Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule, 92235-92238 [2024-27215]
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lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
previously required to be reported to
SLATE], all other Data Elements reported to
SLATE, except the amount of Reportable
Securities loaned [and as otherwise provided
for in paragraph (d) of this Rule].
(b) Delayed Dissemination
For each Initial Covered Securities Loan
and Loan Modification reported to SLATE,
20 business days after the date on which the
Initial Covered Securities Loan was effected
or the loan [amount] was modified, FINRA
will make publicly available:
(1) for an Initial Covered Securities Loan,
the unique identifier assigned by FINRA to
the Covered Securities Loan;
(2) for a Loan Modification, the unique
identifier assigned by FINRA to the Covered
Securities Loan if reported to SLATE or
otherwise identified by FINRA;
(3)[(2)] the security identifier(s) specified
in Rule 6530(a)(2)(A) or (B) that FINRA
determines is appropriate to disseminate; and
(4)[(3)] the amount of Reportable Securities
loaned reported to SLATE.
(c) Daily Loan Statistics
(1) Aggregate Loan Transaction Activity
For each Reportable Security for which an
Initial Covered Securities Loan or Loan
Modification is reported to SLATE on a given
business day, no later than the morning of
the next business day, FINRA will
disseminate the security identifier specified
in Rule 6530(a)(2)(A) or (B) that FINRA
determines is appropriate to disseminate and
the [aggregate loan activity in the Reportable
Security, including the:
(A) ]aggregate volume of securities [(both
in total and by collateral type)] subject to an
Initial Covered Securities Loan or
modification to the amount of Reportable
Securities loaned, reported on the prior
business day.[;]
[(B) aggregate volume of securities (both in
total and by collateral type) subject to a
rebate rate or fee modification, reported on
the prior business day;]
[(C) aggregate volume of securities subject
to an Initial Covered Securities Loan or
modification to the amount of Reportable
Securities loaned with a specified term, and
subject to an Initial Covered Securities Loan
or modification to the amount of Reportable
Securities loaned without a specified term,
reported on the prior business day;]
[(D) aggregate volume of securities subject
to an Initial Covered Securities Loan or
modification to the amount of Reportable
Securities loaned to one or more borrower
types specified in Rule 6530(a)(2)(N) reported
on the prior business day; and]
[(E) the total number of Initial Covered
Securities Loans and terminated Covered
Security Loans (both in total and by collateral
type) reported on the prior business day.]
(2) Loan Rate Distribution Data
For each Reportable Security for which an
Initial Covered Securities Loan or Loan
Modification is reported to SLATE on a given
business day, no later than the morning of
the next business day, FINRA will
disseminate the security identifier specified
in Rule 6530(a)(2)(A) or (B) that FINRA
determines is appropriate to identify the
relevant Reportable Security and information
pertaining to the distribution of loan rebate
rates and lending fees or rates, as applicable,
including:
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(A) the highest rebate rate, lowest rebate
rate, and volume weighted average of the
rebate rates by U.S. currency and non-U.S.
currency, as applicable, reported for Initial
Covered Securities Loans collateralized by
cash and for Loan Modifications
collateralized by cash (where the Loan
Modification involved a change to the rebate
rate); and
(B) the highest lending fee or rate, lowest
lending fee or rate, and volume weighted
average of the lending fees or rates reported
for Initial Covered Securities Loans not
collateralized by cash and for Loan
Modifications not collateralized by cash
(where the Loan Modification involved a
change to the lending fee or rate).
(d) Loan Transaction Information Not
Disseminated
FINRA will not disseminate[:
(1)] any Confidential Data Elements
reported to SLATE[; and
(2) any modifier or indicator required by
either the Rule 6500 Series or the SLATE
Participant specification that FINRA
determines shall not be publicly
disseminated
• • • Supplementary Material: ---------.01 De Minimis Loan Transaction Activity.
