Notice2023-05541
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend Its Fees Schedule
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
March 20, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 53 (Monday, March 20, 2023)</title>
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[Federal Register Volume 88, Number 53 (Monday, March 20, 2023)]
[Notices]
[Pages 16676-16681]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-05541]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97134; File No. SR-C2-2023-007]
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Amend Its Fees Schedule
March 14, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 28, 2023, Cboe C2 Exchange, Inc. (``Exchange'' or ``C2'')
filed with the Securities and Exchange Commission (``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 C2 Exchange, Inc. (the ``Exchange'' or ``C2'') proposes to
update its Fees Schedule. The text of the proposed rule change is
provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://markets.cboe.com/us/options/regulation/rule_filings/ctwo/">http://markets.cboe.com/us/options/regulation/rule_filings/ctwo/</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 16677]]
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 the Cboe Data Services, LLC
(``CDS'') section of its Fees Schedule.\3\ Particularly, the Exchange
proposes to (i) reformat the section of its Fees Schedule pertaining to
market data fees, (ii) harmonize various market data related
definitions to align with the definitions used by the Exchange's
affiliates and (iii) modify its fees relating to the distribution of
the BBO data feed.\4\
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\3\ The Exchange initially filed the proposed fee changes on
January 3, 2023 (SR-C2-2023-001). On February 28, 2023, the Exchange
withdrew that filing and submitted this proposal.
\4\ The BBO Data Feed is a real-time data feed that includes the
following information: (i) outstanding quotes and standing orders at
the best available price level on each side of the market; (ii)
executed trades time, size, and price; (iii) totals of customer
versus non-customer contracts at the best bid and offer (``BBO'');
(iv) all-or-none contingency orders priced better than or equal to
the BBO; (v) expected opening price and expected opening size; (vi)
end-of-day summaries by product, including open, high, low, and
closing price during the trading session; (vi) recap messages any
time there is a change in the open, high, low or last sale price of
a listed option; (vii) COB information; and (viii) product IDs and
codes for all listed options contracts. The quote and last sale data
contained in the BBO data feed is identical to the data sent to the
Options Price Reporting Authority (``OPRA'') for redistribution to
the public.
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Reformatting
The Exchange first proposes to eliminate references to CDS and
rename the section ``Market Data Fees'' to align with the heading of
its affiliates, BZX Options and EDGX Options. The Exchange notes that
no substantive changes are being made with the elimination of the
references to CDS fees. Rather, the proposed change more accurately
reflects the Exchange's role as it relates to its market data products
as CDS is merely an affiliate that is the Cboe contracting entity for
all U.S. equities and options market data products, but the data
products themselves are made available by the Exchange. The Exchange
also proposes to reformat the layout of the fees under the Cboe Data
Services, LLC (``CDS'') section of the Fees Schedule to align with
formatting of the corresponding section in the fees schedules of the
Exchange's options exchanges, Cboe BZX Exchange, Inc. (``BZX Options'')
and Cboe EDGX Exchange, Inc. (``EDGX Options''), including adding a new
``Definitions'' section under the CDS Fees (or as proposed, the Market
Data Fees) section.
Definitions
In order to provide consistent rules and terminology amongst the
Exchange and its affiliated options exchanges, Cboe Options Exchange,
Inc. (``Cboe Options''), Cboe BZX Exchange, Inc. (``BZX Options'') and
Cboe EDGX Exchange, Inc. (``EDGX Options'') (collectively,
``Affiliates'') the Exchange is proposing to amend various definitions
and product names to harmonize with such terms used by its affiliates
BZX Options and EDGX Options, specifically.\5\ As such, the proposed
rule change deletes a defined term, adds certain defined terms, and
makes certain non-substantive changes to existing definitions, as
further described in the table below. The proposed rule change makes
these changes throughout the market data fee language to conform to the
proposed defined terms and the Exchange uses the proposed updated terms
herein.
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\5\ Cboe Options will be submitting a similar filing to
harmonize its definitions and products names to align with those of
BZX Options and EDGX Options as well.
