Notice2024-14385
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule
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Published
July 1, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 126 (Monday, July 1, 2024)</title>
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[Federal Register Volume 89, Number 126 (Monday, July 1, 2024)]
[Notices]
[Pages 54550-54552]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-14385]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100426; File No. SR-CBOE-2024-027]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule
June 25, 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 June 12, 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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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. 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 its Fees Schedule, effective June 3,
2024.\3\ Specifically, the Exchange proposes to adopt and amend certain
fees related to transactions in Mini-SPX Index (``XSP'') options.
Specifically, the proposed rule change amends and adopts certain fees
for XSP in the Rate Table for All Products Excluding Underlying Symbol
List A, as follows:
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\3\ The Exchange initially filed the proposed fee changes on
June 3, 2024 (SR-CBOE-2024-024). On June 11, 2024, the Exchange
withdrew that filing and submitted SR-CBOE-2024-026. On June 12,
2024, the Exchange withdrew that filing and submitted this proposal.
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<bullet> Adopts fee code MP, appended to all Market-Maker (capacity
``M'') orders in XSP that are executed manually (i.e., open outcry) and
assesses a fee of $0.15 per contract; and amends fee code MC, currently
appended to all Market-Maker (capacity ``M'') orders in XSP that are
contra customer (executed manually and electronically) and assesses a
fee of $0.15 per contract, to apply only to Market-Maker (capacity
``M'') orders in XSP that are contra customer and that are executed
electronically.
<bullet> Amends fee code MX, currently appended to all Market-Maker
(capacity ``M'') orders in XSP contra to non-customers and assesses a
fee of $0.09 per contract, to apply to all Market-Maker orders in XSP
contra to non-customers that add liquidity and that are executed
electronically.
<bullet> Adopts fee code MY, appended to all Market-Maker (capacity
``M'') in XSP contra to non-customers that remove liquidity and that
are executed electronically and assesses a fee of $0.14 per contract.
<bullet> Amends fee code XF, appended to all Clearing Trading
Permit Holders (``TPHs'') (capacity ``F'') and Non-Clearing TPH
Affiliates (capacity ``L'') orders in XSP and assesses a fee of $0.13,
to apply to all Clearing Trading Permit Holders (``TPHs'') (capacity
``F''), Non-Clearing TPH Affiliates (capacity ``L''), Broker-Dealer
(capacity ``B''), Joint Back-Office (capacity ``J''), Non-TPH Market-
Maker (capacity ``N''), and Professional (capacity ``U'')
(collectively, ``Non-Market Makers, Non-Customers'') orders in XSP
contra to a customer or contra to a non-customer that add liquidity and
to assess a fee of $0.30 per contract.
<bullet> Amends fee code XB, appended to all Broker-Dealer
(capacity ``B''), Joint Back-Office (capacity ``J''), Non-TPH
[[Page 54551]]
Market-Maker (capacity ``N''), and Professional (capacity ``U'') orders
in XSP and assesses a fee of $0.17 per contract, to apply to all Non-
Market Maker, Non-Customer orders in XSP contra to a non-customer that
remove liquidity and to assess a fee of $0.50 per contract.
Adopts fee code XN, appended to all Non-Market Maker, Non-Customer
orders in XSP that are executed manually (i.e., open outcry) and
assesses a fee of $0.30 per contract.
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.\4\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \5\ 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) \6\ 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,\7\ 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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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
\6\ Id.
\7\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed fees for Market-Maker and
Non-Customer, Non-Market Maker orders in XSP are reasonable, equitable
and not unfairly discriminatory.
The Exchange believes the proposed changes to the fee structure for
Market-Maker orders in XSP are reasonable. The proposed fees, in
general, align with current fees for Market-Maker orders in XSP, with
minor distinctions based on execution method, capacity of the contra-
party, and orders that add liquidity and those that remove liquidity.
The Exchange notes that it is not novel to charge different fees based
on capacity of contra-party, and that current fees for Market-Maker
orders in XSP contain such a distinction. Further, other exchanges
offer varying fees based on whether an order adds or removes
liquidity.\8\
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\8\ See EDGX Options Fees Schedule and BZX Options Fees
Schedule.
