Notice2023-10470
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Update 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
May 17, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 95 (Wednesday, May 17, 2023)</title>
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[Federal Register Volume 88, Number 95 (Wednesday, May 17, 2023)]
[Notices]
[Pages 31543-31549]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-10470]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97486; File No. SR-C2-2023-012]
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Update
Its Fees Schedule
May 11, 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 April 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.
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 March 1, 2023, the Exchange
withdrew that filing and replaced it with SR-C2-2023-007, which was
submitted on February 28, 2023. On April 28, 2023 the Exchange
withdrew that filing and submitted this filing.
\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
instead refer to the ``Exchange'', as well as rename the section
currently titled ``Cboe Data Services, LLC Fees'' to ``Market Data
Fees'' to align with the terminology and heading of its affiliates, BZX
Options and EDGX Options. The Exchange notes that no substantive
changes are being made with the
[[Page 31544]]
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 and reorganize 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 fee schedules of the Exchange's affiliated 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. As part of the reformatting, the Exchange notes
that it is moving up the ``Trial Usage'' description from the end of
the Fees Schedule towards the top (no changes are being made to the
language under this 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, as well as definitions used in Cboe's
Cboe Global Markets Global Data Agreement and Cboe Global Markets North
American Data Policies.\5\ As such, the proposed rule change deletes a
defined term, adds certain defined terms, relocates certain 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.
\6\ All Distributors of C2 Options proprietary market data
products are subject to Cboe Global Markets North American Data
Policies and must still sign the Cboe Global Markets Global Data
Agreement.
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Defined term Provision Current location Description of change
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Customer.......................... A ``Customer'' is any Section I of the Cboe Deletes defined termto
person, company or other Data Services, LLC align terms with BZX
entity that, pursuant to (``CDS'') Section of Options and EDGX
a market data agreement the Fees Schedule. Options. The concept of
with CDS, is entitled to ``Customer'' is also
receive data, either better captured through
directly from CDS or the proposed new term
through an authorized ``Distributor.''
redistributor (i.e., a Eliminates language that
Customer or an extranet specifies that a person,
service provider), company, entity that
whether that data is does not have a market
distributed externally or data agreement in place
used internally. with CDS is not
An entity or person that considered a
receives BBO data from a ``Customer'' since the
Customer through a Exchange is not
Display Only Service is proposing to use that
not a ``Customer'' unless term in the Fees
it has a market data Schedule with respect to
agreement in place with market data fees and
CDS''. does not believe it's
necessary to clarify
this point in the Fees
Schedule.\6\ Neither BZX
Options nor EDGX Options
refer to market data
agreements in their
respective Fees
Schedules.
Distributor....................... A Distributor of an N/A.................. Codifies definition of
Exchange Market Data ``Distributor'' under
product is any entity new ``Definitions''
that receives the section of the C2
Exchange Market Data Options Fees Schedule.
product directly from the An Exchange Market Data
Exchange or indirectly Product refers to any
through another entity Data Product set forth
and then distributes it in the Market Data Fees
internally or externally section of the
to a third party. Exchange's Fees
Schedule. Entities, not
individual persons,
distribute market data.
Definition is 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 N/A.................. Codifies definition of ''
an Exchange Market Data Internal Distributor
product is a Distributor under new
that receives the ``Definitions'' section
Exchange Market Data of the C2 Options Fees
product and then Schedule. Definition is
distributes that data to identical to the
one or more Users within definition used by BZX
the Distributor's own Options and EDGX
entity. Options.
External Distributor.............. An External Distributor of N/A.................. Codifies definition of
an Exchange Market Data ``External Distributor''
product is a Distributor under new
that receives the ``Definitions'' section
Exchange Market Data of the C2 Options Fees
product and then Schedule. Definition is
distributes that data to identical to the
a third party or one or definition used by BZX
more Users outside the Options and EDGX
Distributor's own entity. Options.
User.............................. A User of an Exchange N/A.................. Codifies definition of
Market Data product is a ``User'' under new
natural person, a ``Definitions'' section
proprietorship, of the C2 Options Fees
corporation, partnership, Schedule. Definition is
or entity, or device identical to the one
(computer or other used by BZX Options and
automated service), that EDGX Options.
is entitled to receive
Exchange data.
