[Federal Register Volume 89, Number 122 (Tuesday, June 25, 2024)]
[Notices]
[Pages 53148-53151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13832]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100370; File No. SR-CBOE-2024-025]


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

June 18, 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 June 3, 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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its Fee Schedule. The text of the proposed rule change is 
provided in Exhibit 5.

[[Page 53149]]

    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 update its Fee Schedule to provide a 20% 
discount on fees assessed to Exchange Trading Permit Holders and non-
Trading Permit Holders that purchase $20,000 or more of historical 
Open-Close Data, effective June 3, 2024 through June 30, 2024.
    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 
Exchange 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-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 Exchange 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 Trading Permit Holders and non-
Trading Permit Holders 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 December 2023 or End-of-Day Open-Close Data for 
month of December 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 C2, EDGX, and BZX; 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 Trading Permit Holders or Non-Trading Permit Holders 
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 June 3, 2024, with the program 
remaining in effect through June 30, 2024.
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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).
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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.\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.
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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 adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``SROs'') and broker-dealers increased authority and 
flexibility to offer new and unique

[[Page 53150]]

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.\9\
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    \9\ See supra note 4.
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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 17% of the market share.\10\ 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.'' \11\ 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 historical Open-Close Data.
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    \10\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (June 3, 2024), available at https://markets.cboe.com/us/options/market_statistics/.
    \11\ 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 
Trading Permit Holder or non-Trading Permit Holder 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 Trading Permit Holders and non-Trading Permit 
Holders 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. The Exchange also notes that it previously 
adopted a similar discount program.\12\
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    \12\ See Securities Exchange Act Release No. 99028 (November 28, 
2023), 88 FR 84002 (December 1, 2023) (SR-CBOE-2023-061).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange operates in a 
highly competitive environment in which the Exchange must continually 
adjust its fees to remain competitive. Because competitors are free to 
modify their own fees in response, the Exchange believes that the 
degree to which fee changes in this market may impose any burden on 
competition is extremely limited. As discussed above, Open-Close Data 
is subject to direct competition from several other options exchanges 
that offer substitutes to Open-Close 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:

[[Page 53151]]

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CBOE-2024-025 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-2024-025. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10 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-CBOE-2024-025 and should be submitted on 
or before July 16, 2024.

    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. 2024-13832 Filed 6-24-24; 8:45 am]
BILLING CODE 8011-01-P