[Federal Register Volume 89, Number 74 (Tuesday, April 16, 2024)]
[Notices]
[Pages 26966-26969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07966]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99937; File No. SR-CBOE-2024-017]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Fees for the Cboe Silexx Platform

April 10, 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 April 1, 2024, 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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[[Page 26967]]

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 fees for the Cboe Silexx platform. 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 fees for the Cboe Silexx platform 
(``Silexx platform''),\3\ effective April 1, 2024.
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    \3\ Cboe Silexx, Inc. (``Cboe Silexx''), which is a subsidiary 
of the Exchange's parent, Cboe Global Markets, Inc., offers the 
Silexx platform.
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    By way of background, the Silexx platform consists of a ``front-
end'' order entry and management trading platform (also referred to as 
the ``Silexx terminal'') for listed stocks and options that supports 
both simple and complex orders, and a ``back-end'' platform which 
provides a connection to the infrastructure network. From the Silexx 
platform (i.e., the collective front-end and back-end platform), a 
Silexx user has the capability to send option orders to U.S. options 
exchanges, send stock orders to U.S. stock exchanges (and other trading 
centers), input parameters to control the size, timing, and other 
variables of their trades, and also includes access to real-time 
options and stock market data, as well as access to certain historical 
data. The Silexx platform is designed so that a user may enter orders 
into the platform to send to an executing broker (including Trading 
Permit Holders (``TPHs'')) of its choice with connectivity to the 
platform, which broker will then send the orders to Cboe Options (if 
the broker is a TPH) or other U.S. exchanges (and trading centers) in 
accordance with the user's instructions. The Silexx front-end and back-
end platforms are a software application that is installed locally on a 
user's desktop. Silexx grants users licenses to use the platform, and a 
firm or individual does not need to be a TPH to license the platform.
    The Exchange offers several versions of its Silexx platform. 
Originally, the Exchange offered the following versions of the Silexx 
platform: Basic, Pro, Sell-Side, Pro Plus Risk and Buy-Side Manager 
(``Legacy Platforms''). The Legacy Platforms are designed so that a 
User may enter orders into the platform to send to the executing 
broker, including TPHs, of its choice with connectivity to the 
platform. The executing broker can then send orders to Cboe Options (if 
the broker-dealer is a TPH) or other U.S. exchanges (and trading 
centers) in accordance with the User's instructions. Users cannot 
directly route orders through any of the Legacy Platforms to an 
exchange or trading center nor is the platform integrated into or 
directly connected to Cboe Options' System. In 2019, the Exchange made 
available a new version of the Silexx platform, Silexx FLEX, which 
supports the trading of FLEX Options and allows authorized Users with 
direct access to the Exchange to establish connectivity and submit 
orders directly to the Exchange.\4\ In 2020, the Exchange made an 
additional version of the Silexx platform available, Cboe Silexx, which 
supports the trading of non-FLEX Options and allows authorized Users 
with direct access to the Exchange to establish connectivity and submit 
orders directly to the Exchange.\5\ Cboe Silexx is essentially the same 
platform as Silexx FLEX, with the same applicable functionality, except 
that it additionally supports non-FLEX trading. Use of the Silexx 
platform is completely optional.
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    \4\ See Securities Exchange Act Release No. 87028 (September 19, 
2019) 84 FR 50529 (September 25, 2019) (SR-CBOE-2019-061). Only 
Users authorized for direct access and who are approved to trade 
FLEX Options may trade FLEX Options via Cboe Silexx. Only authorized 
Users and associated persons of Users may establish connectivity to 
and directly access the Exchange, pursuant to Rule 5.5 and the 
Exchange's technical specifications.
    \5\ See Securities Exchange Act Release No. 88741 (April 24, 
2020) 85 FR 24045 (April 30, 2020) (SR-CBOE-2020-040). Only 
authorized Users and associated persons of Users may establish 
connectivity to and directly access the Exchange, pursuant to Rule 
5.5 and the Exchange's technical specifications.
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    The Exchange has adopted fees for additional functionality that 
users may purchase in connection with their use of the Silexx platform. 
The Exchange offers each type of additional functionality as a 
convenience and use of each type of additional functionality is 
discretionary and not compulsory. For example, for the Legacy 
platforms, the Exchange assesses a fee for use of the ``Staged Orders, 
Drop Copies, and Order Routing Functionality for FIX Connections 
(sessions) Using Third-Party FIX Router'' feature. This functionality 
provides firms with the ability to receive staged orders, receive 
``drop copies'' of order fill messages, and route orders to executing 
brokers through a third-party FIX router.
    By way of background, Financial Information eXchange (``FIX'') is 
an industry-standard, non-proprietary API that permits market 
participants to connect to exchanges. FIX connectivity provides users 
with the ability to receive ``drop copy'' order fill messages from 
their executing brokers. These fill messages allow customers to update 
positions, risk calculations, and streamline back-office functions. 
Additionally, FIX connections can be updated to permit the platform to 
receive orders sent from another system and then route these orders 
through the platform for execution (staged orders) as well as provide 
users with the ability to route orders in various ways to executing 
brokers (such as designation of a market to which the broker is to 
route an order received from the platform and use of a broker's ``smart 
router'' functionality). Some users have connections to third-party FIX 
routers, who currently normalize the format of messages of their 
client. To the extent a FIX router has a connection to the Silexx 
platform, users that also have connections to these routers may elect 
to receive staged orders, drop copies, and order routing functionality 
through a FIX router. Additionally, the Silexx platform permits users 
to elect to receive daily transmission of equity order reports related 
to order users submit through the platform.
    As noted above, for the Legacy Platforms, the Exchange assesses a 
fee for use of the ``Staged Orders, Drop Copies, and Order Routing 
Functionality for FIX Connections (sessions) Using Third-Party FIX 
Router'' feature. Currently, the Exchange assesses a fee of $500 per 
month per FIX connection, and such fee is waived for FLEX and Cboe 
Silexx. Similarly, the Exchange assesses a fee for orders routed via 
FIX into Cboe Silexx,

