[Federal Register Volume 89, Number 159 (Friday, August 16, 2024)]
[Notices]
[Pages 66746-66748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-18342]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100695; File No. SR-CboeBZX-2024-073]


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

August 12, 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 July 30, 2024, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule

[[Page 66747]]

change as described in Items 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 Fees 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 (https://www.cboe.com/us/options/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 amend its Fees Schedule to add language 
concerning the application and collection of the Sales Value Fee, as 
described below. The proposed changes to the Fees Schedule do not 
change how the Exchange calculates or collects the Sales Value Fee from 
its Members, i.e., there are no changes to the application and 
assessment of the Sales Value Fee as a result of the proposed changes.
    By way of background, Section 31 of the Securities Exchange Act of 
1934 (the ``Act'') \3\ requires each self-regulatory organization 
(``SRO'') to pay the Securities and Exchange Commission (``SEC'' or 
``Commission'') twice annually a fee based on the aggregate dollar 
amount of certain sales of securities (i.e., ``covered sales''). A 
covered sale is a ``sale of a security, other than an exempt sale or a 
sale of a security future, occurring on a national securities exchange 
or by or through any member of a national securities association 
otherwise than on a national securities exchange.'' \4\ Assessing a 
sales fee to defray the cost of these fees is common practice among the 
national securities exchanges and associations,\5\ and in fact the 
Exchange currently assesses a fee on its Members for covered sales on 
the Exchange to recoup these amounts. The Exchange now proposes to 
amend its Fees Schedule to include information regarding this fee, 
including an explanation and description of the fee and how it is 
collected.
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    \3\ 17 CFR 240.31.
    \4\ 17 CFR 240.31(a)(6).
    \5\ See, e.g., ISE Options 7, Section 12; NASDAQ Options 7, 
Section 8; NYSE Rule 393; and Cboe Options Fees Schedule, Sales 
Value Fee.
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    Specifically, the Exchange proposes to add a section to the Fees 
Schedule labeled ``Sales Value Fee''. The proposed new section defines 
the Sales Value Fee (``Fee'') as the fee assessed by the Exchange to 
each Member for sales in securities when a sale in option securities 
occurs with respect to which the Exchange is obligated to pay a fee to 
the SEC under Section 31 of the Exchange Act or when a sell order in 
option securities is routed for execution at a market other than the 
Exchange, resulting in a covered sale on that market and an obligation 
of the routing broker providing Routing Services for the Exchange, as 
described in Exchange Rule 21.9, to pay the related sales fee of that 
market. The proposed section provides that to the extent the Exchange 
may collect more from Members under the section than is due from the 
Exchange to the Commission under Section 31 of the Act, for example due 
to rounding differences, the excess monies collected may be used by the 
Exchange to fund its general operating expenses. The Exchange may 
reimburse its routing broker for all Section 31-related fees incurred 
by the routing broker in connection with the Routing Services it 
provides.
    The proposed section explains that the transactions to which the 
Fee applies are sales of options (other than options on a security 
index). The Fee is collected indirectly from Members through their 
clearing firms by the Options Clearing Corporation (``OCC'') on behalf 
of the Exchange with respect to options sales and options exercises.
    The proposed section also sets forth the formula for calculating 
the Fee. Specifically, the Fee with respect to options sales and 
options exercises is equal to (i) the Section 31 fee rate multiplied by 
(ii) the Member's aggregate dollar amount of covered sales resulting 
from options transactions occurring on the Exchange during any 
computational period. The Exchange notes that if the SEC's Section 31 
fee rate changes in the middle of a month, the Exchange will perform a 
separate calculation with respect to covered sales under the new fee 
rate for the remaining portion of the month.
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. The Exchange also believes the proposed rule 
change is consistent with Section 6(b)(4) of the Act,\9\ which requires 
that Exchange rules provide for the equitable allocation of reasonable 
dues, fees, and other charges among its Members and other persons using 
its facilities.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ Id.
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed rule change is consistent 
with these requirements because the proposed amended Fees Schedule text 
provides Members with detail regarding the circumstances under which 
the Exchange assesses a Sales Value Fee, and the current process by 
which the Fee is collected. As such, the proposed changes will increase 
transparency, help avoid Member confusion and foster better 
understanding of the application of the Fee. Accordingly, the Exchange 
believes the proposed rule change will promote just and equitable 
principles of

[[Page 66748]]

trade, remove impediments to and perfect the mechanism of a free and 
open market and a national market system, and protect investors and the 
public interest. Further, the Exchange believes the proposed change is 
reasonable, given that assessing a sales fee to defray the cost of fees 
assessed under Section 31 of the Act is common practice among the 
national securities exchanges and associations.\10\
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    \10\ See, e.g., ISE Options 7, Section 12; NASDAQ Options 7, 
Section 8; NYSE Rule 393; and Cboe Options Fees Schedule, Sales 
Value Fee.
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    As noted above, the proposed changes to the Fees Schedule do not 
change how the Exchange calculates or collects the Sales Value Fee from 
its Members, i.e., there are no changes to the application and 
assessment of the Sales Value Fee as a result of the proposed changes. 
Rather, the proposed changes will provide a more complete and accurate 
description of the Sales Value Fee (including an explanation of the Fee 
and how it is collected) to all Members. The Exchange believes the 
proposed change represents an equitable allocation of fees and is not 
unfairly discriminatory because it applies uniformly to all Members.

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 does not 
believe the proposed changes will impose any burden on intramarket 
competition. Particularly, the proposed change applies uniformly to all 
Members, in that the Sales Value Fee will continue to be applied 
uniformly to all Members' applicable orders.
    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. As noted above, 
assessing a sales fee to defray the cost of fees assessed under Section 
31 of the Act is common practice among the national securities 
exchanges and associations.\11\
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    \11\ See, e.g., ISE Options 7, Section 12; NASDAQ Options 7, 
Section 8; NYSE Rule 393; and Cboe Options Fees Schedule, Sales 
Value Fee.
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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 \12\ and paragraph (f) of Rule 19b-4 \13\ 
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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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-2024-073 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-2024-073. 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-2024-073 and should 
be submitted on or before September 6, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-18342 Filed 8-15-24; 8:45 am]
BILLING CODE 8011-01-P