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The Exchange believes it is reasonable to assess lower fees for
Market-Maker orders in XSP that are contra to a non-customer and add
liquidity, and are executed electronically, as such changes are
designed to incentivize an increase in non-customer liquidity-adding
volume in XSP on the Exchange. The Exchange believes that incentivizing
more non-customer orders in XSP will create more trading opportunities,
which, in turn attracts Market-Makers. A resulting increase in Market-
Maker activity facilitates tighter spreads, which may lead to
additional increase of order flow in XSP from other market
participants, further contributing to a deeper, more liquid market to
the benefit of all market participants by creating a more robust and
well-balanced market ecosystem. Further, the Exchange believes that the
changes are reasonable and that the fees, even as amended, will
continue to incentivize TPHs to send additional Market-Maker orders to
the Exchange.
Additionally, the Exchange believes that it is equitable and not
unfairly discriminatory to assess lower fees, in general, to Market-
Makers as compared to other market participants other than Customers
because Market-Makers, unlike other market participants, take on a
number of obligations, including quoting obligations, that other market
participants do not have. Further, these lower fees offered to Market-
Makers are intended to incent Market-Makers to quote and trade more on
the Exchange, thereby providing more trading opportunities for all
market participants.
The Exchange also believes the proposed changes to the fee
structure for Non-Customer, Non-Market Maker orders in XSP are
reasonable. As noted above, it is not novel to charge different fees
based on capacity of contra-party, and other exchanges offer varying
fees based on whether an order adds or removes liquidity.\9\ The
Exchange believes assessing higher fees in general for Non-Customer,
Non-Market Maker orders is reasonable, equitable, and non-
discriminatory because, as noted above, the obligations and
circumstances between market participants differ. The Exchange believes
assessing a higher fee for Non-Customer, Non-Market Maker XSP orders
contra a non-customer that remove liquidity and are executed
electronically is reasonable because it provides an incentive to
maintain non-customer liquidity at the Exchange, thereby promoting
price discovery and enhancing order execution opportunities for all
TPHs. Similarly, the Exchange believes assessing a lower fee for Non-
Customer, Non-Market Maker XSP orders contra to a customer or contra to
a non-customer that add liquidity and are executed electronically is
reasonable because it provides an incentive to add liquidity at the
Exchange, including in customer volume, thereby promoting price
discovery and enhancing order execution opportunities for all TPHs.
Finally, while the fees proposed apply to an Exchange proprietary
product, which are traded exclusively on the Exchange, the Exchange
notes that the proposed fees are generally in line with the options
trading fees of at least one other exchange.\10\
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\9\ See EDGX Options Fees Schedule and BZX Options Fees
Schedule.
\10\ See BOX Fees Schedule, Section IV(A).
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The Exchange believes that the proposed fees for Market-Maker and
Non-Customer, Non-Market Maker orders in XSP are equitable and not
unfairly discriminatory because the proposed fees will apply
automatically and uniformly to all Market-Maker and Non-Customer, Non-
Market Maker orders in XSP, as applicable. The Exchange notes that all
fee amounts applicable to Market-Makers will be applied equally to all
Market-Makers, i.e., all Market Makers will be assessed the same
amount. Similarly, the Exchange notes that the XSP fee amounts for each
separate type of other market participant will be assessed equally to
all such market participants, i.e., all Non-Customer and Non-Market-
Maker orders will be assessed the same amount.
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 does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because the XSP fee amounts for
each separate type of market participants will
[[Page 54552]]
be assessed equally to all such market participants. While different
fees are assessed to different market participants in some
circumstances, the obligations and circumstances between these market
participants differ, as discussed above. For example, Market-Makers
have quoting obligations that are not applicable to other market
participants. Further, the proposed fees structure for XSP is intended
to encourage more trading of XSP, which brings liquidity to the
Exchange and benefits all market participants.
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 fees assessed apply to an Exchange proprietary product, which
are traded exclusively on the Exchange.
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 \11\ and paragraph (f) of Rule 19b-4 \12\
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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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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#5f2d2a333a723c3032323a312b2c1f2c3a3c71383029"><span class="__cf_email__" data-cfemail="e99b9c858cc48a8684848c879d9aa99a8c8ac78e869f">[email protected]</span></a>. Please include
file number SR-CBOE-2024-027 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-2024-027. 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-2024-027 and should be
submitted on or before July 22, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-14385 Filed 6-28-24; 8:45 am]
BILLING CODE 8011-01-P
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