[Federal Register Volume 87, Number 15 (Monday, January 24, 2022)]
[Notices]
[Pages 3599-3604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-01227]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93996; File No. SR-CboeBYX-2022-001]


Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Fees Applicable to Various Market Data Products

January 18, 2022.
    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 January 4, 2022, Cboe BYX Exchange, Inc. (``Exchange'' or 
``BYX'') 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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BYX Exchange, Inc. (``BYX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (the ``Commission'') a 
proposed rule change to amend the fees applicable to various market 
data products. 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://markets.cboe.com/us/equities/regulation/rule_filings/byx/), 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 Exchange proposes to amend the Market Data section applicable 
to its equities trading platform (``BYX Equities''). Particularly, the 
Exchange proposes to (i) decrease the External Distribution fee 
applicable to BYX Top, (ii) adopt a New External Distributor Credit 
applicable to Cboe One Premium, and (iii) extend the New External 
Distributor Credit applicable to BYX Summary Depth Feed from one (1) 
month to three (3) months.
Market Background
    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. In Regulation NMS, 
the Commission highlighted the importance of market forces in 
determining prices and SRO revenues, and also recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \3\ As the Commission 
itself recognized, the market for trading services in NMS stocks has 
become ``more fragmented and competitive.'' \4\
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    \3\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS Adopting Release'').
    \4\ See Securities Exchange Act Release No. 84875, 84 FR 5202, 
5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee Pilot 
for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
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    Equity trading is currently dispersed across sixteen exchanges, 
more than 50 alternative trading systems,\5\ and numerous broker-dealer 
internalizers and wholesalers, all competing fiercely for order flow. 
Based on publicly-available information, no single U.S. equities 
exchange has more than 17% market share.\6\ In turn, the market for 
top-of-book quotation and transaction data is highly competitive as 
national securities exchanges compete vigorously with each other to 
provide efficient, reliable, and low-cost data to a wide range of 
investors and market participants. In fact, there are twelve competing 
products offered by other national securities exchanges today,\7\ not 
counting products offered by the Exchange's affiliates, and each of the 
Exchange's affiliated U.S. equities exchanges also offers similar top-
of-book data. Each of those exchanges offer top-of-book quotation and 
last sale information based on their own quotation and trading activity 
that is substantially similar to the information provided by the 
Exchange through the BYX Top Feed.\8\ Exchange top-of-book

[[Page 3600]]

