Notice2022-20033
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Relating to the Sale of Open-Close Volume Data
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 16, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 179 (Friday, September 16, 2022)</title>
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[Federal Register Volume 87, Number 179 (Friday, September 16, 2022)]
[Notices]
[Pages 56996-56999]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-20033]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95735; File No. SR-CboeEDGX-2022-038]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fees Schedule Relating to the Sale of Open-Close Volume Data
September 12, 2022.
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 September 1, 2022, 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 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 Options'')
proposes to amend its Fees Schedule relating to the sale of Open-Close
volume data. 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 (<a href="http://markets.cboe.com/us/options/regulation/rule_filings/edgx/">http://markets.cboe.com/us/options/regulation/rule_filings/edgx/</a>), 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.
[[Page 56997]]
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 offer a free
trial during the months of September, October, November and December
2022 for an ad-hoc request of three (3) historical months of Intraday
Open-Close historical data to all EDGX Members and non-Members who have
never before subscribed to the Intraday Open-Close historical files,
effective September 1, 2022.
By way of background, the Exchange currently offers End-of-Day
(``EOD'') and Intraday Open-Close Data (collectively, ``Open-Close
Data''). EOD Open-Close Data is an end-of-day volume summary of trading
activity on the Exchange at the option level by origin (customer,
professional customer, broker-dealer, and market maker), side of the
market (buy or sell), price, and transaction type (opening or closing).
The customer and professional customer volume is further broken down
into trade size buckets (less than 100 contracts, 100-199 contracts,
greater than 199 contracts). The Open-Close Data is proprietary EDGX
Options trade data and does not include trade data from any other
exchange. It is also a historical data product and not a real-time data
feed. The Exchange also offers Intraday Open-Close Data, which provides
similar information to that of Open-Close Data but is produced and
updated every 10 minutes during the trading day. Data is captured in
``snapshots'' taken every 10 minutes throughout the trading day and is
available to subscribers within five minutes of the conclusion of each
10-minute period.\3\ The Intraday Open-Close Data provides a volume
summary of trading activity on the Exchange at the option level by
origin (customer, professional customer, broker-dealer, and market
maker), side of the market (buy or sell), and transaction type (opening
or closing). The customer and professional customer volume are further
broken down into trade size buckets (less than 100 contracts, 100-199
contracts, greater than 199 contracts). The Intraday Open-Close Data is
also proprietary EDGX Options trade data and does not include trade
data from any other exchange.
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\3\ For example, subscribers to the intraday product will
receive the first calculation of intraday data by approximately 9:42
a.m. ET, which represents data captured from 9:30 a.m. to 9:40 a.m.
Subscribers will receive the next update at 9:52 a.m., representing
the data previously provided together with data captured from 9:40
a.m. through 9:50 a.m., and so forth. Each update will represent the
aggregate data captured from the current ``snapshot'' and all
previous ``snapshots.''
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Cboe LiveVol, LLC (``LiveVol''), a wholly owned subsidiary of the
Exchange's parent company, Cboe Global Markets, Inc., makes the Open-
Close Data available for purchase to Members and non-Members on the
LiveVol DataShop website (<a href="http://datashop.cboe.com">datashop.cboe.com</a>). Customers may currently
purchase Open-Close Data on a subscription basis (monthly or annually)
or by ad hoc request for a specified month (e.g., request for Intraday
Open-Close Data for month of January 2022).
Open-Close Data is subject to direct competition from similar end-
of-day and intraday options trading summaries offered by several other
options exchanges.\4\ All of these exchanges offer essentially the same
end-of-day and intraday options trading summary information.
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\4\ These substitute products are: Nasdaq PHLX Options Trade
Outline, Nasdaq Options Trade Outline, ISE Trade Profile, GEMX Trade
Profile data; open-close data from Cboe Options, BZX, and C2
Options; and Open Close Reports from MIAX Options, Pearl, and
Emerald.
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Free Trial
The Exchange seeks to re-establish a free trial for historical ad
hoc requests for Intraday Open-Close Data for new purchasers.
Currently, ad hoc requests for historical Intraday Open-Close Data are
available to all customers at the same price and in the same manner.
The current charge for this historical Intraday Open-Close Data
covering all of the Exchange's securities (Equities, Indexes & ETF's)
is $500 per month. The Exchange now proposes to adopt a free trial
available during the months of September, October, November and
December 2022 (i.e., September through December 2022) to provide a
total up to three (3) historical months of Intraday Open-Close Data to
any Member or non-Member that has not previously subscribed to this
offering.\5\ The Exchange notes that it previously offered this free
trial period recently for the months of May, June and July 2022. The
Exchange believes bringing back the proposed trial will again serve as
an incentive for new users who have never purchased Intraday Open-Close
historical data to start purchasing Intraday Open-Close historical
data. Particularly, the Exchange believes it will give potential
subscribers the ability to use and test the data offering before
signing up for additional months. The Exchange also notes another
exchange offers a free trial for new subscribers of a similar data
product.\6\ Lastly, the purchase of Intraday Open-Close historical data
is discretionary and not compulsory.
