[Federal Register Volume 83, Number 191 (Tuesday, October 2, 2018)]
[Notices]
[Pages 49606-49608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21364]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84293; File No. SR-CboeBYX-2018-021]
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Fees for Use on Cboe BYX Exchange, Inc.
September 26, 2018.
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 September 20, 2018, Cboe BYX Exchange, Inc. (the ``Exchange''
or ``BYX'') 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
Exchange has designated the proposed rule change as one establishing or
changing a member due, fee, or other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend the Exchange's fee schedule
applicable to its equities trading platform.
The text of the proposed rule change is available at the Exchange's
website at www.markets.cboe.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
[[Page 49607]]
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 parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend the Exchange's
fee schedule applicable to its equities trading platform (``BYX
Equities'') to add a new ADAV \5\ requirement to qualify for Remove
Volume Tier 8 associated with fee codes W,\6\ BB,\7\ and
N.8\,\9
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\5\ ``ADAV'' means average daily added volume calculated as the
number of shares added per day. See BYX Fee Schedule, Definitions.
ADAV is calculated on a monthly basis. The Exchange excludes from
its calculation of ADAV shares added or removed on any day that the
Exchange's system experiences a disruption that lasts for more than
60 minutes during regular trading hours (``Exchange System
Disruption''), on any day with a scheduled early market close and on
the last Friday in June (the ``Russell Reconstitution Day''). Routed
shares are not included in ADAV calculation. With prior notice to
the Exchange, a Member may aggregate ADAV with other Members that
control, are controlled by, or are under common control with such
Member (as evidenced on such Member's Form BD).
\6\ W is associated with orders that remove liquidity from BYX
in Tape A securities.
\7\ BB is associated with orders that remove liquidity from BYX
in Tape B securities.
\8\ N is associated with orders that remove liquidity from BYX
in Tape C securities.
\9\ The Exchange initially filed the proposed fee change on
September 4, 2018 (SR-CboeBYX-2018-018) for September 4, 2018
effectiveness. On business date September 13, 2018, the Exchange
withdrew SR-CboeBYX-2018-018 and submitted SR-CboeBYX-2018-020. On
September 20, 2018, the Exchange withdrew SR-CboeBYX-2018-020 and
submitted this filing.
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By way of background, the Exchange provides a standard rebate of
$0.0005 per share for orders that remove liquidity from BYX in
securities priced at or above $1.00. Members may also qualify for a
higher rebate based on the Exchange's Remove Volume Tiers, which are
designed to encourage Members to bring order flow to BYX by providing
higher rebates for removing liquidity to firms based on their activity
on the Exchange.\10\ Currently, Members can qualify for a higher rebate
of $0.0017 per share pursuant to Remove Volume Tier 8 if the Member has
a Step-Up Remove TCV \11\ from December 2017 equal or greater than
0.10%. The Exchange proposes to add a second prong to Remove Volume
Tier 8 which will also require a Member to meet an ``adding liquidity''
threshold, in addition to the current ``removing liquidity'' threshold.
Particularly, the Exchange proposes to add the requirement that a
Member have an ADAV that is greater than or equal to 0.30% of the TCV.
The proposed change applies to fee codes W, BB, and N, which relate to
orders that remove liquidity from BYX in Tapes A, B, and C,
respectively. The Exchange believes the proposed change makes the
threshold requirements commensurate with the level of the incentive
provided in Remove Volume Tier 8. The Exchange also notes that another
exchange has adopted a similar rebate that requires Members to meet
thresholds relating to both removing and adding liquidity.\12\
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\10\ See BYX Fee Schedule, footnote 1, Add/Remove Volume Tiers.
\11\ ``TCV'' means total consolidated volume calculated as the
volume reported by all exchanges and trade reporting facilities to a
consolidated transaction reporting plan for the month for which the
fees apply. The Exchange excludes from its calculation of TCV volume
on any day that the Exchange experiences an Exchange System
Disruption, on any day with a scheduled early market close and the
Russell Reconstitution Day.
