga/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
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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’’)
3 The Exchange initially introduced Dedicated
Cores and corresponding pricing on March 1, 2024
(SR–CboeEDGA–2024–008). On March 20, 2024, the
Exchange refiled the proposed fees (SR–
CboeEDGA–2024–009). The Exchange amended the
Dedicated Cores fees on April 1, 2024 (SR–
CboeEDGA–2024–012). On April 12, 2024, the
Exchange withdrew that filing and submitted SR–
CboeEDGA2024–014. On May 13, 2024, the
Exchange withdrew SR–CboeEDGA–2024–009. On
June 3, 2024, the Exchange also withdrew SR–
CboeEDGA–014 and SR–CboeEDGA–2024–020. On
August 1, the Exchange withdrew that filing and
submitted SR–CboeEDGA–2024–032. On business
date September 30, 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.
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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
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 3–10 Dedicated Cores; $850 per
Dedicated Core for 11–15 Dedicated
Cores; and $1,050 per Dedicated Core
for 16 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 11 Dedicated
Cores, it will be charged a total of
$6,050 per month ($0 * 2 + $650 * 8 +
$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
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.
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
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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 a maximum number of 25 Dedicated
Cores for each of their Sponsored
Access relationships.7 The Exchange
has since been able to procure
additional servers with CPU Cores and
also has a better understanding of User
demand relative to its available space
and available Dedicated Cores since the
current maximum was adopted two
months ago. As such, the Exchange
proposes to increase that 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
receive at no additional cost. See Cboe EDGA
Equities Fee Schedule.
7 See Securities Exchange Act Release No. 100300
(June 10, 2024), 89 FR 50653 (June 14, 2024) (SR–
CboeEDGA–2024–020).
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 $30,450
per month if each Sponsored Access relationship
purchased the maximum 35 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 8 Dedicated Cores at $650 each for
each Sponsored User, 5 Dedicated Cores at $850
each for each Sponsored User and 20 Dedicated
Cores at $1,050 each for each Sponsored User
(combined total of 99+ additional Dedicated Cores).
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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
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. For
example, of the Users that currently
maintain Dedicated Cores, 39%
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
10 15
11 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
12 Id.
13 15
U.S.C. 78f(b)(4).
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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 17% of the
Exchange’s Members currently use
Dedicated Cores and as noted above, of
those 17%, 39% take only 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 has seen general
interest in Dedicated Cores from a
variety of market participants, with
varying size and business models. Such
market participants include proprietary
trading firms (who tend to be more
latency sensitive), as well as sell-side
market participants and buy-side market
participants (who tend to be less latency
sensitive). Further, Members have
various reasons for obtaining Dedicated
Cores. Some Members for example, may
be seeking to further reduce latency,
whereas others may use Dedicated Cores
as a general risk mitigation by siloing
their respective activity. Of further note,
only 59% of Members that are propriety
trading firms (who again, generally tend
to be more latency sensitive) utilize
Dedicated Cores, and of that 59%, 30%
are utilizing the 1 to 2 free Dedicated
Cores available to all Users. The lack of
universal, or even widespread, adoption
by all such users therefore demonstrates
that purchasing Dedicated Cores is not
effectively a requirement to compete for
any one type of market participant,
including latency sensitive market
participants. Instead, Dedicated Cores
are an optional and voluntary
connectivity offering, which market
participants are free to choose whether
or not to utilize based on whether they
meet their unique business needs.
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. Moreover, all Users are
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entitled to up to 2 Dedicated Cores at no
additional cost and as previously
discussed, 39% of all Users that take
Dedicated Cores (including both latency
sensitive and non-latency sensitive
Users) take only 1 or 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.14
Moreover, those consuming more
Dedicated Cores do so if they find a
benefit 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
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
14 See e.g., Cboe U.S. Options Fees Schedule, BZX
Options, Options Logical Port Fees, Ports with Bulk
Quoting Capabilities.
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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.15 Moreover, procuring data
center space has grown to be more
challenging than it was five years ago
with the increased demand for data
center space. For example, the U.S.
colocation data center market has
doubled in size in just four years. In
addition to the Exchange’s rollout of
Dedicated Cores, the Exchange is
mindful of its other business areas and
the need to continue to be mindful of its
existing, external restraints in this area.
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. Indeed, since the
launch of Dedicated Cores on February
26, 2024, the Exchange has already
increased the prescribed maximum limit
two times not including the increase
proposed herein, as a result of
evaluating the demand relative to
Dedicated Cores availability and
procuring additional physical space and
CPU Cores.17 The proposed increased
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
15 The Exchange notes that it cannot currently
convert shared CPU cores into Dedicated Cores.
