Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule Regarding Dedicated Cores, 13800-13805 [2025-05042]
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Federal Register / Vol. 90, No. 57 / Wednesday, March 26, 2025 / Notices
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’. . . .’’.31 Accordingly, the
Exchange does not believe its proposed
fee 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 32 and paragraph (f) of Rule
19b–4 33 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:
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Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeEDGX–2025–020 on the subject
line.
31 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)).
32 15 U.S.C. 78s(b)(3)(A).
33 17 CFR 240.19b–4(f).
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Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–CboeEDGX–2025–020. 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–CboeEDGX–2025–020 and should be
submitted on or before April 16, 2025.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025–05044 Filed 3–25–25; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–102701; File No. SR–
CboeEDGA–2025–006]
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend Its
Fee Schedule Regarding Dedicated
Cores
March 20, 2025.
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 March 13,
2025, 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.
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 fee schedule to
adopt fees for Dedicated Cores. 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.
1 15
34 17
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CFR 200.30–3(a)(12).
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2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to amend its
fee schedule to adopt fees for Dedicated
Cores.3
By way of background, the Exchange
recently began to allow Users 4 to assign
a Single Binary Order Entry (‘‘BOE’’)
logical order entry port 5 to a single
dedicated Central Processing Unit (CPU
Core) (‘‘Dedicated Core’’). Historically,
CPU Cores had been shared by logical
order entry ports (i.e., multiple logical
ports from multiple firms may connect
to a single CPU Core). Use of Dedicated
Cores however, can provide reduced
latency, enhanced throughput, and
improved performance since a firm
using a Dedicated Core is utilizing the
full processing power of a CPU Core
instead of sharing that power with other
firms. This offering is completely
voluntary and is available to all Users
that wish to purchase Dedicated Cores.
Users may utilize BOE logical order
entry ports on shared CPU Cores, either
in lieu of, or in addition to, their use of
Dedicated Core(s). As such, Users are
able to operate across a mix of shared
and dedicated CPU Cores which the
Exchange believes provides additional
risk and capacity management. Further,
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 SR–CboeEDGA–2024–039.
On November 26, 2024, the Exchange withdrew that
filing and submitted SR–CboeEDGA–2024–048. On
January 24, 2025, the Exchange withdrew that filing
and submitted SR–CboeEDGA–2025–001. On March
13, 2025, the Exchange withdrew that filing and
submitted this filing.
4 A User may be either a Member or Sponsored
Participant. The term ‘‘Member’’ shall mean any
registered broker or dealer that has been admitted
to membership in the Exchange, limited liability
company or other organization which is a registered
broker or dealer pursuant to Section 15 of the Act,
and which has been approved by the Exchange. A
Sponsored Participant may be a Member or nonMember of the Exchange whose direct electronic
access to the Exchange is authorized by a
Sponsoring Member subject to certain conditions.
See Exchange Rule 11.3.
5 Users may currently connect to the Exchange
using a logical port available through an application
programming interface (‘‘API’’), such as the Binary
Order Entry (‘‘BOE’’) protocol. A BOE logical order
entry port is used for order entry.
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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
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 limited 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
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.
7 See Securities Exchange Act Release No. 100300
(June 10, 2024), 89 FR 50653 (June 14, 2024) (SR–
CboeEDGA–2024–020).
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and available Dedicated Cores since the
initial launch of Dedicated Cores. After
seeing increased User demand, the
Exchange proposed to increase that cap
and provided that Members will be
limited to a maximum number of 80
Dedicated Cores and Sponsoring
Members will be limited to a maximum
number of 35 Dedicated Cores for each
of their Sponsored Access
relationships.8 The Exchange noted at
that time that it would continue
monitoring Dedicated Core interest by
all Users and allotment availability with
the goal of increasing these limits to
meet Users’ needs if and when the
demand is there and/or the Exchange is
able to accommodate additional
Dedicated Cores. Since then, the
Exchange has determined that it is able
to accommodate an increased cap
relative to current demand. As such, the
Exchange proposed to increase the cap
to 120 Dedicated Cores for Members,
effective December 1, 2024.9 Sponsoring
Members will continue to be limited to
a maximum of 35 Dedicated Cores for
each of their Sponsored Access
relationships.10
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
8 See Securities Exchange Act Release No. 101304
(October 10, 2024), 89 FR 83748 (October 17, 2024)
(SR–CboeEDGA–2024–039).