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Description of
Defined term Provision Current location change
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Customer.......................... A ``Customer'' is any person, Section I of the Cboe Deletes defined term
company or other entity that, Data Services, LLC to align terms with
pursuant to a market data (``CDS'') Section of BZX Options and
agreement with CDS, is the Fees Schedule. EDGX Options. The
entitled to receive data, concept of
either directly from CDS or ``Customer'' is
through an authorized also better
redistributor (i.e., a captured through
Customer or an extranet the proposed new
service provider), whether term
that data is distributed ``Distributor''.
externally or used internally.
A third-party vendor of an
Approved Third-Party Device,
as defined in the CDS Fee
Schedule, is not a Customer
unless it has a market data
agreement in place with CDS. A
Floor Broker User, as defined
in the CDS Fee Schedule, is
not a Customer unless it has a
market data agreement in place
with CDS.
Distributor....................... A Distributor of an Exchange N/A.................. Codifies definition
Market Data product is any of ``Distributor''
entity that receives the under new
Exchange Market Data product ``Definitions''
directly from the Exchange or section of the C2
indirectly through another Options Fees
entity and then distributes it Schedule.
internally or externally to a Definition is
third party. identical to the
definition used by
BZX Options and
EDGX Options and
substantially
similar to the
language in the
first sentence of
the definition of
``Customer'' in the
Fees Schedule.
Internal Distributor.............. An Internal Distributor of an N/A.................. Codifies definition
Exchange Market Data product of `` Internal
is a Distributor that receives Distributor under
the Exchange Market Data new ``Definitions''
product and then distributes section of the C2
that data to one or more Users Options Fees
within the Distributor's own Schedule.
entity. Definition is
identical to the
definition used by
BZX Options and
EDGX Options.
External Distributor.............. An External Distributor of an N/A.................. Codifies definition
Exchange Market Data product of ``External
is a Distributor that receives Distributor'' under
the Exchange Market Data new ``Definitions''
product and then distributes section of the C2
that data to a third party or Options Fees
one or more Users outside the Schedule.
Distributor's own entity. Definition is
identical to the
definition used by
BZX Options and
EDGX Options.
[[Page 16678]]
User.............................. A User of an Exchange Market N/A.................. Codifies definition
Data product is a natural of ``User'' under
person, a proprietorship, new ``Definitions''
corporation, partnership, or section of the C2
entity, or device (computer or Options Fees
other automated service), that Schedule.
is entitled to receive Definition is
Exchange data. identical to one
used by BZX Options
and EDGX Options.
Non-Professional User............. A ``Non-Professional User'' is Sections I and III... Relocates definition
a natural person or qualifying under new
trust that uses Data only for ``Definitions''
personal purposes and not for section of the C2
any commercial purpose and, Options Fees
for a natural person who works Schedule and
in the United States, is not: updates the rule
(i) registered or qualified in reference to
any capacity with the ``Section 201(11)''
Securities and Exchange of the Investment
Commission, the Commodities Advisors Act of
Futures Trading Commission, 1940 to ``Section
any state securities agency, 202(a)(11)''.
any securities exchange or
association, or any
commodities or futures
contract market or
association; (ii) engaged as
an ``investment adviser'' as
that term is defined in
Section 201(11) of the
Investment Advisors Act of
1940 (whether or not
registered or qualified under
that Act); or (iii) employed
by a bank or other
organization exempt from
registration under federal or
state securities laws to
perform functions that would
require registration or
qualification if such
functions were performed for
an organization not so exempt;
or, for a natural person who
works outside of the United
States, does not perform the
same functions as would
disqualify such person as a
Non-Professional User if he or
she worked in the United
States.
Professional User................. A Professional User of an Sections I and III... Relocates definition
Exchange Market Data product under new
is any natural person ``Definitions''
recipient of an Exchange section of the C2
Market Data product who is not Options Fees
a Non-Professional User. Schedule
Display Only Service.............. A ``Display Only Service'' Section I............ Relocates definition
allows a natural person end- under new
user to view and manipulate ``Definitions''
data using the Distributor's section of the C2
computerized service, but not Options Fees
to save, copy, export or Schedule
transfer the data or any
results of the manipulation to
any other computer hardware,
software or media, except for
printing it to paper or other
non-magnetic media.