Notwithstanding paragraph (c)(1) of this
Rule, FINRA will not include [may omit from
the aggregate loan activity] aggregate volume
information for a Reportable Security[ies]
[for] unless [which] there were reports
submitted to SLATE on the prior business
day for at least ten distinct Covered
Securities Loans in the Reportable Security
(represented by different FINRA-assigned
unique loan identifiers) [there were three or
fewer types of Initial Covered Securities Loan
and Loan Modification events reported to
SLATE in total on the prior business day].
.02 No Change.
6550. Emergency Authority
No Change.
*
*
*
*
*
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended by Partial
Amendment No. 1, 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–
FINRA–2024–007 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–FINRA–2024–007. This file
PO 00000
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92235
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
FINRA. 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–FINRA–2024–007 and
should be submitted on or before
December 6, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.50
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024–27223 Filed 11–20–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101634; File No. SR–
CBOE–2024–050]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fees
Schedule
November 15, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
1, 2024, Cboe Exchange, Inc. (the
50 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III, below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) 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://www.cboe.com/
AboutCBOE/CBOELegal
RegulatoryHome.aspx), 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
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1. Purpose
The Exchange proposes to amend its
Fees Schedule, effective November 1,
2024.
The Exchange first proposes to amend
a fee related to transactions in Mini-SPX
Index (‘‘XSP’’) options, as set forth in
the Rate Table for All Products
Excluding Underlying Symbol List A.
Specifically, the proposed rule change
amends fee code MY, appended to all
Market-Maker (capacity ‘‘M’’) in XSP
contra to non-customers that remove
liquidity and that are executed
electronically and assesses a fee of $0.30
per contract, to assess a fee of $0.50 per
contract.
Next, the Exchange proposes
clarifying changes to fees related to
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certain orders and auction responses
executed in S&P 500 Index (‘‘SPX’’),
SPX Weekly (‘‘SPXW’’), S&P 500 ESG
Index (‘‘SPESG’’) and Cboe Volatility
Index (‘‘VIX’’) options in the Automated
Improvement Mechanism (‘‘AIM’’)
Auction.
By way of background, AIM includes
functionality in which a Trading Permit
Holder (‘‘TPH’’) (an ‘‘Initiating TPH’’)
may electronically submit for execution
an order it represents as agent on behalf
of a customer,3 broker dealer, or any
other person or entity (‘‘Agency Order’’)
against any other order it represents as
agent, as well as against principal
interest in AIM (an ‘‘Initiating Order’’),
provided it submits the Agency Order
for electronic execution into an AIM
Auction.4 The Exchange may designate
any class of options traded on Cboe
Options as eligible for AIM. The
Exchange notes that all Users, other
than the Initiating TPH, may submit
responses to an Auction (‘‘AIM
Responses’’). AIM Auctions take into
account AIM Responses to the
applicable Auction as well as contra
interest resting on the Cboe Options
Book at the conclusion of the Auction
(‘‘unrelated orders’’), regardless of
whether such unrelated orders were
already present on the Book when the
Agency Order was received by the
Exchange or were received after the
Exchange commenced the applicable
Auction. If contracts remain from one or
more unrelated orders at the time the
Auction ends, they are considered for
participation in the AIM order
allocation process.
Certain AIM-related surcharges under
the Rate Table for Underlying Symbol
List A apply when the Exchange is
operating in a hybrid environment (i.e.,
the trading floor is operable).
Specifically, the SPX AIM Hybrid
Surcharge of $0.50 per contract applies
to all Joint Back-Office (capacity ‘‘J’’),
Market-Maker (capacity ‘‘M’’), BrokerDealer (capacity ‘‘B’’), Non-TPH MarketMaker (capacity ‘‘N’’) and Professional
(capacity ‘‘U’’) (collectively, ‘‘NonCustomers) orders in SPX/SPXW
options executed in AIM, while the SPX
AIM Hybrid Surcharge of $0.39 per
contract applies to all Clearing TPHs
(capacity ‘‘F’’) and for Non-Clearing
TPH Affiliates (capacity ‘‘L’’)
(collectively, ‘‘Firms’’) orders in SPX/
SPXW options executed in AIM. The
SPX AIM Hybrid Originator Surcharge
of $0.10 per contract applies to all SPX/
3 The term ‘‘customer’’ means a Public Customer
or a broker-dealer. The term ‘‘Public Customer’’
means a person that is not a broker-dealer. See Rule
1.1.
