[Federal Register Volume 84, Number 225 (Thursday, November 21, 2019)]
[Notices]
[Pages 64368-64370]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25215]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87546; File No. SR-CBOE-2019-105]


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

November 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 November 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

[[Page 64369]]

notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') 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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In 2016, the Exchange's parent company, Cboe Global Markets, Inc. 
(formerly named CBOE Holdings, Inc.) (``Cboe Global''), which is also 
the parent company of Cboe C2 Exchange, Inc. (``C2''), acquired Cboe 
EDGA Exchange, Inc. (``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX'' or 
``EDGX Options''), Cboe BZX Exchange, Inc. (``BZX'' or ``BZX 
Options''), and Cboe BYX Exchange, Inc. (``BYX'' and, together with 
Cboe Options, C2, EDGX, EDGA, and BZX, the ``Cboe Affiliated 
Exchanges''). Cboe Options migrated its trading platform to the same 
system used by the Cboe Affiliated Exchanges, on October 7, 2019 (the 
``migration''). As a result of the migration, the Exchange adopted a 
new connectivity infrastructure, including new physical ports and 
corresponding fees.\3\ The Exchange proposes to waive physical port 
fees for connections to PULSe, effective November 1, 2019.
---------------------------------------------------------------------------

    \3\ The Exchange notes that effective October 7, 2019, market 
participants will no longer have connectivity to the old Exchange 
architecture.
---------------------------------------------------------------------------

    By way of background, a physical port is utilized by a Trading 
Permit Holder (``TPH'') or non-TPH to connect to the Exchange at the 
data centers where the Exchange's servers are located. Prior to 
migration, the Exchange utilized Network Access Ports for these 
physical connections to the Exchange and assessed fees based on the 
gigabit size of the port. Specifically, TPHs and non-TPHs could elect 
to connect to Cboe Options' trading system via either a 1 gigabit per 
second (``Gb'') Network Access Port or a 10 Gb Network Access Port. The 
Exchange assessed a monthly fee of $1,500 per port for 1 Gb Network 
Access Ports and a monthly fee of $5,000 per port for 10 Gb Network 
Access Ports for access to Cboe Options primary system. Network Access 
Ports could also be used to send orders to PULSe. Upon migration, the 
TPHs and non-TPHs had the option to alternatively elect to connect to 
Cboe Options via new latency equalized Physical Ports. Through January 
31, 2020 however, Cboe Options market participants will still have the 
ability to connect to Cboe Options' trading system via the current 
Network Access Ports. For the month of October 2019, TPHs and non-TPHs 
would be assessed (1) $1,500 per 1 Gb port, regardless if it was a 
legacy Network Access Port or new Physical Port and (2) $5,000 per 10 
Gb port, regardless if it was a legacy Network Access Port or Physical 
Port.\4\ As of November 1, 2019, the monthly fee per 1 Gb Network 
Access Port and Physical Port is $1,500 and the monthly fee per 10 Gb 
Network Access Port and Physical Port is $7,000.
---------------------------------------------------------------------------

    \4\ If a TPH replaced a legacy Network Access Port with a new C1 
latency equalized Physical Port in October 2019, the TPH was not 
billed an additional fee for the new C1 platform physical connection 
for October.
---------------------------------------------------------------------------

    The Exchange notes that although the new latency equalized Physical 
Ports became available on October 7, 2019, the new Physical Ports 
cannot currently be utilized to send orders to PULSe. Accordingly, 
users who wish to route orders to PULSe via the Exchange's physical 
ports must maintain and use a legacy Network Access Fee Port and cannot 
use any of the new Physical Ports for such purpose. As such, the 
Exchange proposes to provide that fees for one Network Access Port that 
is used only to access PULSe will be waived per TPH or non-TPH. As 
such, the Exchange proposes to provide that fees for one Network Access 
Port that is used only to access PULSe will be waived per TPH or non-
TPH. The Exchange notes that whether a user requires a 1 Gb Network 
Access Port or 10 Gb Network Access Port for this particular purpose 
may depend on their own connectivity architecture (i.e., some 
participants may not be able to route orders to PULSe over a 1 Gb, 
whereas others may not be able to route over a 10 Gb). Accordingly, the 
Exchange will waive fees for either a 1 Gb or 10 Gb Network Access 
Port. Such ports will be configured to only allow routing of orders to 
PULSe, regardless of size, and notes further that for this particular 
purpose, a 10 Gb port does not have an advantage over a 1 Gb port.
    The Exchange lastly proposes to eliminate now obsolete language in 
the Physical Connectivity Fees table. Particularly, the Exchange 
proposes to eliminate the Monthly Fees column for fees through October 
31, 2019 and eliminate the reference to ``Effective November 1, 2019'' 
in the title of the column with for fees effective November 1, 2019.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\5\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \6\ 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. Additionally, 
the Exchange believes the proposed rule change is consistent with 
Section 6(b)(4) of the Act,\7\ which requires that Exchange rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its Trading Permit Holders and other persons using 
its facilities.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes the proposed waiver is reasonable as users 
subject to the proposed waiver would not have to pay a fee for one 
Network Access Port used only to access PULSe. As noted above, the 
recently adopted latency equalized Physical Ports that TPHs and

[[Page 64370]]

non-TPHs may purchase to connect to the Exchange's trading system, do 
not support the routing of orders to PULSe. As such, TPHs that wish to 
route orders to PULSe via physical ports must maintain a legacy Network 
Access Port. Due to this limitation, the Exchange believe it's 
reasonable to waive fees for one Network Access Port that is used only 
to access PULSe. As noted above, the Exchange believes it's appropriate 
to waive either one 1 Gb Network Access Port or one 10 Gb Network 
Access Port, as for this particular purpose, there is no latency 
advantages to maintain a 10 Gb versus 1 Gb port and because users' own 
architecture may require one size over the other. The Exchange believes 
the proposed waiver is equitable and not unfairly discriminatory as it 
applies to any TPH or non-TPH that must maintain a Network Access Port 
for the sole purpose of accessing PULSe.
    Lastly, the Exchange believes eliminating obsolete language in the 
Fees Schedule pertaining to fees assessed in a prior month maintains 
clarity in the Fees Schedule and alleviates potential confusion, 
thereby removing impediments to and perfecting the mechanism of a free 
and open market and a national market system, and, in general, 
protecting investors and the public interest.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act because the proposed changes 
applies uniformly to all similarly situated market participants. The 
Exchange believes that the proposed rule change will not cause an 
unnecessary burden on intermarket competition because it only applies 
to trading on Cboe Options. To the extent that the proposed changes 
make Cboe Options a more attractive marketplace for market participants 
at other exchanges, such market participants are welcome to become Cboe 
Options market participants.

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 \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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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-2019-105 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-2019-105. 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 such 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-2019-105, and should be submitted 
on or before December 12, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-25215 Filed 11-20-19; 8:45 am]
 BILLING CODE 8011-01-P