[Federal Register Volume 88, Number 230 (Friday, December 1, 2023)]
[Notices]
[Pages 84028-84030]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-26491]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99027; File No. SR-CboeBZX-2023-094]


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

November 28, 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 November 15, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') 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/equities/regulation/rule_filings/bzx/), 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 update its Fee Schedule to provide a 20% 
discount on fees assessed to BZX Members and non-Members that purchase 
$20,000 or more of historical Open-Close Data, effective November 15, 
2023 through December 31, 2023.
    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 EOD Open-Close Data is proprietary BZX 
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 EOD 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 84029]]

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 proprietary BZX trade data 
and does not include trade data from any other exchange. All Open-Close 
Data products are completely voluntary products, in that the Exchange 
is not required by any rule or regulation to make this data available 
and that potential customers may purchase it on an ad-hoc basis only if 
they voluntarily choose to do so.
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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 Members and non-Members 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 (historical file, e.g., 
request for Intraday Open-Close Data for month of June 2023 or End-of-
Day Open-Close Data for month of June 2023). An ad-hoc request can be 
for any number of months for which the data is available.
    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 Profile, GEMX Trade 
Profile data; open-close data from Cboe Options, C2, and BYX; Open 
Close Reports from MIAX Options, Pearl, and Emerald; and NYSE 
Options Open-Close Volume Summary.
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    The Exchange proposes to provide a temporary pricing incentive 
program in which Members or Non-Members that purchase historical Open-
Close Data will receive a percentage fee discount where specific 
purchase thresholds are met. Specifically, the Exchange proposes to 
provide a 20% discount for ad-hoc purchases of historical Open-Close 
Data of $20,000 or more.\5\ The proposed program will apply to all 
market participants irrespective of whether the market participant is a 
new or current purchaser; however, the discount cannot be combined with 
any other discounts offered by the Exchange, including the academic 
discount provided for Qualifying Academic Purchasers of historical 
Open-Close Data. The Exchange intends to introduce the discount program 
beginning November 15, 2023, with the program remaining in effect 
through December 31, 2023.\6\
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    \5\ The discount will apply on an order-by-order basis. To 
qualify for the discount, an order must contain End-of-Day Ad-hoc 
Requests (historical data) and/or Intraday Ad-hoc Requests 
(historical data) and must total $20,000 or more; the Exchange will 
not aggregate purchases made throughout a billing cycle for purposes 
of the incentive program. The discount will apply to the total 
purchase price, once the $20,000 minimum purchase is satisfied (for 
example, a qualifying order of $25,000 would be discounted to 
$20,000, i.e. receive a 20% discount of $5,000).
    \6\ As part of the proposed rule change, the Exchange also 
proposes to delete obsolete language related to a free trial that 
was offered for the months of September through December 2022 for up 
to 3 months of Intraday Open-Close Historical Data, as the offering 
is no longer in effect.
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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 
changes 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, 
purchasers of 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 purchasers 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 2.
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    The Exchange also operates in a highly competitive environment. 
Indeed, there are currently 17 registered options exchanges that trade 
options. Based on publicly available information, no single options 
exchange has more than 15% 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 
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

[[Page 84030]]

purchasers of historical Open-Close Data.
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    \11\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (November 8, 2023), 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 incentive program for any 
Member or non-Member who purchases historical Open-Close Data is 
reasonable because such purchasers would receive a 20% discount for 
purchasing $20,000 or more worth of historical Open-Close Data. The 
Exchange believes the proposed discount is reasonable as it will give 
purchasers the ability to use and test the historical Open-Close Data 
at a discounted rate, prior to purchasing additional months or a 
monthly subscription, and will therefore encourage and promote users to 
purchase the historical Open-Close Data. Further, the proposed discount 
is intended to promote increased use of the Exchange's historical Open-
Close Data by defraying some of the costs a purchaser would ordinarily 
have to expend before using the data product. The Exchange believes 
that the proposed discount is equitable and not unfairly discriminatory 
because it will apply equally to all Members and non-Members who 
purchase historical Open-Close Data. Lastly, the purchase of this data 
product is discretionary and not compulsory. Indeed, no market 
participant is required to purchase the historical Open-Close Data, and 
the Exchange is not required to make the historical Open-Close Data 
available to all investors. Potential purchasers may request the data 
at any time if they believe it to be valuable or may decline to 
purchase such data.

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 Data. Moreover, purchase of Open-
Close Data 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 changes are grounded in the Exchange's efforts to 
compete more effectively. In this competitive environment, potential 
purchasers are free to choose which, if any, similar product to 
purchase to satisfy their need for market information. As a result, the 
Exchange believes this proposed rule change permits fair competition 
among national securities exchanges. Further, the Exchange believes 
that these changes will not cause any unnecessary or inappropriate 
burden on intermarket competition, as the proposed incentive program 
applies uniformly to any purchaser of historical Open-Close Data.

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 \13\ and paragraph (f) of Rule 19b-4 \14\ 
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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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2023-094 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-CboeBZX-2023-094. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CboeBZX-2023-094 and should 
be submitted on or before December 22, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-26491 Filed 11-30-23; 8:45 am]
BILLING CODE 8011-01-P