9 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.
10 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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Section 6(b) of the Act.11 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 12 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) 13 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) 14 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, 30%
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 35% of the
Exchange’s Members currently use
Dedicated Cores and as noted above, of
those 35%, 30% 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
11 15
12 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
13 Id.
14 15
U.S.C. 78f(b)(4).
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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 is not aware of any specific
reason (operational or otherwise) why a
firm would not partake in the use of the
one to two free Dedicated Cores the
Exchange offers. Indeed the Exchange
does not believe that the set up a firm
would undertake to use free Dedicated
Cores offered by the Exchange is
prohibitively difficult or burdensome;
ultimately, whether or not a firm avails
itself of the free Dedicated Cores is a
business decision, and some firms may
decide that the impact that Dedicated
Cores may have is simply not beneficial
or necessary to how that firm operates.
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). For background, proprietary
trading firms utilize their own capital to
trade without taking outside money
from clients. Due to the nature of their
respective businesses, the Exchange has
classified proprietary trading firms as
latency sensitive, and other groups,
such as buy-side hedge funds, sell-side
banks and sell-side non-banks (such as
agency brokers) as non-latency
sensitive. Proprietary trading firms’
strategies may range from, market
making, to relative value trading and
arbitrage—these all rely on profiting
from general market activity and,
generally, requires faster entry and exit
into trades and positions making
proprietary trading firms more latency
sensitive than other market segments.
Buy-side hedge funds, banks and agency
brokers are not as latency sensitive as,
generally, the strategy for hedge funds is
based on overall long-term positioning
in the market, and banks and agency
brokers may profit from commissions of
customer order flow; both are generally
strategies that are not reliant on speed
to the same extent proprietary trading
firms are. Further, Members have
various reasons for obtaining Dedicated
Cores. Some Members for example, may
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be seeking to further reduce latency or
increase execution determinism,
whereas others may use Dedicated Cores
as a general risk mitigation by siloing
their respective activity. For example,
by using the Dedicated Core(s) to silo its
respective activity, a firm may be able
to mitigate risk during periods of
heightened volatility as the firm will not
need to compete for a shared resource
(i.e., the shared core). Of further note,
only 64% of Members that are propriety
trading firms (who again, generally tend
to be more latency sensitive) utilize
Dedicated Cores, and of that 64%, 36%
are only utilizing the 1 to 2 free
Dedicated Cores available to all Users.
As mentioned above, some non-latency
sensitive firms have chosen to also
adopt Dedicated Cores. 20% of Members
that are not latency sensitive utilize
Dedicated Cores, and of that 20%, 33%
are only 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. Moreover, the Exchange
has received overwhelming positive
feedback and support for Dedicated
Cores from the firms that have chosen
to utilize these in furtherance of their
respective needs, with some Members
even noting that they have moved more
of their order flow to the Exchange and
its affiliated equities exchanges (the
‘‘Equities Exchanges’’) as they have
noticed both better fills and greater
consistency of order execution at the
Equities Exchanges. This demonstrates
that despite any incurred costs for
Members that choose to purchase
Dedicated Cores, it is ultimately a net
win for them as they benefit from better
execution. The Exchange believes it also
demonstrates that Members find the
proposed fees to be both reasonable and
have benefited from purchasing or, are
alternatively benefiting from the
proposed one or two free Dedicated
Cores available at no additional cost.
The Exchange believes this is shown by
both the level of demand for Dedicated
Cores and the feedback from market
participants that have used the
Dedicated Cores for its unique business
needs, including as described above.
