[Federal Register Volume 83, Number 205 (Tuesday, October 23, 2018)]
[Notices]
[Pages 53522-53524]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-23038]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84442; File No. SR-CboeEDGX-2018-047]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change Related
to Fees for Use on Cboe EDGX Exchange, Inc.
October 17, 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 October
[[Page 53523]]
3, 2018, Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') 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 fee schedule applicable
to Members \5\ and non-Members of the Exchange pursuant to Exchange
Rules 15.1(a) and (c).
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\5\ A Member is defined as ``any registered broker or dealer
that has been admitted to membership in the Exchange.'' See Exchange
Rule 1.5(n).
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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
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its fee schedule to adopt new fee
code DM, effective October 3, 2018. Such flag will be yielded when
Members add liquidity in the discretionary range using a MidPoint
Discretionary Order type (``MDO''), which order type was recently
adopted by the Exchange. In sum, an MDO is a Limit Order that is
executable at the National Best Bid (``NBB'') for an order to buy or
the National Best Offer (``NBO'') for an order to sell while resting on
the EDGX Book, with discretion to execute at prices to and including
the midpoint of the National Best Bid and Offer (the ``NBBO'').\6\ MDO
orders can be displayed or hidden. The MDO has two discrete
components--the displayed portion that is pegged to the NBB or NBO, and
a non-displayed portion which gives discretion to execute to the mid-
point of the NBBO, subject to certain limits. The Exchange believes the
proposed pricing is reflective of this concept. Particularly, the
Exchange notes that displayed MDO orders that add liquidity at the bid
or offer will receive one of the existing applicable fee codes, B, V,
Y, 3, or 4 and receive the standard rebate for adding liquidity. The
standard rebate for adding liquidity in securities priced at or above
$1.00 is $0.0020 per share and $0.00003 per share for securities priced
below $1.00. Non-displayed MDO orders that add liquidity at the bid or
offer will receive the existing non-displayed add fee code, HA. The
rebate for orders yielding fee code HA is $0.00150 per share for
securities priced at or above $1.00 and $0.00003 for securities priced
below $1.00. The Exchange lastly proposes that Members that add
liquidity in the discretionary range using a MDO order will receive a
rebate of $0.0015 per share for securities priced at or above $1.00 and
provide a rebate of $0.00003 per share for securities priced below
$1.00. The Exchange notes that the proposed pricing for orders that add
liquidity using MDO orders within the discretionary range is the same
as the pricing for non-displayed MDO orders that add liquidity at the
bid or offer (i.e., orders yielding fee code HA). The Exchange notes
that pursuant to Footnote 11 of the Fees Schedule, orders that add non-
displayed liquidity (e.g., orders yielding fee code HA) may not receive
a rebate if the order has a Discretionary Range instruction. As such,
the Exchange proposes to adopt a new fee code, DM, to be appended to
all MDO orders that add liquidity within the discretionary range.
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\6\ See Securities Exchange Act Release No. 84327 (October 1,
2018) (SR-CboeEDGX-2018-041) (notice of filing and immediate
effectiveness of proposed rule change to adopt MDOs).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\7\ in general, and
furthers the objectives of Section 6(b)(4),\8\ in particular, 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.
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(4).
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The Exchange believes the proposed rebates for orders yielding fee
code DM are reasonable because the amount of the rebates are the same
as the respective rebates applied to other non-displayed orders.\9\ The
Exchange believes the proposed rebates for orders yielding DM is
equitable and not unfairly discriminatory because it applies uniformly
to all members. The Exchange also notes that it believes it is
equitable and reasonable to provide a rebate to MDOs because MDOs add
liquidity at the NBBO while offering price improvement opportunities to
incoming contra-side orders that execute within its discretionary
range. The Exchange believes it's equitable and not unfairly
discriminatory to provide a lower rebate to non-displayed add MDO
orders (i.e., orders yielding fee codes HA and DM) compared to
displayed add MDO orders (i.e., orders yielding fee codes, B, V, Y, 3,
or 4) because such pricing incentivizes the entry of displayed
liquidity on the Exchange, which is consistent with the Exchange's
pricing generally.
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\9\ See e.g., Cboe EDGX U.S. Equities Exchange Fee Schedule, Fee
Code and Associated Fees, Fee Code HA.
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B. Self-Regulatory Organization's Statement on Burden on Competition
This proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. The Exchange does not believe that this change represents a
significant departure from previous pricing offered by the Exchange or
from pricing offered by the Exchange's competitors. The proposed
rebates would apply uniformly to all Members, and 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 changes will impair the ability of Members or competing venues
to maintain their competitive standing in the financial markets.
Further, excessive fees would serve to impair an exchange's ability to
compete for order flow and members rather than burdening competition.
The Exchange believes that its proposal would not burden intramarket
competition because the proposed rate would apply uniformly to all
Members.
[[Page 53524]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from members or other interested parties.
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 \10\ and paragraph (f) of Rule 19b-4
thereunder.\11\ 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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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeEDGX-2018-047 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-CboeEDGX-2018-047. 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 this 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 Number SR-CboeEDGX-2018-047 and should be
submitted on or before November 13, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-23038 Filed 10-22-18; 8:45 am]
BILLING CODE 8011-01-P