Notice2024-00847
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule To Add Historical Depth Data Fee
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
January 18, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 12 (Thursday, January 18, 2024)</title>
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[Federal Register Volume 89, Number 12 (Thursday, January 18, 2024)]
[Notices]
[Pages 3459-3462]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-00847]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99325; File No. SR-C2-2024-001]
Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule To Add Historical Depth Data Fee
January 11, 2024.
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 January 2, 2024, Cboe C2 Exchange, Inc. (the ``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
amend 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 its Fees Schedule, effective January
2, 2024.
By way of background, the Exchange currently makes available for
purchase Depth Data, which is a daily archive of the Exchange's depth
of book real-time feed, which provides depth-of-book quotations and
execution information based on options orders entered into the
System.\3\ The Exchange also offers Historical Depth Data, for no
charge, which offers such data on a historical basis, i.e., T+1 or
later, dating back to October 2019. The Depth Data and Historical Depth
Data are available to Members and Non-Members on the Cboe LiveVol, LLC
(``LiveVol'') website,\4\ for internal use only; LiveVol is a wholly
owned subsidiary of the Exchange's parent company, Cboe Global Markets,
Inc.
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\3\ See Exchange Fees Schedule. Daily end-of-day delivery is
provided via the DataShop SFTP. Files will typically become
available after 8 p.m. ET; see also Exchange Rule 1.1, which defines
``System.''
\4\ See <a href="https://datashop.cboe.com/cboe-us-options-multicast-pitch">https://datashop.cboe.com/cboe-us-options-multicast-pitch</a>.
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The Exchange and affiliated equities and options exchanges (i.e.,
Cboe Exchange, Inc. (``Cboe Options''), Cboe EDGX Exchange, Inc.
(``EDGX''), Cboe BYX Exchange, Inc. (``BYX''), Cboe BZX Exchange, Inc.
(``BZX''), and Cboe EDGA Exchange, Inc. (``EDGA'') (collectively,
``Affiliates'') also offer similar data products. Particularly, each of
the Exchange's Affiliates offer a daily and historical archive of their
depth of book real-time feed with execution information based on their
trading
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activity that is substantially similar to the information provided by
the Exchange through its Depth Data products.
Currently, the Exchange provides Historical Depth Data to users
without a charge. Since the Exchange first began offering access to
historical quotation and transactions data, the Exchange has made a
number of significant enhancements to its platform, including, among
other things, implementing a more efficient means of data delivery (via
SFTP rather than shipment of hard drives), which consequently increases
the value of the market data product.
The Exchange now proposes to amend its Fees Schedule and assess a
fee of $500 per month of Historical Depth Data accessed by a user. As
is currently the case, the data will be provided to data recipients for
internal use only, and thus, no redistribution will be permitted.
The Exchange notes that the Depth Data products, including the
Historical Depth Data, are completely voluntary products, in that the
Exchange is not required by any rule or regulation to make the reports
or services available and that potential subscribers may purchase it
only if they voluntarily choose to do so. Further, the Exchange notes
that other exchanges offer similar products for a fee.\5\
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\5\ See, e.g., <a href="https://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#nom">https://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#nom</a>; and <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf</a>.
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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.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ 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) \8\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. The Exchange also believes the proposed rule
change is consistent with Section 6(b)(4) of the Act,\9\ 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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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
\9\ 15 U.S.C. 78f(b)(4).
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The Exchange believes the proposed change to adopt a fee for
Historical Depth Data is reasonable. 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 also operates in a highly competitive environment.
Indeed, there are currently 17 registered options exchanges that trade
options. Based on publicly available information, no single options
exchange has more than 12% of the market share.\10\ 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.'' \11\ 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 Exchange believes the proposed change
will continue to broaden the availability of U.S. option market data to
investors consistent with the principles of Regulation NMS.
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\10\ See Cboe Global Markets U.S. Options Market Volume Summary
(December 18, 2023), available at <a href="https://markets.cboe.com/us/options/market_statistics/">https://markets.cboe.com/us/options/market_statistics/</a>.
