Notice2023-22812
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Fees for the Cboe Silexx Platform
Primary source
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Published
October 17, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 199 (Tuesday, October 17, 2023)</title>
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[Federal Register Volume 88, Number 199 (Tuesday, October 17, 2023)]
[Notices]
[Pages 71619-71621]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-22812]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98722; File No. SR-CBOE-2023-060]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Fees for the Cboe Silexx Platform
October 11, 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 October 5, 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 fees for the Cboe Silexx platform. 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.
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 fees for the Cboe Silexx platform
(``Cboe Silexx''), effective September 29, 2023.\3\ By way of
background, the Silexx platform consists of a ``front-end'' order entry
and management trading platform (also referred to as the ``Silexx
terminal'') for listed stocks and options that supports both simple and
complex orders, and a ``back-end'' platform which provides a connection
to the infrastructure network. From the Silexx platform (i.e., the
collective front-end and back-end platform), a Silexx user has the
capability to send option orders to U.S. options exchanges, send stock
orders to U.S. stock exchanges (and other trading centers), input
parameters to control the size, timing, and other variables of their
trades, and also includes access to real-time options and stock market
data, as well as access to certain historical data. The Silexx platform
is designed so that a user may enter orders into the platform to send
to an executing broker (including Trading Permit Holders (``TPHs'')) of
its choice with connectivity to the platform, which broker will then
send the orders to Cboe Options (if the broker is a TPH) or other U.S.
exchanges (and trading centers) in accordance with the user's
instructions. The Silexx front-end and back-end platforms are a
software application that is installed locally on a user's desktop.
Silexx grants users licenses to use the platform, and a firm or
individual does not need to be a TPH to license the platform.
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\3\ The Exchange initially filed the proposed fee changes on
September 29, 2023 (SR-CBOE-2023-059). On October 5, 2023, the
Exchange withdrew that filing and submitted this proposal.
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The Exchange offers several versions of its Silexx platform.
Originally, the Exchange offered the following versions of the Silexx
platform: Basic, Pro, Sell-Side, Pro Plus Risk and Buy-Side Manager
(``Legacy Platforms''). The Legacy Platforms are designed so that a
User may enter orders into the platform to send to the executing
broker, including TPHs, of its choice with connectivity to the
platform. The executing broker can then send orders to Cboe Options (if
the broker-dealer is a TPH) or other U.S. exchanges (and trading
centers) in accordance with the User's instructions. Users cannot
directly route orders through any of the Legacy Platforms to an
exchange or trading center nor is the platform
[[Page 71620]]
integrated into or directly connected to Cboe Option's System. In 2019,
the Exchange made available a new version of the Silexx platform,
Silexx FLEX, which supports the trading of FLEX Options and allows
authorized Users with direct access to the Exchange.\4\ In 2020, the
Exchange made an additional version of the Silexx platform available,
Cboe Silexx, which supports the trading of non-FLEX Options and allows
authorized Users with direct access to the Exchange.\5\ Cboe Silexx is
essentially the same platform as Silexx FLEX, with the same applicable
functionality, except that it additionally supports direct access for
non-FLEX trading. Use of any version of the Silexx platform is
completely optional.
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\4\ See Securities Exchange Act Release No. 87028 (September 19,
2019) 84 FR 50529 (September 25, 2019) (SR-CBOE-2019-061). Only
Users authorized for direct access and who are approved to trade
FLEX Options may trade FLEX Options via Cboe Silexx.
\5\ See Securities Exchange Act Release No. 88741 (April 24,
2020) 85 FR 24045 (April 30, 2020) (SR-CBOE-2020-040). Only
authorized Users and associated persons of Users may establish
connectivity to and directly access the Exchange, pursuant to Rule
5.5.
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The Exchange has also assessed Login ID fees for each Silexx
Platform. Particularly, the Exchange assesses the following monthly
fees (per Login ID): $200 for Basic, $400 for Pro, $475 for Sell-Side,
$600 for Pro Plus Risk, $300 for Buy-Side Manager, and with respect to
Cboe Silexx, $399 for the first 16 Login IDs, $299 per each additional
Login ID for the next 16 Login IDs, and a fee of $199 per each
additional Login ID thereafter (i.e., 33+ Login IDs). No fee is
assessed for Silexx FLEX. The Exchange also charges a Market Data Feeds
fee, for connections to other market data feeds. For the Market Data
Feeds fee, the fee is the actual cost, determined on a time (per hour)
and materials basis, which is passed through to the user.
The Exchange is transitioning the Legacy Platforms to the current
version of Cboe Silexx.\6\ While each user completes the transition,
they may choose to have access to both the old and new versions of Cboe
Silexx. Once their transition is complete, the user will only have
access to the new version. The Exchange proposes to provide for a
waiver of any duplicative fees incurred because of the transition.
