[Federal Register Volume 89, Number 34 (Tuesday, February 20, 2024)]
[Notices]
[Pages 12893-12898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03340]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99531; File No. SR-CboeEDGX-2024-011]


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

February 13, 2024.
    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 February 1, 2024, Cboe EDGX Exchange, Inc. (``Exchange'' or 
``EDGX'') 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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') 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

[[Page 12894]]

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 Fee Schedule applicable to its 
equities trading platform (``EDGX Equities'') as follows: (1) by 
modifying the rate associated with fee code DX; (2) by introducing a 
new Add Volume Tier and new Non-Displayed Add Volume Tier; (3) by 
modifying certain Non-Displayed Add Volume Tiers; (4) by modifying the 
Cross Asset Tier; and (5) by discontinuing Growth Tier 5, Non-Displayed 
Step-Up Volume Tier 3, and Retail Growth Tier 3. The Exchange proposes 
to implement these changes effective February 1, 2024.
    The Exchange first notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. More specifically, the 
Exchange is only one of 16 registered equities exchanges, as well as a 
number of alternative trading systems and other off-exchange venues 
that do not have similar self-regulatory responsibilities under the 
Securities Exchange Act of 1934 (the ``Act''), to which market 
participants may direct their order flow. Based on publicly available 
information,\3\ no single registered equities exchange has more than 
14% of the market share. Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow. The Exchange in 
particular operates a ``Maker-Taker'' model whereby it pays rebates to 
members that add liquidity and assesses fees to those that remove 
liquidity. The Exchange's Fee Schedule sets forth the standard rebates 
and rates applied per share for orders that provide and remove 
liquidity, respectively. Currently, for orders in securities priced at 
or above $1.00, the Exchange provides a standard rebate of $0.00160 per 
share for orders that add liquidity and assesses a fee of $0.0030 per 
share for orders that remove liquidity.\4\ For orders in securities 
priced below $1.00, the Exchange provides a standard rebate of $0.00003 
per share for orders that add liquidity and assesses a fee of 0.30% of 
the total dollar value for orders that remove liquidity.\5\ 
Additionally, in response to the competitive environment, the Exchange 
also offers tiered pricing which provides Members opportunities to 
qualify for higher rebates or reduced fees where certain volume 
criteria and thresholds are met. Tiered pricing provides an incremental 
incentive for Members to strive for higher tier levels, which provides 
increasingly higher benefits or discounts for satisfying increasingly 
more stringent criteria.
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    \3\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (January 24, 2024), available at https://www.cboe.com/us/equities/market_statistics/.
    \4\ See EDGX Equities Fee Schedule, Standard Rates.
    \5\ Id.
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Fee Code DX
    The Exchange currently offers fee code DX, which is appended to 
Midpoint Discretionary Orders (``MDOs'') \6\ using the Quote Depletion 
Protection (``QDP'') \7\ order instruction that remove liquidity from 
the Exchange. QDP is designed to provide enhanced protections to MDOs 
by tracking significant executions that constitute the best bid or 
offer on the EDGX Book \8\ and enabling Users \9\ to avoid potentially 
unfavorable executions by preventing MDOs entered with the optional QDP 
instruction from exercising discretion to trade at more aggressive 
prices when QDP has been triggered.\10\ Currently, orders appended with 
fee code DX are assessed a fee of $0.00100 per share in securities at 
