[Federal Register Volume 90, Number 96 (Tuesday, May 20, 2025)]
[Notices]
[Pages 21533-21535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-08923]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103041; File No. SR-CBOE-2025-034]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule With Respect to Market-Maker Orders Transacted on the
Trading Floor
May 14, 2025.
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 May 1, 2025, 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 Fees Schedule with respect to Market-Maker orders
transacted on the trading floor (i.e., manual) in Equity, ETF, and ETN
Options, Sector Indexes and All Other Index Products and the Clearing
Trading Permit Holder (``TPH'') fee cap. 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 its Fees Schedule, effective May 1,
2025.
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 18 options venues to which market participants
may direct their order flow. Based on publicly available information,
no single options exchange has more than 17% of the market share.\3\
Thus, in such a low-concentrated and highly competitive market, no
single options exchange possesses significant pricing power in the
execution of option order flow. The Exchange believes that the ever-
shifting market share among the exchanges from month to month
demonstrates that market participants can shift order flow or
discontinue to reduce use of certain categories of products in response
to fee changes. Accordingly, competitive forces constrain the
Exchange's transaction fees, and market participants can readily trade
on competing venues if they deem pricing levels at those other venues
to be more favorable. In response to competitive pricing, the Exchange,
like other options exchanges, offers rebates and assesses fees for
certain order types executed on or routed through the Exchange.
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\3\ See Cboe Global Markets U.S. Options Monthly Market Volume
Summary (April 29, 2025), available at https://markets.cboe.com/us/options/market_statistics/.
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The Exchange first proposes to increase the fee for Market-Maker
(capacity ``M'') orders transacted on the trading floor (i.e., manual)
in Equity, ETF, and ETN Options, Sector Indexes \4\ and All Other Index
Products (yielding fee code ``MB''), as set forth in the Rate Table for
All Products Excluding Underlying Symbol List A.\5\ Currently, the
Exchange assesses a fee of $0.35 per contract for manual Market-Maker
orders in Equity, ETF, and ETN Options, Sector Indexes and All Other
Index Products which yield fee code MB; the Exchange proposes to
increase the fee from $0.35 per contract, to $0.45 per contract. The
proposed rule change is in-line with, albeit still lower than, similar
fees that other options exchanges with trading floors currently assess
manual market maker transactions.\6\
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\4\ Sector Index underlying symbols: IXB, SIXC, IXE, IXI, IXM,
IXR, IXRE, IXT, IXU, IXV AND IXY. Corresponding option symbols:
SIXB, SIXC, SIXE, SIXI, SIXM, SIXR, SIXRE, SIXT, SIXU, SIXV AND
SIXY. See Exchange Fees Schedule, Footnote 47.
\5\ Underlying Symbol List A: OEX, XEO, RUT, RLG, RLV, RUI,
UKXM, SPX (includes SPXW), SPESG and VIX. See Exchange Fees
Schedule, Footnote 34.
\6\ See e.g., NYSE American Options Fee Schedule, Section I,
paragraph A (Rates for Options transactions), which assesses a fee
of $0.50 per contract for manual NYSE American Options Market Maker
transactions; see also BOX Options Fee Schedule, Section V(A),
Manual Transaction Fees: Qualified Open Outcry Order (``QOO'') and
FLEX Open Outcry Orders (``FOO'') Order Fees, which assesses a fee
of $0.50 per contract for manual Market Maker orders.
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The Exchange also applies a transaction fee cap of $65,000 per
month per Clearing TPH \7\ (and/or their Non-TPH Affiliates) \8\ for
non-facilitation transactions executed in AIM or open outcry, or as a
QCC or FLEX transaction in all products except CBTX, MBTX, MRUT, NANOS,
XSP, SPEQX, FLEX Micros, Sector Indexes and Underlying Symbol List A,
as provided in footnote 34 of the Fees Schedule. The Exchange proposes
to increase such fee cap to $250,000 per month per Clearing TPH and to
amend the ``Clearing Trading Permit Holder Fee Cap'' section of the
Fees Schedule as well as footnote 22 accordingly. The proposed fee cap
is in line with similar fee caps applied by other exchanges.\9\
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\7\ The Clearing TPH Fee Cap applies to all Clearing TPH
proprietary orders (``F'' capacity code). See Exchange Fees
Schedule, Footnote 11.
\8\ See Exchange Fees Schedule, Footnote 11, which defines a
``Non-TPH Affiliate'' as a 100% wholly-owned affiliate or subsidiary
of a Clearing TPH that is registered as a United States or foreign
broker-dealer and that is not a Cboe Options TPH. Only proprietary
orders of the Non-TPH Affiliate that clear through a Cboe Options-
registered OCC clearing number(s) will be included in calculating
the Fee Cap.
\9\ See e.g., NYSE American Options Fee Schedule, Section I,
paragraph I (Firm Monthly Fee Cap), which provides a fee cap of
$250,000 per month per firm for manual transactions (including QCC
transactions). See also PHLX Options Pricing Schedule, Section 4,
``Monthly Firm Fee Cap and Facilitation,'' which provides a monthly
fee cap of $250,000 for firm floor options transactions and QCC
transactions fees.
