[Federal Register Volume 84, Number 92 (Monday, May 13, 2019)]
[Notices]
[Pages 20935-20937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09727]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85794; File No. SR-CboeBYX-2019-007]


Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Amending 
Rule 11.13 (Order Execution and Routing) and Fee Schedule To Delete 
References to TRIM2 and SWPB Routing Options

May 7, 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 April 29, 2019, Cboe BYX Exchange, Inc. (``Exchange'' or ``BYX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Exchange filed the proposal as 
a ``non-controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BYX Exchange, Inc. (the ``Exchange'' or ``BYX'') proposes to 
amend Rule 11.13 (Order Execution and Routing), as well as its Fee 
Schedule, to delete references to the TRIM2 and SWPB routing options. 
The text of the proposed rule change is provided in 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/byx/), 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 Rule 11.13(b)(3)(G) (Other Routing 
Strategies) to delete the TRIM2 routing option. The Exchange also 
proposes to amend its fee schedule to delete references to the TRIM2 
routing options under fee codes BJ and C, as well as the ``Routing 
Tier'' under footnote 3. Additionally, the Exchange proposes to amend 
Rule 11.13(b)(3)(I) (SWP) to delete the SWPB routing option and to 
delete references to SWPB in the fee schedule under fee code SW and 
under footnote 9. The Exchange intends to implement the proposed rule 
changes on May 1, 2019.
    Currently, Rule 11.13(b)(3)(G) provides for the routing options 
under which an order checks the System \5\ for available shares if so 
instructed by the entering User \6\ and then is sent to destinations on 
the applicable System routing table. The term ``System routing table'' 
refers to the proprietary process for determining the specific trading 
venues to which the System routes orders and the order in which it 
routes them.\7\ Rule 11.13(b)(3)(G) currently includes TRIM2 as one of 
such routing options.\8\ In addition, current fee code BJ is yielded on 
orders routed to EDGA using TRIM, TRIM2 or SLIM routing strategy \9\ 
and fee code C is yielded on orders routed to BX using Destination 
Specific, TRIM, TRIM2 or SLIM routing strategy.\10\ Also, current 
footnote 3 provides for additional rebate per share for orders yielding 
fee code C (thus inclusive of a TRIM2 routing strategy) if a Member 
achieves certain criteria.
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    \5\ The ``System'' is the Exchange's electronic communications 
and trading facility designated by the Board through which 
securities orders of Users are consolidated for ranking, execution 
and, when applicable, routing away. See Exchange Rule 1.5(aa).
    \6\ The term ``User'' is defined as ``any Member or Sponsored 
Participant who is authorized to obtain access to the System 
pursuant to Rule 11.3.'' See Exchange Rule 1.5(cc).
    \7\ The Exchange reserves the right to maintain a different 
System routing table for different routing options and to modify the 
System routing table at any time without notice. See Exchange Rule 
11.13(b)(3).
    \8\ TRIM2 routing strategy currently sends orders to: BYX + DRT 
+ BX + EDGA. See also note 3.
    \9\ Orders that yield fee code BJ receive a rebate of $0.0024 
per share.
    \10\ Orders that yield fee code C receive a rebate of $0.0010 
per share.
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    Current Rule 11.13(b)(3)(I) provides for SWP routing options. SWP 
is a routing option under which an order checks the System for 
available displayed shares and then is sent to destinations on the 
System routing table. SWP orders route only to Protected Quotations and 
only for displayed size. Specifically, the current rule provides for 
two forms of SWP routing, SWPA and SWPB. A SWPA order routes to 
destinations on the System routing table even if at the time of entry 
there is an insufficient share quantity in the SWPA order to fulfill 
the displayed size of all Protected Quotations, whereas an entire SWPB 
order will be cancelled back to a User immediately if at the time of 
entry there is an insufficient share quantity in the SWPB order to 
fulfill the displayed size of all Protected Quotations. Moreover, 
current fee code SW is yielded on orders routed using Parallel T, SWPA 
or SWPB routing strategies,\11\ and current footnote 9 describes the 
fees charged for orders yielding fee code SW that remove liquidity in 
securities priced below $1.00 for Parallel T, SWPA or SWPB routed 
executions.
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    \11\ Orders that yield fee code SW receive a discounted fee of 
$0.0033 per share.
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    The Exchange has determined that because few Users elect the TRIM2 
routing option and the SWPB routing option, which often experiences no 
usage for extended periods of time, the current demand does not warrant 
the infrastructure and ongoing maintenance expenses required to support 
these products. Therefore, the Exchange now proposes to delete TRIM2 as 
a routing option under Rule 11.13(b)(3)(G)(v) and SWPB as a routing 
option under Rule 11.13(b)(3)(I). The Exchange proposes to amend the 
Rule formatting accordingly, changing current subparagraph 
(b)(3)(G)(vi) to subparagraph 11.13(b)(3)(G)(v). The Exchange also 
proposes to amend its fee schedule to delete references to the TRIM2 
routing option under fee codes BJ and C, as well