or above $1.00 and 0.30% of dollar value for securities priced below 
$1.00. The Exchange proposes to increase the fee to $0.00150 per share 
in securities at or above $1.00. There is no proposed change in the fee 
assessed to securities priced below $1.00. The purpose of increasing 
the fee associated with fee code DX in securities priced at or above 
$1.00 is for business and competitive reasons, as the Exchange believes 
that increasing such fee as proposed would decrease the Exchange's 
expenditures with respect to transaction pricing in a manner that is 
still consistent with the Exchange's overall pricing philosophy of 
encouraging added liquidity.
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    \6\ See Exchange Rule 11.8(g).
    \7\ See Exchange Rule 11.8(g)(10).
    \8\ See Exchange Rule 1.5(d).
    \9\ See Exchange Rule 1.5(ee).
    \10\ See Securities Exchange Act Release No. 89007 (June 4, 
2020), 85 FR 35454 (June 10, 2020) (SR-CboeEDGX-2020-010) (``Notice 
of Filing of Amendment No. 1 and Order Granting Accelerated Approval 
of a Proposed Rule Change, as Modified by Amendment No. 1, to Amend 
the Rule Relating to MidPoint Discretionary Orders to Allow Optional 
Offset or Quote Depletion Protection Instructions'').
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Add Volume Tiers
    Under footnote 1 of the Fee Schedule, the Exchange currently offers 
various Add/Remove Volume Tiers. In particular, the Exchange offers 
seven Add Volume Tiers that each provide an enhanced rebate for 
Members' qualifying orders yielding fee codes 3,\11\ 4,\12\ B,\13\ 
V,\14\ and Y \15\ where a Member reaches certain add volume-based 
criteria. The Exchange now proposes to introduce a new Add Volume Tier 
to provide Members an additional manner in which they could receive an 
enhanced rebate if certain criteria is met. The criteria for proposed 
Add Volume Tier 8 is as follows:
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    \11\ Fee code 3 is appended to orders adding liquidity to EDGX 
in the pre and post market in Tapes A or C securities.
    \12\ Fee code 4 is appended to orders adding liquidity to EDGX 
in the pre and post market in Tape B securities.
    \13\ Fee code B is appended to orders adding liquidity to EDGX 
in Tape B securities.
    \14\ Fee code V is appended to orders adding liquidity to EDGX 
in Tape A securities.
    \15\ Fee code Y is appended to orders adding liquidity to EDGX 
in Tape C securities.
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     Add Volume Tier 8 provides a rebate of $0.0034 per share 
in securities priced at or above $1.00 to qualifying orders (i.e., 
orders yielding fee codes 3, 4, B, V, or Y) where (1) Member has a 
total retail ADV \16\ (yielding fee codes ZA,\17\ ZO,\18\ ZM,\19\ and 
ZR \20\) >=0.80% of the TCV \21\ or Member has a total retail ADV 
(yielding fee codes ZA, ZO, ZM, and ZR) >=80,000,000; and (2) Member 
has a total remove ADV >=0.80% of the TCV or Member has a total remove 
ADV >=80,000,000.
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    \16\ ``ADV'' means average daily volume calculated as the number 
of shares added to, removed from, or routed by, the Exchange, or any 
combination or subset thereof, per day. ADV is calculated on a 
monthly basis.
    \17\ Fee code ZA is appended to Retail Orders adding liquidity 
to EDGX.
    \18\ Fee code ZO is appended to Retail orders adding liquidity 
to EDGX in the pre and post market.
    \19\ Fee code ZM is appended to Retail orders marked as Day/RHO 
or GTX that remove liquidity from EDGX upon arrival.
    \20\ Fee code ZR is appended to Retail Orders that remove 
liquidity from EDGX.
    \21\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply.
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    In addition to the Add Volume Tiers offered under footnote 1, the 
Exchange also offers a Cross Asset Tier, which is designed to 
incentivize Members to achieve certain levels of participation on both 
the Exchange's equities and options platform (``EDGX Options''). The 
Exchange now proposes to amend

