[Federal Register Volume 84, Number 54 (Wednesday, March 20, 2019)]
[Notices]
[Pages 10355-10357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-05218]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85319; File No. SR-CboeEDGA-2019-003]
Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating To Amend the Fee Schedule Applicable to Members and Non-
Members of the Exchange Pursuant to Exchange Rules 15.1(a) and (c)
March 14, 2019.
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 1, 2019, Cboe EDGA Exchange, Inc. (``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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGA Exchange, Inc. (the ``Exchange'' or ``EDGA'') is filing
with the Securities and Exchange Commission (``Commission'') a proposed
rule change to amend the fee schedule applicable to Members and non-
Members of the Exchange pursuant to Exchange Rules 15.1(a) and (c). The
text of the proposed rule change is attached as Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/edga/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its fee schedule to add a second Add
Volume Tier under footnote 7. The Exchange currently offers one Add
Volume Tier, which provides a reduced fee of $0.0026 per share for
Members that add an ADAV \3\ of greater than or equal to 0.10% of the
TCV \4\ for orders that add liquidity yielding fee codes 3,\5\ 4,\6\
B,\7\ V,\8\ or Y.\9\ The Exchange now proposes to add a second Add
Volume Tier, which will provide a reduced fee of $0.0022 per share for
Members that add an ADAV of greater than or equal to 0.45% of the TCV
for orders that add liquidity yielding the applicable fee codes. The
Exchange believes the proposed change will encourage Members to
increase their liquidity on
[[Page 10356]]
the Exchange and notes that other exchanges have similar volume
tiers.\10\
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\3\ ADAV means average daily volume calculated as the number of
shares added per day. ADAV is calculated on a monthly basis. See
Exchange's fee schedule.
\4\ 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. See Exchange's fee schedule.
\5\ Fee code 3 is appended to displayed and non-displayed orders
which add liquidity to pre and post market (Tape A or C) and are
provided a rebate of $0.0030 per share. Such orders are free for
securities under $1.00.
\6\ Fee code 4 is appended to displayed and non-displayed orders
which add liquidity to pre and post market (Tape B) and are provided
a rebate of $0.0030 per share. Such orders are free for securities
under $1.00.
\7\ Fee code B is appended to displayed and non-displayed orders
which add liquidity to Tape B and are provided a rebate of $0.0030
per share. Such orders are free for securities under $1.00.
\8\ Fee code V is appended to displayed and non-displayed orders
which add liquidity to Tape A and are provided a rebate of $0.0030
per share. Such orders are free for securities under $1.00.
\9\ Fee code Y is appended to displayed and non-displayed orders
which add liquidity Tape C and are provided a rebate of $0.0030 per
share for securities at or above $1.00. Such orders are free for
securities under $1.00.
\10\ See e.g., Cboe BYX U.S. Equities Exchange Fee Schedule,
Add/Remove Volume Tiers.
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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,\11\ in general, and
furthers the objectives of Section 6(b)(4),\12\ 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. The Exchange also notes that it operates in a highly-
competitive market in which market participants can readily direct
order flow to competing venues if they deem fee levels at a particular
venue to be excessive or incentives to be insufficient. The proposed
rule change reflects a competitive pricing structure designed to
incentivize market participants to direct their order flow to the
Exchange.
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\11\ 15 U.S.C. 78f.
\12\ 15 U.S.C. 78f(b)(4).
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The Exchange notes that volume-based discounts, such as Add Volume
Tier 1 currently maintained on the Exchange, have been widely adopted
by other exchanges and are equitable 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. In particular, the Exchange believes the addition
of a second Add Volume Tier under footnote 7 is reasonable because it
provides Members an additional opportunity to receive a reduced rate
for orders that add liquidity and is a reasonable means to encourage
Members to increase their liquidity on the Exchange. The Exchange also
notes that it is reasonable to offer incrementally increasing
incentives in which the difficulty in achieving tier criteria also
incrementally increases, which contributes to, and increases with, the
continuous growth of the Exchange. The Exchange believes that the
proposed additional tier deepens the Exchange's liquidity pool to the
benefit of investors by encouraging more price competition and
providing additional opportunities to trade. Additionally, the Exchange
believes that the proposed tier represents an equitable allocation of
reasonable dues, fees, and other charges because the thresholds
necessary to achieve the proposed Add Volume Tier 2 encourages Members
to add additional liquidity to the Exchange. The Exchange further
believes the proposed fee change is equitable and non-discriminatory
because it applies uniformly to all Members that achieve the proposed
Add Volume Tier 2 by executing a significant volume of liquidity
providing orders on EDGA.
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 the proposed changes
represent a significant departure from previous pricing offered by the
Exchange or from pricing offered by the Exchange's competitors.
Additionally, 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
competition. The Exchange believes that its proposal would not burden
intramarket competition because the proposed rates would apply
uniformly to all Members. The Exchange also notes that the proposed
change discounts the fees for liquidity added to the Exchange, which is
intended to draw additional liquidity to the Exchange to the benefit of
all market participants.
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 \13\ and paragraph (f) of Rule 19b-4 \14\
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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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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-CboeEDGA-2019-003 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-2019-003. 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 the filing also will 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-CboeEDGA-2019-003 and
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should be submitted on or before April 10, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-05218 Filed 3-19-19; 8:45 am]
BILLING CODE 8011-01-P