[[Page 20936]]

as within the ``Routing Tier'' under footnote 3, and to delete 
references to the SWPB routing option under fee code SW and footnote 9. 
Users seeking to route to other trading centers may use alternative 
methods, such as utilizing other routing strategies offered by the 
Exchange, or connecting to those venues directly or through a third 
party service provider.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\12\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \13\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and 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. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \14\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ Id.
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    In particular, The Exchange does not believe that this proposal 
will permit unfair discrimination among customers, brokers, or dealers 
because the TRIM2 and SWPB routing options will no longer be available 
to all Users. Also, the Exchange believes the proposed rule change to 
remove references to TRIM2 and SWPB will remove impediments to the 
mechanism of a free and open market, thereby protecting investors and 
the public interest. As stated, the Exchange noted that few Users elect 
the TRIM2 or SWPB routing options and has determined that the current 
demand does not warrant the infrastructure and ongoing maintenance 
expense required to support these products. Therefore, the Exchange is 
discontinuing these routing options. The Exchange notes that routing 
through the Exchange is voluntary and alternative routing options 
offered by the Exchange as well as other methods remain available to 
Users that wish to route to other trading centers. In addition, neither 
the TRIM2 nor the SWPB routing option are core product offerings by the 
Exchange, nor is the Exchange required by the Act to offer such 
products. By removing references to routing options that will no longer 
be offered by the Exchange, the Exchange believes the proposed rule 
change will remove impediments to the mechanism of a free and open 
market and protect investors by providing investors with rules that 
accurately reflect routing options currently available.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change to 
remove TRIM2 and SWPB is not designed to address any competitive issues 
but rather to delete the TRIM2 and SWPB routing options that are rarely 
used on the Exchange.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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 \15\ and Rule 19b-4(f)(6) \16\ thereunder 
because the proposal does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; and (iii) by its terms, become operative for 30 days 
from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest.\17\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's intent to file 
the proposed rule change, along with a brief description and text of 
the proposed rule change, at least five business days prior to the 
date of filing of the proposed rule change, or such shorter time as 
designated by the Commission. The Exchange has satisfied this 
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \18\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay period. The Commission 
believes that waiver of the 30-day operative delay period is consistent 
with the protection of investors and the public interest. Specifically, 
the Commission believes that the proposal would accurately reflect 
routing options that are currently available on the Exchange and delete 
routing options no longer offered by the Exchange. For these reasons, 
the Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, 
and designates the proposed rule change to be operative upon filing 
with the Commission.\19\
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    \18\ 17 CFR 240.19b-4(f)(6)(iii).
    \19\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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.\20\
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    \20\ 15 U.S.C. 78s(b)(3)(C).
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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-CboeBYX-2019-007 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-CboeBYX-2019-007. 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

[[Page 20937]]

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-
CboeBYX-2019-007 and should be submitted on or before June 3, 2019.
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    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-09727 Filed 5-10-19; 8:45 am]
BILLING CODE 8011-01-P