Notice2023-18305
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule To Eliminate Reference to the ETF Implied Liquidity Feed and Corresponding Fees
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
August 25, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 164 (Friday, August 25, 2023)</title>
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[Federal Register Volume 88, Number 164 (Friday, August 25, 2023)]
[Notices]
[Pages 58334-58336]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-18305]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98183; File No. SR-CboeBZX-2023-060]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule To Eliminate Reference to the ETF Implied Liquidity
Feed and Corresponding Fees
August 21, 2023.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 8, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'' or ``BZX
Equities'') 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/bzx/">http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/</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 its Fee Schedule applicable to its
equities trading platform (``BZX Equities'') to eliminate reference to
the ETF Implied Liquidity Feed and corresponding fees, effective August
8, 2023.
The Exchange proposes to amend the Market Data section of its fee
schedule to eliminate reference to, and corresponding fees for, a
market data product called the ETF Implied Liquidity Feed.\3\ The ETF
Implied Liquidity feed is an optional data feed that provides the
Exchange's proprietary calculation of the implied liquidity and the
aggregate best bid and offer (``BBO'') of all displayed orders on the
Exchange and its affiliated exchanges \4\ for all standard, non-
leveraged U.S. equity Exchange Traded Funds (``ETFs'') traded on the
System.\5\ An ETF's implied liquidity disseminated via the feed
consists of the ETF's implied BBO (including the implied size)
calculated via a proprietary methodology based on the national best bid
and offer (``NBBO''), the number of shares of securities underlying one
creation unit of the ETF, and the estimated cash included in one
creation unit of the ETF. The Exchange disseminates the aggregate BBO
through the ETF Implied Liquidity feed no earlier than it provides its
BBO to the processors under the CTA Plan or the Nasdaq/UTP Plan. The
Exchange currently assesses (i) Distribution Fees for both Internal and
External, Distributors \6\ (ii) Usage Fees for both Professional \7\
and Non-Professional \8\ Users; and a (iii) Data Consolidation fee.
Specifically, the Exchange assesses (i) Internal Distributors a monthly
fee of $1,500 and External Distributors a monthly fee of $5,000; (ii)
Professional Users a monthly fee of $0.25 (if receiving internally) or
$25 (if receiving externally); (iii) Non-Professional Users a monthly
fee of $1.00 (whether receiving internally or externally); and a
monthly Data Consolidation Fee of $500. The Fee Schedule currently
provides that Distributors of the Cboe One Feed (as described in Rule
11.22(j)) may also receive upon request access to the ETF Implied
Liquidity Feed without incurring an additional Logical Port fee for the
ETF Implied Liquidity Feed. It also provides that External Distributors
of the Cboe One Feed will also receive
[[Page 58335]]
upon request access to the ETF Implied Liquidity Feed for external
distribution only without incurring an additional Distributor fee or,
if an External Distributor, the Data Consolidation fee for the ETF
Implied Liquidity Feed.
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\3\ The ETF Implied Liquidity Feed was adopted in 2017. See
Securities Exchange Act Release No. 80580 (May 3, 2017), 82 FR 21585
(May 9, 2017) (SR-BatsBZX-2017-25) and Securities Exchange Act
Release No. 80772 (May 25, 2017), 82 FR 25389 (June 1, 2017) (SR-
BatsBZX-2017-036).
\4\ The Exchange's affiliates are Cboe EDGA Exchange, Inc.,
(``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX''), and Cboe BYX
Exchange, Inc. (``BYX'') (``collectively, the ``Bats Exchanges'').
\5\ The securities underlying each of the U.S. equity ETFs
included in the proposed feed must be considered NMS Securities as
defined under Rule 600(b)(46) of Regulation NMS. 17 CFR
242.600(b)(46)
\6\ A ``Distributor'' is defined as ``any entity that receives
the Exchange Market Data product directly from the Exchange or
indirectly through another entity and then distributes it internally
or externally to a third party.'' An ``Internal Distributor'' is
defined as ``a Distributor that receives the Exchange Market Data
product and then distributes that data to one or more Users within
the Distributor's own entity.'' An ``External Distributor'' is
defined as ``a Distributor that receives the Exchange Market Data
product and then distributes that data to a third party or one or
more Users outside the Distributor's own entity.''
\7\ A Professional User of an Exchange Market Data product is
any User other than a Non-Professional User.
\8\ A ``Non-Professional User'' of an Exchange Market Data
product is a natural person or qualifying trust that uses Data only
for personal purposes and not for any commercial purpose and, for a
natural person who works in the United States, is not: (i)
registered or 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 202(a)(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.
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Currently there are no market participants that are taking the ETF
Implied Liquidity feed. As such, the Exchange no longer wishes to
maintain or offer this product and therefore proposes to decommission
the ETF Implied Liquidity feed and delete the corresponding reference
to the product from its Fee Schedule.\9\
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\9\ The Exchange intends to also submit a corresponding rule
filing to eliminate reference to this feed in the Exchange's
Rulebook under Exchange Rule 11.22(n). See SR-CboeBZX-2023-059.
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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 that the proposal to
decommission the ETF Implied Liquidity feed and remove reference to the
feed and corresponding fees in the Fee Schedule is appropriate given
the non-usage of the product among market participants. Further, the
ETF Implied Liquidity feed is optional, and its use is not a
prerequisite for trading on the Exchange. The Exchange also notes that
is not required to maintain or offer any one proprietary market data
product, including the ETF Implied Liquidity feed. The Exchange also
believes that the proposed rule change is fair and equitable and is not
designed to permit unfair discrimination as it applies uniformly to all
Members (i.e., the product will no longer be available for any Member).
Eliminating reference to this feed in the Exchange's Fee Schedule will
promote clarity in the rules as to what data products may or may not be
available. The Exchange has also provided notice of such
termination.\14\
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\14\ See Exchange Notice C2023073104, ``Cboe Equities Fee
Schedule Updates Effective August 1, 2023'' issued on July 31, 2023
available at <a href="https://cdn.cboe.com/resources/fee_schedule/2023/Cboe-Equities-Exchanges-Fee-Schedule-Updates-Effective-August-1-2023.pdf">https://cdn.cboe.com/resources/fee_schedule/2023/Cboe-Equities-Exchanges-Fee-Schedule-Updates-Effective-August-1-2023.pdf</a>.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The ETF Implied Liquidity
feed is an optional data feed offered by the Exchange, it is not a
prerequisite to trading on the Exchange, and the Exchange is not
required to offer or maintain such feed.
The Exchange believes that the proposed deletion does impose any
intramarket competition as it applies to all Members (i.e. the product
will no longer be available to any Member). The Exchange believes that
the proposed rule change also does not impose any undue burden on
intermarket competition. The ETF Implied Liquidity feed is an optional
data product offered by the Exchange and market participants are not
required to subscribe to it and the Exchange is not required to offer
it. Moreover, the proposed change is not being submitted for
competitive reasons, but rather to eliminate a data product that is not
being actively used by market participants today.
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 \15\ and paragraph (f) of Rule 19b-4 \16\
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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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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#c5b7b0a9a0e8a6aaa8a8a0abb1b685b6a0a6eba2aab3"><span class="__cf_email__" data-cfemail="4b393e272e66282426262e253f380b382e28652c243d">[email protected]</span></a>. Please include
file number SR-CboeBZX-2023-060 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-CboeBZX-2023-060. 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
[[Page 58336]]
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-CboeBZX-2023-060 and should be submitted
on or before September 15, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-18305 Filed 8-24-23; 8:45 am]
BILLING CODE 8011-01-P
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