4 See Rule 5.37 (AIM); Rule 5.38 (Complex AIM);
and Rule 5.73 (FLEX AIM).
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Frm 00151
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SPXW Agency/Primary orders. Footnote
26 is appended to the aforementioned
surcharges and provides that the SPX
AIM Hybrid Surcharges, including the
Originator Surcharge, apply only to
SPX/SPXW orders executed in AIM and
C–AIM during Regular Trading Hours
(‘‘RTH’’) when the Exchange is
operating in a hybrid environment (i.e.,
the trading floor is operable). Footnote
26 further provides the SPX AIM Hybrid
Surcharge will apply to all SPX/SPXW
AIM Agency/Primary, Contra and
Response orders; and the SPX AIM
Hybrid Originator Surcharge will apply
to all SPX/SPXW Agency/Primary
orders and such fee will be invoiced to
the executing TPH.5
In contrast, the Exchange notes that
the Rate Table for Underlying Symbol
List A includes the following fees,
which apply when the Exchange trading
floor is inoperable: AIM Response
Surcharge Fee (for SPX/SPXW and
SPESG) of $0.05 per contract, AIM
Contra Surcharge Fee (for SPX/SPXW
and SPESG) of $0.10 per contract, and
AIM Agency/Primary Surcharge Fee (for
SPX/SPXW) of $0.10 per contract and
(for VIX) of $0.04 per contract.6
Each of the aforementioned fees has
appended to it Footnote 12, which
governs pricing changes in the event the
Exchange trading floor becomes
inoperable. Particularly, in the event the
trading floor becomes inoperable, the
Exchange will continue to operate in a
screen-based only environment using a
floorless configuration of the System
that is operational while the trading
floor facility is inoperable. The
Exchange will operate using that
configuration only until the Exchange’s
trading floor facility becomes
operational. Open outcry trading will
not be available in the event the trading
floor becomes inoperable.
The Exchange proposes to amend the
titles of the AIM Response Surcharge
Fee, the AIM Contra Surcharge Fee, and
the AIM Agency/Primary Surcharge Fee
to include ‘‘(Trading Floor Inoperable)’’,
to further distinguish between when the
5 See Securities Exchange Act Release No. 91252
(March 3, 2021), 86 FR 13598 (March 9, 2021) (SR–
CBOE–2021–021[sic]), wherein the Exchange
adopted these surcharges.
6 See Securities Exchange Act Release No. 88883
(May 15, 2020), 85 FR 31012 (May 21, 2020) (SR–
CBOE–2020–045), wherein the Exchange adopted
the AIM Contra Surcharge and the AIM Response
Surcharge. See also Securities Exchange Act
Release No. 88426 (March 19, 2020), 85 FR 16978
(March 25, 2020) (SR–CBOE–2020–021), wherein
the Exchange adopted the AIM Execution Surcharge
for SPX/SPXW/VIX AIM Agency/Primary Orders
(later re-named the AIM Agency/Primary Surcharge
Fee).
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Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
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various surcharges would be
applicable.7
The Exchange also proposes to amend
Footnote 12, to provide clarity as to
when such changes would apply. As
noted above, in the event the trading
floor becomes inoperable, the Exchange
will continue to operate in a screenbased only environment using a
floorless configuration of the System
that is operational while the trading
floor facility is inoperable. To avoid
confusion, since the Exchange also
operates a screen-based only
environment during its Global Trading
Hours (‘‘GTH’’) trading session, the
Exchange propose to amended Footnote
12 to specify that the Exchange will
apply the pricing changes in the event
the Cboe Options trading floor becomes
inoperable and the Exchange operates in
a screen-based only environment during
RTH, for the duration of the time the
Exchange operates in a screen-based
only environment during RTH (as well
as for the Curb session immediately
following a RTH trading session in
which the Cboe Options trading floor is
inoperable and the Exchange operates in
a screen-based only environment). The
Exchange also propose to add references
throughout the footnote to note that
such pricing changes apply when the
Exchange operates in a screen-based
only environment during RTH.