[[Page 12895]]

the criteria of the Cross Asset Tier as the tier has expired. The 
proposed criteria for the Cross Asset Tier is as follows:
     The Cross Asset Tier provides a rebate of $0.0029 per 
share for securities priced at or above $1.00 for qualifying orders 
(i.e., orders yielding fee codes 3, 4, B, V, or Y) where (1) Member has 
a Tape B & C ADAV >=6,000,000; and (2) Member has an Add ADV on EDGX 
Options >=300,000 in SPY.
    The proposed Cross Asset Tier will no longer have an expiration 
date as it will no longer contain a component criteria requiring 
Members to grow their volume over a certain baseline month. In 
conjunction with the proposed modifications to the Cross Asset Tier, 
the Exchange also proposes to remove the definition of Market Maker Add 
\22\ from the fee schedule as this term is no longer being utilized.
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    \22\ ``Market Maker Add'' means any order for the account of a 
registered Market Maker on EDGX Options appended with fee code NM or 
PM.
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    Also under footnote 1, the Exchange offers four Non-Displayed Add 
Volume Tiers that each provide an enhanced rebate for Members' 
qualifying orders yielding fee codes DM,\23\ HA,\24\ MM,\25\ and 
RP,\26\ where a Member reaches certain volume-based criteria offered in 
each tier. The Exchange now proposes to introduce a new Non-Displayed 
Add Volume Tier to provide Members an additional manner in which they 
could receive an enhanced rebate if certain criteria is met. The 
criteria for proposed Non-Displayed Add Volume Tier 5 is as follows:
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    \23\ Fee code DM is appended to orders that add liquidity using 
MidPoint Discretionary Order within discretionary range.
    \24\ Fee code HA is appended to non-displayed orders that add 
liquidity.
    \25\ Fee code MM is appended to non-displayed orders that add 
liquidity using Mid-Point Peg.
    \26\ Fee code RP is appended to non-displayed orders that add 
liquidity using Supplemental Peg.
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     Non-Displayed Add Volume Tier 5 provides a rebate of 
$0.0026 per share for securities priced at or above $1.00 for 
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP) 
where (1) Member has a total retail ADV (yielding fee codes ZA, ZO, ZM, 
and ZR) >=0.80% of the TCV or Member has a total retail ADV (yielding 
fee codes ZA, ZO, ZM, and ZR) >=80,000,000; and (2) Member has a total 
remove ADV >=0.80% of the TCV or Member has a total remove ADV 
>=80,000,000.
    In addition to introducing proposed Non-Displayed Add Volume Tier 
5, the Exchange also proposes to amend Non-Displayed Add Volume Tiers 
1-3 by removing the second prong of criteria from each of the three 
tiers and modifying the TCV requirement for Non-Displayed Add Volume 
Tiers 2 and 3. Currently, the criteria for Non-Displayed Add Volume 
Tiers 1-3 is as follows:
     Non-Displayed Add Volume Tier 1 provides a rebate of 
$0.0015 per share for securities priced at or above $1.00 for 
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP) 
where Member has an ADAV >=0.05% of TCV for Non-Displayed orders that 
yield fee codes DM, HA, HI,\27\ MM or RP; or Member has an ADAV 
>=5,000,000 for Non-Displayed orders that yield fee codes DM, HA, HI, 
MM or RP.
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    \27\ Fee code HI is appended to non-displayed orders that 
receive price improvement and add liquidity to EDGX.
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     Non-Displayed Add Volume Tier 2 provides a rebate of 
$0.0020 per share for securities priced at or above $1.00 for 
