[Federal Register Volume 84, Number 98 (Tuesday, May 21, 2019)]
[Notices]
[Pages 23101-23103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10516]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85869; File No. SR-CboeBZX-2019-040]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the BZX Equities Fee Schedule To Correct an Inadvertent Drafting Error
Introduced in a Previous Rule Filing
May 15, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 1, 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, 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 BZX Equities fee schedule to correct
an inadvertent drafting error introduced in a previous rule filing. 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.
[[Page 23102]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
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 correct an inadvertent drafting error
introduced in a previous rule filing that changed the terminology used
to describe certain connectivity products offered to Exchange members.
On December 21, 2018, the Exchange filed a proposed rule change to
revise the nomenclature associated with logical port fees charged for
order entry, which were renamed to ``match capacity fees.'' \3\ The
purpose of that filing was to properly characterize the fees for order
entry logical ports as capacity fees to better reflect the service
offering of these products and shed additional light on how firms are
charged for connectivity. Although, as represented in the filing, no
changes to the Exchange's charges were proposed,\4\ the Exchange
thought that this was an important step to increase transparency around
its connectivity services. Specifically, the Exchange thought that
identifying its fees charged for order entry logical ports as capacity
fees, and providing associated data and analysis surrounding the use of
order entry logical ports would provide valuable information to the
Commission and the industry about the services provided by the Exchange
to firms that choose to access these services. To reflect this change
to the terminology used to describe order entry logical ports in the
BZX Equities fee schedule, the Exchange deleted a line item titled
``Logical Ports (excluding Purge Port, Multicast PITCH Spin Server Port
or GRP Port),'' and replaced it with a section titled ``Match Capacity
Fees,'' subject to the same monthly fee, but unfortunately did not
address the remaining logical ports used for other purposes.
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\3\ See Securities Exchange Act Release No. 84963 (December 26,
2018), 84 FR 830 (January 31, 2019) (SR-CboeBZX-2018-095).
\4\ For example, the filing repeatedly referenced changes to
``the nomenclature associated with the current logical port fees''
or ``proposed changes in terminology,'' and did not address any
changes related to logical ports used to deliver market data to
subscribers.
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The Exchange understands that the deleted language should not have
been removed from the fee schedule in order to effect the nomenclature
change described in its December filing, as such language was not
previously limited to order entry logical ports. As described in a
number of prior filings, including the filing to initially introduce
this logical port line item in 2009,\5\ the deleted language previously
applied both to the order entry ports that were explicitly the subject
of the December filing, and a handful of other ports that were not
addressed in that filing, including drop ports and ports used for the
receipt of certain market data feeds. Specifically, the deleted section
had applied to Cboe Auction Feed Ports, FIXDROP Ports, Order Drop
Ports, Last Sale Ports, PITCH Ports, and TOP Ports.\6\ As a result, the
new nomenclature inserted for match capacity fees--which was adopted
solely with order entry connectivity in mind--does not quite capture
all of the other connectivity offerings included under this section.
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\5\ See Securities Exchange Act Release No. 60586 (August 28,
2009), 74 FR 46256 (September 8, 2009) (SR-BATS-2009-026) (Approval
Order).
\6\ All other logical ports, except for Purge Ports, Multicast
PITCH Spin Server, Multicast PITCH GRP Ports, and match capacity
allocations are currently offered free of charge.
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The Exchange therefore proposes to add language back to this
section to properly account for drop and market data ports that have
been charged under the same heading as order entry connectivity since
2009. Specifically, the fee schedule would provide that other logical
ports (i.e., including Cboe Auction Feed Ports, FIXDROP Ports, Order
Drop Ports, Last Sale Ports, PITCH Ports, and TOP Ports) are subject to
a monthly fee of $550 per month, thereby ensuring that these fees are
identified separately from the match capacity fees charged for order
entry. The Exchange believes that this change would increase
transparency around its charges by fixing a drafting error introduced
when the Exchange renamed its order entry logical port charges.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act,\7\ in general, and furthers the requirements
of Section 6(b)(4),\8\ 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. Specifically,
the Exchange believes that the proposed rule change is reasonable,
equitable, and not unfairly discriminatory as it would clarify the fees
charged for drop and market data ports. As an unintended result of a
drafting error in recent proposed rule change to change the
nomenclature associated with order entry connectivity, the BZX Equities
fee schedule is missing language that applied to certain other logical
ports. The Exchange believes that reinserting language that references
these other logical port options would reduce confusion around the
Exchange's charges and ensure that these fees are appropriately
referenced on the fee schedule. The fees described in the proposed
language are the same as the fees identified prior to the inadvertent
deletion of this language in the December filing, but the fee schedule
would be amended to explicitly list all of the ports charged under this
section in the interest of furthering transparency around the
Exchange's charges. The Exchange believes that these steps will help
ensure that its fee schedule fully and accurately represents the fees
charged for market data logical ports, as previously filed with the
Commission.
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\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Rather, the proposed rule
change is designed to reduce potential confusion around the Exchange's
connectivity charges by reinstating a line item in the Exchange's fee
schedule that should not have been deleted when the Exchange changed
the nomenclature associated with order entry logical port fees, and
adding additional detail to this item that describes the products for
which those fees apply. The Exchange believes that this change would
increase transparency to the benefit of members and investors without
having any significant impact on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received 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 \9\ and paragraph (f) of Rule 19b-4 \10\
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
[[Page 23103]]
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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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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-2019-040 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-2019-040. 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, 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-2019-040, and should be submitted on or before June 11, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-10516 Filed 5-20-19; 8:45 am]
BILLING CODE 8011-01-P