\11\ 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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Additionally, the Exchange believes the proposed changes to the
Historical Depth Data fee are reasonable, as the Exchange's Historical
Depth Data is a competitively priced alternative to historical depth of
book data disseminated by other national securities exchanges. The
Exchange's Depth Data products, including Historical Depth Data,
benefits a wide range of investors that participate in the national
market system. As noted above, Nasdaq and NYSE have similar Depth Data
offerings for a charge.\12\ The Exchange therefore believes that the
proposed fees are reasonable and set at a level to compete with other
exchanges that offer similar reports. Indeed, proposing fees that are
excessively higher than established fees for similar data products
would simply serve to reduce demand for the Exchange's data product,
which as noted, is entirely optional. As such, if a market participant
views another exchange's potential report as more attractive, then such
market participant can merely choose not to purchase the Exchange's
Historical Depth Data offering and instead purchase another exchange's
similar data product, which offers similar data points, albeit based on
other market's trading activity. Further, the Exchange believes the
fees are reasonable since, as proposed, they represent a relatively
modest fee for historical depth of book data that has proven valuable
for investors.
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\12\ See supra note 5.
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The Exchange also believes that the proposed fee is reasonable
because it is reasonably aligned with the value and benefits provided
to users that choose to purchase Historical Depth Data from the
Exchange. As discussed above, Historical Depth Data may be beneficial
to Members and non-Members as it may provide helpful trading
information regarding investor sentiment that may allow market
participants to make more informed trading decisions and may be used to
create and test trading models and analytical strategies and provide
comprehensive insight into trading on the Exchange. As noted above,
since first offering Historical Depth Data, the Exchange has made a
number of significant enhancements to its platform, including, among
other things, implementing a more efficient means of data delivery (via
SFTP rather than shipment of hard drives), which consequently increases
the value of the market data product. Finally, the Exchange believes
that the proposed change to the Exchange's Historical
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Depth Data offerings is equitable and not unfairly discriminatory
because the change to the offering applies to all current and potential
subscribers of the products uniformly, in that all subscribers will be
assessed the new proposed fee for purchases of Historical Depth Data.
As stated, purchase of Historical Depth Data is completely optional and
not necessary for trading. Rather, the Exchange voluntarily makes
Historical Depth Data available, and users may choose to purchase the
data based on their own individual business needs.
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. As discussed above, the
Exchange's Historical Depth Data offering is subject to direct
competition from several other exchanges that offer similar data
products. The proposed rule changes are grounded in the Exchange's
efforts to compete more effectively. In this competitive environment,
potential purchasers are free to choose which, if any, similar product
to purchase to satisfy their need for market information. As a result,
the Exchange believes the proposed rule changes permit fair competition
among national securities exchanges.
Additionally, the Exchange believes the proposed rule change does
not impose any burden on intramarket competition that is not necessary
or appropriate in furtherance of the purposes of the Act. The change to
the Historical Depth Data offering applies to all current and potential
subscribers of the product uniformly, in that all subscribers will be
assessed the same fee for subscribing to receive Historical Depth Data.
Moreover, purchase of Historical Depth Data is optional.
Further, the Exchange also 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. As
noted above, other exchanges offer similar data products, which are
similarly priced.\13\ 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 16
other options exchanges and off-exchange venues. Additionally, the
Exchange represents a small percentage of the overall market. Based on
publicly available information, no single options exchange has more
than 12% of the market share.\14\ Therefore, no exchange possesses
significant pricing power in the execution of option order flow.
Indeed, participants can readily choose to send their orders to other
exchange and off-exchange venues if they deem fee levels at those other
venues to be more favorable. Moreover, the Commission has repeatedly
expressed its preference for competition over regulatory intervention
in determining prices, products, and services in the securities
markets. Specifically, 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.'' \15\ The fact that this market is competitive has also
long been recognized by the courts. In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .''.\16\ 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.
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\13\ See supra note 5.
\14\ See supra note 10.
\15\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\16\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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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 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#6715120b024a04080a0a020913142714020449000811"><span class="__cf_email__" data-cfemail="cab8bfa6afe7a9a5a7a7afa4beb98ab9afa9e4ada5bc">[email protected]</span></a>. Please include
file number SR-C2-2024-001 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-C2-2024-001. 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
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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-C2-2024-001 and should be submitted on
or before February 8, 2024.
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. 2024-00847 Filed 1-17-24; 8:45 am]
BILLING CODE 8011-01-P
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