[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