[Federal Register Volume 87, Number 179 (Friday, September 16, 2022)]
[Notices]
[Pages 57005-57008]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20034]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95736; File No. SR-CBOE-2022-044]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fees Schedule Relating to the Sale of Open-Close Volume Data

September 12, 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 September 1, 2022, 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

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its Fees Schedule relating to the sale of Open-Close volume 
data. 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
    The Exchange proposes to amend its Fees Schedule to offer a free 
trial during the months of September, October, November and December 
2022 for an ad-hoc request of three (3) historical months of Intraday 
Open-Close historical data to all Cboe Options Trading Permit Holders 
(``TPHs'') and non-TPHs who have never before subscribed to the 
Intraday Open-Close historical files, effective September 1, 2022.
    By way of background, the Exchange currently offers End-of-Day 
(``EOD'') and Intraday Open-Close Data (collectively, ``Open-Close 
Data''). EOD Open-Close Data is an end-of-day volume summary of trading 
activity on the Exchange at the option level by origin (customer, 
professional customer, broker-dealer, and market maker), side of the 
market (buy or sell), price, and transaction type (opening or closing). 
The customer and professional customer volume is further broken down 
into trade size buckets (less than 100 contracts, 100-199 contracts, 
greater than 199 contracts). The Open-Close Data is proprietary Cboe 
Options trade data and does not include trade data from any other 
exchange. It is also a historical data product and not a real-time data 
feed. The Exchange also offers Intraday Open-Close Data, which provides 
similar information to that of Open-Close Data but is produced and 
updated every 10 minutes during the trading day. Data is captured in 
``snapshots'' taken every 10 minutes throughout the trading day and is 
available to subscribers within five minutes of the conclusion of each 
10-minute period.\3\ The Intraday Open-

[[Page 57006]]

Close Data provides a volume summary of trading activity on the 
Exchange at the option level by origin (customer, professional 
customer, broker-dealer, and market maker), side of the market (buy or 
sell), and transaction type (opening or closing). The customer and 
professional customer volume are further broken down into trade size 
buckets (less than 100 contracts, 100-199 contracts, greater than 199 
contracts). The Intraday Open-Close Data is also proprietary Cboe 
Options trade data and does not include trade data from any other 
exchange.
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    \3\ For example, subscribers to the intraday product will 
receive the first calculation of intraday data by approximately 9:42 
a.m. ET, which represents data captured from 9:30 a.m. to 9:40 a.m. 
Subscribers will receive the next update at 9:52 a.m., representing 
the data previously provided together with data captured from 9:40 
a.m. through 9:50 a.m., and so forth. Each update will represent the 
aggregate data captured from the current ``snapshot'' and all 
previous ``snapshots.''
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    Cboe LiveVol, LLC (``LiveVol''), a wholly owned subsidiary of the 
Exchange's parent company, Cboe Global Markets, Inc., makes the Open-
Close Data available for purchase to TPHs and non-TPHs on the LiveVol 
DataShop website (datashop.cboe.com). Customers may currently purchase 
Open-Close Data on a subscription basis (monthly or annually) or by ad 
hoc request for a specified month (e.g., request for Intraday Open-
Close Data for month of January 2022).
    Open-Close Data is subject to direct competition from similar end-
of-day and intraday options trading summaries offered by several other 
options exchanges.\4\ All of these exchanges offer essentially the same 
end-of-day and intraday options trading summary information.
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    \4\ These substitute products are: Nasdaq PHLX Options Trade 
Outline, Nasdaq Options Trade Outline, ISE Trade Profile, GEMX Trade 
Profile data; open-close data from C2 Options, BZX, and EDGX; and 
Open Close Reports from MIAX Options, Pearl, and Emerald.
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Free Trial
    The Exchange seeks to re-establish a free trial for historical ad 
hoc requests for Intraday Open-Close Data for new purchasers. 
Currently, ad hoc requests for historical Intraday Open-Close Data are 
available to all customers at the same price and in the same manner. 
The current charge for this historical Intraday Open-Close Data 
covering all of the Exchange's securities (Equities, Indexes & ETF's) 
is $1,000 per month. The Exchange now proposes to adopt a free trial 
available during the months of September, October, November and 
December 2022 (i.e., September through December 2022) to provide a 
total up to three (3) historical months of Intraday Open-Close Data to 
any TPH or non-TPH that has not previously subscribed to this 
offering.\5\ The Exchange notes that it previously offered this free 
trial period recently for the months of May, June and July 2022. The 
Exchange believes bringing back the proposed trial will again serve as 
an incentive for new users who have never purchased Intraday Open-Close 
historical data to start purchasing Intraday Open-Close historical 
data. Particularly, the Exchange believes it will give potential 
subscribers the ability to use and test the data offering before 
signing up for additional months. The Exchange also notes another 
exchange offers a free trial for new subscribers of a similar data 
product.\6\ Lastly, the purchase of Intraday Open-Close historical data 
is discretionary and not compulsory.
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    \5\ For example, if a TPH or non-TPH that has never made an ad-
hoc request for a specified month of Intraday Open-Close historical 
data wishes to purchase Intraday Open-Close Data for the months of 
January, February and March 2022 during the month of September 2022, 
the historical files for those months would be provided free of 
charge. If a new user wishes to purchase Intraday Open-Close 
historical data for the months of January, February, March and April 
2022 during the month of September 2022, then the data for January, 
February and March 2022 would be provided free of charge, and the 
new user would be charged $1,000 for the April 2022 historical file.
    \6\ See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A., 
Nasdaq ISE Open/Close Trade Profile End of Day.
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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.\7\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \8\ 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 the 
Section 6(b)(5) \9\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Id.
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``SROs'') and broker-dealers increased authority and 
flexibility to offer new and unique market data to the public. It was 
believed that this authority would expand the amount of data available 
to consumers, and also spur innovation and competition for the 
provision of market data. The Exchange believes the proposed fee change 
will further broaden the availability of U.S. option market data to 
investors consistent with the principles of Regulation NMS. Open-Close 
Data is designed to help investors understand underlying market trends 
to improve the quality of investment decisions. Indeed, subscribers to 
the data may be able to enhance their ability to analyze option trade 
and volume data and create and test trading models and analytical 
strategies. The Exchange believes Open-Close Data provides a valuable 
tool that subscribers can use to gain comprehensive insight into the 
trading activity in a particular series, but also emphasizes such data 
is not necessary for trading and as noted above, is entirely optional. 
Moreover, several other exchanges offer a similar data product which 
offer same type of data content through end-of-day or intraday 
reports.\10\
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    \10\ See supra note 4.
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    The Exchange also operates in a highly competitive environment. 
Indeed, there are currently 16 registered options exchanges that trade 
options. Based on publicly available information, no single options 
exchange has more than 16% of the market share.\11\ The Commission has 
repeatedly expressed its preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. Particularly, 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.'' \12\ Making similar data products available to 
market participants fosters competition in the marketplace, and