[[Page 31545]]
Non-Professional User............. A ``Non-Professional Section III.......... Relocates definition
User'' is a natural under new
person or qualifying ``Definitions'' section
trust that uses Data only of the C2 Options Fees
for personal purposes and Schedule and updates the
not for any commercial rule reference to
purpose and, for a ``section 201(11)'' of
natural person who works the Investment Advisors
in the United States, is Act of 1940 to ``section
not: (i) registered or 202(a)(11)''.
qualified in any capacity
with the Securities and
Exchange Commission, the
Commodities Futures
Trading Commission, any
state securities agency,
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 Section III.......... Relocates definition
Exchange Market Data under new
product is any User other ``Definitions'' section
than a Non-Professional of the C2 Options Fees
User. Schedule and eliminates
reference to ``natural
person'' recipient of
``Data'' to align with
the ``Professional
User'' definition used
by BZX Options and EDGX
Options, as well as
Cboe's market data
policies and agreements.
Display Only Service.............. A ``Display Only Service'' Section I............ Relocates definition
allows a natural person under new
end-user to view and ``Definitions'' section
manipulate data using the of the C2 Options Fees
Distributor's Schedule. Replaces
computerized service, but reference to
not to save, copy, export ``Customer'' with
or transfer the data or ``Distributor''.
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 Section I under Relocates definition
computer, workstation or ``User Fees''. under new
other item of equipment, ``Definitions'' section
fixed or portable, that of the C2 Options Fees
receives, accesses and/or Schedule.
displays data in visual,
audible or other form.
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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.\7\
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\7\ 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 IV. 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.................................. Direct Data Access Fee.
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The Exchange believes the proposed changes to eliminate, modify and
adopt the terms discussed above will add 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, as well as
well as definitions used in Cboe's Cboe Global Markets Global Data
Agreement and Cboe Global Markets North American Data Policies.
Further, the Exchange notes that the above-described changes relating
to definitions 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) as such
definitions are more consistent with the definitions already used in
the Cboe Global Markets Global Data Agreement and Cboe Global Markets
North American Data Policies, to which all firms receiving C2 Options
market data must adhere to.
C2 Options Top Fee Changes
The Exchange first proposes to modify its current User Fees. The
Exchange currently charges all Distributors a Distribution Fee of
$2,500 per month (which applies for Internal and/or External
Distribution). Additionally, the Exchange currently assesses 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 and are not employees or natural person
independent contractors of the Distributor, the Distributor's
affiliates or an authorized service facilitator.\8\ Internal
Distributors
[[Page 31546]]
may currently distribute C2 Options Top Data to an unlimited number of
internal Users and Devices within the Distributor at no further cost
(aside from the above-mentioned monthly Distribution Fee). 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 User and a monthly fee of $0.10 per Non-Professional
User.\9\
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\8\ 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. In
connection with a Distributor's distribution of the market data
product, Distributors are required to report all Professional and
Non-Professional Users in accordance with the following: Distributor
should count as one User each unique User that the Distributor has
entitled to have access to the market data product. However, where a
device is dedicated specifically to a single individual, the
Distributor should count only the individual and need not count the
device. Distributor should identify and report each unique User. If
a User uses the same unique method to gain access to the market data
product, the Distributor should count that as one User. However, if
a unique User uses multiple methods to gain access to the market
data product (e.g., a single User has multiple passwords and user
identifications), the Distributor should report all of those methods
as an individual User. Distributors should report each unique
individual person who receives access through multiple devices as
one User so long as each device is dedicated specifically to that
individual. If a Distributor entitles one or more individuals to use
the same device, the Distributor should include only the
individuals, and not the device, in the count.
\9\ 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 to an unlimited number of Professional and Non-
Professional Users. The Enterprise Fee is an alternative to
Professional and Non-Professional User fees and is assessed in addition
to the Distribution Fee, which the Exchange proposes to make clear in
the Fee Schedule. 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.\10\ 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
Distributor must provide the Exchange with a count of the total number
of Professional and Non-Professional Users of C2 Options Top.\11\ 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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\10\ For example, if a Distributor (e.g., Refinitiv) that
distributes C2 Options Top to Retail Brokerage Firm A and Retail
Brokerage Firm B (which ``entities'' redistribute BZX Options Top to
its respective Users) and wishes to have the Users under each firm
covered by an Enterprise license, the Distributor would be subject
to two Enterprise Fees.
