[Federal Register Volume 84, Number 96 (Friday, May 17, 2019)]
[Notices]
[Pages 22543-22546]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10228]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85849; File No. SR-CboeEDGA-2019-010]
Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the EDGA Equities Trading Platform Fee Schedule
May 13, 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 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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[[Page 22544]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe EDGA Exchange, Inc. (``EDGA'' 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 EDGA
equities trading platform (``EDGA Equities'') as it relates to pricing
for the use of the ROBB and ROCO routing strategies. The text of the
proposed rule change is attached [sic] 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 purpose of the proposed rule change is to amend the EDGA
Equities fee schedule to change the pricing applicable to orders routed
using the ROBB and ROCO routing strategies in connection with planned
changes to the System routing table.\3\ ROBB and ROCO are a routing
strategies offered by the Exchange that are used to target certain low
cost venues by routing to those venues after accessing available
liquidity on the EDGA Book. In February 2019, NYSE American LLC (``NYSE
American'') and NYSE National, Inc. (``NYSE National'') were added to
the System routing table as a low cost protected market centers.
Therefore, pursuant to Rule 11.11(g), the Exchange has determined to
add NYSE American and NYSE National as a low cost venues under the ROBB
and ROCO routing strategies. These changes to the ROBB and ROCO routing
strategies 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
11.11(g). 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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In recognition of the fact that NYSE American and NYSE National can
be accessed at a low cost today, for securities priced at or above
$1.00, the Exchange proposes to provide a fee to orders routed to NYSE
American using the ROBB or ROCO routing strategies and a rebate for
orders routed to NYSE National using the ROBB or ROCO routing
strategies. Specifically, the Exchange proposes to add ROBB and ROCO to
the list of routing strategies that yield fee code NX, which relates to
orders routed to NYSE National, and to the list of routing strategies
that yield fee code MX, which relates to orders routed to NYSE
American. As proposed, orders routed to NYSE National using the ROBB or
ROCO routing strategies 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. Orders routed to
NYSE American using the ROBB or ROCO routing strategies would be
assessed a fee of $0.00020, and no charge or rebate would be applied
for securities prices below $1.00. The fee and rebate are consistent
with those currently offered for orders routed to NYSE National and
NYSE American using a similar low cost routing strategy, ROUC, yielding
fee code NX and MX, respectively.
In addition to this, the Exchange proposes to reduce the per share
rebate [sic] for orders routed to Cboe EDGX Exchange, Inc. (``EDGX'')
and to reduce the per share fee [sic] assessed for orders routed to
EDGX that add liquidity, including pre- and post-market orders.
Currently, the Exchange assesses a fee of $0.0030 per share for orders
routed to EDGX (yielding fee code I) in securities priced at or above
$1.00. The Exchange also currently provides a standard rebate of
$0.0027 per share for orders routed to EDGX that add liquidity,
including pre- and post-market orders, (yielding fee code P) in
securities priced at or above $1.00. The Exchange now proposes to
reduce the fee assessed for orders routed to EDGX (yielding fee code I)
in securities priced at or above $1.00 from $0.0030 to $0.00265. With
respect to orders routed to EDGX that add liquidity, including pre- and
post-market orders, (yielding fee code P) in securities priced at or
above $1.00, the Exchange proposes to reduce the per share rebate from
$0.0027 to $0.0017.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act,\4\ in general, and furthers the requirements
of Section 6(b)(4),\5\ 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 ROBB and ROCO routing
strategies. As stated, ROBB and ROCO specifically target certain
equities exchanges that provide low cost executions or rebates to
liquidity removing orders, and routes to those venues after trading
with the EDGA Book. The Exchange believes that the proposed changes
reflect the intent of Members when they submit routable order flow to
the Exchange using the ROBB and ROCO routing strategies.
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that it is reasonable and equitable to begin
rebating orders routed to NYSE National using the ROBB and ROCO routing
strategies. As mentioned previously, the Exchange added these 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
EDGA members using the ROBB and ROCO routing strategies. The Exchange
currently offers such incentives when routing to those markets using
another low cost routing strategy, ROUC. As is the case for orders
routed via the ROUC routing strategy to NYSE American or NYSE National,
the Exchange believes the proposed fees and rebates applicable to the
ROBB and ROCO routing strategies to these venues generally reflect the
current transaction fees and rebates available for accessing liquidity
on those markets.\6\ The Exchange believes that this change may
increase interest in the Exchange's
[[Page 22545]]
ROBB and ROCO routing strategies, in particular, by passing on better
pricing to EDGA Members that choose to enter such orders on the
Exchange, thereby encouraging additional order flow to be entered to
the EDGA Book.
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\6\ 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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In addition to this, the Exchange believes that the proposed
routing fee changes are equitable and not unfairly discriminatory as
the proposed rebate would apply equally to all Members that use the
Exchange to route orders using the associated routing strategies. 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.
The Exchange also believes that its proposal to reduce rates for
orders routed to EDGX is reasonable because Members will pay lower
transaction fees for such orders. Additionally, the Exchange notes that
the proposed fee is lower than transaction fees assessed on other
Exchanges.\7\ The Exchange notes that the proposed fee reduction is not
unfairly discriminatory as it applies uniformly to Members.
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\7\ See NYSE Price List 2019, Routing Fees.
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Finally, the Exchange believes the proposed reduced rebates for
orders routed to EDGX that add liquidity (including pre- and post-
market orders) is reasonable, equitable and not unfairly discriminatory
because Members will still receive rebates for such orders, albeit at a
lower amount. The Exchange also believes the proposed reduction of
rebates for such orders is reasonable because the Exchange must balance
the revenue received for orders that add liquidity (and as described
above, the Exchange is reducing the rates assessed for orders routed to
EDGX). Rebates for orders that add liquidity incentivize members to
bring additional order flow through the Exchange, thereby promoting
price discovery and enhancing order execution opportunities for
Members.
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 notes that the use of available
routing strategies is optional for all Members. Also, the proposed
rates and rebates would apply uniformly to all Members, and 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 the ability of
members or competing venues to maintain their competitive standing in
the financial markets. Further, excessive fees would serve to impair an
exchange's ability to compete for order flow and members rather than
burdening competition. Moreover, the proposed fee changes are designed
to incentivize liquidity, which the Exchange believes will benefit all
market participants by encouraging a transparent and competitive
market. 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 \8\ and paragraph (f) of Rule 19b-4 \9\
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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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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-2019-010 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-2019-010. 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
[[Page 22546]]
comment submissions. You should submit only information that you wish
to make available publicly. All submissions should refer to File Number
SR-CboeEDGA-2019-010 and should be submitted on or before June 7, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-10228 Filed 5-16-19; 8:45 am]
BILLING CODE 8011-01-P