The Exchange also proposes to amend
Footnote 26 to specify that the SPX AIM
Hybrid Surcharges, including the
Originator Surcharge, apply only to
SPX/SPXW Orders executed in AIM
(and C–AIM) during RTH and Curb
when the Exchange is operating in a
hybrid environment (i.e., the trading
floor is operable).
Finally, the Exchange also proposes to
rename certain fees under the Clearing
Trading Permit Holder Fee Cap section
of the Fees Schedule. Specifically, the
Exchange proposes to rename ‘‘AIM
Facilitation Contra Order’’ to ‘‘AIM
Contra Order’’ and to rename ‘‘AIM
Solicitation Contra Order’’ to ‘‘SAM
Contra Order’’, to more accurately
reflect terminology used by the
Exchange throughout the Fees Schedule
and within the Rulebook.
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
7 As part of the proposed rule change, the
Exchange proposes to move the AIM-related
surcharges applicable when the Exchange trading
floor is inoperable to be listed below the AIMrelated surcharges applicable when the Exchange is
operating in its normal hybrid environment.
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18:02 Nov 20, 2024
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and, in particular, the requirements of
Section 6(b) of the Act.8 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 9 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) 10 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange also believes the
proposed rule change is consistent with
Section 6(b)(4) of the Act,11 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
TPHs and other persons using its
facilities.
The Exchange believes that the
proposed fee change for Market-Maker
orders in XSP that are contra to noncustomers that remove liquidity and
that are executed electronically is
reasonable, equitable and not unfairly
discriminatory. Specifically, the
Exchange believes the proposed change
to the fee for Market-Maker orders in
XSP contra to non-customers that
remove liquidity and that are executed
electronically is reasonable. The
proposed fee, in general, aligns with
current fees for other types of orders in
XSP, namely Clearing Trading Permit
Holder Proprietary XSP orders contra to
non-customers that remove liquidity
and are executed electronically (which
yield fee code XB). The Exchange
believes that the changes are reasonable
and that the fee, even as amended, will
continue to incentivize TPHs to send
additional Market-Maker orders to the
Exchange.
The Exchange believes that the
proposed fee change to the fee for
Market-Maker orders in XSP contra to
non-customers that remove liquidity
and that are executed electronically is
equitable and not unfairly
discriminatory because the proposed fee
will apply automatically and uniformly
8 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
10 Id.
11 15 U.S.C. 78f(b)(4).
9 15
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92237
to all applicable Market-Maker orders in
XSP which yield fee code MY.
Additionally, the Exchange believes
the clarifying changes to the Fees
Schedule will remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, will protect
investors and the public interest.
Specifically, by amending the names of
fees related to certain orders and
auction responses executed in SPX/
SPXW, SPESG and VIX via AIM to
better describe when such fees are
applicable, the proposed change is
designed to add clarity within the Fees
Schedule. Similarly, by renaming
certain fees under the Clearing Trading
Permit Holder Fee Cap section of the
Fees Schedule to more accurately reflect
terminology used by the Exchange
throughout the Fees Schedule and
within the Rulebook, the proposed
change is designed to mitigate any
potential confusion resulting from
outdated terminology. Overall, the
changes are intended to add clarity to
the Fees Schedule, thereby mitigating
any potential confusing, to the benefit of
investors. The Exchange notes that the
proposed clarifying changes do not
change the fees (or applicability of such
fees).
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed rule change related to XSP fee
code MY will impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because the
proposed fees will apply automatically
and uniformly to all applicable MarketMaker orders in XSP which yield fee
code MY. The Exchange does not
believe the proposed clarifying rule
changes will impose any burden on
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as the
changes will not result in any practical
changes to the fees, but rather are being
added to eliminate potential confusion.