Device............................ A ``Device'' means any N/A.................. Adds new definition
computer, workstation or other under new
item of equipment, fixed or ``Definitions''
portable, that receives, section of the C2
accesses and/or displays data Options Fees
in visual, audible or other Schedule.
form. Definition is
identical to one
used by Cboe
Options.
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The Exchange also proposes to rename the following market data
products and fees and use the proposed names herein, in order to align
with the naming convention used by the Exchange's affiliates, BZX
Options, EDGX Options and Cboe Options, as applicable for similar data
products and fees.\6\
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\6\ See BZX Options Exchange Fees Schedule, Market Data Fees and
EDGX Options Exchange Fees Schedule, Market Data Fees. See also Cboe
Data Services, LLC Fees Schedule, Section V. System Fees.
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Current name Proposed name
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BBO Data Feed............................. C2 Options Top.
Book Depth Data Feed...................... C2 Options Depth.
Complex Order Book (COB) Data Feed........ C2 Complex Order Book (COB).
Port Fee.................................. Data Access Fee.
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The Exchange believes the proposed changes to eliminate, modify and
adopt the terms discussed above will add additionally transparency to
the Fees Schedule and will protect investors, as the changes provide
more clarity within the rule and more harmonized rule language across
the Fees Schedules of the Cboe affiliated options exchanges. Further,
the Exchange notes that the changes are non-substantive changes or
provide additional detail in the rule regarding current market
participants that purchase or use the Exchange's market data products.
None of these differences impact the manner in which any of the terms
and corresponding fees apply, including how the Exchange would have
otherwise characterized a Distributor or User (Professional or Non-
Professional).
C2 Options Top Fee Changes
The Exchange first proposes to modify its current User Fees. The
Exchange currently charges a ``User Fee'' of $50 per month per Device
or user ID for use of the data in the C2 Options Top Data Feed by
``Display Only Service'' users. The current User fee is payable only
for ``external'' Display Only Service users who receive C2 Options
Top.\7\ Internal Distributors may currently distribute C2 Options Top
Data to an unlimited number of internal users and Devices within the
Distributor at no further cost. The Exchange proposes to eliminate the
current C2 Options Top User fee and in its place adopt Professional and
Non-Professional User fees for C2 Options Top that would apply to both
Internal and External Distributors for all Professional and Non-
Professional Users. Particularly, the Exchange proposes to charge C2
Options Top Distributors a monthly fee of $5.00 per Professional Users
User and a monthly fee of $0.10 per Non-Professional User.\8\
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\7\ Pursuant to the Cboe Global Markets North American Data
Policies, Distributors must report the number of authorized external
devices that receive C2 Options Top data during a calendar month
within 15 days after such month in the manner and format specified
by the Exchange from time to time to determine applicable fees.
\8\ Distributors that receive C2 Options Top Data will be
required to count every Professional User and Non-Professional User
to which they provide the data feed.
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The Exchange lastly proposes to establish a $10,000 per month
Enterprise Fee that will permit a Distributor to purchase a monthly
(and optional) Enterprise license to receive the C2 Options Top Data
for distribution
[[Page 16679]]
to an unlimited number of Professional and Non-Professional Users. The
Enterprise Fee is an alternative to Professional and Non-Professional
User fees and will permit a Distributor to pay a flat fee to receive
the data for an unlimited number of Professional and Non-Professional
Users, which the Exchange proposes to make clear in the Fee Schedule.
Like User fees, the Enterprise Fee would be assessed in addition to the
Distribution Fees. The Enterprise Fee may provide an opportunity to
reduce fees. For example, if a Distributor has 10,000 Professional
Users who each receive C2 Options Top at $5.00 per month (as proposed),
then that Distributor will pay $50,000 per month in Professional Users
fees. If the Distributor instead were to purchase the proposed
Enterprise license, it would alternatively pay a flat fee of $10,000
for an unlimited number of Professional and Non-Professional Users. A
Distributor must pay a separate Enterprise Fee for each entity that
controls the display of C2 Options Top if it wishes for such Users to
be covered by an Enterprise Fee rather than by per User fees.\9\ A
Distributor that pays the Enterprise Fee will not have to report its
number of such Users on a monthly basis. Rather, every six months, the
recipient firm must provide the Exchange with a count of the total
number of Professional and Non-Professional Users users of C2 Options
Top.\10\ The Exchange notes that the purchase of an Enterprise license
is voluntary, and a firm may elect to instead use the per User
structure and benefit from the proposed per User Fees described above.