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP) 
where Member has an ADAV >=0.08% of TCV for Non-Displayed orders that 
yield fee codes DM, HA, HI, MM or RP; or Member has an ADAV >=8,000,000 
for Non-Displayed orders that yield fee codes DM, HA, HI, MM or RP.
     Non-Displayed Add Volume Tier 3 provides a rebate of 
$0.0025 per share for securities priced at or above $1.00 for 
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP) 
where Member has an ADAV >=0.10% of TCV for Non-Displayed orders that 
yield fee codes DM, HA, HI, MM or RP; or Member has an ADAV 
>=10,000,000 for Non-Displayed orders that yield fee codes DM, HA, HI, 
MM or RP.
    The proposed criteria for Non-Displayed Add Volume Tiers 1-3 is as 
follows:
     Non-Displayed Add Volume Tier 1 provides a rebate of 
$0.0015 per share for securities priced at or above $1.00 for 
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP) 
where Member has an ADAV >=0.05% of TCV for Non-Displayed orders that 
yield fee codes DM, HA, HI, MM or RP.
     Non-Displayed Add Volume Tier 2 provides a rebate of 
$0.0020 per share for securities priced at or above $1.00 for 
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP) 
where Member has an ADAV >=0.10% of TCV for Non-Displayed orders that 
yield fee codes DM, HA, HI, MM or RP.
     Non-Displayed Add Volume Tier 3 provides a rebate of 
$0.0025 per share for securities priced at or above $1.00 for 
qualifying orders (i.e., orders yielding fee codes DM, HA, MM, or RP) 
where Member has an ADAV >=0.12% of TCV for Non-Displayed orders that 
yield fee codes DM, HA, HI, MM or RP.
    Together, the proposed addition of Add Volume Tier 8 and Non-
Displayed Add Volume Tier 5, proposed amendment to the Cross Asset 
Tier, and proposed amendments to Non-Displayed Add Volume Tiers 1-3 are 
each intended to provide Members an opportunity to earn an enhanced 
rebate by increasing their order flow to the Exchange, which further 
contributes to a deeper, more liquid market and provides even more 
execution opportunities for active market participants. Incentivizing 
an increase in liquidity adding volume through enhanced rebate 
opportunities encourages liquidity adding Members on the Exchange to 
contribute to a deeper, more liquid market, providing for overall 
enhanced price discovery and price improvement opportunities on the 
Exchange. As such, increased overall order flow benefits all Members by 
contributing towards a robust and well-balanced market ecosystem.
    In addition to the proposed additions and modifications to footnote 
1 discussed above, the Exchange now proposes to discontinue Growth Tier 
5 and Non-Displayed Step-Up Volume Tier 3 as the Exchange no longer 
wishes to, nor is required to, maintain such tiers. More specifically, 
the proposed change removes these tiers as the Exchange would rather 
redirect future resources and funding into other programs and tiers 
intended to incentivize increased order flow.
Retail Volume Tiers
    Under footnote 2 of the Fee Schedule, the Exchange currently offers 
various Retail Volume Tiers which provide an enhanced rebate for Retail 
Member Organizations (``RMOs'') \28\ an opportunity to receive an 
enhanced rebate from the standard rebate for Retail Orders \29\ that 
add liquidity (i.e., yielding fee code ZA or ZO). Currently, the 
Exchange offers one Retail Growth Tiers where an RMO is eligible for an 
enhanced rebate for qualifying orders (i.e., yielding fee code ZA or 
ZO) meeting certain add volume-based criteria, including ``growing'' 
its volume over a certain baseline month. The Exchange now proposes to 
discontinue Retail Growth Tier 3 as the Exchange no longer wishes to, 
nor is required to,