The Exchange also believes it’s notable
that no negative comment letters in
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connection with the proposed pricing
have been received since the Exchange
first filed proposed fees for Dedicated
Cores back on March 1, 2024.
Additionally, as noted earlier, Members
can (and many have) decide that
utilizing even a free Dedicated Core is
not needed for their business. The
Exchange also notes it has not received
any feedback for Members that raise
concerns over the barrier to entry to use
Dedicated Cores, including notably the
free Dedicated Cores—nor is the
Exchange aware of any reason why a
firm would ultimately choose not to use
the free Dedicated Cores, other than it
is not necessary for its business.
Ultimately, this is a business decision
that each Member must make and is best
suited to determine and will ultimately
depend on the priorities and strategies
of that Member’s respective business
needs.
The Exchange also notes that at least
one other exchange also has a
comparable offering.15 The Nasdaq
Stock Market, LLC (‘‘Nasdaq’’),
introduced the Dedicated Ouch Port
Infrastructure in 2014 16 which allows a
member firm to assign up to 30 of its
OUCH ports to a dedicated server
infrastructure for its exclusive use.17 A
Dedicated OUCH Port Infrastructure
subscription is available to a member
firm for a fee of $5,000 per month,
which is in addition to the standard fees
assessed for each OUCH port. A onetime installation fee of $5,000 is
assessed subscribers for each Dedicated
OUCH Port Server subscription.18 While
there are differences in the offerings
themselves—the Exchange offering is
more akin to a service offering while the
Nasdaq offering is more akin to an
infrastructure offering (and as such, the
pricing structure does differ)—both
offerings offer the ability for a firm to
utilize a full processing power of a CPU
Core. Moreover, the Exchange’s service
offering also provides more flexibility,
as firms with modest needs at Nasdaq
have to buy all 30 ports offered and
can’t choose to buy less ports (i.e.,
cores). Lastly, the Exchange emphasizes
that order processing itself is not
affected by the introduction of
Dedicated Cores. No relevant changes
are intended to the matching engine,
which is, and remains, the main
component of the Exchange’s
15 See
The Nasdaq Stock Market, Equity 7 Pricing
Schedule, Section 115(g)(3), Dedicated Ouch Port
Infrastructure.
16 See Securities Exchange Act Release No. 70693
(October 16, 2013), 78 FR 62761 (October 22, 2013)
(SR–NASDAQ–2013–131).
17 See supra note 15.
18 Id.
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infrastructure being responsible for the
actual processing of orders.
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, 30% 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. The Exchange
believes that such pricing further creates
a lower barrier to entry for all Members,
making this service widely available to
all who deem it helpful for their
business, including those with more
modest needs. Other exchanges
similarly assess higher fees to those that
consume more Exchange resources.19
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 limited
resources in order to provide an
additional number of Dedicated Cores or
put the Exchange in a position that it
cannot accommodate demand.
Moreover, as discussed above and in
more detail below, the Exchange cannot
currently offer an unlimited number of
19 See e.g., Cboe U.S. Options Fees Schedule, BZX
Options, Options Logical Port Fees, Ports with Bulk
Quoting Capabilities.
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13803
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
cables, as well as the readiness of the
Exchange’s data center space to
accommodate additional Dedicated
Cores in the Exchange’s respective
Order Handler Cabinets.20 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 procuring
additional space 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.21 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
three 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.22 The proposed increased
20 The Exchange notes that it cannot currently
convert shared CPU cores into Dedicated Cores.
21 The Exchange does not have any Users that
take Dedicated Cores at or near the maximum limits
and the average number of Dedicated Cores used for
the Exchange is 11.
