[Federal Register Volume 90, Number 155 (Thursday, August 14, 2025)]
[Notices]
[Pages 39253-39256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-15423]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103670; File No. SR-CboeEDGX-2025-064]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule by Modifying the First Prong of Criteria of Add
Volume Tier 8 and Decreasing the Rebate Associated With Add Volume Tier
8
August 11, 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 August 1, 2025, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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
[[Page 39254]]
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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
amend its Fee Schedule by modifying the first prong of criteria of Add
Volume Tier 8 and decreasing the rebate associated with Add Volume Tier
8. 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/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary.
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 (``EDGX Equities'') by modifying the first
prong of criteria of Add Volume Tier 8 and decreasing the rebate
associated with Add Volume Tier 8. The Exchange proposes to implement
these changes effective August 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 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,\3\ no single registered equities exchange has more than
14% 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.\4\ For orders in securities
priced below $1.00, the Exchange provides a rebate of $0.00003 per
share for orders that add liquidity and assesses a fee of 0.30% of the
total dollar value for orders that remove liquidity.\5\ 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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\3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (July 28, 2025), available at https://www.cboe.com/us/equities/market_statistics/.
\4\ See EDGX Equities Fee Schedule, Standard Rates.
\5\ 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,\6\ V,\7\ Y,\8\ 3 \9\ and 4 \10\ where a Member reaches certain
add volume-based criteria. The Exchange now proposes to modify the
first prong of criteria in Add Volume Tier 8. In addition, the Exchange
proposes to decrease the rebate associated with Add Volume Tier 8. The
current criteria and rebate for Add Volume Tier 8 is as follows:
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\6\ Fee code B is appended to orders that add liquidity to EDGX
in Tape B securities.
\7\ Fee code V is appended to orders that add liquidity to EDGX
in Tape A securities.
\8\ Fee code Y is appended to orders that add liquidity to EDGX
in Tape C securities.
\9\ Fee code 3 is appended to orders that add liquidity to EDGX
in Tape A or Tape C securities during the pre and post market.
\10\ Fee code 4 is appended to orders that add liquidity to EDGX
in Tape B securities during the pre and post market.
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Add Volume Tier 8 provides a rebate of $0.0034 per share
in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, Y, 3 or 4) where (1) Member has a total
remove ADV \11\ >= 0.37% of the TCV \12\ or Member has a total remove
Ex-Subdollar ADV \13\ as a percentage of Ex-Subdollar TCV \14\ >=
0.37%; and (2) Member has a Hidden, Primary Peg ADV \15\ >= 1,000,000;
and (3) Member has a Hidden Midpoint ADV (i.e., yielding fee codes DM
or MM) >= 5,000,000.
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\11\ ``ADV'' means average daily volume calculated as the number
of shares added to, removed from, or routed by, the Exchange, or any
combination or subset thereof, per day. ADV is calculated on a
monthly basis.
\12\ ``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.
\13\ ``Ex-Subdollar ADV'' means ADV that excludes executions in
securities priced below $1.00.
\14\ ``Ex-Subdollar TCV'' means TCV that excludes executions in
securities that have an average daily price below $1.00.
\15\ ``Hidden, Primary Peg ADV'' means ADV in non-displayed
orders that include a Primary Peg instruction as defined in EDGX
Equities Rule 11.6(j)(2).
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The proposed criteria and rebate for Add Volume Tier 8 is as
follows:
Add Volume Tier 8 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, Y, 3 or 4) where (1) Member has a total
remove ADV >= 0.40% of the TCV or Member has a total remove Ex-
Subdollar ADV as a percentage of Ex-Subdollar TCV >= 0.40%; and (2)
Member has a Hidden, Primary Peg ADV >= 1,000,000; and (3) Member has a
Hidden Midpoint ADV (i.e., yielding fee codes DM or MM) >= 5,000,000.