data is therefore widely available today from a number of different 
sources.
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    \5\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \6\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (December 10, 2021) available at http://markets.cboe.com/us/equities/market_share/.
    \7\ Competing top-of-book products include, Nasdaq Basic, BX 
Basic, PSX Basic, NYSE BQT, NYSE BBO/Trades, NYSE Arca BQT, NYSE 
Arca BBO/Trades, NYSE American BBO/Trades, NYSE Chicago BBO/Trades, 
IEX TOPS, MIAX PEARL Equities Top of Market Feed, and MEMX MEMOIR 
Top.
    \8\ For example, The Nasdaq Stock Market LLC (``Nasdaq'') offers 
``Nasdaq Basic'' which is a real-time market data product that 
offers best bid and offer and last sale information for all U.S. 
exchange-listed securities based on liquidity within the Nasdaq 
market center and trades reported to the FINRA/Nasdaq Trade 
Reporting Facility (``Nasdaq TRF''). See Nasdaq Equity Rules, Equity 
7, Pricing Schedule, Section 147(a). The type of information 
contained on the BYX Top Feed is substantially similar to that 
offered through Nasdaq Basic, except that the Exchange disseminates 
information about quotes and trades on BYX, whereas Nasdaq Basic 
provides information about quotes and trades on Nasdaq and the 
Nasdaq TRF. Other national securities with competing top-of-book 
products also offer substantially similar types of information 
through those top-of-book products.
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Fees for External Distribution of BYX Top
    The Exchange first proposes to decrease the external distribution 
fee applicable to BYX Top,\9\ which is an uncompressed data feed that 
offers top-of-book quotations and execution information based on equity 
orders entered into the System.\10\ Currently, the Exchange charges an 
external distribution fee (i.e., distribution outside the distributor's 
own firm) of $1,000 per month to External Distributors \11\ of BYX Top. 
The Exchange also charges a professional user fee of $1.00 per month, a 
non-professional user fee of $0.025 per month, an enterprise fee of 
$10,000 per month, and a digital media enterprise fee of $2,500 per 
month that is applicable to External Distributors. The external 
distribution fees have been in place, without change, since June 1, 
2016.\12\ Nonetheless, the Exchange proposes to decrease the monthly 
charge for external distribution of BYX Top from $1,000 to $250 per 
month (i.e., a decrease of $750 per month),\13\ which would continue to 
be cheaper than similar products offered by certain of the Exchange's 
competitors.\14\ The Exchange proposes no changes to the professional, 
non-professional, enterprise and digital media enterprise fees 
associated with external distribution.
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    \9\ See Exchange Rule 11.22(d).
    \10\ See Exchange Rule 1.5(aa).
    \11\ An External Distributor of an Exchange Market Data product 
is a Distributor that receives the Exchange Market Data product and 
then distributes that data to a third party or one or more Users 
outside the Distributor's own entity.
    \12\ See Securities Exchange Act Release No. 77886 (May 23, 
2016) 81 FR 33722 (May 27, 2016) (SR-BatsBYX-2016-08).
    \13\ The Exchange notes that the fee for Cboe One Summary is 
equivalent to the aggregate BYX Top, BZX, Top, EDGX Top, and EDGA 
Top fees. The Exchange is not proposing to change the current Cboe 
One Summary external distribution fee. Instead, the Cboe EDGX 
Exchange, Inc. (``EDGX'') has simultaneously with this proposal 
proposed to increase its fee for EDGX Top by $750 in order to ensure 
the proposed fee will continue to not cause the combined cost of 
subscribing to BYX, EDGA, EDGX, and BZX individual Top and Last Sale 
feeds to be greater than those currently charged to subscribe to the 
Cboe One Summary fee.
    \14\ See infra notes 28, 29, 31, and 32.
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Cboe One Premium and BYX Top Depth New External Distributor Credit
    The Exchange next proposes to adopt a New External Distributor 
Credit applicable to Cboe One Premium and extend the New External 
Distributor Credit applicable to BYX Summary Depth Feed from one (1) 
month to three (3) months. By way of background, Cboe One Premium is a 
data feed that disseminates, on a real-time basis, the aggregate best 
bid and offer (``BBO'') of all displayed orders for securities traded 
on BYX and its affiliated exchanges (i.e., EDGX, Cboe EDGA Exchange, 
Inc. (``EDGA''), and Cboe BZX Exchange, Inc. (``BZX'')) and contains 
optional functionality which enables recipients to receive aggregated 
