[Federal Register Volume 88, Number 14 (Monday, January 23, 2023)]
[Notices]
[Pages 4058-4061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-01117]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96677; File No. SR-CboeEDGX-2023-001]


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

January 17, 2023.
    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 3, 2023, Cboe EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule chanege 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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX Options'') 
proposes to amend its Fee 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://markets.cboe.com/us/options/regulation/rule_filings/edgx/), 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 Fee Schedule, effective January 
3, 2023. The Exchange proposes to modify its market data fees for EDGX 
Options Top.\3\ Particularly, the Exchange proposes to modify the 
Professional and Non-Professional User Fees and adopt a new Enterprise 
Fee for EDGX Options Top.
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    \3\ EDGX Options Top is an uncompressed data feed that offers 
top of book quotations and execution information based on options 
orders entered into the System.
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    The Exchange first proposes to reduce the Professional and Non-
Professional User fees for EDGX Options Top. The Exchange currently 
charges Internal Distributors and External Distributors that 
redistribute any of the EDGX Options Data Feeds different fees for 
their Professional Users \4\ and Non-Professional Users.\5\ The 
Exchange currently assesses a monthly fee for Professional Users of 
$10.00 per User and a monthly fee of $1.00 per Non-Professional 
User.\6\ Further, the Fee Schedule provides that Users of any one of 
EDGX Options market data products (i.e., EDGX Options Top, EDGX Options 
Depth, EDGX Options Auction Feed, EDGX Options Complex Depth, EDGX 
Options Complex Top, and EDGX Options Complex Auction Fees) may 
receive, at no additional charge, access to any or all of the other 
market data products listed. The Exchange proposes to reduce the User 
fees for EDGX Options Top. Particularly, the Exchange proposes to 
reduce the monthly (i) Professional User fee from $10 per user to $5 
per user and (ii) Non-Professional User fee from $1.00 per user to 
$0.10 per user. The Exchange also proposes to start charging separate 
User fees for EDGX Options Top. User Fees for the Exchange's remaining 
market data products will continue to receive, at no additional charge, 
access to any or all of the other market data products lists (with the 
exception of EDGX Options Top. The Exchange has reformatted the Market 
Data Fees table to make this clear.\7\
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    \4\ A Professional User of an Exchange Market Data product is 
any User other than a Non-Professional User.
    \5\ A ``Non-Professional User'' of an Exchange Market Data 
product is a natural person or qualifying trust that uses Data only 
for personal purposes and not for any commercial purpose and, for a 
natural person who works in the United States, is not: (i) 
registered or qualified in any capacity with the Securities and 
Exchange Commission, the Commodities Futures Trading Commission, any 
state securities agency, any securities exchange or association, or 
any commodities or futures contract market or association; (ii) 
engaged as an ``investment adviser'' as that term is defined in 
Section 202(a)(11) of the Investment Advisors Act of 1940 (whether 
or not registered or qualified under that Act); or (iii) employed by 
a bank or other organization exempt from registration under federal 
or state securities laws to perform functions that would require 
registration or qualification if such functions were performed for 
an organization not so exempt; or, for a natural person who works 
outside of the United States, does not perform the same functions as 
would disqualify such person as a Non-Professional User if he or she 
worked in the United States.
    \6\ Distributors that receive EDGX Options Data Feeds are 
required to count every Professional User and Non-Professional User 
to which they provide the market data product(s).
    \7\ The Exchange is not proposing any changes to the current 
User Fee rates for its other market data products at this time and 
Users of any one of the remaining market data products may continue 
to receive, at no additional charge, access to any or all of the 
other market data products listed (i.e., except for EDGX Options 
Top).
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    The Exchange lastly proposes to establish a $20,000 per month 
Enterprise Fee that will permit a recipient firm who receives EDGX 
Options Top Data from a Distributor to receive the data for an 
unlimited number of Professional and Non-Professional Users. The 
Enterprise Fee is an alternative to User fees and will permit a 
recipient firm who receives EDGX Options Top Data from a Distributor to 
pay a flat fee to receive the data for an unlimited number of 
Professional and Non-Professional Users, which the Exchange proposes to 
make clear in the Fee Schedule. The Enterprise Fee may provide a 
recipient an opportunity to reduce its fees. For example, if a 
recipient firm has 15,000 Professional Users who each receive EDGX 
Options Top at $5.00 per month (as proposed), then that recipient firm 
will pay $75,000 per month in Professional Users fees. If the recipient 
firm instead were to purchase the proposed Enterprise license, the 
recipient firm would alternatively pay a flat fee of $20,000 for an 
unlimited number of Professional and Non-Professional Users. A 
recipient firm must pay a separate Enterprise Fee for each Distributor 
that controls the display of EDGX Options Top if it wishes such User to 
be covered by an Enterprise Fee rather than by per User fees. A 
recipient firm that pays the Enterprise Fee will not have to report its 
number of such Users on a monthly basis. Rather, every six months, the 
recipient firm must provide the Exchange with a count of the total 
number of authorized person users of each product, including both 
Professional and Non-Professional Users. The Exchange notes that the 
purchase of an Enterprise license is

