[Federal Register Volume 90, Number 101 (Wednesday, May 28, 2025)]
[Notices]
[Pages 22518-22523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-09487]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103098; File No. SR-CboeBZX-2025-068]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule To Modify Components of Certain Add Volume Tiers,
Step-Up Tiers, and Single MPID Investor Tiers
May 21, 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 9, 2025, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the
[[Page 22519]]
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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to
amend its Fee Schedule by: (i) updating the shares component of certain
Add Volume Tiers; (ii) revising the criteria and rebate of Add Volume
Tier 8; (iii) updating the shares component of Single MPID Investor
Tier 1; (iv) removing Step-Up Tier 3; and (v) creating a Cross Asset
Tier. 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/equities/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 Fee Schedule applicable to its
equities trading platform (``BZX Equities'') by: (i) updating the
shares component of certain Add Volume Tiers; (ii) revising the
criteria and rebate of Add Volume Tier 8; (iii) updating the shares
component of Single MPID Investor Tier 1; (iv) removing Step-Up Tier 3;
and (v) creating a Cross Asset Tier. The Exchange proposes to implement
these changes effective May 1, 2025.\3\
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\3\ The Exchange initially filed the proposed fee changes on May
1, 2025 (SR-CboeBZX-2025-062). On May 9, 2025, the Exchange withdrew
that filing and submitted this proposal.
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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,\4\ no single registered equities exchange has more than
15% 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.\5\ For orders in securities
priced below $1.00, the Exchange does not provide a rebate for orders
that add liquidity and assesses a fee of 0.30% of the total dollar
value for orders that remove liquidity.\6\ 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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\4\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (April 23, 2025), available at https://www.cboe.com/us/equities/market_statistics/.
\5\ See BZX Equities Fee Schedule, Standard Rates.
\6\ Id.
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Add/Remove Volume Tiers
Under footnote 1 of the Fee Schedule, the Exchange offers various
Add/Remove Volume Tiers. In particular, the Exchange offers nine Add
Volume Tiers that provide enhanced rebates for orders yielding fee
codes B,\7\ V \8\ and Y \9\ where a Member reaches certain add volume-
based criteria. The Exchange now proposes to modify the criteria of Add
Volume Tiers 1-3 and Add Volume Tiers 5-7 by revising the share amount
in the second prong of criteria. The current criteria for Add Volume
Tiers 1-3 and Add Volume Tiers 5-7 is as follows:
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\7\ Fee code B is appended to displayed orders that add
liquidity to BZX in Tape B securities.
\8\ Fee code V is appended to displayed orders that add
liquidity to BZX in Tape A securities.
\9\ Fee code Y is appended to displayed orders that add
liquidity to BZX in Tape C securities.
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Add Volume Tier 1 provides a rebate of $0.0020 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV \10\
as a percentage of TCV \11\ >=0.05% or Member has an ADAV >=6,000,000.
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\10\ ``ADAV' means average daily added volume calculated as the
number of shares added per day. ADAV is calculated on a monthly
basis.
\11\ ``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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Add Volume Tier 2 provides a rebate of $0.0023 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV as a
percentage of TCV >=0.20% or Member has an ADAV >=23,000,000.
Add Volume Tier 3 provides a rebate of $0.0027 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV as a
percentage of TCV >=0.30% or Member has an ADAV >=30,000,000.
Add Volume Tier 5 provides a rebate of $0.0029 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV as a
percentage of TCV >=0.35% or Member has an ADAV >=35,000,000.
Add Volume Tier 6 provides a rebate of $0.0030 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV as a
percentage of TCV >=0.60% or Member has an ADAV >=70,000,000.
Add Volume Tier 7 provides a rebate of $0.0031 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV as a
percentage of TCV >=1.00% or Member has an ADAV >=115,000,000.
The proposed criteria for Add Volume Tiers 1-3 and Add Volume Tiers
5-7 is as follows:
[[Page 22520]]
Add Volume Tier 1 provides a rebate of $0.0020 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV as a
percentage of TCV >=0.05% or Member has an ADAV >=10,000,000.
Add Volume Tier 2 provides a rebate of $0.0023 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV as a
percentage of TCV >=0.20% or Member has an ADAV >=40,000,000.
Add Volume Tier 3 provides a rebate of $0.0027 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV as a
percentage of TCV >=0.30% or Member has an ADAV >=50,000,000.
Add Volume Tier 5 provides a rebate of $0.0029 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV as a
percentage of TCV >=0.35% or Member has an ADAV >=60,000,000.