22 See Securities Exchange Act Release No. 99983
(April 17, 2024), 89 FR 30418 (April 23, 2024) (SR–
E:\FR\FM\26MRN1.SGM
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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.23 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.
khammond on DSK9W7S144PROD with NOTICES
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
CboeEDGA–2024–014); Securities Exchange Act
Release No. 100300 (June 10, 2024), 89 FR 50653
(June 14, 2024) (SR–CboeEDGA–2024–020) and
Securities Exchange Act Release No. 100736
(August 15, 2024), 89 FR 67696 (August 21, 2024)
(SR–CboeEDGA–2024–032).
23 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).
VerDate Sep<11>2014
16:57 Mar 25, 2025
Jkt 265001
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. Further, as
described above, Nasdaq also already
provides a similar offering.24
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.’’ 25 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’. . . .’’.26 Accordingly, the
Exchange does not believe its proposed
change imposes any burden on
24 See The Nasdaq Stock Market, Equity 7 Pricing
Schedule, Section 115(g)(3), Dedicated Ouch Port
Infrastructure.
25 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
26 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)).
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
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 27 and paragraph (f) of Rule
19b–4 28 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
CboeEDGA–2025–006 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–2025–006. 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
27 15
28 17
E:\FR\FM\26MRN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
26MRN1
Federal Register / Vol. 90, No. 57 / Wednesday, March 26, 2025 / Notices
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–2025–006 and should
be submitted on or before April 16,
2025.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Sherry R. Haywood,
Assistant Secretary.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–102704; File No. SR–
NASDAQ–2025–029]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing of Proposed Rule Change To
List and Trade Shares of the 21Shares
Polkadot Trust Under Nasdaq Rule
5711(d)
khammond on DSK9W7S144PROD with NOTICES
March 20, 2025.
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 March 17,
2025, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
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.
1. Purpose
The Exchange proposes to list and
trade the Shares under Nasdaq Rule
5711(d), which governs the listing and
trading of Commodity-Based Trust
Shares on the Exchange.3 21Shares US
LLC (the ‘‘Sponsor’’) is the sponsor of
the Trust. Any statements or
representations included in this
proposal regarding: (a) the description
of the reference assets or trust holdings;
(b) limitations on the reference assets or
trust holdings; (c) dissemination and
availability of the reference asset or
intraday indicative value; or (d) the
applicability of Nasdaq listing rules
specified in this proposal shall
constitute continued listing standards
for the Shares listed on the Exchange.
Overview of the Trust and the Shares
According to the Registration
Statement, the Trust is a Delaware
3 The Commission approved Nasdaq Rule 5711 in
Securities Exchange Act Release No. 66648 (March
23, 2012), 77 FR 19428 (March 30, 2012) (SR–
NASDAQ–2012–013).
29 17
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
16:57 Mar 25, 2025
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of 21Shares Polkadot Trust
(the ‘‘Trust’’) under Nasdaq Rule
5711(d) (‘‘Commodity-Based Trust
Shares’’). The shares of the Trust are
referred to herein as the ‘‘Shares.’’
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/nasdaq/rulefilings, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2025–05042 Filed 3–25–25; 8:45 am]
VerDate Sep<11>2014
solicit comments on the proposed rule
change from interested persons.
Jkt 265001
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
13805
statutory trust, formed on October 29,
2024.4 The Trust will operate pursuant
to a trust agreement (the ‘‘Trust
Agreement’’), as amended and/or
restated from time to time. CSC
Delaware Trust Company, a Delaware
trust company, is the trustee of the Trust
(the ‘‘Trustee’’). The Trust is managed
and controlled by 21Shares US LLC (the
‘‘Sponsor’’). A third party to be
appointed by the Sponsor and/or the
Trustee will be the administrator of the
Trust (the ‘‘Administrator’’).