two-sided quotations from BYX and its affiliated equities exchanges for 
up to five (5) price levels.\15\ Currently, the Exchange charges an 
external distribution fee of $12,500 per month to External Distributors 
of Cboe One Premium. The Exchange now proposes to adopt a New External 
Distributor Credit which provide that new External Distributors of the 
Cboe One Premium Feed will not be charged an External Distributor Fee 
for their first three (3) months in order to allow them to enlist new 
Users to receive the Cboe One Summary[sic] Feed. The Exchange believes 
the proposal will incentivize External Distributors to enlist new users 
to receive Cboe One Premium. To ensure consistency across the Cboe 
Equity Exchanges, BZX, EDGX, and EDGA will be filing companion 
proposals to reflect this proposal in their respective fee schedules.
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    \15\ The Cboe Aggregated Market (``Cboe One'') Feed is a data 
feed that contains the aggregate best bid and offer of all displayed 
orders for securities traded on the Exchange and its affiliated 
exchanges (i.e., EDGX, EDGA, and BZX). See Exchange Rule 11.22(i). 
The Cboe One Feed contains optional functionality which enables 
recipients to receive aggregated two-sided quotations from the Cboe 
Equities Exchanges for up to five (5) price levels (``Cboe One 
Premium Feed''). The Cboe One Premium external distribution fee is 
equal to the aggregate BYX Summary Depth, BYX Summary Depth, EDGA 
Summary Depth, and BZX Summary Depth external distribution fees.
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    The Exchange notes that it offers similar credits for other market 
data products. For example, the Exchange currently offers a one (1) 
month New External Distributor Credit applicable to Cboe One 
Summary,\16\ which is a data feed that disseminates, on a real-time 
basis, the aggregate BBO of all displayed orders for securities traded 
on BYX and its affiliated equities exchanges and also contains 
individual last sale information for the BYX and its affiliated 
equities exchanges.\17\ It also offers a New External Distributor 
Credit of one (1) month for subscribers of BYX Summary Depth, which is 
a data feed that offers aggregated two-sided quotations for all 
displayed orders entered into the System for up to five (5) price 
levels. BYX Summary Depth also contains the individual last sale 
information, Market Status, Trading Status, and Trade Break 
messages.\18\ The External Distribution fees for Cboe One Premium is 
equivalent to the aggregate BYX Summary Depth, BZX Summary Depth, EDGX 
Summary Depth, and EDGA Summary Depth External Distribution fees. In 
order to alleviate any competitive issues that may arise with a vendor 
seeking to offer a product similar to the Cboe One Premium Feed based 
on the underlying data feeds, the Exchange proposes to also extend the 
current New External Distributor Credit for BYX Summary Depth from one 
(1) month to three (3) months and the Exchange's affiliates EDGX, BZX 
and EDGA are also submitting similar proposals to increase the length 
of their respective Summary Depth New External Distributor Credits from 
one (1) month to three (3) months. The respective proposals to extend 
these credits to three months ensures the proposed New External 
Distributor Credit for Cboe One Premium will continue to not cause the 
combined cost of subscribing to BYX, EDGA, EDGX, and BZX Summary Depth 
feeds for new External Distributors to be greater than those currently 
charged to subscribe to the Cboe One Premium feed.
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    \16\ See Exchange Rule 11.22(i).
    \17\ The Exchange notes that when it first adopted the New 
External Distributor Credit for Cboe One Summary, it similarly 
applied for a new External Distributor's first three (3) months. See 
Securities Exchange Act Release No. 74284 (February 18, 2015), 80 FR 
9792 (February 24, 2015) (SR-BYX-2015-09).
    \18\ See Exchange Rule 11.22(k)
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\19\ in general, and 
furthers the objectives of Section 6(b)(4),\20\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its members and other recipients of 
Exchange data. In addition, the Exchange believes that the proposed 
rule change is consistent with Section 11(A) of the Act as it supports 
(i) fair competition among brokers and dealers, among exchange markets, 
and between exchange markets and markets other than exchange markets, 
and (ii) the availability to brokers, dealers, and investors of 
information with respect to quotations for and transactions in 
securities.\21\ Finally, the proposed rule change is also consistent 
with Rule 603 of Regulation NMS,\22\ which provides