The Exchange does not believe that
the proposed rule changes will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed rule change
related to a XSP fee code applies to
Exchange proprietary products, which
are traded exclusively on the Exchange.
To the extent that the proposed changes
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Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
make Cboe Options a more attractive
marketplace for market participants at
other exchanges, such market
participants are welcome to become
Cboe Options market participants. The
clarifying rule changes are not intended
to have any impact on competition, as
they make no substantive change to the
Fees Schedule and will have no impact
on trading on the Exchange.
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 12 and paragraph (f) of Rule
19b–4 13 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission 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:
lotter on DSK11XQN23PROD with NOTICES1
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–
CBOE–2024–050 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–CBOE–2024–050. 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–CBOE–2024–050 and should be
submitted on or before December 12,
2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024–27215 Filed 11–20–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101640; File No. 4–443]
Joint Industry Plan; Notice of Filing of
Proposed Amendment To Add
Paragraph (c) to Section 6 of the Plan
for the Purpose of Developing and
Implementing Procedures Designed To
Facilitate the Listing and Trading of
Standardized Options Authorizing the
OLPP Sponsors To Act Jointly To
Discuss Quote Mitigation Issues and
Potential Solutions
November 15, 2024.
Pursuant to Section 11A of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 608 thereunder,2
14 17
CFR 200.30–3(a)(12).
U.S.C. 78k–1.
2 17 CFR 242.608.
12 15
U.S.C. 78s(b)(3)(A).
13 17 CFR 240.19b–4(f).
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notice is hereby given that on October
31, 2024, Cboe BZX Exchange, Inc.,
Cboe C2 Exchange, Inc., Cboe EDGX
Exchange, Inc., and Cboe Exchange,
Inc., on behalf of the Sponsors 3 of the
Plan for the Purpose of Developing and
Implementing Procedures Designed to
Facilitate the Listing and Trading of
Standardized Options Submitted
Pursuant to Section 11A(a)(3)(B) of the
Securities Exchange Act of 1934
(‘‘Options Listing Procedures Plan,’’
‘‘Plan,’’ or ‘‘OLPP’’),4 filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed amendment
to the OLPP. The amendment proposes
to add a provision to the OLPP
authorizing the OLPP Sponsors to act
jointly to discuss both quote mitigation
issues and potential solutions to address
any issues identified, including, but not
limited to, discussing potential new
options strike listing methodologies and
rules, in order to determine whether the
Sponsors might propose one or more
amendments to the Plan for Commission
approval or whether the individual
Sponsors might seek to amend their
own rules.
The Commission is publishing this
notice to solicit comments from
interested persons on the proposed
amendment. Set forth below in Section
I, which is being published substantially
as filed by the Sponsors, is the
statement of the purpose and summary
of the amendment, along with
information pursuant to Rule 608(a)
under the Act.
I. Requirements Pursuant to Rule 608(a)
1. Text of Amendment
This [a]mendment proposes to add
paragraph (c) to Section 6 of the OLPP.
The text of the proposed amendment is
in Exhibit I, which is set forth in Section
II, below.
2. Purpose of Amendment
For many years, as the options
industry has expanded and become
more complex, industry participants
have raised so-called ‘‘quote mitigation’’
3 The Sponsors of the OLPP are: BOX Exchange
LLC; Cboe BZX Exchange, Inc.; Cboe C2 Exchange,
Inc.; Cboe EDGX Exchange, Inc.; Cboe Exchange,
Inc.; MEMX LLC; Miami International Securities
Exchange LLC; MIAX Emerald, LLC; MIAX Pearl,
LLC; MIAX Sapphire LLC; Nasdaq BX, Inc.; Nasdaq
GEMX, LLC; Nasdaq ISE, LLC; Nasdaq MRX, LLC;
Nasdaq PHLX LLC; The Nasdaq Stock Market LLC;
NYSE American LLC; NYSE Arca, Inc.; and The
Options Clearing Corporations.