The Trust is a passive investment
vehicle that does not seek to generate
returns beyond tracking the price of
DOT tokens, the native token of the
Polkadot Network (as defined below)
(‘‘DOT’’). This means the Sponsor does
not speculatively sell DOT at times
when its price is high or speculatively
acquire DOT at low prices in the
expectation of future price increases. It
also means the Trust will not utilize
leverage, derivatives or any similar
arrangements in seeking to meet its
investment objective. The Trust’s
investment objective is to seek to track
the performance of DOT, as measured
by the performance of the CME CF
Polkadot—Dollar Reference Rate—New
York Variant (‘‘Pricing Benchmark’’),
adjusted for the Trust’s expenses and
other liabilities. The Pricing Benchmark
is calculated by CF Benchmarks Ltd.
(the ‘‘Benchmark Provider’’) based on an
aggregation of executed trade flow of
major DOT trading platforms
(‘‘Constituent Exchanges’’). The Pricing
Benchmark is designed to reflect the
performance of DOT in U.S. dollars. In
seeking to achieve its investment
objective, the Trust will hold DOT and
will value its Shares daily based on the
Pricing Benchmark. Coinbase Custody
Trust Company, LLC (the ‘‘DOT
Custodian’’) is the DOT custodian for
the Trust and will hold all of the Trust’s
DOT on the Trust’s behalf.
When the Trust sells or redeems its
Shares, DOT will be transferred into or
out of the Trust, as applicable, in
exchange for blocks of 10,000 Shares (a
‘‘Basket’’) that are based on the quantity
of DOT attributable to each Share of the
Trust (net of accrued but unpaid
Sponsor Fees (defined below) and any
accrued but unpaid extraordinary
expenses or liabilities).
4 See Registration Statement on Form S–1, dated
January 31, 2025 filed with the Commission on
behalf of the Trust. The descriptions of the Trust,
the Shares, the Pricing Benchmark (as defined
below), and Trust’s holdings contained herein are
based, in part, on information in the Registration
Statement. The Registration Statement in not yet
effective and the Shares will not trade on the
Exchange until such time that the Registration
Statement is effective.
E:\FR\FM\26MRN1.SGM
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]]>Agencies
[Federal Register Volume 90, Number 57 (Wednesday, March 26, 2025)]
[Notices]
[Pages 13800-13805]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-05042]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102701; File No. SR-CboeEDGA-2025-006]
Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule Regarding Dedicated Cores
March 20, 2025.
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 March 13, 2025, 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.
---------------------------------------------------------------------------
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 fee schedule to adopt fees for Dedicated Cores.
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.
[[Page 13801]]
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 SR-CboeEDGA-2024-039. On November
26, 2024, the Exchange withdrew that filing and submitted SR-
CboeEDGA-2024-048. On January 24, 2025, the Exchange withdrew that
filing and submitted SR-CboeEDGA-2025-001. On March 13, 2025, 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 limited
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 initial launch of Dedicated Cores. After seeing
increased User demand, the Exchange proposed to increase that cap and
provided that Members will be limited to a maximum number of 80
Dedicated Cores and Sponsoring Members will be limited to a maximum
number of 35 Dedicated Cores for each of their Sponsored Access
relationships.\8\ The Exchange noted at that time that it would
continue monitoring Dedicated Core interest by all Users and allotment
availability with the goal of increasing these limits to meet Users'
needs if and when the demand is there and/or the Exchange is able to
accommodate additional Dedicated Cores. Since then, the Exchange has
determined that it is able to accommodate an increased cap relative to
current demand. As such, the Exchange proposed to increase the cap to
120 Dedicated Cores for Members, effective December 1, 2024.\9\
Sponsoring Members will continue to be limited to a maximum of 35
Dedicated Cores for each of their Sponsored Access relationships.\10\
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 100300 (June 10,
2024), 89 FR 50653 (June 14, 2024) (SR-CboeEDGA-2024-020).
\8\ See Securities Exchange Act Release No. 101304 (October 10,
2024), 89 FR 83748 (October 17, 2024) (SR-CboeEDGA-2024-039).
\9\ 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.
\10\ 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
[[Page 13802]]
Section 6(b) of the Act.\11\ Specifically, the Exchange believes the
proposed rule change is consistent with the Section 6(b)(5) \12\
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) \13\ 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) \14\ 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.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ Id.