[[Page 3601]]

that any national securities exchange that distributes information with 
respect to quotations for or transactions in an NMS stock do so on 
terms that are not unreasonably discriminatory.
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    \19\ 15 U.S.C. 78f.
    \20\ 15 U.S.C. 78f(b)(4).
    \21\ 15 U.S.C. 78k-1.
    \22\ See 17 CFR 242.603.
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    The Exchange operates in a highly competitive environment. Indeed, 
there are now sixteen registered U.S equities exchanges, and with the 
exception of Long-Term Stock Exchange, Inc. (``LTSE''), which has 
determined to not offer any proprietary market data feeds, each of 
these exchanges offer associated market data products to their 
customers, either with or without a fee. It is in this robust and 
competitive market in which the Exchange is proposing to increase its 
fees, while still providing its data at a significantly lower price 
than competing products offered by other national securities exchanges 
with similar data quality.
    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. Further, with respect 
to market data, the decision of the United States Court of Appeals for 
the District of Columbia Circuit in NetCoalition v. SEC upheld the 
Commission's reliance on the existence of competitive market mechanisms 
to evaluate the reasonableness and fairness of fees for proprietary 
market data: ``In fact, the legislative history indicates that the 
Congress intended that the market system `evolve through the interplay 
of competitive forces as unnecessary regulatory restrictions are 
removed' and that the SEC wield its regulatory power `in those 
situations where competition may not be sufficient,' such as in the 
creation of a `consolidated transactional reporting system.' '' \23\ 
The court agreed with the Commission's conclusion that ``Congress 
intended that `competitive forces should dictate the services and 
practices that constitute the U.S. national market system for trading 
equity securities.' '' \24\ As discussed in this filing, significant 
competitive forces constrain the ability of the Exchange to charge 
supra-competitive fees.
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    \23\ NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010) 
(``NetCoalition I'') (quoting H.R. Rep. No. 94-229 at 92 (1975), as 
reprinted in 1975 U.S.C.C.A.N. 323).
    \24\ Id. at 535.
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BYX Top
i. The BYX Top Feed Is an Optional Market Data Product, and the 
Exchange Is Constrained in its Pricing by Significant Competitive 
Forces
    Subscribing to BYX Top is entirely optional. The Exchange is not 
required to make BYX Top available to any customers, nor is any 
customer required to purchase BYX Top.\25\ A customer's decision as to 
whether to purchase BYX Top is therefore entirely discretionary and is 
based on that firms individual business needs. Generally, firms that 
choose to subscribe to BYX Top do so because they believe that it is a 
cost-effective source for top-of-book data that provides valuable 
information about the market for national market system (``NMS'') 
stocks traded on the Exchange, where a consolidated display covering 
all U.S. equities exchanges is not required. Such firms are able to 
determine for themselves whether BYX Top helps them to achieve their 
business goals, and if so, whether or not it is attractively priced 
compared to other similar top-of-book products offered by competing 
exchanges. Indeed, if BYX Top does not provide sufficient value to 
firms based on the uses those firms may have for it, such firms may 
simply choose to conduct their business operations in ways that do not 
use BYX Top. And, as discussed later in this filing, any External 
Distributor of top-of-book data that does not wish to purchase BYX Top, 
due to the price of that data or for any other reason, can choose to 
substitute similar information from other exchanges. Although the 
Exchange is not required to make any data, including top-of-book data, 
available through its proprietary market data platform, the Exchange 
believes that making such data available increases investor choice, and 
contributes to a fair and competitive market. Specifically, making such 
data publicly available through proprietary data feeds allows investors 
to choose alternative, potentially less costly, market data based on 
their business needs. For example, a broker or fintech firm may choose 
to purchase BYX Top, or a similar product from another exchange, in 
order to perform investment analysis, or to provide general information 
about the market for U.S. equity securities, respectively. In either 
case the choice to purchase BYX Top would be based on the firm's 
determination of the value of the data offered by their chosen product 
compared to the cost of acquiring this data instead of receiving 
similar data from other sources. BYX Top serves as a valuable reference 
for investors that do not require a consolidated display. Making 
alternative products available to market participants ultimately 
ensures competition in the marketplace, and constrains the ability of 
exchanges to charge supra-competitive fees. Further, in the event that 
a market data customer views one exchange's top-of-book data product 
and/or fees as more or less attractive than a competitor's offerings 
they can and often do switch between competing products. As discussed, 
similar top-of-book information is available from a number of competing 
U.S. equities exchanges.\26\ This includes a number of large 
established exchanges that charge for access to such top-of-book data, 
as well as certain smaller or new exchange entrants that provide 
similar data without charge, in many cases as a way of attracting 
customers to their exchange while they seek to grow market share. In 
this way, BYX Top and other top-of-book products offered by a number of 
U.S. equities exchanges, are all substitutes. The availability of these 
substitute products constrains the Exchange's ability to charge supra-
competitive prices as market participants can easily obtain similar 
data from one of the Exchange's many competitors. In fact, the impact 
of competition on the market in which BYX Top is offered to market 
participants and investors is showcased by Exchange affiliates' other 
recent fee changes related to this product, which involved the 
reduction of fees to facilitate the Exchange affiliates' ability to 
compete for customers.
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    \25\ The Exchange notes that broker-dealers are not required to 
purchase proprietary market data to comply with their best execution 
obligations. See In the Matter of the Application of Securities 
Industry and Financial Markets Association for Review of Actions 
Taken by Self-Regulatory Organizations, Release Nos. 34- 72182; AP-
3-15350; AP-3-15351 (May16, 2014). Similarly, there is no 
requirement in Regulation NMS or any other rule that proprietary 
data be utilized for order routing decisions, and some broker-
dealers and ATSs have chosen not to do so.
    \26\ Although the Exchange does not have access to the customer 
lists for other competing products, it understands based on 
conversations with subscribers to BYX Top that they typically view 
exchange top-of-book products as substitutes and do not generally 
look to purchase such data from more than one national securities 
exchange.
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    Distributors can discontinue use of BYX Top at any time and for any 
reason, including due to an assessment of the reasonableness of fees 
charged. Other External Distributors are free to similarly cancel their 
subscriptions in favor of a competitor offering, or cheaper or free 
data offered by the Exchange's affiliated U.S. equities exchanges, if 
they believe that the fees are too high given their particular use case 
for obtaining the data that the Exchange provides over BYX Top. The 
Exchange offers all of its proprietary market data products pursuant to 
a month-to-month contract that allows subscribers to choose to 
terminate their subscription at any time. As a result, there are no 
contractual or other legal