4 OLPP is a national market system plan approved
by the Commission pursuant to Section 11A of the
Act and Rule 608 thereunder. See Securities
Exchange Act Release No. 44521 (July 6, 2001), 66
FR 36809 (July 13, 2001). The full text of the OLPP
is available at https://www.theocc.com/getmedia/
198bfc93-5d51-443c-9e5b-fd575a0a7d0f/options_
listing_procedures_plan.pdf.
E:\FR\FM\21NON1.SGM
21NON1
Agencies
[Federal Register Volume 89, Number 225 (Thursday, November 21, 2024)]
[Notices]
[Pages 92235-92238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27215]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101634; File No. SR-CBOE-2024-050]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule
November 15, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 1, 2024, Cboe Exchange, Inc. (the
[[Page 92236]]
``Exchange'' or ``Cboe Options'') filed with the Securities and
Exchange Commission (the ``Commission'') the proposed rule change as
described in Items I, II, and III, below, which Items have been
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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 Fees Schedule, effective
November 1, 2024.
The Exchange first proposes to amend a fee related to transactions
in Mini-SPX Index (``XSP'') options, as set forth in the Rate Table for
All Products Excluding Underlying Symbol List A. Specifically, the
proposed rule change amends fee code MY, appended to all Market-Maker
(capacity ``M'') in XSP contra to non-customers that remove liquidity
and that are executed electronically and assesses a fee of $0.30 per
contract, to assess a fee of $0.50 per contract.
Next, the Exchange proposes clarifying changes to fees related to
certain orders and auction responses executed in S&P 500 Index
(``SPX''), SPX Weekly (``SPXW''), S&P 500 ESG Index (``SPESG'') and
Cboe Volatility Index (``VIX'') options in the Automated Improvement
Mechanism (``AIM'') Auction.
By way of background, AIM includes functionality in which a Trading
Permit Holder (``TPH'') (an ``Initiating TPH'') may electronically
submit for execution an order it represents as agent on behalf of a
customer,\3\ broker dealer, or any other person or entity (``Agency
Order'') against any other order it represents as agent, as well as
against principal interest in AIM (an ``Initiating Order''), provided
it submits the Agency Order for electronic execution into an AIM
Auction.\4\ The Exchange may designate any class of options traded on
Cboe Options as eligible for AIM. The Exchange notes that all Users,
other than the Initiating TPH, may submit responses to an Auction
(``AIM Responses''). AIM Auctions take into account AIM Responses to
the applicable Auction as well as contra interest resting on the Cboe
Options Book at the conclusion of the Auction (``unrelated orders''),
regardless of whether such unrelated orders were already present on the
Book when the Agency Order was received by the Exchange or were
received after the Exchange commenced the applicable Auction. If
contracts remain from one or more unrelated orders at the time the
Auction ends, they are considered for participation in the AIM order
allocation process.
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\3\ The term ``customer'' means a Public Customer or a broker-
dealer. The term ``Public Customer'' means a person that is not a
broker-dealer. See Rule 1.1.
\4\ See Rule 5.37 (AIM); Rule 5.38 (Complex AIM); and Rule 5.73
(FLEX AIM).
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Certain AIM-related surcharges under the Rate Table for Underlying
Symbol List A apply when the Exchange is operating in a hybrid
environment (i.e., the trading floor is operable). Specifically, the
SPX AIM Hybrid Surcharge of $0.50 per contract applies to all Joint
Back-Office (capacity ``J''), Market-Maker (capacity ``M''), Broker-
Dealer (capacity ``B''), Non-TPH Market-Maker (capacity ``N'') and
Professional (capacity ``U'') (collectively, ``Non-Customers) orders in
SPX/SPXW options executed in AIM, while the SPX AIM Hybrid Surcharge of
$0.39 per contract applies to all Clearing TPHs (capacity ``F'') and
for Non-Clearing TPH Affiliates (capacity ``L'') (collectively,
``Firms'') orders in SPX/SPXW options executed in AIM. The SPX AIM
Hybrid Originator Surcharge of $0.10 per contract applies to all SPX/
SPXW Agency/Primary orders. Footnote 26 is appended to the
aforementioned surcharges and provides that the SPX AIM Hybrid
Surcharges, including the Originator Surcharge, apply only to SPX/SPXW
orders executed in AIM and C-AIM during Regular Trading Hours (``RTH'')
when the Exchange is operating in a hybrid environment (i.e., the
trading floor is operable). Footnote 26 further provides the SPX AIM
Hybrid Surcharge will apply to all SPX/SPXW AIM Agency/Primary, Contra
and Response orders; and the SPX AIM Hybrid Originator Surcharge will
apply to all SPX/SPXW Agency/Primary orders and such fee will be
invoiced to the executing TPH.\5\
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\5\ See Securities Exchange Act Release No. 91252 (March 3,
2021), 86 FR 13598 (March 9, 2021) (SR-CBOE-2021-021[sic]), wherein
the Exchange adopted these surcharges.