[[Page 12896]]

maintain such tier. More specifically, the proposed change removes this 
tier as the Exchange would rather redirect future resources and funding 
into other programs and tiers intended to incentivize increased order 
flow.
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    \28\ See EDGX Rule 11.21(a)(1). A ``Retail Member Organization'' 
or ``RMO'' is a Member (or a division thereof) that has been 
approved by the Exchange under this Rule to submit Retail Orders.
    \29\ See EDGX Rule 11.21(a)(2). A ``Retail Order'' is an agency 
or riskless principal order that meets the criteria of FINRA Rule 
5320.03 that originates from a natural person and is submitted to 
the Exchange by a Retail Member Organization, provided that no 
change is made to the terms of the order with respect to price or 
side of the market and the order does not originate from a trading 
algorithm or any other computerized methodology.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\30\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \31\ 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) \32\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \33\ 
as it is designed to 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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    \30\ 15 U.S.C. 78f(b).
    \31\ 15 U.S.C. 78f(b)(5).
    \32\ Id.
    \33\ 15 U.S.C. 78f(b)(4).
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    As described above, the Exchange operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or incentives to be insufficient. The Exchange believes that 
its proposal to: (1) introduce a new Add Volume Tier and new Non-
Displayed Add Volume Tier; (2) modify certain Non-Displayed Add Volume 
Tiers; and (3) modify the Cross Asset Tier reflects a competitive 
pricing structure designed to incentivize market participants to direct 
their order flow to the Exchange, which the Exchange believes would 
enhance market quality to the benefit of all Members. Additionally, the 
Exchange notes that relative volume-based incentives and discounts have 
been widely adopted by exchanges,\34\ including the Exchange,\35\ and 
are reasonable, equitable and non-discriminatory because they are open 
to all Members on an equal basis and provide additional benefits or 
discounts that are reasonably related to (i) the value to an exchange's 
market quality and (ii) associated higher levels of market activity, 
such as higher levels of liquidity provision and/or growth patterns. 
Competing equity exchanges offer similar tiered pricing structures, 
including schedules of rebates and fees that apply based upon members 
achieving certain volume and/or growth thresholds, as well as assess 
similar fees or rebates for similar types of orders, to that of the 
Exchange.
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    \34\ See, e.g., BZX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
    \35\ See, e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
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    In particular, the Exchange believes its proposal to: (1) introduce 
a new Add Volume Tier and new Non-Displayed Add Volume Tier; (2) modify 
certain Non-Displayed Add Volume Tiers; and (3) modify the Cross Asset 
Tier is reasonable because the new and revised tiers will be available 
to all Members and provide all Members with an opportunity to receive 
an enhanced rebate, including additional opportunities to receive an 
enhanced rebate with the addition of proposed Add Volume Tier 8 and 
proposed Non-Displayed Add Volume Tier 5. The Exchange further believes 
its proposal to: (1) introduce a new Add Volume Tier and new Non-
Displayed Add Volume Tier; (2) modify certain Non-Displayed Add Volume 
Tiers; and (3) modify the Cross Asset Tier will provide a reasonable 
means to encourage liquidity adding displayed orders in Members' order 
flow to the Exchange and to incentivize Members to continue to provide 
liquidity adding volume to the Exchange by offering them an opportunity 
to receive an enhanced rebate on qualifying orders. While the modified 
criteria in proposed Non-Displayed Add Volume Tiers 1-3 and the Cross 
Asset Tier is slightly more difficult than the current criteria found 
in those respective tiers, the proposed criteria is not a significant 
departure from existing criteria, is reasonably correlated to the 
enhanced rebate offered by the Exchange, and will continue to 
incentivize Members to submit order flow to the Exchange. An overall 
increase in activity would deepen the Exchange's liquidity pool, offers 
additional cost savings, support the quality of price discovery, 
promote market transparency and improve market quality, for all 
investors.
    The Exchange believes that its proposal to eliminate current Growth 
Tier 5, Non-Displayed Step-Up Volume Tier 3, and Retail Growth Tier 3 
is reasonable because the Exchange is not required to maintain these 
tiers, nor is it required to provide Members an opportunity to receive 
enhanced rebates. The Exchange believes its proposal to eliminate these 
tiers is also equitable and not unfairly discriminatory because it 
applies to all Members (i.e., the tiers will not be available for any 
Member). The Exchange also notes that the proposed rule change to 
remove these tiers merely results in Members not receiving an enhanced 
rebate, which, as noted above, the Exchange is not required to offer or 
maintain. Furthermore, the proposed rule change to eliminate current 
Growth Tier 5, Non-Displayed Step-Up Volume Tier 3, and Retail Growth 
Tier 3 enables the Exchange to redirect resources and funding into 
other programs and tiers intended to incentivize increased order flow.
    Further, the Exchange believes that its proposal to modify the fee 
associated with fee code DX is reasonable, equitable, and consistent 
with the Act because such change is designed to decrease the Exchange's 
expenditures with respect to transaction pricing in order to offset 
some of the costs associated with the Exchange's current pricing 
structure, which provides various rebates for liquidity-adding orders, 
and the Exchange's operations generally, in a manner that is consistent 
with the Exchange's overall pricing philosophy of encouraging added 
liquidity. The proposed increased fee of $0.0015 per share is 
reasonable and appropriate because while it is slightly higher than the 
existing fee, it remains lower than other fees assessed by the Exchange 
in order to remove liquidity.\36\ The Exchange further believes that 
the proposed increase to the fee associated with fee code DX is not 
unfairly discriminatory because it applies to all Members equally, in 
that all Members will be assessed the higher fee upon submitting orders 
appended with fee codes DX.
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    \36\ See e.g., EDGX Equity Fee Schedule, Fee Codes and 
Associated Fees. For example, orders with a fee code of BB, N, or W 
are assessed a fee of $0.00300.
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    Without having a view of activity on other markets and off-exchange 
venues, the Exchange has no way of knowing whether this proposed rule 
change would definitely result in any Members qualifying the new 
proposed tiers. While the Exchange has no way of

[[Page 12897]]

predicting with certainty how the proposed changes will impact Member 
activity, based on the prior months volume, the Exchange anticipates 
that at least one Member will be able to satisfy proposed Add Volume 
Tier 8, at least one Member will be able to satisfy the proposed Cross 
Asset Tier, at least one Member will be able to satisfy proposed Non-
Displayed Tier 1, at least two Members will be able to satisfy proposed 
Non-Displayed Tier 2, at least one Member will be able to satisfy 
proposed Non-Displayed Tier 3, and at least one Member will be able to 
satisfy proposed Non-Displayed Add Volume Tier 5. The Exchange also 
notes that proposed changes will not adversely impact any Member's 
ability to qualify for enhanced rebates offered under other tiers. 
Should a Member not meet the proposed new criteria, the Member will 
merely not receive that corresponding enhanced rebate.