Add Volume Tier 6 provides a rebate of $0.0030 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV as a
percentage of TCV >=0.60% or Member has an ADAV >=120,000,000.
Add Volume Tier 7 provides a rebate of $0.0031 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member has an ADAV as a
percentage of TCV >=1.00% or Member has an ADAV >=200,000,000.
The proposed modifications to Add Volume Tiers 1-3 and Add Volume
Tiers 5-7 represents a modest increase in difficulty of one prong of
criteria to achieve the applicable tier threshold in response to higher
market volumes while maintaining an existing prong of criteria and the
existing rebates. The Exchange believes that the proposed criteria
continues to be commensurate with the rebate received for each tier and
will encourage Members to grow their volume on the Exchange. Increased
volume on the Exchange contributes to a deeper and more liquid market,
which benefits all market participants and provides greater execution
opportunities on the Exchange.
In addition to the proposed modifications to Add Volume Tiers 1-3
and Add Volume Tiers 5-7, the Exchange now proposes to amend the
criteria and rebate associated with Add Volume Tier 8. The current
criteria of Add Volume Tier 8 is as follows:
Add Volume Tier 8 provides a rebate of $0.0031 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member (1) has an ADAV as
a percentage of TCV >=0.40%; and (2) Member has a Tape C ADV \12\
>=1.20% of the Tape C TCV; and (3) Member has a Remove ADV >=0.40% of
the TCV.
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\12\ ADV means average daily volume calculated as the number of
shares added or removed, combined, per day. ADV is calculated on a
monthly basis.
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The proposed rebate and criteria for Add Volume Tier 8 is as
follows:
Add Volume Tier 8 provides a rebate of $0.0032 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member (1) has an ADAV as
a percentage of TCV >=0.40%; and (2) Member has a Tape C ADV >=0.50% of
the Tape C TCV; and (3) Member has an ADAV >=0.10% of the TCV as Non-
Displayed orders that yield fee codes HB,\13\ HI,\14\ HV \15\ or
HY.\16\
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\13\ Fee code HB is appended to non-displayed orders that add
liquidity to BZX in Tape B securities.
\14\ Fee code HI is appended to non-displayed orders that add
liquidity to BZX and receive price improvement.
\15\ Fee code HV is appended to non-displayed orders that add
liquidity to BZX in Tape A securities.
\16\ Fee code HY is appended to non-displayed orders that add
liquidity to BZX in Tape C securities.
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The proposed modifications to the criteria and rebate of Add Volume
Tier 8 represent an effort by the Exchange to slightly increase the
enhanced rebate available to Members in exchange for satisfying
criteria amended to increase the amount of non-displayed liquidity
available on the Exchange. The Exchange believes that the proposed
criteria is commensurate with the rebate received and will encourage
Members to grow both their displayed and non-displayed volume on the
Exchange. Increased volume on the Exchange contributes to a deeper and
more liquid market, which benefits all market participants and provides
greater execution opportunities on the Exchange.
Step-Up Tiers
Under footnote 2 of the Fee Schedule the Exchange offers two Step-
Up Tiers that provide Members an opportunity to receive an enhanced
rebate from the standard rebate for liquidity adding orders that yield
fee codes B, V, and Y where the Member increases its relative liquidity
each month over a predetermined baseline. The Exchange now proposes to
remove Step-Up Tier 3 as the Exchange no longer wishes to, nor is
required to, 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.
Single MPID Investor Tiers
Under footnote 4 of the Fee Schedule the Exchange offers Single
MPID Investor Tiers. In particular, the Exchange offers two Single MPID
Investor Tiers that provide enhanced rebates for orders yielding fee
codes B, V and Y where an MPID reaches certain add volume-based
criteria. The Exchange now proposes to revise the share amount in the
first prong of criteria of Single MPID Investor Tier 1 as well as
remove a semicolon from the second prong of criteria, which was
included in error. The current criteria is as follows:
Single MPID Investor Tier 1 provides an enhanced rebate of
$0.0032 per share in Tape B securities priced at or above $1.00 and an
enhanced rebate of $0.0033 per share in Tapes A and C securities priced
at or above $1.00 to qualifying orders (i.e., orders yielding fee codes
B, V, or Y) where: (1) MPID has an ADAV as a percentage of TCV >=0.45%;
or MPID has an ADAV >=45,000,000; and (2) MPID has an ADAV >=0.05%; of
the TCV as Non-Displayed orders that yield fee codes HB, HI, HV or HY.