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voluntary, and a firm may elect to instead use the per User structure 
and benefit from the proposed per User Fees described above. For 
example, a firm that does not have a sufficient number of subscribers 
to benefit from purchase of the license need not do so.
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.\8\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \9\ 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,\10\ which requires that Exchange rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its Members and other persons using its facilities.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange first notes that it 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 18% of the market share.\11\ 
The Exchange believes 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. Indeed, there are 
several competing products offered by other national securities 
exchanges today, not counting products offered by the Exchange's 
affiliates, and each of the Exchange's affiliated U.S. options 
exchanges also offers similar top-of-book data.\12\ 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 EDGX 
Options Top Feed. Further, the quote and last sale data contained in 
the EDGX Options Top Feed is identical to the data sent to OPRA for 
redistribution to the public.\13\ Accordingly, market participants can 
substitute EDGX Options Top with feeds from other exchanges and/or 
through OPRA. Exchange top-of-book data is therefore widely available 
today from a number of different sources.
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    \11\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (December 27, 2022), available at https://markets.cboe.com/us/options/market_statistics/.
    \12\ See e.g.,, NYSE Arca Options Proprietary Market Data Fees 
Schedule, MIAX Options Exchange, Fee Schedule, Section 6 (Market 
Data Fees), Nasdaq PHLX Options 7 Pricing Schedule, Section 10 
(Proprietary Data Feed Fees) and Cboe Data Services, LLC Fees 
Schedule.
    \13\ The Exchange notes that it makes available to ``Customers'' 
the BBO data and last sale data that is included in the EDGX Options 
Top Data Feed no earlier than the time at which the Exchange sends 
that data to OPRA.
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    Moreover, the EDGX Options Top is distributed and purchased on a 
voluntary basis, in that neither the Exchange nor market data 
distributors are required by any rule or regulation to make this data 
available. Accordingly, Distributors and Users can discontinue use at 
any time and for any reason, including due to an assessment of the 
reasonableness of fees charged. As described above, market participants 
have a wide variety of alternative market data products from which to 
choose, such as similar proprietary data products offered by other 
exchanges and consolidated data. Further, the Exchange is not required 
to make any proprietary data products available or to offer any 
specific pricing alternatives to any customers. Moreover, all broker-
dealers involved in order routing must take consolidated data from 
OPRA, and proprietary data feeds cannot be used to meet that particular 
requirement. As such, all proprietary data feeds are optional.
    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.'' \14\ Making 
similar data products available to market participants fosters 
competition in the marketplace, and 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 fees to attract purchasers of EDGX Options Top 
Data.
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    \14\ 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 the proposed changes to reduce the current 
Professional and Non-Professional User fees are reasonable as recipient 
firms will be subject to lower User fees. Additionally, the User fees 
continue to be lower than User fees assessed by other exchanges for 
similar data.\15\ The Exchange believes that the proposed fees are 
equitable and not unfairly discriminatory because they will be charged 
uniformly to recipient firms and Users. The Exchange also believes 
continuing to offer EDGX Options Top Data to Non-Professional Users at 
a lower cost than Professional Users results in greater equity among 
data recipients, as Professional Users are categorized as such based on 
their employment and participation in financial markets, and thus, are 
compensated to participate in the markets. Although Non-Professional 
Users too can receive significant financial benefits through their 
participation in the markets, the Exchange believes it is reasonable to 
charge more to those Users who are more directly engaged in the 
markets.
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    \15\ See e.g., Nasdaq PHLX Options 7 Pricing Schedule, Section 
10 (Proprietary Data Feed Fees), which provides for a fee of $40 per 
month to professional users and $1.00 per month to non-professional 
users of Top of PHLX Options (TOPO) Data. See also NYSE American 
Options Proprietary Market Data Fees schedule, which provides for a 
fee of $50 per month to professional users and $1.00 per month to 
non-professional users of American Options Top Data.
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    The Exchange believes the proposed change to start charging 
separate User fees for EDGX Options Top is equitable and reasonable 
because the Exchange has not charged for separate User Fees for both 
feeds since EDGX Options Top was adopted in January 2018 and the 
Exchange now wishes to have separate User fees for EDGX Options 
Top.\16\ Moreover, the remaining EDGX Options data products are purely 
optional. Only those Customers that deem the products