[[Page 3602]]

impediments for firms that wish to cancel their subscription to the 
Exchange's market data products, including BYX Top. In addition, the 
Exchange notes that a majority of External Distributors of BYX Top 
either receive this data through a market data vendor, as opposed to 
directly from the Exchange, or is a market data vendor itself. Thus, 
firms can seamlessly switch to any other competitor product offered by 
their chosen vendor without incurring additional switching costs, such 
as the cost of establishing connectivity to another exchange to receive 
its market data.\27\
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    \27\ Market data vendors typically establish connectivity to a 
number of national securities exchanges to be able to offer their 
market data to customers.
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    In setting the proposed fees for BYX Top, the Exchange considered 
the competitiveness of the market for proprietary data and all of the 
implications of that competition. Indeed, the Exchange is not in a 
position to charge unreasonable fees for its top-of-book data as there 
are a number of competing products in the market, including products 
that are currently offered free of charge by certain other exchanges 
that have determined not to charge for their market data. The existence 
of alternatives to BYX Top ensures that the Exchange cannot set 
unreasonable fees when vendors and subscribers can freely elect these 
alternatives or choose not to purchase a specific proprietary data 
product if the attendant fees are not justified by the returns that any 
particular vendor or data recipient would achieve through the purchase.
ii. The Proposed Fees Are Reasonable Given the Value of the Data 
Provided to Customers, and When Compared to Competing Market Data 
Products
    The proposed fees are also reasonable they would represent a 
decreased fee for top-of-book data that has proven valuable for 
investors. BYX Top is a competitively-priced alternative to top-of-book 
data disseminated by other national securities exchanges. It is 
purchased by a wide variety of market participants and vendors, 
including data platforms, websites, fintech firms, buy-side investors, 
retail brokers, regional banks, and securities firms inside and outside 
of the U.S. that desire low cost, high quality, real-time U.S. equity 
market data. By providing lower cost access to U.S. equity market data, 
BYX Top benefits a wide range of investors that participate in the 
national market system. As discussed, the decision to purchase a 
particular market data product from a particular exchange is largely 
based on two factors: (1) The quality of the data, and (2) the price 
charged for access to that data. The Exchange believes that BYX Top is 
competitive on both of these factors.
    First, BYX Top would remain competitively priced compared to 
similar products offered by other comparable U.S. equities exchanges. 
Although BYX Top is not offered free of charge like certain other 
competitor offerings, particularly those offered by newer U.S. equities 
exchanges that are seeking to grow market share, it is made available 
at a price that is less than the prices charged by the Exchange's main 
competitors--i.e., those with comparable market shares and data 
quality. Notably, BYX Top would remain significantly cheaper than 
similar products offered by New York Stock Exchange LLC (``NYSE''), 
NYSE Arca, Inc. (``Arca'') and Nasdaq in terms of the fees charged for 
external distribution. For example, NYSE charges a total of $4,000 per 
month for access and redistribution of their equivalent products, i.e., 
$1,500 per month for applicable top-of-book quotation information,\28\ 
and an additional $1,500 per month for transaction information,\29\ 
both of which are included in BYX Top for a single fee.\30\ In 
addition, a $1,000 per month redistribution fee is applied. Arca, which 