\12\ See Nasdaq BX, Inc. (``BX'') Rule 7018, Nasdaq BX Equities
System Order Execution and Routing, which provides a $0.0016 per
share executed credit for orders that meet thresholds relating to
accessing liquidity and adding liquidity.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the requirements of Section 6 of the Act \13\ and, in particular,
the requirements of Section 6(b)(4) and 6(b)(5),\14\ as it is designed
to provide for the equitable allocation of reasonable dues, fees and
other charges among its members and other persons using its facilities
and is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
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.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the amount of the rebate under Remove
Volume Tier 8 is reasonable because it remains unchanged. The Exchange
also believes that it is reasonable to require an additional threshold
in order to receive the rebate because the Exchange believes the
updated requirements are commensurate with the level of the rebate
offered and ensures Members are providing adequate market participation
in return for this rebate.
The Exchange believes the proposal to add a requirement to Remove
Volume Tier 8 is an equitable allocation and is not unfairly
discriminatory because the proposed rule change applies to all
similarly situated Members. Particularly, volume-based rebates such as
those currently maintained on the Exchange have been widely adopted by
exchanges and are equitable and non-discriminatory because they are
open to all Members on an equal basis and provide additional benefits
or discounts that are reasonably related to (i) the value of an
exchange's market quality; (ii) associated with higher levels of market
activity, such as higher levels of liquidity provision and/or growth
patterns; and (iii) introduction of higher volumes of orders into the
price and volume discovery processes. The Exchange believe it's
reasonable, equitable and not unfairly discriminatory to require that
Members meet an adding liquidity threshold in addition to the existing
liquidity removing threshold because the proposed ADAV requirement is
intended to ensure Members achieving this rebate will meaningfully
support trading on the exchange by also providing liquidity that
supports the displayed market and, therefore, market quality. The
Exchange believes the enhanced rebated under Remove Volume Tier 8,
together with the other existing rebates and reduced fees under Add/
Remove Volume Tiers 1-9 provide members with choice and flexibility.
Particularly, the Exchange notes that Members have other opportunities
to receive enhanced rebates or reduced fees should a member be unable
to satisfy the qualification criteria required to receive the rebate
under Remove Volume Tier 8. As noted above, the Exchange also notes
that another exchange has adopted a similar rebate that requires
Members to meet thresholds relating to both adding and removing
liquidity.\15\ In sum, the Exchange believes that the proposed change
is an equitable allocation and is not unfairly discriminatory.
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\15\ See Nasdaq BX, Inc., Rule 7018, Nasdaq BX Equities System
Order Execution and Routing, which provides a $0.0016 per share
executed credit for orders that meet thresholds relating to
accessing liquidity and adding liquidity.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposed amendment to its fee schedule
would not impose any burden on competition that is not necessary or
appropriate in
[[Page 49608]]
furtherance of the purposes of the Act. The Exchange does not believe
that the proposed change represents a significant departure from
previous pricing programs offered by the Exchange or pricing offered by
the Exchange's competitors. Members may opt to disfavor the Exchange's
pricing if they believe that alternatives offer them better value.
Accordingly, the Exchange does not believe that the proposed change
will impair the ability of Members or competing venues to maintain
their competitive standing in the financial markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \16\ and paragraph (f) of Rule 19b-4
thereunder.\17\ 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.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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 proposal is
consistent with the Act. Comments may be submitted by any of the
following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File No. SR-CboeBYX-2018-021 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 No. SR-CboeBYX-2018-021. 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 (http://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 10:00 a.m. and
3:00 p.m. Copies of such filing will also be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File No. SR-CboeBYX-2018-021 and should be submitted on
or before October 23, 2018.
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\18\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-21364 Filed 10-1-18; 8:45 am]
BILLING CODE 8011-01-P