Notice2023-21795
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Relating to the Sale of Open-Close Volume Data
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 3, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 190 (Tuesday, October 3, 2023)</title>
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[Federal Register Volume 88, Number 190 (Tuesday, October 3, 2023)]
[Notices]
[Pages 68237-68240]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-21795]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98571; File No. SR-CBOE-2023-055]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule Relating to the Sale of Open-Close Volume Data
September 27, 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 September 25, 2023, Cboe Exchange, Inc. (the ``Exchange'' or
``Cboe Options'') 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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend its Fees Schedule relating to the sale of Open-Close volume
data. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx">http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx</a>), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.
[[Page 68238]]
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 Fees Schedule to offer a free
trial for an ad-hoc request of up to six (6) historical months of
Intraday Open-Close historical data to all Cboe Options Trading Permit
Holders (``TPHs'') and non-TPHs who have never subscribed to the
Intraday Open-Close historical files or previously received a free
trial, effective September 25, 2023.
By way of background, the Exchange currently offers End-of-Day
(``EOD'') and Intraday Open-Close Data (collectively, ``Open-Close
Data''). EOD Open-Close Data is an end-of-day volume summary of trading
activity on the Exchange at the option level by origin (customer,
professional customer, broker-dealer, and market maker), side of the
market (buy or sell), price, and transaction type (opening or closing).
The customer and professional customer volume is further broken down
into trade size buckets (less than 100 contracts, 100-199 contracts,
greater than 199 contracts). The Open-Close Data is proprietary Cboe
Options trade data and does not include trade data from any other
exchange. It is also a historical data product and not a real-time data
feed. The Exchange also offers Intraday Open-Close Data, which provides
similar information to that of Open-Close Data but is produced and
updated every 10 minutes during the trading day. Data is captured in
``snapshots'' taken every 10 minutes throughout the trading day and is
available to subscribers within five minutes of the conclusion of each
10-minute period.\3\ The Intraday Open-Close Data provides a volume
summary of trading activity on the Exchange at the option level by
origin (customer, professional customer, broker-dealer, and market
maker), side of the market (buy or sell), and transaction type (opening
or closing). The customer and professional customer volume are further
broken down into trade size buckets (less than 100 contracts, 100-199
contracts, greater than 199 contracts). The Intraday Open-Close Data is
also proprietary Cboe Options trade data and does not include trade
data from any other exchange.
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\3\ For example, subscribers to the intraday product will
receive the first calculation of intraday data by approximately 9:42
a.m. ET, which represents data captured from 9:30 a.m. to 9:40 a.m.
Subscribers will receive the next update at 9:52 a.m., representing
the data previously provided together with data captured from 9:40
a.m. through 9:50 a.m., and so forth. Each update will represent the
aggregate data captured from the current ``snapshot'' and all
previous ``snapshots.''
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Cboe LiveVol, LLC (``LiveVol''), a wholly owned subsidiary of the
Exchange's parent company, Cboe Global Markets, Inc., makes the Open-
Close Data available for purchase to TPHs and non-TPHs on the LiveVol
DataShop website (<a href="http://datashop.cboe.com">datashop.cboe.com</a>). Customers may currently purchase
Intraday Open-Close Data on a subscription basis (monthly or annually)
or by ad hoc request for a specified month (e.g., request for Intraday
Open-Close Data for month of August 2023).
Open-Close Data is subject to direct competition from similar end-
of-day and intraday options trading summaries offered by several other
options exchanges.\4\ All of these exchanges offer essentially the same
end-of-day and intraday options trading summary information.
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\4\ These substitute products are: Nasdaq PHLX Options Trade
Outline, Nasdaq Options Trade Outline, ISE Trade Profile, GEMX Trade
Profile data; open-close data from C2 Options, BZX, and EDGX; and
Open Close Reports from MIAX Options, Pearl, and Emerald.
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Free Trial
The Exchange seeks to re-establish a free trial for historical ad
hoc requests for Intraday Open-Close Data for new purchasers.
Currently, ad hoc requests for historical Intraday Open-Close Data are
available to all customers at the same price and in the same manner.
The current charge for this historical Intraday Open-Close Data
covering all of the Exchange's securities (Equities, Indexes & ETF's)
is $1,000 per month. The Exchange previously offered a free trial
during the months of September, October, November and December 2022 for
an ad-hoc request of three (3) historical months of Intraday Open-Close
historical data to all Cboe Options Trading Permit Holders (``TPHs'')
and non-TPHs who have never before subscribed to the Intraday Open-
Close historical files.\5\
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\5\ See Securities Exchange Act Release No. 34-95736 (September
12, 2022), 87 FR 57005 (September 16, 2022) (SR-CBOE-2022-044).
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The Exchange now proposes to reestablish a free trial and amend the
Fees Schedule to provide a total up to six (6) historical months of
Intraday Open-Close Data to any TPH or non-TPH that has not previously
subscribed to this offering or previously received a free trial.\6\ As
noted above, the Exchange previously offered a free trial period
recently for the months of September through December 2022. The
Exchange believes bringing back the proposed trial, on a general six-
month basis, will again serve as an incentive for new users who have
never purchased Intraday Open-Close historical data (or received such
data via a previous free trial offer) to start purchasing Intraday
Open-Close historical data. Particularly, the Exchange believes it will
give potential subscribers the ability to use and test the data
offering before signing up for additional months. The Exchange also
notes another exchange offers a free trial for new subscribers of a
similar data product.\7\ Lastly, the purchase of Intraday Open-Close
historical data is discretionary and not compulsory.