\14\ 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, 30% 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 35% of the Exchange's Members currently use Dedicated
Cores and as noted above, of those 35%, 30% 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 is not aware of
any specific reason (operational or otherwise) why a firm would not
partake in the use of the one to two free Dedicated Cores the Exchange
offers. Indeed the Exchange does not believe that the set up a firm
would undertake to use free Dedicated Cores offered by the Exchange is
prohibitively difficult or burdensome; ultimately, whether or not a
firm avails itself of the free Dedicated Cores is a business decision,
and some firms may decide that the impact that Dedicated Cores may have
is simply not beneficial or necessary to how that firm operates. 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). For background, proprietary trading firms utilize their own
capital to trade without taking outside money from clients. Due to the
nature of their respective businesses, the Exchange has classified
proprietary trading firms as latency sensitive, and other groups, such
as buy-side hedge funds, sell-side banks and sell-side non-banks (such
as agency brokers) as non-latency sensitive. Proprietary trading firms'
strategies may range from, market making, to relative value trading and
arbitrage--these all rely on profiting from general market activity
and, generally, requires faster entry and exit into trades and
positions making proprietary trading firms more latency sensitive than
other market segments. Buy-side hedge funds, banks and agency brokers
are not as latency sensitive as, generally, the strategy for hedge
funds is based on overall long-term positioning in the market, and
banks and agency brokers may profit from commissions of customer order
flow; both are generally strategies that are not reliant on speed to
the same extent proprietary trading firms are. Further, Members have
various reasons for obtaining Dedicated Cores. Some Members for
example, may be seeking to further reduce latency or increase execution
determinism, whereas others may use Dedicated Cores as a general risk
mitigation by siloing their respective activity. For example, by using
the Dedicated Core(s) to silo its respective activity, a firm may be
able to mitigate risk during periods of heightened volatility as the
firm will not need to compete for a shared resource (i.e., the shared
core). Of further note, only 64% of Members that are propriety trading
firms (who again, generally tend to be more latency sensitive) utilize
Dedicated Cores, and of that 64%, 36% are only utilizing the 1 to 2
free Dedicated Cores available to all Users. As mentioned above, some
non-latency sensitive firms have chosen to also adopt Dedicated Cores.
20% of Members that are not latency sensitive utilize Dedicated Cores,
and of that 20%, 33% are only 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. Moreover, the
Exchange has received overwhelming positive feedback and support for
Dedicated Cores from the firms that have chosen to utilize these in
furtherance of their respective needs, with some Members even noting
that they have moved more of their order flow to the Exchange and its
affiliated equities exchanges (the ``Equities Exchanges'') as they have
noticed both better fills and greater consistency of order execution at
the Equities Exchanges. This demonstrates that despite any incurred
costs for Members that choose to purchase Dedicated Cores, it is
ultimately a net win for them as they benefit from better execution.
The Exchange believes it also demonstrates that Members find the
proposed fees to be both reasonable and have benefited from purchasing
or, are alternatively benefiting from the proposed one or two free
Dedicated Cores available at no additional cost. The Exchange believes
this is shown by both the level of demand for Dedicated Cores and the
feedback from market participants that have used the Dedicated Cores
for its unique business needs, including as described above. The
Exchange also believes it's notable that no negative comment letters in
[[Page 13803]]
connection with the proposed pricing have been received since the
Exchange first filed proposed fees for Dedicated Cores back on March 1,
2024. Additionally, as noted earlier, Members can (and many have)
decide that utilizing even a free Dedicated Core is not needed for
their business. The Exchange also notes it has not received any
feedback for Members that raise concerns over the barrier to entry to
use Dedicated Cores, including notably the free Dedicated Cores--nor is
the Exchange aware of any reason why a firm would ultimately choose not
to use the free Dedicated Cores, other than it is not necessary for its
business. Ultimately, this is a business decision that each Member must
make and is best suited to determine and will ultimately depend on the
priorities and strategies of that Member's respective business needs.