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to be of sufficient overall value and usefulness would purchase them. 
Additionally, the Exchange is not required to provide any User fee 
waiver to any Distributors of EDGX Options Top. The Exchange believes 
the proposed change is equitable and not unfairly discriminatory as it 
will apply uniformly to recipient firms.
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    \16\ See Securities Exchange Act Release No. 82462 (January 12, 
2018), 83 FR 1647 (January 8, 2018) (SR-CboeEDGX-2017-010).
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    The proposed Enterprise Fee for EDGX Options Top Feed is equitable 
and reasonable as the proposed fee could result in a fee reduction for 
recipient firms with a large number of Professional and Non-
Professional Users. If a recipient firm has a smaller number of 
Professional Users of EDGX Options Top Data, then it may continue using 
the per User structure and benefit from the proposed per User Fee 
reductions. By reducing prices for recipient firms with a large number 
of Professional and Non-Professional Users, the Exchange believes that 
more firms may choose to receive and to distribute EDGX Options Top 
Data, thereby expanding the distribution of this market data for the 
benefit of investors.
    The Exchange further believes that the proposed Enterprise Fee is 
reasonable because it will simplify reporting for certain recipients 
that have large numbers of Professional and Non-Professional Users. 
Firms that pay the proposed Enterprise Fee will not have to report the 
number of Users on a monthly basis as they currently do, but rather 
will only have to count authorized users every six months, which is a 
significant reduction in administrative burden. Finally, as described 
above the Enterprise Fee is entirely optional. A firm that does not 
have a sufficient number of subscribers to benefit from purchase of the 
license need not do so.

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 
top-of-book data is constrained by competition among exchanges that 
offer similar data products to their customers. Top-of-book data is 
broadly disseminated by competing U.S. options exchanges and through 
OPRA. There are therefore a number of alternative products available to 
market participants and investors, including products offered by 
certain competing exchanges. 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.
    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 would apply to all 
similarly situated recipient firms of EDGX Options Top on an equal and 
non-discriminatory basis. The Exchange believes the differentiated fees 
for Professional and Non-Professional Users of EDGX Options Top is 
appropriate given Professional Users are categorized as such based on 
their employment and participation in financial markets, and thus, are 
compensated to participate in the markets. Non-Professional Users too 
can receive significant financial benefits through their participation 
in the markets, however the Exchange believes it is reasonable to 
charge more to those Users who are more directly engaged in the 
markets. The Exchange therefore believes that the proposed fee neither 
favors nor penalizes one or more categories of market participants in a 
manner that would impose an undue burden on 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 particular, market 
participants are not forced to subscribe to EDGX Options Top, or any of 
the Exchange's data feeds, as described above. Also as described above, 
there are numerous substitute products offered by other national 
securities exchanges, as well as OPRA. 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 \17\ and paragraph (f) of Rule 19b-4 \18\ 
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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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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-CboeEDGX-2023-001 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-CboeEDGX-2023-001. 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

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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-CboeEDGX-2023-001 and should 
be submitted on or before February 13, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-01117 Filed 1-20-23; 8:45 am]
BILLING CODE 8011-01-P