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\6\ For example, if a TPH or non-TPH that has never made an ad-
hoc request for a specified month of Intraday Open-Close historical
data wishes to purchase Intraday Open-Close Data for the months of
January, February, March, April, May and June 2023 during the month
of September 2023, the historical files for those months would be
provided free of charge. If a new user wishes to purchase Intraday
Open-Close historical data for the months of January, February,
March, April, May, June, and July 2023 during the month of September
2023, then the data for January, February, March, April, May, and
June 2023 would be provided free of charge, and the new user would
be charged $1,000 for the July 2023 historical file.
\7\ See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A.,
Nasdaq ISE Open/Close Trade Profile End of Day.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\8\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \9\ 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,
[[Page 68239]]
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) \10\ requirement that the rules
of an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ Id.
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In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation and competition for the
provision of market data. The Exchange believes the proposed fee change
will further broaden the availability of U.S. option market data to
investors consistent with the principles of Regulation NMS. Open-Close
Data is designed to help investors understand underlying market trends
to improve the quality of investment decisions. Indeed, subscribers to
the data may be able to enhance their ability to analyze option trade
and volume data and create and test trading models and analytical
strategies. The Exchange believes Open-Close Data provides a valuable
tool that subscribers can use to gain comprehensive insight into the
trading activity in a particular series, but also emphasizes such data
is not necessary for trading and as noted above, is entirely optional.
Moreover, several other exchanges offer a similar data product which
offer same type of data content through end-of-day or intraday
reports.\11\
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\11\ See supra note 4.
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The Exchange also operates in a highly competitive environment.
Indeed, there are currently 16 registered options exchanges that trade
options. Based on publicly available information, no single options
exchange has more than 15% of the market share.\12\ 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.'' \13\ Making similar data products available to
market participants fosters competition in the marketplace, and
constrains the ability of exchanges to charge supracompetitive fees. In
the event that a market participant views one exchange's data product
as more or less attractive than the competition they can and do switch
between similar products. The proposed fees are a result of the
competitive environment, as the Exchange seeks to adopt a fee waiver to
attract future purchasers of historical Intraday Open-Close Data.
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\12\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (September 12, 2023), available at <a href="https://markets.cboe.com/us/options/market_statistics/">https://markets.cboe.com/us/options/market_statistics/</a>.
\13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange believes that the proposed free trial for any TPH or
non-TPH who has not previously purchased Intraday Open-Close historical
data or received a free trial is reasonable because such users would
not be subject to fees for up to 6 months' worth of Intraday Open-Close
historical data. The Exchange believes the proposed free trial is also
reasonable as it will give potential subscribers the ability to use and
test the Intraday Open-Close historical data prior to purchasing
additional months and will therefore encourage and promote new users to
purchase the Intraday Open-Close historical data. The Exchange believes
that the proposed discount is equitable and not unfairly discriminatory
because it will apply equally to all TPHs and non-TPHs who have not
previously purchased Intraday Open-Close historical data or previously
received a free trial. Also as noted above, another exchange offers a
free trial to new users for a similar data product \14\ and the
Exchange itself recently offered a similar free trial.\15\ Lastly, the
purchase of this data product is discretionary and not compulsory.
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\14\ See supra note 7.
\15\ See supra note 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange operates in a
highly competitive environment in which the Exchange must continually
adjust its fees to remain competitive. Because competitors are free to
modify their own fees in response, the Exchange believes that the
degree to which fee changes in this market may impose any burden on
competition is extremely limited.
As discussed above, Open-Close Data is subject to direct
competition from several other options exchanges that offer substitutes
to Open-Close. Moreover, purchase of Open-Close is optional. It is
designed to help investors understand underlying market trends to
improve the quality of investment decisions, but is not necessary to
execute a trade.
The proposed rule change is grounded in the Exchange's efforts to
compete more effectively. The Exchange is proposing to provide a free
trial for market participants to test investment strategies and trading
models, and develop market sentiment indicators. This change will not
cause any unnecessary or inappropriate burden on intermarket
competition, but rather will promote competition by encouraging new
market participants to investigate the product. Other exchanges are, of
course, free to match this change or undertake other competitive
responses, enhancing overall competition. Indeed, as discussed, another
exchange currently offers a similar free-trial period for similar
data.\16\
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\16\ See supra note 7.
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The proposed rule change will not cause any unnecessary or
inappropriate burden on intramarket competition. Particularly, the
proposed rule change will apply to all TPHs and non-TPHs who have never
made an ad-hoc request to purchase Intraday Open-Close historical data.
Moreover, purchase of Intraday Open-Close historical files is
discretionary and not compulsory.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \17\ and paragraph (f) of Rule 19b-4 \18\
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
[[Page 68240]]
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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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 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#f684839a93db95999b9b93988285b6859395d8919980"><span class="__cf_email__" data-cfemail="2250574e470f414d4f4f474c5651625147410c454d54">[email protected]</span></a>. Please include
file number SR-CBOE-2023-055 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-CBOE-2023-055. 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-CBOE-2023-055 and should be
submitted on or before October 24, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21795 Filed 10-2-23; 8:45 am]
BILLING CODE 8011-01-P
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