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\5\ For example, if a Member or non-Member that has never made
an ad-hoc request for a specified month of Intraday Open-Close
historical data wishes to purchase Intraday Open-Close Data for the
months of January, February and March 2022 during the month of
September 2022, the historical files for those months would be
provided free of charge. If a new user wishes to purchase Intraday
Open-Close historical data for the months of January, February,
March and April 2022 during the month of September 2022, then the
data for January, February and March 2022 would be provided free of
charge, and the new user would be charged $500 for the April 2022
historical file.
\6\ See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A.,
Nasdaq ISE Open/Close Trade Profile End of Day.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\7\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \8\ 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) \9\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ Id.
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In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation and competition for the
provision of market data. The Exchange believes the proposed fee change
will further broaden the availability of U.S. option market data to
investors consistent with the principles of Regulation NMS. Open-Close
Data is designed to help investors understand underlying market trends
to improve the quality of investment decisions. Indeed,
[[Page 56998]]
subscribers to the data may be able to enhance their ability to analyze
option trade and volume data and create and test trading models and
analytical strategies. The Exchange believes Open-Close Data provides a
valuable tool that subscribers can use to gain comprehensive insight
into the trading activity in a particular series, but also emphasizes
such data is not necessary for trading and as noted above, is entirely
optional. Moreover, several other exchanges offer a similar data
product which offer same type of data content through end-of-day or
intraday reports.\10\
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\10\ See supra note 2.
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The Exchange also operates in a highly competitive environment.
Indeed, there are currently 16 registered options exchanges that trade
options. Based on publicly available information, no single options
exchange has more than 16% of the market share.\11\ The Commission has
repeatedly expressed its preference for competition over regulatory
intervention in determining prices, products, and services in the
securities markets. Particularly, in Regulation NMS, the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and, also, recognized that current regulation of the
market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \12\ Making similar data products available to
market participants fosters competition in the marketplace, and
constrains the ability of exchanges to charge supracompetitive fees. In
the event that a market participant views one exchange's data product
as more or less attractive than the competition they can and do switch
between similar products. The proposed fees are a result of the
competitive environment, as the Exchange seeks to adopt a fee waiver to
attract future purchasers of historical Intraday Open-Close Data.
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\11\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (August 31, 2022), available at <a href="https://markets.cboe.com/us/options/market_statistics/">https://markets.cboe.com/us/options/market_statistics/</a>.
\12\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange believes that the proposed free trial for any Member
or non-Member who has not previously purchased Intraday Open-Close
historical data is reasonable because such users would not be subject
to fees for up to 3 months' worth of Intraday Open-Close historical
data. The Exchange believes the proposed free trial is also reasonable
as it will give potential subscribers the ability to use and test the
Intraday Open-Close historical data prior to purchasing additional
months and will therefore encourage and promote new users to purchase
the Intraday Open-Close historical data. The Exchange believes that the
proposed discount is equitable and not unfairly discriminatory because
it will apply equally to all Members and non-Members who have not
previously purchased Intraday Open-Close historical data. Also as noted
above, another exchange offers a free trial to new users for a similar
data product \13\ and the Exchange itself recently offered a similar
free trial.\14\ Lastly, the purchase of this data product is
discretionary and not compulsory.
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\13\ See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A.,
Nasdaq ISE Open/Close Trade Profile End of Day.
\14\ See Securities Exchange Act Release No. 34-94914 (May 13,
2022), 87 FR 30538 (May 19, 2022) (SR-CboeEDGX-2022-028).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange operates in a
highly competitive environment in which the Exchange must continually
adjust its fees to remain competitive. Because competitors are free to
modify their own fees in response, the Exchange believes that the
degree to which fee changes in this market may impose any burden on
competition is extremely limited.
As discussed above, Open-Close Data is subject to direct
competition from several other options exchanges that offer substitutes
to Open-Close. Moreover, purchase of Open-Close is optional. It is
designed to help investors understand underlying market trends to
improve the quality of investment decisions, but is not necessary to
execute a trade.
The proposed rule change is grounded in the Exchange's efforts to
compete more effectively. The Exchange is proposing to provide a free
trial for market participants to test investment strategies and trading
models, and develop market sentiment indicators. This change will not
cause any unnecessary or inappropriate burden on intermarket
competition, but rather will promote competition by encouraging new
market participants to investigate the product. Other exchanges are, of
course, free to match this change or undertake other competitive
responses, enhancing overall competition. Indeed, as discussed, another
exchange currently offers a similar free-trial period for similar
data.\15\
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\15\ See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A.,
Nasdaq ISE Open/Close Trade Profile End of Day.
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The proposed rule change will not cause any unnecessary or
inappropriate burden on intramarket competition. Particularly, the
proposed rule change will apply to all Members and non-Members who have
never made an ad-hoc request to purchase Intraday Open-Close historical
data. Moreover, purchase of Intraday Open-Close historical files is
discretionary and not compulsory.
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 \16\ and paragraph (f) of Rule 19b-4 \17\
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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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#384a4d545d155b5755555d564c4b784b5d5b165f574e"><span class="__cf_email__" data-cfemail="94e6e1f8f1b9f7fbf9f9f1fae0e7d4e7f1f7baf3fbe2">[email protected]</span></a>. Please include
File Number SR-CboeEDGX-2022-038 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange
[[Page 56999]]
Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeEDGX-2022-038. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CboeEDGX-2022-038 and should be
submitted on or before October 7, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20033 Filed 9-15-22; 8:45 am]
BILLING CODE 8011-01-P
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