The Exchange also notes that at least one other exchange also has a
comparable offering.\15\ The Nasdaq Stock Market, LLC (``Nasdaq''),
introduced the Dedicated Ouch Port Infrastructure in 2014 \16\ which
allows a member firm to assign up to 30 of its OUCH ports to a
dedicated server infrastructure for its exclusive use.\17\ A Dedicated
OUCH Port Infrastructure subscription is available to a member firm for
a fee of $5,000 per month, which is in addition to the standard fees
assessed for each OUCH port. A one-time installation fee of $5,000 is
assessed subscribers for each Dedicated OUCH Port Server
subscription.\18\ While there are differences in the offerings
themselves--the Exchange offering is more akin to a service offering
while the Nasdaq offering is more akin to an infrastructure offering
(and as such, the pricing structure does differ)--both offerings offer
the ability for a firm to utilize a full processing power of a CPU
Core. Moreover, the Exchange's service offering also provides more
flexibility, as firms with modest needs at Nasdaq have to buy all 30
ports offered and can't choose to buy less ports (i.e., cores). Lastly,
the Exchange emphasizes that order processing itself is not affected by
the introduction of Dedicated Cores. No relevant changes are intended
to the matching engine, which is, and remains, the main component of
the Exchange's infrastructure being responsible for the actual
processing of orders.
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\15\ See The Nasdaq Stock Market, Equity 7 Pricing Schedule,
Section 115(g)(3), Dedicated Ouch Port Infrastructure.
\16\ See Securities Exchange Act Release No. 70693 (October 16,
2013), 78 FR 62761 (October 22, 2013) (SR-NASDAQ-2013-131).
\17\ See supra note 15.
\18\ Id.
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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, 30%
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. The Exchange believes that such pricing further creates a lower
barrier to entry for all Members, making this service widely available
to all who deem it helpful for their business, including those with
more modest needs. Other exchanges similarly assess higher fees to
those that consume more Exchange resources.\19\ 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 limited resources in order to
provide an additional number of Dedicated Cores or put the Exchange in
a position that it cannot accommodate demand. 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.
---------------------------------------------------------------------------
\19\ 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 cables, as well as the readiness of the Exchange's data center
space to accommodate additional Dedicated Cores in the Exchange's
respective Order Handler Cabinets.\20\ 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 procuring additional
space 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.\21\ 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
three 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.\22\ The proposed
increased
[[Page 13804]]
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.\23\ 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.
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\20\ The Exchange notes that it cannot currently convert shared
CPU cores into Dedicated Cores.
\21\ The Exchange does not have any Users that take Dedicated
Cores at or near the maximum limits and the average number of
Dedicated Cores used for the Exchange is 11.
\22\ See Securities Exchange Act Release No. 99983 (April 17,
2024), 89 FR 30418 (April 23, 2024) (SR-CboeEDGA-2024-014);
Securities Exchange Act Release No. 100300 (June 10, 2024), 89 FR
50653 (June 14, 2024) (SR-CboeEDGA-2024-020) and Securities Exchange
Act Release No. 100736 (August 15, 2024), 89 FR 67696 (August 21,
2024) (SR-CboeEDGA-2024-032).
\23\ 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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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. Further, as described above, Nasdaq also
already provides a similar offering.\24\
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\24\ See The Nasdaq Stock Market, Equity 7 Pricing Schedule,
Section 115(g)(3), Dedicated Ouch Port Infrastructure.
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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.'' \25\ 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'. . . .''.\26\
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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\25\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\26\ 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 \27\ and paragraph (f) of Rule 19b-4 \28\
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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\27\ 15 U.S.C. 78s(b)(3)(A).
\28\ 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-2025-006 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-2025-006. 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
[[Page 13805]]
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-2025-006 and should be
submitted on or before April 16, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-05042 Filed 3-25-25; 8:45 am]
BILLING CODE 8011-01-P