16 The Exchange notes that no Users that have
Dedicated Cores currently are at or near the
maximum limits. The average number of Dedicated
Cores used for the Exchange is 11.
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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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
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 fee 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,
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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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 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
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).
E:\FR\FM\17OCN1.SGM
17OCN1
83752
Federal Register / Vol. 89, No. 201 / Thursday, October 17, 2024 / Notices
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeEDGA–2024–039 on the subject
line.
ddrumheller on DSK120RN23PROD with NOTICES1
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–CboeEDGA–2024–039. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–CboeEDGA–2024–039 and should
VerDate Sep<11>2014
18:31 Oct 16, 2024
Jkt 265001
be submitted on or before November 7,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–23903 Filed 10–16–24; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #20533 and #20534;
FLORIDA Disaster Number FL–20009]
Presidential Declaration Amendment of
a Major Disaster for the State of Florida
U.S. Small Business
Administration.
ACTION: Amendment 5.
AGENCY:
This is an amendment of the
Presidential declaration of a major
disaster for the State of Florida (FEMA–
4806–DR), dated August 10, 2024.
DATES: Issued on October 9, 2024.
Physical Loan Application Deadline
Date: November 12, 2024.
Economic Injury (EIDL) Loan
Application Deadline Date: May 12,
2025.
SUMMARY:
Visit the MySBA Loan
Portal at https://lending.sba.gov to
apply for a disaster assistance loan.
FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster
Recovery & Resilience, U.S. Small
Business Administration, 409 3rd Street
SW, Suite 6050, Washington, DC 20416,
(202) 205–6734.
SUPPLEMENTARY INFORMATION: The notice
of the President’s major disaster
declaration for the State of Florida,
dated August 10, 2024, is hereby
amended to extend the deadline for
filing applications for physical damages
as a result of this disaster to November
12, 2024.
Incident: Hurricane Debby.
Incident Period: August 1, 2024
through August 27, 2024.
All other information in the original
declaration remains unchanged.
ADDRESSES:
(Catalog of Federal Domestic Assistance
Number 59008)
Rafaela Monchek,
Deputy Associate Administrator, Office of
Disaster Recovery & Resilience.
[FR Doc. 2024–23886 Filed 10–16–24; 8:45 am]
BILLING CODE 8026–09–P
23 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00119
Fmt 4703
Sfmt 4703
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #20753 and #20754;
GEORGIA Disaster Number GA–20014]
Presidential Declaration of a Major
Disaster for Public Assistance Only for
the State of Georgia
U.S. Small Business
Administration.
ACTION: Notice.
AGENCY:
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Georgia (FEMA–4830–DR),
dated October 9, 2024.
DATES: Issued on October 9, 2024.
Physical Loan Application Deadline
Date: December 9, 2024.
Economic Injury (EIDL) Loan
Application Deadline Date: July 9, 2025.
ADDRESSES: Visit the MySBA Loan
Portal at https://lending.sba.gov to
apply for a disaster assistance loan.
FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster
Recovery & Resilience, U.S. Small
Business Administration, 409 3rd Street
SW, Suite 6050, Washington, DC 20416,
(202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
President’s major disaster declaration on
October 9, 2024, Private Non-Profit
organizations that provide essential
services of a governmental nature may
file disaster loan applications online
using the MySBA Loan Portal https://
lending.sba.gov or other locally
announced locations. Please contact the
SBA disaster assistance customer
service center by email at
disastercustomerservice@sba.gov or by
phone at 1–800–659–2955 for further
assistance.
Incident: Hurricane Helene.
Incident Period: September 24, 2024
and continuing.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Appling, Atkinson,
Bacon, Brantley, Burke, Coffee,
Effingham, Jeff Davis, Jenkins,
Mitchell, Pierce, Screven, Ware,
Wayne, Worth.
The Interest Rates are:
SUMMARY:
Percent
For Physical Damage:
Non-Profit Organizations with
Credit Available Elsewhere ...
Non-Profit Organizations without Credit Available Elsewhere .....................................
For Economic Injury:
E:\FR\FM\17OCN1.SGM
17OCN1
3.250
3.250
]]>Agencies
[Federal Register Volume 89, Number 201 (Thursday, October 17, 2024)]
[Notices]
[Pages 83748-83752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23903]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101304; File No. SR-CboeEDGA-2024-039]
Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fees Schedule Regarding Dedicated Cores
October 10, 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 30, 2024, Cboe EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
[[Page 83749]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGA Exchange, Inc. (the ``Exchange'' or ``EDGA 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/edga/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
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 Dedicated Cores and
corresponding pricing on March 1, 2024 (SR-CboeEDGA-2024-008). On
March 20, 2024, the Exchange refiled the proposed fees (SR-CboeEDGA-
2024-009). The Exchange amended the Dedicated Cores fees on April 1,
2024 (SR-CboeEDGA-2024-012). On April 12, 2024, the Exchange
withdrew that filing and submitted SR-CboeEDGA2024-014. On May 13,
2024, the Exchange withdrew SR-CboeEDGA-2024-009. On June 3, 2024,
the Exchange also withdrew SR-CboeEDGA-014 and SR-CboeEDGA-2024-020.
