[Federal Register Volume 84, Number 95 (Thursday, May 16, 2019)]
[Notices]
[Pages 22203-22205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10123]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85825; File No. SR-CboeBZX-2019-039]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Fee Schedule Applicable to the BZX Equities Trading Platform (``BZX 
Equities'') as It Relates to Pricing for the Use of the TRIM Routing 
Strategy

May 10, 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 May 1, 2019, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') 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 BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (the ``Commission'') a 
proposed rule change to amend the fee schedule applicable to the BZX 
equities trading platform (``BZX Equities'') as it relates to pricing 
for the use of the TRIM routing strategy. The text of the proposed rule 
change is attached as Exhibit 5. [sic]
    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.

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 purpose of the proposed rule change is to amend the BZX 
Equities fee schedule to change the pricing applicable to orders routed 
using the TRIM routing strategy in connection with planned changes to 
the System routing table.\3\ TRIM is a routing strategy offered by the 
Exchange that is used to target certain low cost venues by routing to 
those venues after accessing available liquidity on the BZX Book. In 
February 2019, New York Stock Exchange (``NYSE'') was removed from the 
System routing table as a low cost protected market center, and NYSE 
American LLC (``NYSE American'') and NYSE National, Inc. (``NYSE 
National'') were added as a low cost protected market centers. 
Therefore, pursuant to Rule 11.13(b)(3), the Exchange has determined to 
modify the System routing table such that TRIM no longer routes to 
NYSE, and has decided to add NYSE American and NYSE National as a low 
cost venues under the TRIM routing strategy. These changes to the TRIM 
routing strategy are scheduled to be introduced on May 1, 2019.
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    \3\ 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. See Rule 
11.13(b)(3). 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.
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    Currently, orders routed to NYSE using the TRIM routing strategy 
are assessed a fee of $0.00280 per share.\4\ Orders routed using the 
TRIM routing strategy to BYX are provided a rebate of $0.00150 per 
share,\5\ to EDGA are provided a rebate of $0.00240 per share,\6\ and 
to BX and provided a rebate of $0.00100 per share.\7\ Also, orders 
currently routed to NYSE American using the SLIM strategy are assessed 
a fee of $0.0002 and yield fee code MX, and orders routed to NYSE 
National using the SLIM routing strategy are provided a rebate of 
$0.00200 and yield fee code NX. The Exchange proposes a number of 
changes to these fees in

[[Page 22204]]

