Notice2024-07966
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
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Published
April 16, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 74 (Tuesday, April 16, 2024)</title>
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[Federal Register Volume 89, Number 74 (Tuesday, April 16, 2024)]
[Notices]
[Pages 26966-26969]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-07966]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99937; File No. SR-CBOE-2024-017]
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
April 10, 2024.
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 April 1, 2024, 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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[[Page 26967]]
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
(``Silexx platform''),\3\ effective April 1, 2024.
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\3\ Cboe Silexx, Inc. (``Cboe Silexx''), which is a subsidiary
of the Exchange's parent, Cboe Global Markets, Inc., offers the
Silexx platform.
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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.
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 integrated into or
directly connected to Cboe Options' 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 to establish connectivity and submit
orders directly 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 to establish connectivity and submit
orders directly to the Exchange.\5\ Cboe Silexx is essentially the same
platform as Silexx FLEX, with the same applicable functionality, except
that it additionally supports non-FLEX trading. Use 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. Only authorized
Users and associated persons of Users may establish connectivity to
and directly access the Exchange, pursuant to Rule 5.5 and the
Exchange's technical specifications.
\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 and the Exchange's technical specifications.
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The Exchange has adopted fees for additional functionality that
users may purchase in connection with their use of the Silexx platform.
The Exchange offers each type of additional functionality as a
convenience and use of each type of additional functionality is
discretionary and not compulsory. For example, for the Legacy
platforms, the Exchange assesses a fee for use of the ``Staged Orders,
Drop Copies, and Order Routing Functionality for FIX Connections
(sessions) Using Third-Party FIX Router'' feature. This functionality
provides firms with the ability to receive staged orders, receive
``drop copies'' of order fill messages, and route orders to executing
brokers through a third-party FIX router.
By way of background, Financial Information eXchange (``FIX'') is
an industry-standard, non-proprietary API that permits market
participants to connect to exchanges. FIX connectivity provides users
with the ability to receive ``drop copy'' order fill messages from
their executing brokers. These fill messages allow customers to update
positions, risk calculations, and streamline back-office functions.
Additionally, FIX connections can be updated to permit the platform to
receive orders sent from another system and then route these orders
through the platform for execution (staged orders) as well as provide
users with the ability to route orders in various ways to executing
brokers (such as designation of a market to which the broker is to
route an order received from the platform and use of a broker's ``smart
router'' functionality). Some users have connections to third-party FIX
routers, who currently normalize the format of messages of their
client. To the extent a FIX router has a connection to the Silexx
platform, users that also have connections to these routers may elect
to receive staged orders, drop copies, and order routing functionality
through a FIX router. Additionally, the Silexx platform permits users
to elect to receive daily transmission of equity order reports related
to order users submit through the platform.
As noted above, for the Legacy Platforms, the Exchange assesses a
fee for use of the ``Staged Orders, Drop Copies, and Order Routing
Functionality for FIX Connections (sessions) Using Third-Party FIX
Router'' feature. Currently, the Exchange assesses a fee of $500 per
month per FIX connection, and such fee is waived for FLEX and Cboe
Silexx. Similarly, the Exchange assesses a fee for orders routed via
FIX into Cboe Silexx,
[[Page 26968]]
applicable to each TPH broker to whom a TPH customer using a non-Cboe
Silexx workstation sends orders electronically to a TPH broker's Silexx
workstation. The fee is $500 per month for each TPH broker with a
Silexx workstation to which the TPH customer sends orders.
The Exchange now proposes to adopt an additional order routing fee
for Cboe Silexx, effective April 1, 2024. Particularly, the Exchange
proposes to adopt a ``FIX order routing out of Cboe Silexx'' fee which
would be payable by each receiving trading firms (such as an executing
broker) that maintains a FIX router connected to the Silexx platform to
receive orders electronically from a Silexx workstation, The proposed
fee is $500 per month per receiving trading firm, regardless of how
many Silexx workstations it connects to.
The proposed fee is substantially similar to the ``FIX order
routing into Cboe Silexx'' fee, which assesses $500 per month for each
receiving Trading Permit Holder that uses a non-Silexx workstation to
send orders electronically into (as compared to out of) a TPH broker's
Cboe Silexx workstation to which the TPH customer sends orders.
Additionally, the Silexx Fees Schedule also currently provides for a
``Staged Orders, Drop Copies, and Order Routing Functionality for FIX
Connections (sessions) Using Third-Party FIX Router'' fee set forth in
the Silexx Fees Schedule, which is applicable to Legacy Platforms and
currently waived for FLEX and Cboe Silexx. As noted above, Silexx users
that have connections to these third-party FIX routers may elect to
receive staged orders, drop copies, and order routing functionality
through the FIX route. Establishing the monthly fee for the Cboe Silexx
platform will allow for Cboe Silexx's recoupment of the costs of
maintaining and supporting FIX order routing out of Cboe Silexx to
third-party entities.
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. 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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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
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In particular, the Exchange believes the proposed monthly fee for
FIX order routing out of Cboe Silexx is reasonable, equitable, and not
unfairly discriminatory because the fee will apply uniformly to all
receiving trading firms that elect to establish and maintain a FIX
router connection to the Cboe Silexx platform. The Exchange notes that
each additional type of Silexx functionality, including FIX order
routing out of Cboe Silexx, are available to all market participants,
and users have discretion to determine which, if any, types of
functionality to purchase. The Exchange believes the monthly fee for
FIX order routing out of Cboe Silexx functionality, as proposed, is
reasonable, as the fee is the same as an analogous fee currently
charged for similar functionality on the Legacy Platforms, and as well
as for Cboe Silexx as it relates to FIX order routing into Cboe Silexx
functionality. Additionally, the Exchange believes the proposed fee is
reasonable as it accounts for administrative costs that Cboe Silexx is
incurring, but not charging users, to maintain support for these third-
party FIX routers.
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.
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 the
proposed rule change will apply to similarly situated participants
uniformly, as described in detail above. The Exchange notes that each
additional type of Silexx functionality is available to all market
participants, and users have discretion to determine which, if any,
types of functionality to purchase.
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.
Further, the proposed rule change relates to an optional platform. 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, including for routing orders to the Exchange (indirectly or
directly if they are authorized Users). Use of the functionality is
completely voluntary.
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.
[[Page 26969]]
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 \9\ and paragraph (f) of Rule 19b-4 \10\
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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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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#a7d5d2cbc28ac4c8cacac2c9d3d4e7d4c2c489c0c8d1"><span class="__cf_email__" data-cfemail="94e6e1f8f1b9f7fbf9f9f1fae0e7d4e7f1f7baf3fbe2">[email protected]</span></a>. Please include
file number SR-CBOE-2024-017 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-2024-017. 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
10:00 a.m. and 3:00 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-2024-017 and should
be submitted on or before May 7, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-07966 Filed 4-15-24; 8:45 am]
BILLING CODE 8011-01-P
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