[[Page 57007]]

constrains the ability of exchanges to charge supracompetitive fees. In 
the event that a market participant views one exchange's data product 
as more or less attractive than the competition they can and do switch 
between similar products. The proposed fees are a result of the 
competitive environment, as the Exchange seeks to adopt a fee waiver to 
attract future purchasers of historical Intraday Open-Close Data.
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    \11\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (August 31, 2022), available at https://markets.cboe.com/us/options/market_statistics/.
    \12\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    The Exchange believes that the proposed free trial for any TPH or 
non-TPH who has not previously purchased Intraday Open-Close historical 
data is reasonable because such users would not be subject to fees for 
up to 3 months' worth of Intraday Open-Close historical data. The 
Exchange believes the proposed free trial is also reasonable as it will 
give potential subscribers the ability to use and test the Intraday 
Open-Close historical data prior to purchasing additional months and 
will therefore encourage and promote new users to purchase the Intraday 
Open-Close historical data. The Exchange believes that the proposed 
discount is equitable and not unfairly discriminatory because it will 
apply equally to all TPHs and non-TPHs who have not previously 
purchased Intraday Open-Close historical data. Also as noted above, 
another exchange offers a free trial to new users for a similar data 
product \13\ and the Exchange itself recently offered a similar free 
trial.\14\ Lastly, the purchase of this data product is discretionary 
and not compulsory.
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    \13\ See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A., 
Nasdaq ISE Open/Close Trade Profile End of Day.
    \14\ See Securities Exchange Act Release No. 34-94913 (May 13, 
2022), 87 FR 30534 (May 19, 2022) (SR-CBOE-2022-023).
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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 
impose 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 in which the Exchange must continually 
adjust its fees to remain competitive. Because competitors are free to 
modify their own fees in response, the Exchange believes that the 
degree to which fee changes in this market may impose any burden on 
competition is extremely limited.
    As discussed above, Open-Close Data is subject to direct 
competition from several other options exchanges that offer substitutes 
to Open-Close. Moreover, purchase of Open-Close is optional. It is 
designed to help investors understand underlying market trends to 
improve the quality of investment decisions, but is not necessary to 
execute a trade.
    The proposed rule change is grounded in the Exchange's efforts to 
compete more effectively. The Exchange is proposing to provide a free 
trial for market participants to test investment strategies and trading 
models, and develop market sentiment indicators. This change will not 
cause any unnecessary or inappropriate burden on intermarket 
competition, but rather will promote competition by encouraging new 
market participants to investigate the product. Other exchanges are, of 
course, free to match this change or undertake other competitive 
responses, enhancing overall competition. Indeed, as discussed, another 
exchange currently offers a similar free-trial period for similar 
data.\15\
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    \15\ See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A., 
Nasdaq ISE Open/Close Trade Profile End of Day.
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    The proposed rule change will not cause any unnecessary or 
inappropriate burden on intramarket competition. Particularly, the 
proposed rule change will apply to all TPHs and non-TPHs who have never 
made an ad-hoc request to purchase Intraday Open-Close historical data. 
Moreover, purchase of Intraday Open-Close historical files is 
discretionary and not compulsory.

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 \16\ and paragraph (f) of Rule 19b-4 \17\ 
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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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 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-2022-044 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-2022-044. 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-2022-044 and should be submitted on 
or before October 7, 2022.


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20034 Filed 9-15-22; 8:45 am]
BILLING CODE 8011-01-P