\11\ 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.\12\ Specifically, the
Exchange believes the proposed rule change is consistent with the
section 6(b)(5) \13\ 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) requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange also believes this proposal is
consistent with section 6(b)(8) of the Act, which requires that the
rules of an exchange not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.\14\
In addition, the Exchange believes that the proposed rule change is
consistent with section 11(A) of the Act as it supports (i) fair
competition among brokers and dealers, among exchange markets, and
between exchange markets and markets other than exchange markets, and
(ii) the availability to brokers, dealers, and investors of information
with respect to quotations for and transactions in securities.\15\ The
Exchange also believes the proposed rule change is consistent with
section 6(b)(4) of the Act,\16\ 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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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ 15 U.S.C. 78f(b)(8).
\15\ 15 U.S.C. 78k-1.
\16\ 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 18% of the market share.\17\
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.\18\ 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.\19\ Accordingly, Exchange top-of-book
data is widely available today from a number of different sources.
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\17\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (April 24, 2023), available at <a href="https://markets.cboe.com/us/options/market_statistics/">https://markets.cboe.com/us/options/market_statistics/</a>.
\18\ 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.
\19\ 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. 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
[[Page 31547]]
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 \20\ from OPRA for the same classes
or series of options that are included in the proprietary data feed
(including for exclusively listed products), and proprietary data feeds
cannot be used to meet that particular requirement.\21\ As such, all
proprietary data feeds are purely optional and only those that deem the
product to be of sufficient overall value and usefulness would purchase
it.
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\20\ ``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.
\21\ 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 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.'' \22\ 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 a
competitor 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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\22\ 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.\23\ Moreover, Display Only Service Users
will now be subject to lower fees as the Exchange proposes to
significantly reduce the monthly User fees from $50 per Device or User
ID for Display Only Service User to $5.00 per Professional User or
$0.10 per Non-Professional User. Although External Distributors are
currently only subject to a User fee for external Users that are
Display Only Service Users, the proposed fee for all external Users
(which are likely to be Non-Professional Users) is significantly lower
(i.e., $0.10 per Non-Professional User) than the current $50 User fee.
Moreover, the proposed fee structure of differentiated Professional and
Non-Professional fees that are paid by both Internal and External
Distributors for all Users, not just Display Only Service users, 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.\24\ The Exchange also believes offering C2 Options Top to
Non-Professional Users at a rate lower than the rate for 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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\23\ 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 is not included in the above comparison because there
are no User fees based on Professional or Non-Professional
classification, but rather a $50 per month, more Device or User ID
fee for Display Only Service users only. Further there are no fees
for any internal Users.
\24\ 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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Although Internal Distributors do not currently pay any User fees
for C2 Options Top, the Exchange believes its reasonable, equitable and
not unfairly discriminatory to start assessing User fees, as internal
and external users will be treated the same. Additionally, other
exchanges also assess User fees for internal users of similar data,
including the Exchange's affiliates.\25\ Moreover, the proposed rates
Internal Distributors will be subject to for User fees are in line with
User fees assessed by other exchanges for similar data.\26\ The
Exchange believes the proposed monthly User fees for which Internal
Distributors of C2 Options Top will now be subject to are equitably
allocated because they would be charged on an equal basis for all
internal Users that receive C2 Options Top.
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\25\ See BZX Options Fees Schedule, Market Data Fees and EDGX
Options Fees Schedule, Market Data Fees. See also Nasdaq PHLX
Options 7 Pricing Schedule, Section 10 (Proprietary Data Feed Fees).
\26\ See supra note 23.
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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 Distributors 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
[[Page 31548]]
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 and providing more consistency with definitions used in the
Cboe Global Markets Global Data Agreement and Cboe Global Markets North
American Data Policies. Doing so would ensure consistent terms amongst
the Exchange and its affiliates, as well as the Exchange's data
agreements and policies, 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. For example, Top-of-
book data is broadly disseminated by competing U.S. options exchanges.
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. As discussed, the proposed fees would apply to all
similarly situated Distributors 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 \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
<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#f280879e97df919d9f9f979c8681b2819791dc959d84"><span class="__cf_email__" data-cfemail="c8babda4ade5aba7a5a5ada6bcbb88bbadabe6afa7be">[email protected]</span></a>. Please include
File Number SR-C2-2023-012 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-C2-2023-012. 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
[[Page 31549]]
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. 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-C2-2023-012 and should be submitted on or before June 7, 2023.
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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10470 Filed 5-16-23; 8:45 am]
BILLING CODE 8011-01-P
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