[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