has a similar pricing model to NYSE, charges a rate of $2,250 per month 
for access and redistribution of its equivalent products, separated 
into a $750 per month charge for top-of-book quotation information, an 
additional $750 per month charge for transaction information, and $750 
per month for redistribution.\31\ Finally, Nasdaq charges its External 
Distributors a fee of $2,000 per month for Nasdaq Basic, which includes 
both top-of-book quotation information and transaction information for 
the same fee, a $350 per month Data Consolidation fee, and a $100 per 
month Monthly Administrative Fee.\32\ The external distribution charges 
associated with obtaining comparable U.S. equities market data from 
NYSE, Arca and Nasdaq runs significantly more than the proposed fee to 
be charged by the Exchange, meaning that the Exchange would continue to 
be offering its data at a price that is attractive compared to the 
prices charged by its competitors.
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    \28\ See NYSE PDP Market Data Pricing, Section 1.3, NYSE BBO.
    \29\ See NYSE PDP Market Data Pricing, Section 1.4, NYSE Trades.
    \30\ Supra note 3.
    \31\ See NYSE PDP Market Data Pricing, Section 3.3, NYSE Arca 
BBO; NYSE PDP Market Data Pricing, Section 3.4, NYSE Arca Trades.
    \32\ See Nasdaq Equity Rules, Equity 7, Pricing Schedule, 
Section 147(c)(1). In addition, Nasdaq also charges distributors a 
$100 monthly administrative fee. See Nasdaq Equity Rules, Equity 7, 
Pricing Schedule, Section 135.
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iii. The Proposed Fees Are Equitable and Not Unfairly Discriminatory as 
External Distributors Will Be Subject to Uniform Pricing Based on Their 
Usage of the Data and Differences Between the Fees Charged for Internal 
and External Distribution Are Appropriate
    The Exchange believes the proposed fees for external distribution 
of BYX Top will continue to be allocated fairly and equitably among 
subscribers, and are not unfairly discriminatory, as the proposed fees 
will apply equally to all data recipients that choose to subscribe to 
BYX Top and distribute that data to external subscribers. As proposed, 
all External Distributors of BYX Top will continue to be subject to the 
same external distribution fee, regardless of the type of business that 
they operate, or the use they plan to make of the data feed. Thus, all 
External Distributors would have access to BYX Top on the same 
equitable and non-discriminatory terms.
    The Exchange believes that it is also fair and equitable, and not 
unfairly discriminatory to charge different fees for internal and 
external distribution of the BYX Top. As the proposed distribution fee 
charged to External Distributors is higher[sic] than the existing 
distribution fee charged to Internal Distributors,\33\ the proposal is 
designed to incentivize External Distributors to subscribe to BYX Top. 
Nonetheless, External Distributors are subject to professional user 
fees, non-professional user fees, an enterprise fee, and a digital 
media enterprise fee to which Internal Distributors are not subject.
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    \33\ An Internal Distributor of an Exchange Market Data product 
is a Distributor that receives the Exchange Market Data product and 
then distributes that data to one or more Users within the 
Distributor's own entity.
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New External Distributor Fee Credit
    The Exchange also believes that adopting a New External Distributor 
Credit for Cboe One Premium is equitable and reasonable. As discussed 
above, a similar New External Distributor Fee Credit was initially 
adopted at the time the Exchange began to offer the Cboe One Summary to 
subscribers. It was intended to incentivize new Distributors to enlist 
Users to subscribe to Cboe One Summary in an effort to broaden the 
product's distribution. Now the Exchange proposes to adopt a similar