For example, a firm that does not have a sufficient number of Users to
benefit from purchase of the license need not do so.
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\9\ For example, if a Distributor that distributes C2 Options
Top to Retail Brokerage Firm A and Retail Brokerage Firm B and
wishes to have the Users under each firm covered by an Enterprise
license, the Distributor would be subject to two Enterprise Fees.
\10\ See Cboe Global Markets North American Data Policies.
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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.\11\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \12\ 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
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 Trading Permit Holders and other persons using
its facilities.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ 15 U.S.C. 78f(b)(4).
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The Exchange first notes that it 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 17% of the market share.\14\
The Exchange believes top-of-book quotation and transaction data is
highly competitive as national securities exchanges compete vigorously
with each other to provide efficient, reliable, and low-cost data to a
wide range of investors and market participants. Indeed, there are
several competing products offered by other national securities
exchanges today, not counting products offered by the Exchange's
affiliates, and each of the Exchange's affiliated U.S. options
exchanges also offers similar top-of-book data.\15\ Each of those
exchanges offer top-of-book quotation and last sale information based
on their own quotation and trading activity that is substantially
similar to the information provided by the Exchange through the C2
Options Top Feed. Further, the quote and last sale data contained in
the C2 Options Data Feed is identical to the data sent to OPRA for
redistribution to the public.\16\ Accordingly, Exchange top-of-book
data is widely available today from a number of different sources.
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\14\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (February 24, 2023), available at <a href="https://markets.cboe.com/us/options/market_statistics/">https://markets.cboe.com/us/options/market_statistics/</a>.
\15\ See e.g., NYSE Arca Options Proprietary Market Data Fees
Schedule, MIAX Options Exchange, Fee Schedule, Section 6 (Market
Data Fees), Nasdaq PHLX Options 7 Pricing Schedule, Section 10
(Proprietary Data Feed Fees) and Cboe Data Services, LLC Fees
Schedule.
\16\ The Exchange notes that it makes available the BBO data and
last sale data that is included in the C2 Options Top Data Feed no
earlier than the time at which the Exchange sends that data to OPRA.
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Moreover, the C2 Options Top Data Feed is distributed and purchased
on a voluntary basis, in that neither the Exchange nor market data
distributors are required by any rule or regulation to make this data
available. Accordingly, Distributors and Users can discontinue use at
any time and for any reason, including due to an assessment of the
reasonableness of fees charged. Additionally, only those Distributors
that deem a product to be of sufficient overall value and usefulness
would purchase them for distribution to Users. Further, Distributors
are not required to distribute, and Users are not required to receive,
any one particular data product and may choose to receive none, one, or
several of the Exchange's market data products. Indeed less than 25% of
the Exchange's market data subscriptions is for C2 Options Top. As
described above, market participants have a wide variety of alternative
market data products from which to choose, such as similar proprietary
data products offered by other exchanges and consolidated data.
Further, the Exchange is not required to make any proprietary data
products available or to offer any specific pricing alternatives to any
customers. Moreover, persons (including broker-dealers) who subscribe
to any exchange proprietary data feed must also have equivalent access
to consolidated Options Information \17\ from OPRA for the same classes
or series of options that are included in the proprietary data feed,
and proprietary data feeds cannot be used to meet that particular
requirement.\18\ As such, all proprietary data feeds are optional.
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\17\ ``Consolidated Options Information'' means consolidated
Last Sale Reports combined with either consolidated Quotation
Information or the BBO furnished by OPRA. Access to consolidated
Options Information is deemed ``equivalent'' if both kinds of
information are equally accessible on the same terminal or work
station. See Limited Liability Company Agreement of Options Price
Reporting Authority, LLC (``OPRA Plan''), Section 5.2(c)(iii). The
Exchange notes that this requirement under the OPRA Plan is also
reiterated under the Cboe Global Markets Global Data Agreement and
Cboe Global Markets North American Data Policies, which subscribers
to any exchange proprietary product must sign and are subject to,
respectively. Additionally, the Exchange's Data Order Form (used for
requesting the Exchange's market data products) requires
confirmation that the requesting market participant receives data
from OPRA.