[[Page 26968]]

applicable to each TPH broker to whom a TPH customer using a non-Cboe 
Silexx workstation sends orders electronically to a TPH broker's Silexx 
workstation. The fee is $500 per month for each TPH broker with a 
Silexx workstation to which the TPH customer sends orders.
    The Exchange now proposes to adopt an additional order routing fee 
for Cboe Silexx, effective April 1, 2024. Particularly, the Exchange 
proposes to adopt a ``FIX order routing out of Cboe Silexx'' fee which 
would be payable by each receiving trading firms (such as an executing 
broker) that maintains a FIX router connected to the Silexx platform to 
receive orders electronically from a Silexx workstation, The proposed 
fee is $500 per month per receiving trading firm, regardless of how 
many Silexx workstations it connects to.
    The proposed fee is substantially similar to the ``FIX order 
routing into Cboe Silexx'' fee, which assesses $500 per month for each 
receiving Trading Permit Holder that uses a non-Silexx workstation to 
send orders electronically into (as compared to out of) a TPH broker's 
Cboe Silexx workstation to which the TPH customer sends orders. 
Additionally, the Silexx Fees Schedule also currently provides for a 
``Staged Orders, Drop Copies, and Order Routing Functionality for FIX 
Connections (sessions) Using Third-Party FIX Router'' fee set forth in 
the Silexx Fees Schedule, which is applicable to Legacy Platforms and 
currently waived for FLEX and Cboe Silexx. As noted above, Silexx users 
that have connections to these third-party FIX routers may elect to 
receive staged orders, drop copies, and order routing functionality 
through the FIX route. Establishing the monthly fee for the Cboe Silexx 
platform will allow for Cboe Silexx's recoupment of the costs of 
maintaining and supporting FIX order routing out of Cboe Silexx to 
third-party entities.
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.\6\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \7\ 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) \8\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. Additionally, the Exchange also believes the 
proposed rule change is consistent with Section 6(b)(4) of the Act, 
which requires that Exchange rules provide for the equitable allocation 
of reasonable dues, fees, and other charges among its Trading Permit 
Holders and other persons using its facilities.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ Id.
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    In particular, the Exchange believes the proposed monthly fee for 
FIX order routing out of Cboe Silexx is reasonable, equitable, and not 
unfairly discriminatory because the fee will apply uniformly to all 
receiving trading firms that elect to establish and maintain a FIX 
router connection to the Cboe Silexx platform. The Exchange notes that 
each additional type of Silexx functionality, including FIX order 
routing out of Cboe Silexx, are available to all market participants, 
and users have discretion to determine which, if any, types of 
functionality to purchase. The Exchange believes the monthly fee for 
FIX order routing out of Cboe Silexx functionality, as proposed, is 
reasonable, as the fee is the same as an analogous fee currently 
charged for similar functionality on the Legacy Platforms, and as well 
as for Cboe Silexx as it relates to FIX order routing into Cboe Silexx 
functionality. Additionally, the Exchange believes the proposed fee is 
reasonable as it accounts for administrative costs that Cboe Silexx is 
incurring, but not charging users, to maintain support for these third-
party FIX routers.
    Finally, the Exchange notes that use of the platform is 
discretionary and not compulsory, as users can choose to route orders, 
including to Cboe Options, without the use of the platform. The 
Exchange makes the platform available as a convenience to market 
participants, who will continue to have the option to use any order 
entry and management system available in the marketplace to send orders 
to the Exchange and other exchanges; the platform is merely an 
alternative offered by the Exchange.

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 proposed change will not 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed rule change will apply to similarly situated participants 
uniformly, as described in detail above. The Exchange notes that each 
additional type of Silexx functionality is available to all market 
participants, and users have discretion to determine which, if any, 
types of functionality to purchase.
    The Exchange does not believe that the proposed rule changes will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed change applies only to Cboe Options. Additionally, Cboe Silexx 
is similar to types of products that are widely available throughout 
the industry, including from some exchanges, at similar prices. To the 
extent that the proposed changes make Cboe Options a more attractive 
marketplace for market participants at other exchanges, such market 
participants are welcome to become Cboe Options market participants. 
Further, the proposed rule change relates to an optional platform. As 
discussed, the use of the platform continues to be completely voluntary 
and market participants will continue to have the flexibility to use 
any entry and management tool that is proprietary or from third-party 
vendors, and/or market participants may choose any executing brokers to 
enter their orders. The Cboe Silexx platform is not an exclusive means 
of trading, and if market participants believe that other products, 
vendors, front-end builds, etc. available in the marketplace are more 
beneficial than Cboe Silexx, they may simply use those products 
instead, including for routing orders to the Exchange (indirectly or 
directly if they are authorized Users). Use of the functionality is 
completely voluntary.

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.

[[Page 26969]]

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 \9\ and paragraph (f) of Rule 19b-4 \10\ 
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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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-CBOE-2024-017 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-2024-017. 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 
10:00 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. 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-CBOE-2024-017 and should 
be submitted on or before May 7, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-07966 Filed 4-15-24; 8:45 am]
BILLING CODE 8011-01-P