Notice2024-18342
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule Concerning the Sales Value 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
August 16, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 159 (Friday, August 16, 2024)</title>
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[Federal Register Volume 89, Number 159 (Friday, August 16, 2024)]
[Notices]
[Pages 66746-66748]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-18342]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100695; File No. SR-CboeBZX-2024-073]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule Concerning the Sales Value Fee
August 12, 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 July 30, 2024, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule
[[Page 66747]]
change as described in Items 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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') 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="https://www.cboe.com/us/options/regulation/rule_filings/bzx/">https://www.cboe.com/us/options/regulation/rule_filings/bzx/</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 to add language
concerning the application and collection of the Sales Value Fee, as
described below. The proposed changes to the Fees Schedule do not
change how the Exchange calculates or collects the Sales Value Fee from
its Members, i.e., there are no changes to the application and
assessment of the Sales Value Fee as a result of the proposed changes.
By way of background, Section 31 of the Securities Exchange Act of
1934 (the ``Act'') \3\ requires each self-regulatory organization
(``SRO'') to pay the Securities and Exchange Commission (``SEC'' or
``Commission'') twice annually a fee based on the aggregate dollar
amount of certain sales of securities (i.e., ``covered sales''). A
covered sale is a ``sale of a security, other than an exempt sale or a
sale of a security future, occurring on a national securities exchange
or by or through any member of a national securities association
otherwise than on a national securities exchange.'' \4\ Assessing a
sales fee to defray the cost of these fees is common practice among the
national securities exchanges and associations,\5\ and in fact the
Exchange currently assesses a fee on its Members for covered sales on
the Exchange to recoup these amounts. The Exchange now proposes to
amend its Fees Schedule to include information regarding this fee,
including an explanation and description of the fee and how it is
collected.
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\3\ 17 CFR 240.31.
\4\ 17 CFR 240.31(a)(6).
\5\ See, e.g., ISE Options 7, Section 12; NASDAQ Options 7,
Section 8; NYSE Rule 393; and Cboe Options Fees Schedule, Sales
Value Fee.
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Specifically, the Exchange proposes to add a section to the Fees
Schedule labeled ``Sales Value Fee''. The proposed new section defines
the Sales Value Fee (``Fee'') as the fee assessed by the Exchange to
each Member for sales in securities when a sale in option securities
occurs with respect to which the Exchange is obligated to pay a fee to
the SEC under Section 31 of the Exchange Act or when a sell order in
option securities is routed for execution at a market other than the
Exchange, resulting in a covered sale on that market and an obligation
of the routing broker providing Routing Services for the Exchange, as
described in Exchange Rule 21.9, to pay the related sales fee of that
market. The proposed section provides that to the extent the Exchange
may collect more from Members under the section than is due from the
Exchange to the Commission under Section 31 of the Act, for example due
to rounding differences, the excess monies collected may be used by the
Exchange to fund its general operating expenses. The Exchange may
reimburse its routing broker for all Section 31-related fees incurred
by the routing broker in connection with the Routing Services it
provides.
The proposed section explains that the transactions to which the
Fee applies are sales of options (other than options on a security
index). The Fee is collected indirectly from Members through their
clearing firms by the Options Clearing Corporation (``OCC'') on behalf
of the Exchange with respect to options sales and options exercises.
The proposed section also sets forth the formula for calculating
the Fee. Specifically, the Fee with respect to options sales and
options exercises is equal to (i) the Section 31 fee rate multiplied by
(ii) the Member's aggregate dollar amount of covered sales resulting
from options transactions occurring on the Exchange during any
computational period. The Exchange notes that if the SEC's Section 31
fee rate changes in the middle of a month, the Exchange will perform a
separate calculation with respect to covered sales under the new fee
rate for the remaining portion of the month.
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 Members 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 that the proposed rule change is consistent
with these requirements because the proposed amended Fees Schedule text
provides Members with detail regarding the circumstances under which
the Exchange assesses a Sales Value Fee, and the current process by
which the Fee is collected. As such, the proposed changes will increase
transparency, help avoid Member confusion and foster better
understanding of the application of the Fee. Accordingly, the Exchange
believes the proposed rule change will promote just and equitable
principles of
[[Page 66748]]
trade, remove impediments to and perfect the mechanism of a free and
open market and a national market system, and protect investors and the
public interest. Further, the Exchange believes the proposed change is
reasonable, given that assessing a sales fee to defray the cost of fees
assessed under Section 31 of the Act is common practice among the
national securities exchanges and associations.\10\
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\10\ See, e.g., ISE Options 7, Section 12; NASDAQ Options 7,
Section 8; NYSE Rule 393; and Cboe Options Fees Schedule, Sales
Value Fee.
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As noted above, the proposed changes to the Fees Schedule do not
change how the Exchange calculates or collects the Sales Value Fee from
its Members, i.e., there are no changes to the application and
assessment of the Sales Value Fee as a result of the proposed changes.
Rather, the proposed changes will provide a more complete and accurate
description of the Sales Value Fee (including an explanation of the Fee
and how it is collected) to all Members. The Exchange believes the
proposed change represents an equitable allocation of fees and is not
unfairly discriminatory because it applies uniformly to all Members.
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 the proposed changes will impose any burden on intramarket
competition. Particularly, the proposed change applies uniformly to all
Members, in that the Sales Value Fee will continue to be applied
uniformly to all Members' applicable orders.
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. As noted above,
assessing a sales fee to defray the cost of fees assessed under Section
31 of the Act is common practice among the national securities
exchanges and associations.\11\
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\11\ See, e.g., ISE Options 7, Section 12; NASDAQ Options 7,
Section 8; NYSE Rule 393; and Cboe Options Fees Schedule, Sales
Value Fee.
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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 \12\ and paragraph (f) of Rule 19b-4 \13\
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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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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#3a484f565f17595557575f544e497a495f59145d554c"><span class="__cf_email__" data-cfemail="bac8cfd6df97d9d5d7d7dfd4cec9fac9dfd994ddd5cc">[email protected]</span></a>. Please include
file number SR-CboeBZX-2024-073 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-CboeBZX-2024-073. 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-CboeBZX-2024-073 and should
be submitted on or before September 6, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-18342 Filed 8-15-24; 8:45 am]
BILLING CODE 8011-01-P
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