The proposed criteria is as follows:
Single MPID Investor Tier 1 provides an enhanced rebate of
$0.0032 per share in Tape B securities priced at or above $1.00 and an
enhanced rebate of $0.0033 per share in Tapes A and C securities priced
at or above $1.00 to qualifying orders (i.e., orders yielding fee codes
B, V, or Y) where: (1) MPID has an ADAV as a percentage of TCV >=0.45%;
or MPID has an ADAV >=55,000,000; and (2) MPID has an ADAV >=0.05% of
the TCV as Non-Displayed orders that yield fee codes HB, HI, HV or HY.
The proposed modification to Single MPID Tier 1 represents a modest
increase in difficulty of one prong of criteria to achieve the
applicable tier threshold in response to higher market volumes while
maintaining the remaining criteria and the existing rebates. The
Exchange believes that the proposed criteria continues to be
commensurate with the rebate received for this tier and will encourage
MPIDs to grow their volume on the Exchange. Increased volume on the
Exchange contributes to a deeper and more liquid market, which benefits
all market participants and provides greater execution opportunities on
the Exchange.
[[Page 22521]]
Cross Asset Tier
The Exchange proposes to introduce a new Cross Asset Tier under
footnote 1, which is designed to incentivize Members to achieve certain
levels of participation on both the Exchange's equities and options
platform (``BZX Options''). The proposed criteria is as follows:
The Cross Asset Tier provides a rebate of $0.0032 per
share for securities priced at or above $1.00 for qualifying orders
(i.e., orders yielding fee codes B, V, or Y) where (1) Member has a
Primary Peg ADV >=300,000; and (2) Member has an ADAV >=0.015% of the
TCV as Non-Displayed orders that yield fee codes HB, HI, HV or HY; and
(3) Member has an ADV in Customer \17\ orders on BZX Options >=0.05% of
average OCV.\18\
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\17\ ``Customer'' applies to any order for the account of a
Priority Customer as defined in BZX Rule 16.1.
\18\ ``OCV'' means the total equity and ETF options volume that
clears in the Customer range at the Options Clearing Corporation
(``OCC'') for the month for which the fees apply, excluding volume
on any day that the Exchange experiences an Exchange System
Disruption and on any day with a scheduled early market close.
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The proposed Cross Asset Tier is intended to provide an additional
manner to incentivize Members to add and remove non-displayed liquidity
on the Exchange while also increasing participation in BZX Options. The
Exchange believes the addition of the Cross Asset Tier will incentivize
Members to grow their volume on the Exchange, thereby contributing to a
deeper and more liquid market, which benefits all market participants
and provides greater execution opportunities on the Exchange. Increased
overall order flow benefits all Members by contributing towards a
robust and well-balanced market ecosystem.
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.\19\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \20\ 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) \21\ 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) \22\
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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\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(5).
\21\ Id.
\22\ 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: (i) revise the shares component of Add Volume Tiers 1-
3 and Add Volume Tiers 5-7; (ii) revise the criteria and rebate of Add
Volume Tier 8; (iii) revise the criteria of Single MPID Investor Tier
1; and (iv) introduce a new 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,\23\ including the Exchange,\24\ 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 exchanges offer similar tiered pricing structures, including
schedules or 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.\25\
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\23\ See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers. See also, The Nasdaq Options Market LLC
(``NOM'') Pricing Schedule, Options 7, Section 2, Footnote 4; NYSE
Arca Equities, Fees and Charges, Cross-Asset Tier.
\24\ See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove
Volume Tiers.
\25\ Supra footnote 22[sic].
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In particular, the Exchange believes its proposal to (i) revise the
shares component of Add Volume Tiers 1-3 and Add Volume Tiers 5-7; (ii)
revise the criteria and rebate of Add Volume Tier 8; (iii) revise the
criteria of Single MPID Investor Tier 1; and (iv) introduce a new Cross
Asset Tier is reasonable because the revised and proposed tiers will be
available to all Members and provide all Members with an opportunity to
receive an enhanced rebate. The Exchange further believes the proposed
modification to the Add Volume Tiers and the Single MPID Investor Tier,
as well as the introduction of a new Cross Asset Tier will provide a
reasonable means to encourage liquidity adding displayed and non-
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. An overall increase in activity would
deepen the Exchange's liquidity pool, offer additional cost savings,
support the quality of price discovery, promote market transparency and
improve market quality, for all investors.
