Notice2024-24940
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Company Listing Fees in BZX Rule 14.13
Primary source
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Published
October 28, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 208 (Monday, October 28, 2024)</title>
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[Federal Register Volume 89, Number 208 (Monday, October 28, 2024)]
[Notices]
[Pages 85574-85576]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-24940]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101406; File No. SR-CboeBZX-2024-097]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Company Listing Fees in BZX Rule 14.13
October 22, 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 October 9, 2024, Cboe BZX Exchange, Inc. (``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II 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. (``BZX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (``Commission'' or ``SEC'')
a proposed rule change to amend the fees applicable to securities
listed on the Exchange, which are set forth in BZX Rule 14.13, Company
Listing Fees. 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/equities/regulation/rule_filings/BZX/">http://markets.cboe.com/us/equities/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
On January 1, 2019, the Exchange adopted an entry fee for exchange-
traded products (``ETPs'') \3\ that are not ``Generically-Listed
ETPs''.\4\ The entry fee adopted in the Original Entry Fee Filing
imposed a maximum entry fee on an issuer basis of $22,500 per calendar
year. Now, the Exchange proposes to eliminate the yearly $22,500
maximum entry fee (the ``entry fee cap'') applied to issuers. The
Exchange also proposes to amend Rule 14.13 in order to adopt a separate
fee of $3,500 per ETP for Companies \5\ that make a change to a product
already approved for listing and trading on the Exchange that requires
a proposed rule change pursuant to Section 19(b) of the Exchange Act
(an ``Exchange Rule Filing Amendment'').\6\
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\3\ As defined in Rule 11.8(e)(1)(A), the term ``ETP'' means any
security listed pursuant to Exchange Rule 14.11.
\4\ ``Generically-Listed ETPs'' refers to all ETPs, with the
exception of Index Fund Shares, Portfolio Depositary Receipts,
Managed Fund Shares, Linked Securities, Currency Trust Shares, and
Exchange-Traded Fund Shares that are listed on the Exchange pursuant
to Rule 19b-4(e) under the Exchange Act and for which a proposed
rule change pursuant to Section 19(b) of the Exchange Act is not
required to be filed with the Commission. See Exchange Rule
14.13(b)(1)(B)(v)(a). See Securities Exchange Act No. 83597 (July 5,
2018) 83 FR 32164 (July 11, 2018) (SR-CboeBZX-2018-046) (the
``Original Entry Fee Filing'').
\5\ See Exchange Rule 14.1(a)(3).
\6\ The Exchange initially filed the proposed fee change on
September 12, 2024 (SR-CboeBZX-2024-086). On September 19, 2024, the
Exchange withdrew that filing and submitted SR-CboeBZX-2024-090. On
September 30, 2024, the Exchange withdrew that filing and submitted
SR-CboeBZX-2024-095. On October 9, 2024, the Exchange withdrew that
filing and submitted this proposal.
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[[Page 85575]]
Entry Fee Cap
Rule 14.13(b)(1)(B)(v) sets forth the entry fees applicable to
ETPs, which charge an entry fee of $7,500 per ETP that is not a
Generically-Listed ETP. Specifically, ETPs that are not Generically-
Listed ETPs require an Exchange Rule Filing \7\ to list and trade the
ETP on the Exchange, and thus require significantly more time and
Exchange resources to bring to market than Generically-Listed ETPs.
Rule 14.13(b)(1)(B)(v)(a)(2) also provides that each issuer will be
subject to an aggregate maximum entry fee of $22,500 per calendar year.
Therefore, an issuer is only required to pay an entry fee for a maximum
of three new ETPs that are not Generically Listed ETPs per year.
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\7\ An initial Exchange Rule Filing refers to the proposed rule
change filed pursuant to Section 19(b) of the Exchange Act required
to initially list and trade an ETP on the Exchange. See Exchange
Rule 14.13(b)(1)(B)(v)(a).
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Now, the Exchange proposes to eliminate the yearly $22,500 entry
fee cap applied to ETP issuers. The Exchange believes that eliminating
the entry fee cap would address the costs associated with preparing
more than three Exchange Rule Filings for an issuer on an annual basis.
The Exchange also proposes to combine the text of existing Exchange
Rule 14.13(b)(1)(B)(v)(a)(1) and Exchange Rule 14.13(b)(1)(B)(v)(a) and
to correspondingly delete the (1) from the Rulebook.
Exchange Rule Filing Amendment Fee
The Exchange also proposes to adopt Rule 14.13(b)(4) which would
provide for an Exchange Rule Filing Amendment fee of $3,500 per ETP.
The proposed Exchange Rule Filing Amendment fee would apply to a
Company that makes a change to a product already approved for listing
and trading on the Exchange that would require the Exchange to prepare
an Exchange Rule Filing Amendment. In general, any change that requires
a new or amended representation from the initial Exchange Rule Filing
would require an Exchange Rule Filing Amendment. Such a fee would be
used to address the costs associated with preparing and submitting an
Exchange Rule Filing Amendment when Companies make a change that would
require such an amendment. The Exchange notes that Companies making
multiple changes that are addressed in the same Exchange Rule Filing
Amendment would only be charged $3,500 total and would not be charged
for each individual change in the Exchange Rule Filing Amendment.\8\
The Exchange will charge for each Exchange Rule Filing Amendment unless
it is in furtherance of the same continuous effort. Specifically,
similar to existing Rule 14.13(b)(1)(B)(v)(a)(1), proposed Rule
14.13(b)(4) would provide that an Exchange Rule Filing Amendment will
be considered in furtherance of the same continuous effort if: the
Exchange Rule Filing Amendment is required for ministerial purposes
related to another previously filed Exchange Rule Filing Amendment,\9\
or if the Exchange Rule Filing Amendment is withdrawn and refiled
within 30 calendar days.\10\
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\8\ An Exchange Rule Filing Amendment that modified
representations across multiple ETPs in the same Exchange Rule
Filing Amendment would be charged the fee for each individual ETP.
