[Federal Register Volume 84, Number 74 (Wednesday, April 17, 2019)]
[Notices]
[Pages 16062-16064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07705]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85636; File No. SR-CboeBZX-2019-021]
Self-Regulatory Organizations; Cboe BZX 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 BZX Rules 15.1(a) and (c)
April 12, 2019.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on March 29, 2019, Cboe BZX Exchange, Inc. (the
``Exchange'' or ``BZX'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II, below, which Items have been prepared by the self-
regulatory organization. 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\ 15 U.S.C. 78a.
\3\ 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
BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') is filing with the
Securities and Exchange Commission (``Commission'') a proposed rule
change to amend the fee schedule applicable to Members and non-Members
\4\ of the Exchange pursuant to BZX Rules 15.1(a) and (c). The text of
the proposed rule change is attached as Exhibit 5 [sic].
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\4\ 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 also available on the
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
[[Page 16063]]
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 self-regulatory organization
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 those 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 Exchange proposes to amend its fee schedule applicable to its
equities trading platform (``BZX Equities'') to add a Non-Displayed Add
Volume Tier, effective April 1, 2019.
The Exchange currently offers three Non-Displayed Add Volume Tiers
under footnote 1, which provide an enhanced rebate between $0.0018 to
$0.0025 per share for qualifying Tape A, B, and C non-displayed orders
that add liquidity (i.e., yield fee codes HV, HB, and HY,
respectively). The Exchange now proposes to add a fourth Non-Displayed
Add Volume Tier. Under the proposed Non-Displayed Add Volume Tier 4, a
Member may receive an enhanced rebate of $0.0029 per share where they
add an ADV \5\ greater than or equal to 0.38% of the TCV \6\ as Non-
Displayed orders that yield fee codes HB, HI,\7\ HV or HY. The Exchange
believes the proposed new tier will encourage Members to increase their
liquidity on the exchange.
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\5\ ``ADV'' means average daily volume calculated as the number
of shares added or removed, combined, per day. ADAV and ADV are
calculated on a monthly basis. See Exchange Fee Schedule.
\6\ ``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. Id.
\7\ Fee code HI is appended to non-displayed orders that receive
price improvement and add liquidity. Id.
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2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with the objectives of Section 6 of the Act,\8\ in general, and
furthers the objectives of Section 6(b)(4),\9\ 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 changes reflect a competitive pricing structure designed to
incentivize market participants to direct their order flow to the
Exchange.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
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In particular, the Exchange notes that volume-based rebates such as
that proposed herein have been widely adopted by exchanges, including
the Exchange, 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 to an exchange's market quality;
(ii) associated 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 believes that the proposed tier is a
reasonable, fair and equitable, and not unfairly discriminatory
allocation of fees and rebates because it will provide Members with an
incentive to reach certain thresholds on the Exchange.
More specifically, the Exchange believes the proposed Non-Displayed
Add Volume Tier 4 is a reasonable means to encourage Members to
increase their liquidity on the Exchange. The Exchange further believes
that the proposed tier represents an equitable allocation of reasonable
dues, fees, and other charges because the threshold necessary to
achieve the tier encourages Members to add increased liquidity on BZX
each month. The increased liquidity benefits all investors by deepening
the Exchange's liquidity pool, offering additional flexibility for all
investors to enjoy cost savings, supporting the quality of price
discovery, promoting market transparency and improving investor
protection. The Exchange also believes that the proposed rebate is
reasonable based on the difficulty of satisfying the tier's criteria as
compared to the existing Non-Displayed Add Volume tiers, which provide
lower rebates and similar, but less stringent, criteria. Furthermore,
the Exchange believes that the proposed tier is not unfairly
discriminatory as it applies to all members that meet the required
criteria.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange does not believe
the proposed change burdens competition, but rather, enhances
competition as it is intended to increase the competitiveness of BZX by
adopting an additional pricing incentive in order to attract order flow
and incentivize participants to increase their participation on the
Exchange. The Exchange 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 structures to be unreasonable or
excessive. 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. The
Exchange also notes that the proposed change is intended to enhance the
rebate for liquidity added to the Exchange, which is intended to draw
additional liquidity to the Exchange to the benefit of all market
participants. The Exchange does not believe the proposed amendment
would burden intramarket competition as it would be available to all
Members uniformly.
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 unsolicited 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 is effective upon filing pursuant to
Section 19(b)(3)(A)(ii) of the Act,\10\ and subparagraph (f)(2) of Rule
19b-4 \11\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such 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
[[Page 16064]]
the purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings under Section 19(b)(2)(B) \12\
of the Act to determine whether the proposed rule change should be
approved or disapproved.
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\12\ 15 U.S.C. 78s(b)(2)(B).
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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-CboeBZX-2019-021 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 Number SR-CboeBZX-2019-021. 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 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-CboeBZX-2019-021 and should be submitted
on or before May 8, 2019.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-07705 Filed 4-16-19; 8:45 am]
BILLING CODE 8011-01-P