Notice2023-15125
Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee 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
July 18, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 136 (Tuesday, July 18, 2023)</title>
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[Federal Register Volume 88, Number 136 (Tuesday, July 18, 2023)]
[Notices]
[Pages 45945-45947]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-15125]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97881; File No. SR-CboeEDGA-2023-009]
Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule
July 12, 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 June 30, 2023, Cboe EDGA Exchange, Inc. (``Exchange'' or ``EDGX'')
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 EDGA Exchange, Inc. (the ``Exchange'' or ``EDGA'') proposes to
amend its Fee 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/equities/regulation/rule_filings/edga/">http://markets.cboe.com/us/equities/regulation/rule_filings/edga/</a>), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
[[Page 45946]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fee Schedule applicable to its
equities trading platform (``EDGA Equities'') by amending the
definition of ADV and the definition of the Russell Reconstitution Day.
The Exchange proposes to implement these changes effective June 22,
2023.\3\
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\3\ The Exchange initially filed the proposed fee change on June
22, 2023 (SR-CboeEDGA-2023-008). On June 30, 2023, the Exchange
withdrew that proposal and submitted this proposal.
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The ``definitions'' section of the Exchange's Fee Schedule defines
various terms used throughout the Fee Schedule. As explained under the
definitions of ADAV, ADV, and TCV,\4\ the Exchange currently excludes
the Russell Reconstitution Day from the calculation of ADAV, ADV, and
TCV, each of which are calculated on a monthly basis.\5\ The Russell
Reconstitution Day is defined in the Fee Schedule as ``the last Friday
in June.'' \6\ While generally the Russell Reconstitution Day does
occur on the last Friday in June, in months [sic] where there are five
Fridays in June the Russell Reconstitution Day instead falls on the
fourth Friday in June. The Exchange proposes to amend the definition of
Russell Reconstitution Day to ``the fourth Friday in June'' \7\ in
order to provide a more accurate description of the date which will not
be included in the calculation of ADAV, ADV, and TCV to its Members.\8\
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\4\ ``ADAV'' means average daily added volume calculated as the
number of shares added per day and ``ADV'' means daily volume
calculated as the number of shares added to, removed from, or routed
by, the Exchange, or any combination or subset thereof, per day.
ADAV and ADV are calculated on a monthly basis. ``TCV'' means total
consolidated volume as the volume reported by all exchanges and
trade reporting facilities to a consolidated transaction reporting
plan for the month for which the fees apply. The Exchange notes that
it intends to amend the definition of ADV, discussed infra.
\5\ The Russell Reconstitution Day is generally characterized by
high trading volumes, much of which are derived from market
participants who are not generally as active entering the market to
rebalance their holdings in-line with the annual rebalancing of the
Russell indices. The Exchange, along with other competing exchanges,
excludes the Russell Reconstitution Day from certain volume
calculations as the high trading volumes can significantly impact
trading and quoting calculations.
\6\ See EDGA Equities Fee Schedule, Definitions.
\7\ See Russell U.S. Equity Indices Construction and
Methodology, available at <a href="https://research.ftserussell.com/products/downloads/Russell-US-indexes.pdf">https://research.ftserussell.com/products/downloads/Russell-US-indexes.pdf</a> (last accessed June 21, 2023).
\8\ See Rule 1.5(n) (``Member''). The term ``Member'' shall mean
any registered broker or dealer that has been admitted to membership
in the Exchange. A Member will have the status of a ``member'' of
the Exchange as that term is defined in Section 3(a)(3) of the Act.
Membership may be granted to a sole proprietor, partnership,
corporation, limited liability company or other organization which
is a registered broker or dealer pursuant to Section 15 of the Act,
and which has been approved by the Exchange.
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The Exchange also proposes to amend the definition of ADV in order
to correct an inadvertent removal of the word ``average''. The proposed
revised definition of ADV would read ``average daily volume calculated
as the number of shares added to, removed from, or routed by, the
Exchange, or any combination or subset thereof, per day.'' This
proposed definition will align the definition of ADV on the Exchange
with the definition of ADV on the Exchange's affiliates.\9\ The
Exchange is not proposing to make any other changes to the Definitions
in its Fee Schedule and will announce the change via a Trade Desk
notice to Members.
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\9\ See, e.g., EDGX Equities Fee Schedule, Definitions.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\10\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \11\ 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) \12\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \13\
as it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its Members and other persons using
its facilities.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ Id.
\13\ 15 U.S.C. 78f(b)(4).
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In particular, the Exchange believes its proposal to amend the
definition of the ``Russell Reconstitution Day'' is not designed to
permit unfair discrimination between customer, issuers, brokers, or
dealers and is designed to provide for the equitable allocation of
fees. Specifically, the proposal is intended only to add clarity to the
Exchange's Fee Schedule by providing Members with additional certainty
as to their level of rebates and costs for trading during the month of
June and involves no substantive change. Further, the Exchange's
proposal to amend the definition of ADV is intended to correct an
inadvertent deletion of the word ``average'' and align the definition
of ADV with the definition found on the Exchange's affiliates.
Additionally, the proposed changes promote just and equitable
principles of trade and are designed to remove impediments to and
perfect the mechanism of a free and open market and a national market
system as they provides transparency to Members regarding how ADV is
calculated and which date in the month of June will not be included in
the calculation of ADAV, ADV, and TCV.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Rather, as discussed above,
the Exchange believes that the proposed changes would encourage the
submission of additional order flow to a public exchange, thereby
promoting market depth, execution incentives and enhanced execution
opportunities, as well as price discovery and transparency for all
Members. As a result, the Exchange believes that the proposed changes
further the Commission's goal in adopting Regulation NMS of fostering
competition among orders, which promotes ``more efficient pricing of
[[Page 45947]]
individual stocks for all types of orders, large and small.''
The Exchange believes the proposed rule changes do not impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Specifically, the Exchange
does not believe that its proposal to revise the definitions of ``ADV''
and ``Russell Reconstitution Day'' will have any impact on competition
as the changes are only intended to add clarity to the Exchange's Fee
Schedule and involve no substantive change.
Next, the Exchange believes the proposed rule changes does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the
Exchange represents a small percentage of the overall market. By
providing Members with a greater level of certainty as to how their
volume is calculated and to which date in the month of June will be
excluded from the calculation of ADAV, ADV, and TCV, the Exchange is
providing additional certainty as to the level of rebates and costs for
trading during the month of the Russell reconstitution, which could
promote competition between the Exchange and other execution venues.
Accordingly, the Exchange does not believe its proposed fee change
imposes any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
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 \14\ and paragraph (f) of Rule 19b-4 \15\
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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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#a9dbdcc5cc84cac6c4c4ccc7dddae9daccca87cec6df"><span class="__cf_email__" data-cfemail="c2b0b7aea7efa1adafafa7acb6b182b1a7a1eca5adb4">[email protected]</span></a>. Please include
file number SR-CboeEDGA-2023-009 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-CboeEDGA-2023-009. 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="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-CboeEDGA-2023-009 and should
be submitted on or before August 8, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-15125 Filed 7-17-23; 8:45 am]
BILLING CODE 8011-01-P
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