\9\ Specifically, the Exchange would not assess an additional
fee to an ETP in the event that an Exchange Rule Filing Amendment
was submitted to the Commission, rejected by the Commission, and
shortly thereafter resubmitted. Instances where Exchange Rule Filing
Amendments are either rejected or withdrawn and refiled shortly
thereafter often involve minor or ministerial errors that are in
furtherance of the same continuous effort.
\10\ The proposed fee would not be applicable to an amendment to
an open Exchange Rule Filing Amendment. For example, assume the
Exchange has already made an Exchange Rule Filing Amendment to amend
a representation in the initial filing to list and trade the ETP. If
another Exchange Rule Filing Amendment (e.g., amendment no. 2 to the
previously filed Exchange Rule Filing Amendment) is necessary, the
Exchange would not charge an additional Exchange Rule Filing
Amendment fee. As another example, if a partial amendment no. 3 is
needed to that Exchange Rule Filing Amendment, the Exchange would
not charge an additional Exchange Rule Filing Amendment Fee for that
partial amendment. Stated differently, the proposed fee would not be
applicable to an amendment to an open Exchange Rule Filing
Amendment.
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The Exchange proposes to implement the proposed fees effective
September 10, 2024.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\11\ Additionally, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \12\ requirement that the rules
of an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \13\
as it is designed to 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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\11\ 15 U.S.C. 78f(b).
\12\ Id.
\13\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that proposed Rules 14.13(b)(1)(B)(v)(a) and
14.13(b)(4), which are both designed to address the Exchange's costs in
preparing and filing Exchange Rule Filings and Exchange Rule Filing
Amendments, are reasonable, fair and equitable, and not an unfairly
discriminatory allocation of fees and other charges because they would
apply equally to all Companies. Specifically, the Exchange's proposal
to eliminate the entry fee cap for ETPs would only impact Companies
that require more than three Exchange Rule Filings in a given calendar
year. As each Exchange Rule Filing requires significant Exchange
resources on an individual basis, and because there is no reduced cost
to the Exchange for preparing multiple Exchange Rule Filings for a
single Company, the Exchange believes it reasonable to address the
Exchange's cost in preparing such Exchange Rule Filings even if they
exceed three in a given year for a given Company. The Exchange also
believes its proposal to adopt an Exchange Rule Filing Amendment fee is
reasonable given the additional resources required by the Exchange in
connection with ETPs requiring an Exchange Rule Filing Amendment
pursuant to Section 19(b), specifically the significant additional time
and extensive legal and business resources required by Exchange staff
to prepare and review such filings and to communicate with issuers and
the Commission regarding such filings.
The Exchange believes the technical change to combine Rule
14.13(b)(1)(B)(v)(a) and Rule 14.13(b)(1)(B)(v)(a)(1) is consistent
with Section 6(b)(1) \14\ because it will allow Members of the Exchange
to more easily interpret Exchange Rules.
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\14\ 15 U.S.C. 78f(b)(1).
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Furthermore, the marketplace for listings is extremely competitive
and there are several other national securities exchanges that offer
ETP listings. Transfers between listing venues occur frequently for
numerous reasons, including listing fees. The proposed rule change
reflects a competitive pricing structure, which the Exchange believes
will enhance competition both among ETP issuers and listing venues, to
the benefit of investors.
Based on the foregoing, the Exchange believes that the proposed
rule changes are consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance
[[Page 85576]]
of the purposes of the Act. With respect to the proposal to eliminate
the entry fee cap for ETPs and adopt a new fee for each Exchange Rule
Filing Amendment, the Exchange does not believe that the changes burden
competition, but instead, enhance competition, as they are intended to
address the costs associated with preparing an Exchange Rule Filing and
Exchange Rule Filing Amendment when Companies require such filings. As
such, the proposal is a competitive proposal designed to enhance
pricing competition among listing venues and implement pricing for such
rule filings that better reflects expenses associated with listing ETPs
on the Exchange. The Exchange does not believe the proposed amendment
would burden intramarket competition as the proposed fee would be
assessed to all issuers uniformly that require more than three Exchange
Rule Filings in a given year or an Exchange Rule Filing Amendment.
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 \15\ and paragraph (f) of Rule 19b-4 \16\
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.
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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#0b797e676e26686466666e657f784b786e68256c647d"><span class="__cf_email__" data-cfemail="c2b0b7aea7efa1adafafa7acb6b182b1a7a1eca5adb4">[email protected]</span></a>. Please include
file number SR-CboeBZX-2024-097 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-2024-097. 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-2024-097 and should
be submitted on or before November 18, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-24940 Filed 10-25-24; 8:45 am]
BILLING CODE 8011-01-P
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