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[[Page 21534]]
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.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ 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) \12\ 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,\13\ which
requires that Exchange rules provide for the equitable allocation of
reasonable dues, fees, and other charges among its TPHs and other
persons using its facilities.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ Id.
\13\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that its proposed change to increase the fee
assessed for manual Market-Maker orders yielding fee code ``MB'' and to
increase the Clearing TPH Fee Cap are consistent with Section 6(b)(4)
of the Act in that the proposed rule changes are reasonable, equitable
and not unfairly discriminatory. As noted above, the Exchange operates
in highly competitive market. The Exchange is only one of several
options venues to which market participants may direct their order
flow, and it represents a small percentage of the overall market. The
Exchange believes that the proposed fee is reasonable, equitable, and
not unfairly discriminatory in that competing options exchanges offer
similar fees in connection with Market-Maker transactions in open
outcry and firm fee caps, as the Exchange now proposes.
The Exchange believes that the proposed rule change to increase the
fee assessed for Market-Maker manual orders in Equity, ETF, and ETN
Options, Sector Indexes and All Other Index Products yielding fee code
``MB'' is reasonable in that it is reasonably designed to align the
Exchange's assessment of fees on such orders with the rates assessed by
other options exchanges. The Exchange believes that the proposed rule
change is equitable and not unfairly discriminatory because the
proposed fee will apply automatically and uniformly to all Market-Maker
orders transacted in open outcry (i.e., manual) which yield fee code
``MB''. Additionally, the proposed rule change is reasonable, equitable
and not unfairly discriminatory because, as noted above, it is in-line
with, albeit lower than, similar fees that other options exchanges with
trading floors currently assess manual market maker transactions.\14\
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\14\ See e.g., NYSE American Options Fee Schedule, Section I,
paragraph A (Rates for Options transactions), which assesses a fee
of $0.50 per contract for manual NYSE American Options Market Maker
transactions; see also BOX Options Fee Schedule, Section V(A),
Manual Transaction Fees: Qualified Open Outcry Order (``QOO'') and
FLEX Open Outcry Orders (``FOO'') Order Fees, which assesses a fee
of $0.50 per contract for manual Market Maker orders.
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The Exchange believes that the proposed increase in the Clearing
Trading Permit Holder Fee Cap amount is reasonable because it is in-
line with similar fee caps offered on other exchanges.\15\ The Exchange
believes that the proposed fee cap is equitable and reasonable as it
will continue to apply uniformly to all Clearing TPHs that submit
qualifying volume to meet the cap.
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\15\ See e.g., NYSE American Options Fee Schedule, Section I,
paragraph I (Firm Monthly Fee Cap), which provides a fee cap of
$250,000 per month per firm for manual transactions (including QCC
transactions). See also PHLX Options Pricing Schedule, Section 4,
``Monthly Firm Fee Cap and Facilitation,'' which provides a monthly
fee cap of $250,000 for firm floor options transactions and QCC
transactions fees.
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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. Specifically, the Exchange
believes the proposed rule change does not impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed changes to
increase the fee assessed for manual Market-Maker orders yielding fee
code ``MB'' and to increase the Clearing TPH Fee Cap apply uniformly to
all market participants.
Next, the Exchange believes the proposed rule change does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As noted above,
the fee change for manual Market-Maker orders yielding fee code ``MB''
is in-line with similar fees that other options exchanges with trading
floors currently assess manual market maker transactions,\16\ and the
proposed fee cap is in line with similar fee caps applied by other
exchanges.\17\ As previously discussed, the Exchange operates in a
highly competitive market. TPHs have numerous alternative venues they
may participate on and direct their order flow, including 17 other
options exchanges. Additionally, the Exchange represents a small
percentage of the overall market. Based on publicly available
information, no single options exchange has more than 15% of the market
share. Therefore, no exchange possesses significant pricing power in
the execution of order flow. Indeed, participants can readily choose to
send their orders to other exchanges if they deem fee levels at those
other venues to be more favorable. As noted above, the Exchange
believes that the proposed fee changes are comparable to that of other
exchanges offering similar functionality. 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
[[Page 21535]]
investors and listed companies.'' 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'. . . .''. 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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\16\ See e.g., NYSE American Options Fee Schedule, Section I,
paragraph A (Rates for Options transactions), which assesses a fee
of $0.50 per contract for manual NYSE American Options Market Maker
transactions; see also BOX Options Fee Schedule, Section V(A),
Manual Transaction Fees: Qualified Open Outcry Order (``QOO'') and
FLEX Open Outcry Orders (``FOO'') Order Fees, which assesses a fee
of $0.50 per contract for manual Market Maker orders.
\17\ See e.g., NYSE American Options Fee Schedule, Section I,
paragraph I (Firm Monthly Fee Cap), which provides a fee cap of
$250,000 per month per firm for manual transactions (including QCC
transactions). See also PHLX Options Pricing Schedule, Section 4,
``Monthly Firm Fee Cap and Facilitation,'' which provides a monthly
fee cap of $250,000 for firm floor options transactions and QCC
transactions fees.
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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 \18\ and paragraph (f) of Rule 19b-4 \19\
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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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 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-2025-034 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-2025-034. 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-CBOE-2025-034 and should be
submitted on or before June 10, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-08923 Filed 5-19-25; 8:45 am]
BILLING CODE 8011-01-P