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. Rather, as discussed above, 
the Exchange believes that the proposed changes would encourage the 
submission of additional order flow to a public exchange, thereby 
promoting market depth, execution incentives and enhanced execution 
opportunities, as well as price discovery and transparency for all 
Members. As a result, the Exchange believes that the proposed changes 
further the Commission's goal in adopting Regulation NMS of fostering 
competition among orders, which promotes ``more efficient pricing of 
individual stocks for all types of orders, large and small.''
    The Exchange believes the proposed rule changes do not impose any 
burden on intramarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Particularly, the proposed 
changes to: (1) introduce a new Add Volume Tier and new Non-Displayed 
Add Volume Tier; (2) modify certain Non-Displayed Add Volume Tiers; and 
(3) modify the Cross Asset Tier will apply to all Members equally in 
that all Members are eligible for the proposed new and revised tiers, 
have a reasonable opportunity to meet the proposed new and revised 
tiers' criteria and will receive the enhanced rebate on their 
qualifying orders if such criteria is met. Further, the proposed change 
to the fee associated with fee code DX do not impose an unnecessary 
burden as all Members will be subject to the higher fee assessed to 
orders appended with fee code DX. The Exchange does not believe the 
proposed changes burden competition, but rather, enhances competition 
as it is intended to increase the competitiveness of EDGX by amending 
existing pricing incentives and adopting new pricing incentives in 
order to attract order flow and incentivize participants to increase 
their participation on the Exchange, providing for additional execution 
opportunities for market participants and improved price transparency. 
Greater overall order flow, trading opportunities, and pricing 
transparency benefits all market participants on the Exchange by 
enhancing market quality and continuing to encourage Members to send 
orders, thereby contributing towards a robust and well-balanced market 
ecosystem.
    The Exchange believes the proposed elimination of Growth Tier 5, 
Non-Displayed Step-Up Volume Tier 3, and Retail Growth Tier 3 do not 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. Particularly, 
the proposed changes to eliminate Growth Tier 5, Non-Displayed Step-Up 
Volume Tier 3, and Retail Growth Tier 3 will not impose any burden on 
intramarket competition because the changes apply to all Members 
uniformly, as in, the tiers will no longer be available to any Member.
    Next, the Exchange believes the proposed rule changes does not 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. As previously 
discussed, the Exchange operates in a highly competitive market. 
Members have numerous alternative venues that they may participate on 
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the 
Exchange represents a small percentage of the overall market. Based on 
publicly available information, no single equities exchange has more 
than 14% of the market share.\37\ Therefore, no exchange possesses 
significant pricing power in the execution of order flow. Indeed, 
participants can readily choose to send their orders to other exchange 
and off-exchange venues if they deem fee levels at those other venues 
to be more favorable. Moreover, the Commission has repeatedly expressed 
its preference for competition over regulatory intervention in 
determining prices, products, and services in the securities markets. 
Specifically, 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.'' \38\ The fact that this market is competitive has also 
long been recognized by the courts. In NetCoalition v. Securities and 
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one 
disputes that competition for order flow is `fierce.' . . . As the SEC 
explained, `[i]n the U.S. national market system, buyers and sellers of 
securities, and the broker-dealers that act as their order-routing 
agents, have a wide range of choices of where to route orders for 
execution'; [and] `no exchange can afford to take its market share 
percentages for granted' because `no exchange possesses a monopoly, 
regulatory or otherwise, in the execution of order flow from broker 
dealers'. . . .''.\39\ Accordingly, the Exchange does not believe its 
proposed fee change imposes any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.
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    \37\ Supra note 3.
    \38\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \39\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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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 \40\ and paragraph (f) of Rule 19b-4 \41\ 
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

[[Page 12898]]

change should be approved or disapproved.
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    \40\ 15 U.S.C. 78s(b)(3)(A).
    \41\ 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-CboeEDGX-2024-011 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-2024-011. 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-CboeEDGX-2024-011 and should 
be submitted on or before March 12, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\42\
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    \42\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-03340 Filed 2-16-24; 8:45 am]
BILLING CODE 8011-01-P