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In contrast, the Exchange notes that the Rate Table for Underlying
Symbol List A includes the following fees, which apply when the
Exchange trading floor is inoperable: AIM Response Surcharge Fee (for
SPX/SPXW and SPESG) of $0.05 per contract, AIM Contra Surcharge Fee
(for SPX/SPXW and SPESG) of $0.10 per contract, and AIM Agency/Primary
Surcharge Fee (for SPX/SPXW) of $0.10 per contract and (for VIX) of
$0.04 per contract.\6\
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\6\ See Securities Exchange Act Release No. 88883 (May 15,
2020), 85 FR 31012 (May 21, 2020) (SR-CBOE-2020-045), wherein the
Exchange adopted the AIM Contra Surcharge and the AIM Response
Surcharge. See also Securities Exchange Act Release No. 88426 (March
19, 2020), 85 FR 16978 (March 25, 2020) (SR-CBOE-2020-021), wherein
the Exchange adopted the AIM Execution Surcharge for SPX/SPXW/VIX
AIM Agency/Primary Orders (later re-named the AIM Agency/Primary
Surcharge Fee).
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Each of the aforementioned fees has appended to it Footnote 12,
which governs pricing changes in the event the Exchange trading floor
becomes inoperable. Particularly, in the event the trading floor
becomes inoperable, the Exchange will continue to operate in a screen-
based only environment using a floorless configuration of the System
that is operational while the trading floor facility is inoperable. The
Exchange will operate using that configuration only until the
Exchange's trading floor facility becomes operational. Open outcry
trading will not be available in the event the trading floor becomes
inoperable.
The Exchange proposes to amend the titles of the AIM Response
Surcharge Fee, the AIM Contra Surcharge Fee, and the AIM Agency/Primary
Surcharge Fee to include ``(Trading Floor Inoperable)'', to further
distinguish between when the
[[Page 92237]]
various surcharges would be applicable.\7\
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\7\ As part of the proposed rule change, the Exchange proposes
to move the AIM-related surcharges applicable when the Exchange
trading floor is inoperable to be listed below the AIM-related
surcharges applicable when the Exchange is operating in its normal
hybrid environment.
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The Exchange also proposes to amend Footnote 12, to provide clarity
as to when such changes would apply. As noted above, in the event the
trading floor becomes inoperable, the Exchange will continue to operate
in a screen-based only environment using a floorless configuration of
the System that is operational while the trading floor facility is
inoperable. To avoid confusion, since the Exchange also operates a
screen-based only environment during its Global Trading Hours (``GTH'')
trading session, the Exchange propose to amended Footnote 12 to specify
that the Exchange will apply the pricing changes in the event the Cboe
Options trading floor becomes inoperable and the Exchange operates in a
screen-based only environment during RTH, for the duration of the time
the Exchange operates in a screen-based only environment during RTH (as
well as for the Curb session immediately following a RTH trading
session in which the Cboe Options trading floor is inoperable and the
Exchange operates in a screen-based only environment). The Exchange
also propose to add references throughout the footnote to note that
such pricing changes apply when the Exchange operates in a screen-based
only environment during RTH.