connection with the changes to the routing table for TRIM.
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    \4\ See Cboe BZX U.S. Equities Exchange Fee Schedule, fee code 
D.
    \5\ See Cboe BZX U.S. Equities Exchange Fee Schedule, fee code 
BY.
    \6\ See Cboe BZX U.S. Equities Exchange Fee Schedule, fee code 
BJ.
    \7\ See Cboe BZX U.S. Equities Exchange Fee Schedule, fee code 
TV.
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    In recognition of the fact that NYSE American and NYSE National can 
be accessed at a low cost today, the Exchange proposes to provide a fee 
and rebates to orders routed to these exchanges using the TRIM routing 
strategy, respectively. Specifically, the Exchange proposes to add TRIM 
to the list of routing strategies that yield fee codes MX and NX, which 
relate to orders routed to NYSE American and NYSE National, 
respectively. As proposed, orders routed using the TRIM routing 
strategy would be assessed a fee of $0.00020 per share if executed on 
NYSE American (yielding an MX fee code). If executed on NYSE National 
(yielding an NX fee code), those orders using the TRIM routing strategy 
would be provided a rebate of $0.00200 per share in securities priced 
at or above $1.00, and no charge or rebate would be applied for 
securities priced below $1.00. The fee and rebates are consistent with 
the fee and rebates currently offered for orders routed to NYSE 
American and NYSE National using a similar low cost routing strategy, 
SLIM, which yield fee codes MX and NX, respectively.
    In addition to this, the Exchange notes that orders routed to BYX 
using the TRIM or SLIM routing strategy \8\ are provided rebates that 
are applicable to eligible orders in all securities. BYX, however, does 
not provide rebates to orders that remove liquidity in securities 
priced below $1.00, and instead charges a fee.\9\ As such, the Exchange 
proposes to amend the pricing for orders routed to BYX pursuant to fee 
code BY, such that no charge or rebate would be provided in securities 
priced below $1.00 (i.e., the Exchange proposes to append footnote 11 
to fee code BY in the Fees Codes and Associated Fees table).
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    \8\ See supra note 5. The Exchange also notes that it is 
simultaneously proposing to discontinue the use of the TRIM2 routing 
strategy, effective May 1, 2019, which is currently provided as a 
routing strategy that yields fee code BY.
    \9\ Orders that remove liquidity on BYX in securities prices 
below $1.00 are charged a fee of equal to 0.10% of the total dollar 
value. See Cboe BYX U.S. Equities Exchange Fee Schedule, Standard 
Rates.
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    Moreover, since NYSE is no longer included as a low cost protected 
market center, the Exchange proposes to eliminate special pricing for 
orders routed to NYSE using the TRIM routing strategy under fee code D. 
Such orders would now pay the default routing fee for orders routed 
using this routing strategy.\10\
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    \10\ Pursuant to proposed fee codes MX and NX, as well as fee 
codes BY, BJ and TV. See supra notes 5-7.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act,\11\ in general, and furthers the 
requirements 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 believes the proposed routing fee changes are appropriate 
as they reflect changes to the System routing table used to determine 
the order in which venues are accessed using the TRIM routing strategy. 
As stated, TRIM specifically targets certain equities exchanges that 
provide low cost executions or rebates to liquidity removing orders, 
and routes to those venues after trading with the BZX Book. The 
Exchange believes that the proposed changes reflect the intent of 
Members when they submit routable order flow to the Exchange using the 
TRIM routing strategy.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable and equitable to assess 
the proposed fee on orders routed to NYSE American and proposed rebate 
on orders routed to NYSE National using the TRIM routing strategy. As 
mentioned previously, the Exchange recently added these two exchanges 
to its list of low cost protected market centers, and wishes to provide 
the benefit of the rebate or lower fee provided by those markets to BZX 
Members using the TRIM routing strategy. The Exchange currently offers 
such incentives when routing to those markets using another low cost 
routing strategy, SLIM. As is the case for orders routed via the SLIM 
routing strategy to NYSE American or NYSE National, the Exchange 
believes the proposed fees and rebates applicable to the TRIM routing 
strategy to these venues generally reflect the current transaction fees 
and rebates available for accessing liquidity on those markets.\13\ The 
Exchange believes that these changes may increase interest in the 
Exchange's TRIM routing strategy, in particular, by passing on better 
pricing to BZX members that choose to enter such orders on the 
Exchange, thereby encouraging additional order flow to be entered to 
the BZX Book. In addition to this, the Exchange believes that is 
reasonable and equitable to eliminate special pricing for orders routed 
to NYSE using TRIM under fee code D, as NYSE is no longer included as a 
low cost protected market center.
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    \13\ NYSE American currently charges a fee for removing 
liquidity that is $0.00020 per share in securities priced at or 
above $1.00, and 0.25% of the total dollar value of the transaction 
in securities priced below $1.00. See NYSE American Equities Price 
List, I. Transaction Fees.
    NYSE National currently provides a rebate of $0.00200 per share 
in securities priced at or above $1.00 for members that achieve 
their taking tier. See NYSE National Schedule of Fees and Rebates, 
I. Transaction Fees, B. Tiered Rates. Orders that remove liquidity 
in securities below $1.00 are executed without charge or rebate. See 
NYSE National, Schedule of Fees and Rebates, I. Transaction Fees, A. 
General Rates.
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    The Exchange also believes that it is reasonable and equitable to 
provide free executions, rather than rebates, for orders routed to BYX 
using the TRIM or SLIM routing strategies \14\ in securities priced 
below $1.00. Although BYX generally provides rebates to orders that 
remove liquidity, those rebates are limited to securities priced at or 
above $1.00.\15\ For orders that remove liquidity in securities priced 
below $1.00, BYX instead charges a fee.\16\ With the proposed change to 
the routing fees, the Exchange would recoup some, but not all, of the 
cost associated with routing orders in lower priced securities to BYX 
on behalf of Members that use the TRIM or SLIM routing strategies.\17\
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    \14\ See supra note 8.
    \15\ See supra note 9.
    \16\ Id.
    \17\ See supra note 8.
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    Finally, the Exchange believes that the proposed changes are 
equitable and not unfairly discriminatory as the proposed fees and 
rebates would apply equally to all Members that use the Exchange to 
route orders using the associated routing strategy. The proposed fees 
are designed to reflect the fees charged and rebates offered by certain 
away trading centers that are accessed by Exchange routing strategies, 
and are being made in conjunction with changes to the System routing 
table designed to provide Members with low cost executions for their 
routable order flow. Furthermore, if Members do not favor the proposed 
pricing, they can send their routable orders directly to away markets 
instead of using routing functionality provided by the Exchange. 
Routing through the Exchange is voluntary, and the Exchange operates in 
a competitive environment where market participants can readily direct 
order flow to competing venues or providers of routing services if they 
deem fee levels to be excessive.

[[Page 22205]]

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
proposed routing fee changes are designed to reflect changes being made 
to the System routing table used to determine where to send certain 
routable orders, and generally provide better pricing to Members for 
orders routed to low cost protected market centers using the Exchange's 
routing strategies. The Exchange operates in a highly competitive 
market in which market participants can readily direct their order flow 
to competing venues. In such an environment, the Exchange must 
continually review, and consider adjusting, its fees and rebates to 
remain competitive with other exchanges. For the reasons described 
above, the Exchange believes that the proposed fee changes reflect this 
competitive environment.

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

    No written comments were either solicited or received.

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 \18\ and paragraph (f) of Rule 19b-4 \19\ 
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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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 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-CboeBZX-2019-039 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-2019-039. 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-2019-039 and should be submitted 
on or before June 6, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-10123 Filed 5-15-19; 8:45 am]
 BILLING CODE 8011-01-P