\18\ Id.
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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
[[Page 16680]]
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.'' \19\
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 fees to attract purchasers of C2 Options Top
Data.
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\19\ 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 the proposed changes to adopt new
Professional and Non-Professional User fees are reasonable as the User
fees continue to be to be in line with User fees assessed by other
exchanges for similar data.\20\ Moreover, External users will now be
subject to lower fees as the Exchange proposes to significantly reduce
the monthly User fees from $50 per External User to $5.00 per
Professional User or $0.10 per Non-Professional User. Although External
Distributors are currently only subject to fees for external users, the
fee for external users (which are likely to be Non-Professional Users)
are significantly lower (i.e., $0.10 per Non-Professional User) than
the current $50 fee for external users. Moreover, the proposed fee
structure of differentiated Professional and Non-Professional fees that
are paid by both Internal and External Distributors has long been used
by other exchanges, including the Exchange, for their proprietary data
products, and by the OPRA plan in order to reduce the price of data to
retail investors and make it more broadly available.\21\ The Exchange
also believes offering C2 Options Top to Non-Professional Users at a
lower cost than Professional Users results in greater equity among data
recipients, as Professional Users are categorized as such based on
their employment and participation in financial markets, and thus, are
compensated to participate in the markets. Although Non-Professional
Users too can receive significant financial benefits through their
participation in the markets, the Exchange believes it is reasonable to
charge more to those Users who are more directly engaged in the
markets. The Exchange believes that the proposed fees are equitable and
not unfairly discriminatory because they will be charged uniformly to
Distributors for their Professional and Non-professional Users.
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\20\ See e.g., Nasdaq PHLX Options 7 Pricing Schedule, Section
10 (Proprietary Data Feed Fees), which provides for a fee of $40 per
month to professional users and $1.00 per month to non-professional
users to cover the usage of PHLX Options (TOPO) Data, TOPO Plus
Orders, PHLX Orders and PHLX Depth Data feeds. See also NYSE
American Options Proprietary Market Data Fees schedule, which
provides for a fee of $50 per month to professional users and $1.00
per month to non-professional users of American Options Top Data,
American Options Deep and American Options Complex products. By
comparison, the total Professional User fee for C2 Options Top and
C2 Options COB is in line, and in fact lower than the above
Professional User fee at $30 per Professional User (i.e., $5 per
Professional Users of C2 Options Top, as proposed, and $25 per
Professional User of C2 Options COB). The Exchange's combined Non-
Professional User Fee at $0.10 per Non-Professional User (i.e.,
$0.30 per Non-Professional User of C2 Options Top, as proposed, and
$0 per Non-Professional User of C2 Options COB) is lower than PHLX's
and NYSE American's aforementioned Non-Professional User fees. C2
Options Depth does not charge users based on Professional or Non-
Professional classification and market participants have always been
subject to separate User fees across C2 Options market data
products.
\21\ See, e.g., Securities Exchange Act Release No. 59544 (March
9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131)
(establishing the $15 Non-Professional User Fee (Per User) for NYSE
OpenBook); See, e.g., Securities Exchange Act Release No. 67589
(August 2, 2012), 77 FR 47459 (August 8, 2012) (revising OPRA's
definition of the term ``Nonprofessional''); and See Securities
Exchange Act Release No. 70683 (October 15, 2013), 78 FR 62798
(October 22, 2013) (SR-CBOE-2013-087) (establishing Professional and
Non-Professional User fees for Cboe Options COB Data Feed).
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The proposed Enterprise Fee for C2 Options Top Feed is equitable
and reasonable as the proposed fee could result in a fee reduction for
Distributors with a large number of Professional and Non-Professional
Users. If a Distributor has a smaller number of Professional Users of
C2 Options Top Data, then it may continue using the per User structure
and benefit from the proposed per C2 Options Top User Fee reductions.