The Exchange also proposes to amend Footnote 26 to specify that the
SPX AIM Hybrid Surcharges, including the Originator Surcharge, apply
only to SPX/SPXW Orders executed in AIM (and C-AIM) during RTH and Curb
when the Exchange is operating in a hybrid environment (i.e., the
trading floor is operable).
Finally, the Exchange also proposes to rename certain fees under
the Clearing Trading Permit Holder Fee Cap section of the Fees
Schedule. Specifically, the Exchange proposes to rename ``AIM
Facilitation Contra Order'' to ``AIM Contra Order'' and to rename ``AIM
Solicitation Contra Order'' to ``SAM Contra Order'', to more accurately
reflect terminology used by the Exchange throughout the Fees Schedule
and within the Rulebook.
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.\8\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \9\ 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) \10\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange also believes the proposed rule
change is consistent with Section 6(b)(4) of the Act,\11\ which
requires that Exchange rules provide for the equitable allocation of
reasonable dues, fees, and other charges among its TPHs and other
persons using its facilities.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ Id.
\11\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed fee change for Market-Maker
orders in XSP that are contra to non-customers that remove liquidity
and that are executed electronically is reasonable, equitable and not
unfairly discriminatory. Specifically, the Exchange believes the
proposed change to the fee for Market-Maker orders in XSP contra to
non-customers that remove liquidity and that are executed
electronically is reasonable. The proposed fee, in general, aligns with
current fees for other types of orders in XSP, namely Clearing Trading
Permit Holder Proprietary XSP orders contra to non-customers that
remove liquidity and are executed electronically (which yield fee code
XB). The Exchange believes that the changes are reasonable and that the
fee, even as amended, will continue to incentivize TPHs to send
additional Market-Maker orders to the Exchange.
The Exchange believes that the proposed fee change to the fee for
Market-Maker orders in XSP contra to non-customers that remove
liquidity and that are executed electronically is equitable and not
unfairly discriminatory because the proposed fee will apply
automatically and uniformly to all applicable Market-Maker orders in
XSP which yield fee code MY.
Additionally, the Exchange believes the clarifying changes to the
Fees Schedule will remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general,
will protect investors and the public interest. Specifically, by
amending the names of fees related to certain orders and auction
responses executed in SPX/SPXW, SPESG and VIX via AIM to better
describe when such fees are applicable, the proposed change is designed
to add clarity within the Fees Schedule. Similarly, by renaming certain
fees under the Clearing Trading Permit Holder Fee Cap section of the
Fees Schedule to more accurately reflect terminology used by the
Exchange throughout the Fees Schedule and within the Rulebook, the
proposed change is designed to mitigate any potential confusion
resulting from outdated terminology. Overall, the changes are intended
to add clarity to the Fees Schedule, thereby mitigating any potential
confusing, to the benefit of investors. The Exchange notes that the
proposed clarifying changes do not change the fees (or applicability of
such fees).
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule change related to XSP fee code MY will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed fees will apply automatically and uniformly to all applicable
Market-Maker orders in XSP which yield fee code MY. The Exchange does
not believe the proposed clarifying rule changes will impose any burden
on intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as the changes will not result
in any practical changes to the fees, but rather are being added to
eliminate potential confusion.
The Exchange does not believe that the proposed rule changes will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed rule change related to a XSP fee code applies to Exchange
proprietary products, which are traded exclusively on the Exchange. To
the extent that the proposed changes
[[Page 92238]]
make Cboe Options a more attractive marketplace for market participants
at other exchanges, such market participants are welcome to become Cboe
Options market participants. The clarifying rule changes are not
intended to have any impact on competition, as they make no substantive
change to the Fees Schedule and will have no impact on trading on the
Exchange.
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 \12\ and paragraph (f) of Rule 19b-4 \13\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
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-CBOE-2024-050 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-CBOE-2024-050. 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-CBOE-2024-050 and should be
submitted on or before December 12, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024-27215 Filed 11-20-24; 8:45 am]
BILLING CODE 8011-01-P