The proposed increase in the percentage requirement of the first
prong of criteria in Add Volume Tier 8 is intended to reflect recent
higher trading volumes in securities priced at or above $1.00. The
Exchange believes that the proposed criteria continues to be
commensurate with the rebate received for the applicable tier and will
continue to 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. The purpose of
decreasing the rebate associated with Add Volume Tier 8 in securities
priced at or above $1.00 is for business and competitive reasons, as
the Exchange
[[Page 39255]]
believes that lowering such rebate as proposed would decrease the
Exchange's expenditures with respect to transaction pricing in a manner
that is still consistent with the Exchange's overall pricing philosophy
of encouraging added liquidity.
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.\16\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \17\ 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) \18\ 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) \19\
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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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
\18\ Id.
\19\ 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 modify the first prong of criteria of Add Volume Tier 8
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,\20\
including the Exchange,\21\ 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.\22\
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\20\ See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove
Volume Tiers. See also, NYSE Arca Equities Fees and Charges, NYSE
Arca Marketplace: Trade Related Fees and Credits, Footnote 1 and
NYSE Arca Equities Fees and Charges, Tier Rates--Round Lots and Odd
Lots (Per Share Price $1.00 or Above).
\21\ See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
\22\ Supra footnote 20.
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In particular, the Exchange believes its proposal to modify the
first prong of criteria of Add Volume Tier 8 is reasonable because the
revised tier 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 Add Volume Tier 8 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.
Additionally, the Exchange believes that the proposed changes to
Add Volume Tier 8 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 Add Volume Tier 8
represent an equitable allocation of fees and rebates and are not
unfairly discriminatory because all Members continue to be eligible for
the revised tier and have the opportunity to meet the tier's criteria
and receive the corresponding enhanced rebate if such criteria is met.
The Exchange believes its proposal to reduce the rebate associated
with Add Volume Tier 8 is reasonable, equitable, and consistent with
the Act because such change is designed to decrease the Exchange's
expenditures with respect to transaction pricing in order to offset
some of the costs associated with the Exchange's current pricing
structure, which provides various rebates for liquidity-adding orders,
and the Exchange's operations generally, in a manner that is consistent
with the Exchange's overall pricing philosophy of encouraging added
liquidity. The proposed reduced rebate of $0.0027 per share is
reasonable and appropriate because while it is slightly lower than the
existing rebate, it remains competitive with other fees assessed by
competing Exchanges offering similar Add Volume Tiers.\23\ The Exchange
further believes that the proposed reduction to the rebate associated
with Add Volume Tier 8 is not unfairly discriminatory because it
applies to all Members equally, in that all Members will receive the
lower rebate upon satisfying the criteria associated with Add Volume
Tier 8.
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\23\ Supra note 20.
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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. 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 no
Members will be able to satisfy proposed Add Volume Tier 8. The
Exchange also notes that the 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.
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
[[Page 39256]]
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
modification to the first prong of criteria of Add Volume Tier 8 will
apply to all Members equally in that all Members are eligible for the
revised tier, have a reasonable opportunity to meet the tier's proposed
criteria and will receive the enhanced rebate on their qualifying
orders if such criteria is met. Additionally, the proposed change to
reduce the rebate associated with Add Volume Tier 8 does not impose an
unnecessary burden as all Members will receive the reduced rebate for
orders that satisfy the criteria of Add Volume Tier 8. The Exchange
does not believe the proposed changes burden competition, but rather,
enhance competition as they are intended to increase the
competitiveness of EDGX 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.
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.
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 14% of the market share.\24\ 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.'' \25\ 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' . . . .''.\26\ 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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\24\ Supra note 4.
\25\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\26\ 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 \27\ and paragraph (f) of Rule 19b-4 \28\
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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\27\ 15 U.S.C. 78s(b)(3)(A).
\28\ 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-CboeEDGX-2025-064 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-CboeEDGX-2025-064. 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 filing 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-CboeEDGX-2025-064 and should be
submitted on or before September 4, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2025-15423 Filed 8-13-25; 8:45 am]
BILLING CODE 8011-01-P