[[Page 3603]]

credit for Cboe One Premium subscribers for their first three (3) 
months to similarly incentivize new Distributors to enlist Users to 
subscribe to Cboe One Premium in an effort to broaden the product's 
distribution. While this incentive is not available to Internal 
Distributors of Cboe One Premium, the Exchange believes it is 
appropriate as Internal Distributors have no subscribers outside of 
their own firm. The Exchange believes extending the New External 
Distributor Credit for BYX Summary Depth from one (1) month to three 
(3) months is also equitable and reasonable, as it (along with 
simultaneous corresponding proposals by the Exchange's affiliates) 
ensures the proposed New External Distributor Credit for Cboe One 
Premium will continue to not cause the combined cost of subscribing to 
BYX, EDGA, EDGX, and BZX Summary Depth feeds for new External 
Distributors to be greater than those currently charged to subscribe to 
the Cboe One Premium feed.

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

    The Exchange does not believe that the proposed rule change would 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
operates in a highly competitive environment, and its ability to price 
these data products is constrained by competition among exchanges that 
offer similar data products to their customers. Top-of-book data and 
depth-of-book data is broadly disseminated by competing U.S. equities 
exchanges. There are therefore a number of alternative products 
available to market participants and investors, including products 
offered by certain competing exchanges without charge. In this 
competitive environment potential subscribers are free to choose which 
competing product to purchase to satisfy their need for market 
information. Often, the choice comes down to price, as market data 
customers look to purchase cheaper data products, and quality, as 
market participants seek to purchase data that represents significant 
market liquidity.
    Intramarket Competition. The Exchange believes that the proposed 
fees do not put any market participants at a relative disadvantage 
compared to other market participants. As discussed, the proposed fees 
and credit would apply to all External Distributors of BYX Top and Cboe 
One Premium, respectively, on an equal and non-discriminatory basis. 
The difference in fees for internal and external distribution of BYX 
Top are reasonably designed to incentivize External Distributors to 
subscribe to BYX To. Further, the credit applicable to only External 
Distributors is appropriate as it incentivizes such External 
Distributors to enlist subscribers, whereas Internal Distributors have 
no subscribers outside their firm. The Exchange therefore believes that 
the proposed fees neither favor nor penalize one or more categories of 
market participants in a manner that would impose an undue burden on 
competition.
    Intermarket Competition. The Exchange believes that the proposed 
fees do not impose a burden on competition or on other SROs that is not 
necessary or appropriate in furtherance of the purposes of the Act. In 
setting the proposed fees, the Exchange is constrained by the 
availability of numerous substitute products offered by other national 
securities exchanges. Because market data customers can find suitable 
substitute feeds, an exchange that overprices its market data products 
stands a high risk that users may substitute another product. These 
competitive pressures ensure that no one exchange's market data fees 
can impose an undue burden on competition, and the Exchange's proposed 
fees do not do so here.

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 \34\ and paragraph (f) of Rule 19b-4 \35\ 
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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    \34\ 15 U.S.C. 78s(b)(3)(A).
    \35\ 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-CboeBYX-2022-001 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-CboeBYX-2022-001. 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-CboeBYX-2022-001 and should be submitted 
on or before February 14, 2022.


[[Page 3604]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-01227 Filed 1-21-22; 8:45 am]
BILLING CODE 8011-01-P