On August 1, the Exchange withdrew that filing and submitted SR-
CboeEDGA-2024-032. On business date September 30, 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 3-10 Dedicated
Cores; $850 per Dedicated Core for 11-15 Dedicated Cores; and $1,050
per Dedicated Core for 16 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 11 Dedicated Cores, it will be
charged a total of $6,050 per month ($0 * 2 + $650 * 8 + $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
EDGA 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 a maximum number of
25 Dedicated Cores for each of their Sponsored Access relationships.\7\
The Exchange has since been able to procure additional servers with CPU
Cores and also has a better understanding of User demand relative to
its available space and available Dedicated Cores since the current
maximum was adopted two months ago. As such, the Exchange proposes to
increase that 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
[[Page 83750]]
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. 100300 (June 10,
2024), 89 FR 50653 (June 14, 2024) (SR-CboeEDGA-2024-020).
\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 $30,450 per month if each Sponsored Access
relationship purchased the maximum 35 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 8 Dedicated Cores at $650 each for each Sponsored User, 5
Dedicated Cores at $850 each for each Sponsored User and 20
Dedicated Cores at $1,050 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 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. For example, of the Users
that currently maintain Dedicated Cores, 39% 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 17% of the Exchange's Members currently use Dedicated
Cores and as noted above, of those 17%, 39% take only 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 has seen general interest in Dedicated Cores from a
variety of market participants, with varying size and business models.
Such market participants include proprietary trading firms (who tend to
be more latency sensitive), as well as sell-side market participants
and buy-side market participants (who tend to be less latency
sensitive). Further, Members have various reasons for obtaining
Dedicated Cores. Some Members for example, may be seeking to further
reduce latency, whereas others may use Dedicated Cores as a general
risk mitigation by siloing their respective activity. Of further note,
only 59% of Members that are propriety trading firms (who again,
generally tend to be more latency sensitive) utilize Dedicated Cores,
and of that 59%, 30% are utilizing the 1 to 2 free Dedicated Cores
available to all Users. The lack of universal, or even widespread,
adoption by all such users therefore demonstrates that purchasing
Dedicated Cores is not effectively a requirement to compete for any one
type of market participant, including latency sensitive market
participants. Instead, Dedicated Cores are an optional and voluntary
connectivity offering, which market participants are free to choose
whether or not to utilize based on whether they meet their unique
business needs.
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. Moreover, all Users are entitled to up to 2
Dedicated Cores at no additional cost and as previously discussed, 39%
of all Users that take Dedicated Cores (including both latency
sensitive and non-latency sensitive Users) take only 1 or 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.\14\ Moreover, those consuming more
Dedicated Cores do so if they find a benefit 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.
---------------------------------------------------------------------------
\14\ See e.g., 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
[[Page 83751]]
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.\15\ Moreover, procuring data center space has
grown to be more challenging than it was five years ago with the
increased demand for data center space. For example, the U.S.
colocation data center market has doubled in size in just four years.
In addition to the Exchange's rollout of Dedicated Cores, the Exchange
is mindful of its other business areas and the need to continue to be
mindful of its existing, external restraints in this area. 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. Indeed, since the launch of Dedicated
Cores on February 26, 2024, the Exchange has already increased the
prescribed maximum limit two times not including the increase proposed
herein, as a result of evaluating the demand relative to Dedicated
Cores availability and procuring additional physical space and CPU
Cores.\17\ The proposed increased 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 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.
---------------------------------------------------------------------------
\15\ The Exchange notes that it cannot currently convert shared
CPU cores into Dedicated Cores.
\16\ The Exchange notes that no Users that have Dedicated Cores
currently are at or near the maximum limits. The average number of
Dedicated Cores used for the Exchange is 11.
\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 fee 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.
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\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)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \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
[[Page 83752]]
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-CboeEDGA-2024-039 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-CboeEDGA-2024-039. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-CboeEDGA-2024-039 and should
be submitted on or before November 7, 2024.
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. 2024-23903 Filed 10-16-24; 8:45 am]
BILLING CODE 8011-01-P