The Exchange believes the proposed Cross Asset Tier represents an
equitable allocation of fee and rebates and is not unfairly
discriminatory because all Members will be eligible for the proposed
tier and have the opportunity to meet the tier's criteria and receive
the corresponding enhanced rebate if such criteria is met. To the
extent a Member participates on BZX Equities but not on BZX Options,
the Exchange continues to believe that its proposal represents an
equitable allocation of fees and rebates and is not unfairly
discriminatory with respect to such Member based on the overall benefit
to the Exchange resulting from the success of its options platform.
Particularly, the Exchange believes that additional such success allows
the Exchange to continue to provide and potentially expand its existing
incentive programs to the benefit of all participants on the Exchange,
regardless of whether they participate on BZX Options or not.
Additionally, the Exchange believes that the proposed changes to
the Add Volume Tiers and the Single MPID Investor Tier are reasonable
as they do not represent a significant departure from the criteria
currently offered in the Fee Schedule. The Exchange also believes that
the proposed changes to the Add Volume Tiers and the Single MPID
Investor Tier represents an equitable allocation of fees and rebates
and is not unfairly discriminatory because all Members continue to be
eligible for the revised tiers and have
[[Page 22522]]
the opportunity to meet the tiers' criteria and receive the
corresponding enhanced rebates if such criteria is met.
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 for the
revised Add Volume Tiers, the Single MPID Investor Tier, and the
proposed Cross Asset Tier. While the Exchange has no way of predicting
with certainty how the proposed changes will impact Member activity,
based on the prior month's volume, the Exchange anticipates that at
least four Members will be able to satisfy proposed Add Volume Tier 1,
no Members will be able to satisfy proposed Add Volume Tier 2, at least
one Member will be able to satisfy proposed Add Volume Tier 3, at least
three Members will be able to satisfy proposed Add Volume Tier 5, no
Members will be able to satisfy proposed Add Volume Tier 6, no Members
will be able to satisfy proposed Add Volume Tier 7, at least two
Members will be able to satisfy proposed Add Volume Tier 8, at least
three Members will be able to satisfy the proposed Single MPID Investor
Tier, and at least one Member will be able to satisfy the proposed
Cross Asset Tier. 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.
Furthermore, the Exchange believes that its proposal to eliminate
Step-Up Tier 3 is reasonable because the Exchange is not required to
maintain this tier nor provide Members an opportunity to receive
enhanced rebates. The Exchange believes its proposal to eliminate this
tier is equitable and not unfairly discriminatory because it applies to
all Members (i.e., the tier will not be available for any Member). The
proposed rule change merely results in Members not receiving an
enhanced rebate, which, as noted above, the Exchange is not required to
offer or maintain. In addition, the proposed rule change to eliminate
Step-Up Tier 3 enables the Exchange to redirect resources and funding
into other programs and tiers intended to incentivize increased order
flow.
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 change 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
modifications to the Add Volume Tiers and the Single MPID Tier along
with the introduction of the Cross Asset Tier will apply to all Members
equally in that all Members are eligible for the revised and proposed
tiers, have a reasonable opportunity to meet the tiers' proposed
criteria and will receive the enhanced rebate on their qualifying
orders if such criteria is met. The Exchange does not believe the
proposed changes burden competition, but rather, enhance competition as
they are intended to increase the competitiveness of BZX by amending
existing 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. Additionally, the
Exchange believes that the proposed criteria based on BZX Options
volume will provide an additional incentive to those Members who are
also Customers on BZX Options to send additional orders to BZX Options,
which in turn provides additional liquidity in the market. 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 proposed change to eliminate Step-Up Tier 3 will not impose any
burden on intramarket competition because the change applies to all
Members uniformly in that the tier will no longer be available to any
Member.
Next, the Exchange believes the proposed rule changes do 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 15% of the market share.\26\ 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.'' \27\ 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'. . . .''.\28\ Accordingly, the Exchange does not believe its
proposed fee change imposes any burden on competition that is not
necessary or
[[Page 22523]]
appropriate in furtherance of the purposes of the Act.
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\26\ Supra note 4.
\27\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\28\ 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 \29\ and paragraph (f) of Rule 19b-4 \30\
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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\29\ 15 U.S.C. 78s(b)(3)(A).
\30\ 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-2025-068 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-2025-068. 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-2025-068 and should
be submitted on or before June 18, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-09487 Filed 5-27-25; 8:45 am]
BILLING CODE 8011-01-P