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\6\ Only authorized Users and associated persons of Users will
continue to be able to establish connectivity to and directly access
the Exchange, pursuant to Rule 5.5. Unauthorized Users will not be
able to connect directly to the Exchange. The new Cboe Silexx
platform will function in the same manner as the Legacy Platforms
versions currently available to Users: it will be completely
voluntary; orders entered through the platform will receive no
preferential treatment as compared to orders electronically sent to
Cboe Options in any other manner; orders entered through the
platform will be subject to current trading rules in the same manner
as all other orders sent to the Exchange, which is the same as
orders that are sent through the Exchange's System today; the
Exchange's System will not distinguish between orders sent from
Silexx and orders sent in any other manner; and Silexx will provide
technical support, maintenance and user training for the new
platform version upon the same terms and conditions for all Users.
The Exchange plans to decommission the Legacy Platforms at a future
to-be-determined date, at which time the Legacy Platforms will be
unavailable to users.
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Specifically, the Exchange proposes a waiver for new users of Cboe
Silexx who are migrating from the Legacy Platforms of any Cboe Silexx
Login ID fees that are incurred during the migration for up to two
months. Login ID fees for the Legacy Platforms will continue to apply
to migrating users, as applicable (i.e., to extent users which to
retain the ability to login to both versions of the platform during the
migration period). Similarly, the Exchange proposes a waiver of any
duplicative Market Data Feeds fees incurred by users during the
migration to the new Cboe Silexx since, while each user completes the
transition, they could receive market data on both versions (old and
new) of the platform.
The proposed waivers will allow users of Cboe Silexx to transition
to the new version of the platform without incurring duplicative Login
ID and Market Data Feed fees for access to both the old and new
versions of Cboe Silexx during this transitional period. The Exchange
also believes not assessing duplicative fees for Users transitioning to
Cboe Silexx will serve as an incentive to market participants to start
using the Cboe Silexx platform, while also providing time and
flexibility for such Users to become familiar with and fully acclimated
to the new platform.
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.\7\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \8\ 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) \9\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. Additionally, the Exchange also believes the
proposed rule change is consistent with Section 6(b)(4) of the Act,
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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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ Id.
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In particular, the Exchange believes the proposed rule change is
reasonable, equitable, and not unfairly discriminatory because the fee
waivers will apply to new users of Cboe Silexx who are migrating from
the Legacy Platforms. The Exchange believes waiving the Login ID and
Market Data Feed fees for Cboe Silexx during this transition period is
reasonable because it will allow all TPHs that migrate to the Cboe
Silexx platform to avoid having to pay duplicative fees that they would
otherwise have to pay as a result of the migration to the platform. The
waivers are also reasonable, equitable and not unfairly discriminatory
because the waiver applies to users who are already subject to a
monthly Login ID fee (albeit for the Legacy Platform), as well as
Market Data Feed fees (for those receiving it on the Legacy Platform).
Additionally, the fee waiver period will be limited to the timeframe
during which such Users have access to the old and new version of Cboe
Silexx and would otherwise result in duplicative fees. The Exchange
further believes a fee waiver of two months is an appropriate and
reasonable amount of time for Users to become familiar with and fully
acclimated to the new platform and therefore able to terminate their
connection to the Legacy Platforms.
Finally, the Exchange notes that use of the platform, is
discretionary and not compulsory, as users can choose to route orders,
including to Cboe Options, without the use of the platform. The
Exchange makes the platform available as a convenience to market
participants, who will continue to have the option to use any order
entry and management system available in the marketplace to send orders
to the Exchange and other exchanges; the platform is merely an
alternative offered by the Exchange.
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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 proposed change will not
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because proposed
rule change applies to all users who are migrating to Cboe Silexx from
the Legacy Platforms and are already paying Login ID and/or market data
fees, as applicable. Further, the proposed rule change relates to an
optional platform. The proposed fee amendments will apply to similarly
situated participants uniformly, as described in detail above. As
discussed, the use of the platform continues to be completely voluntary
and market participants will continue to have the flexibility to use
any entry and management tool that is proprietary or from third-party
vendors, and/or market participants may choose any executing brokers to
enter their orders. The Cboe Silexx platform is not an exclusive means
of trading, and if market participants believe that other products,
vendors, front-end builds, etc. available in the marketplace are more
beneficial than Cboe Silexx, they may simply use those products
instead. Use of the functionality is completely voluntary.
The Exchange does not believe that the proposed rule changes will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed change applies only to Cboe Options. Additionally, Cboe Silexx
is similar to types of products that are widely available throughout
the industry, including from some exchanges, at similar prices. To the
extent that the proposed changes make Cboe Options a more attractive
marketplace for market participants at other exchanges, such market
participants are welcome to become Cboe Options market participants.
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 \10\ and paragraph (f) of Rule 19b-4 \11\
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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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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#443631282169272b2929212a3037043721276a232b32"><span class="__cf_email__" data-cfemail="0c7e796069216f6361616962787f4c7f696f226b637a">[email protected]</span></a>. Please include
file number SR-CBOE-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-CBOE-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 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-2023-060 and should be
submitted on or before November 7, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-22812 Filed 10-16-23; 8:45 am]
BILLING CODE 8011-01-P
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