[Federal Register Volume 84, Number 199 (Tuesday, October 15, 2019)]
[Notices]
[Pages 55203-55205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22386]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87249; File No. SR-CBOE-2019-076]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Amending 
Its Fees Schedule

October 8, 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 October 1, 2019, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') 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

    The Exchange proposes to amend its fees schedule. 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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 55204]]

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 its Fees Schedule in connection with 
fees assessed for transactions in options on the MSCI Emerging Markets 
Index (``MXEF'') (a proprietary product exclusively listed on the 
Exchange). The Exchange intends to implement the proposed change on 
October 1, 2019.
    The Exchange now proposes to waive the current fee $0.25 fee 
assessed for Customer (``C'') transactions in MXEF, through December 
31, 2019. The Exchange has experienced a precipitous decrease in MXEF 
Customer volume in the last three months. Indeed, the average volume 
per month from January 2019 through June 2019 was approximately 20,111 
contracts. From July 2019 through September 2019 the average volume per 
month was 17,613 contracts; an overall decrease of 12.4% per month. In 
light of this decreasing volume trend in MXEF Customer volume, the 
proposed three-month waiver of fees for MXEF Customer transactions is 
designed to incentivize a renewed increase of Customer volume in MXEF 
on the Exchange. The Exchange believes that incentivizing more Customer 
orders in MXEF will create more trading opportunities, which, in turn 
attracts Market-Makers. A resulting increase in Market-Maker activity 
facilitates tighter spreads, which may lead to additional increase of 
order flow in MXEF from other market participants, further contributing 
to a deeper, more liquid market to the benefit of all market 
participants by creating a more robust and well-balanced market 
ecosystem. The Exchange notes the proposed waiver is applicable to all 
Customer orders in MXEF.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act, in general, and furthers 
the objectives of Section 6(b)(4), in particular, as it is designed to 
provide for the equitable allocation of reasonable dues, fees and other 
charges among its Members and issuers and other persons using its 
facilities. The Exchange also believes that the proposed rule change is 
consistent with the objectives of Section 6(b)(5) 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, and, particularly, is not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.
    In particular, the Exchange believes that the proposed waiver is 
consistent with the Act in that it is reasonable, equitable, and not 
unfairly discriminatory. First, the Exchange believes the proposed 
waiver is reasonable because customers will not be charged any fee for 
MXEF orders. The Exchange believes the proposed three-month waiver is 
reasonable and equitable because it is designed to incentivize Customer 
MXEF executions, whose order flow, as stated, enhances liquidity on the 
Exchange for the benefit of all market participants by providing more 
trading opportunities, which attracts Market-Makers. An increase in 
Market-Maker activity in turn facilitates tighter spreads, which 
potentially increases order flow from other market participants. In 
addition to this, the Exchange believes that it is reasonable and 
equitable to waive the Customer transaction fee in MXEF through 
December 31, 2019, because this gives ample time to for the Exchange to 
evaluate whether the waiver has resulted in the desired effect of 
encouraging Customer order flow and, in turn, increased liquidity from 
other market participants.
    The Exchange believes that the proposal represents an equitable 
allocation of fees and is not unfairly discriminatory because the 
waiver will apply to all Trading Permit Holders that submit Customer 
orders in MXEF. Moreover, the Exchange notes that while the proposed 
fee assessed for Customer orders will be lower than fees assessed for 
other market participants \3\ the Exchange believes that the proposed 
waiver is equitable and not unfairly discriminatory because, as 
described above, Customer order flow enhances liquidity on the Exchange 
for the benefit of all market participants. Moreover, the options 
industry has a long history of providing preferential pricing to 
Customers, and the Exchange's current Fee Schedule currently does so in 
many places, as do the fees structures of multiple other exchanges.\4\ 
The Exchange notes that all fee amounts applicable to Customers will be 
applied equally to all Customers, i.e., all Customers will be assessed 
the same amount.
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    \3\ See Cboe Options Fees Schedule, ``Index Options Rate Table--
All Index Products Excluding Underlying Symbol List A (34) and 
Sector Indexes''. Firms are assessed a transaction fee between $0.25 
and $0.75, depending on the transaction type, and Market-Makers are 
assessed a transaction fee between $0.03 and $0.23 based on a 
sliding scale. See Cboe Options Fees Schedule, ``Liquidity Provider 
Sliding Scale''.
    \4\ See MIAX Options Fee Schedule, Transaction Fees, SPIKES, 
which gives preferential Customer treatment for transactions in MIAX 
Option's proprietary product, SPIKES.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
not impose any burden on intramarket or intermarket competition that is 
not necessary or appropriate in furtherance of the purposes of the Act. 
Rather, as discussed above, the Exchange believes that the proposed 
change would encourage the submission of additional liquidity in MXEF, 
in response to a recent decrease in MXEF order flow, thereby promoting 
market depth, price discovery and transparency and enhancing order 
execution opportunities for all TPHs.
    The Exchange believes the proposed rule change does not impose any 
burden on intramarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act because the proposed fee 
waiver offered to Customers in MXEF will be assessed equally to all 
such participants. As described above, preferential pricing to 
Customers is a long-standing options industry practice which serves to 
enhance Customer order flow, thereby attracting Marker-Makers to 
facilitate tighter spreads and trading opportunities to the benefit of 
all market participants.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed waiver applies to a product traded exclusively on the 
Exchange. Overall, the proposed change is designed to encourage 
additional order flow to the Exchange, which the Exchange believes 
benefits all market participants on the Exchange by providing more 
liquidity, thus trading opportunities, encouraging even more TPHs to 
send orders, thereby contributing towards a robust and well-balanced 
market ecosystem to the benefit of all market participants.

[[Page 55205]]

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 \5\ and paragraph (f) of Rule 19b-4 \6\ 
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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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 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-CBOE-2019-076 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-CBOE-2019-076. 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-CBOE-2019-076 and should be submitted on 
or before November 5, 2019.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-22386 Filed 10-11-19; 8:45 am]
 BILLING CODE 8011-01-P