By reducing prices for recipient firms with a large number of
Professional and Non-Professional Users, the Exchange believes that
more firms may choose to receive and to distribute C2 Options Top Data,
thereby expanding the distribution of this market data for the benefit
of investors.
The Exchange further believes that the proposed Enterprise Fee is
reasonable because it will simplify reporting for certain recipients
that have large numbers of Professional and Non-Professional Users.
Firms that pay the proposed Enterprise Fee will not have to report the
number of Users on a monthly basis as they currently do, but rather
will only have to count Professional and Non-Professional users every
six months, which is a significant reduction in administrative burden.
Finally, as described above the Enterprise Fee is entirely optional. A
firm that does not have a sufficient number of Users to benefit from
purchase of the license need not do so.
The Exchange lastly believes the proposed changes relating to the
defined terms and terminology will provide additional specificity and
clarity, while also harmonizing the various definition with that of its
affiliates. Doing so would ensure consistent terms amongst the Exchange
and its affiliates, thereby reducing the potential for confusion
amongst market data subscribers of the Exchange's and its affiliates'
market data products. Additionally, the proposed new terms are
identical to the terms already used by the Exchange's affiliates BZX
Options and EDGX Options. Similarly, the Exchange believes the proposal
to reformate the fees will provide for a more streamlined fees
schedule, thereby reducing potential confusion. Accordingly, the
Exchange believes the proposed changes remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, protect investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
result in 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, and its ability to price
top-of-book data is constrained by competition among exchanges that
offer similar data products to their customers. Top-of-book data is
broadly disseminated by competing U.S. options exchanges and through
OPRA. There are therefore a number of alternative products available to
market participants and investors, including products offered by
certain competing exchanges, as well as OPRA. In this competitive
environment potential Distributors are free to choose which competing
product to purchase to satisfy their need for market information.
Often, the choice comes down to price, as market data customers look to
purchase cheaper data products, and quality, as market participants
seek to purchase data that represents significant market liquidity.
The Exchange believes that the proposed fees do not put any market
participants at a relative disadvantage compared to other market
participants.
[[Page 16681]]
As discussed, the proposed fees would apply to all similarly situated
recipient firms of C2 Options Top on an equal and non-discriminatory
basis. The Exchange believes the differentiated fees for Professional
and Non-Professional Users of C2 Options Top is appropriate given
Professional Users are categorized as such based on their employment
and participation in financial markets, and thus, are compensated to
participate in the markets. Non-Professional Users too can receive
significant financial benefits through their participation in the
markets, however the Exchange believes it is reasonable to charge more
to those Users who are more directly engaged in the markets. The
Exchange therefore believes that the proposed fee neither favors nor
penalizes one or more categories of market participants in a manner
that would impose an undue burden on competition.
The Exchange believes that the proposed fees do not impose a burden
on competition or on other SROs that is not necessary or appropriate in
furtherance of the purposes of the Act. In particular, market
participants are not forced to subscribe to C2 Options Top Data, or any
of the Exchange's data feeds, as described above. As noted, the quote
and last sale data contained in the Exchange's C2 Option Top feed is
identical to the data sent to OPRA for redistribution to the public.
Accordingly, Exchange top-of-book data is widely available today from a
number of different sources.
Because market data customers can find suitable substitute feeds,
an exchange that overprices its market data products stands a high risk
that users may substitute another product. These competitive pressures
ensure that no one exchange's market data fees can impose an undue
burden on competition, and the Exchange's proposed fees do not do so
here.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from members or other interested parties.
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 \22\ and paragraph (f) of Rule 19b-4 \23\
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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\22\ 15 U.S.C. 78s(b)(3)(A).
\23\ 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#becccbd2db93ddd1d3d3dbd0cacdfecddbdd90d9d1c8"><span class="__cf_email__" data-cfemail="addfd8c1c880cec2c0c0c8c3d9deeddec8ce83cac2db">[email protected]</span></a>. Please include
File Number SR-C2-2023-007 on the subject line.
Paper Comments
<bullet> 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-C2-2023-007. 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-C2-2023-007 and should be submitted on
or before April 10, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-05541 Filed 3-17-23; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on March 20, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.