Notice2024-25536
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule
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
November 4, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 213 (Monday, November 4, 2024)</title>
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[Federal Register Volume 89, Number 213 (Monday, November 4, 2024)]
[Notices]
[Pages 87706-87708]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-25536]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101465; File No. SR-CBOE-2024-048]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule
October 29, 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 October 18, 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 Fee 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 update its Fee Schedule to provide a
temporary 20% discount on fees assessed to Exchange Trading Permit
Holders and non-Trading Permit Holders that purchase $20,000 or more of
ad hoc purchases of CBOE Options Historical Depth Data (``Historical
Depth Reports''), effective October 18, 2024 through December 31, 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.
The Exchange also offers Historical Depth Data, which offers such data
on a historical basis, i.e., T+1 or later. The Historical Depth Report
is a completely voluntary product, in that the Exchange is not required
by any rule or regulation to make this data available and that
potential customers may purchase it on an ad-hoc basis only if they
voluntarily choose to do so.
Cboe LiveVol, LLC (``LiveVol''), a wholly owned subsidiary of the
Exchange's parent company, Cboe Global Markets, Inc., makes the
Historical Depth Report available for purchase to Users on the LiveVol
DataShop website (<a href="http://datashop.cboe.com">datashop.cboe.com</a>). The Historical Depth Data is
available for purchase to Trading Permit Holders and non-Trading Permit
Holders; the Exchange charges a fee per month of historical data of
$1,500. The Historical Depth Report provided on a historical basis is
only provided to data recipients for internal use only, and thus, no
redistribution will be permitted. The Exchange notes that the
Historical Depth Report is subject to direct competition from other
exchanges, as other exchanges offer similar products for a fee.\3\
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\3\ 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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The Exchange and affiliated equities and options exchanges (i.e.,
Cboe C2 Exchange, Inc. (``C2 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.\4\ Particularly,
[[Page 87707]]
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 activity that is substantially similar to the
information provided by the Exchange through its Depth Data products.
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\4\ See, for example, EDGX Fee Schedule, BZX Fee Schedule, BYX
Fee Schedule.
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The Exchange proposes to provide a temporary pricing incentive
program in which Trading Permit Holders or non-Trading Permit Holders
that purchase Historical Depth Reports will receive a percentage fee
discount where specific purchase thresholds are met. Specifically, the
Exchange proposes to provide a temporary 20% discount for ad-hoc
purchases of Historical Depth Data of $20,000 or more.\5\ The proposed
program will apply to all market participants irrespective of whether
the market participant is a new or current purchaser; however, the
discount cannot be combined with any other discounts offered by the
Exchange. The Exchange intends to introduce the discount program
beginning October 18, 2024, with the program remaining in effect
through December 31, 2024. The Exchange also notes that it previously
adopted similar discount programs for other historical data products
offered by the Exchange.\6\
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\5\ The discount will apply on an order-by-order basis. The
discount will apply to the total purchase price, once the $20,000
minimum purchase is satisfied (for example, a qualifying order of
$25,000 would be discounted to $20,000, i.e. receive a 20% discount
of $5,000).
\6\ See Securities Exchange Act Release No. 99028 (November 28,
2023), 88 FR 84002 (December 1, 2023) (SR-CBOE-2023-061) and
Securities Exchange Act Release No. 100370 (June 18, 2024), 89 FR
53148 (June 25, 2024) (SR-CBOE-2024-025).
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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.\7\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \8\ 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) \9\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ Id.
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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 believes that the proposed fee
changes will further broaden the availability of U.S. options market
data to investors consistent with the principles of Regulation NMS. The
Exchange believes the dissemination of historical depth of book data
via Historical Depth Reports benefits investors through increased
transparency and may promote better informed trading, as well as
research and studies of the options industry. Nevertheless, the
Exchange notes that such data is not necessary for trading and as noted
above, is entirely optional. Moreover, several other exchanges offer a
similar data product which offer the same type of data content through
similar reports.\10\
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\10\ See supra note 4.
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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 17% of the market share.\11\ 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.'' \12\ 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 proposed fees are a result of the
competitive environment, as the Exchange seeks to adopt fees to attract
purchasers of Historical Depth Reports.
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\11\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (October 1, 2024), available at <a href="https://markets.cboe.com/us/options/market_statistics/">https://markets.cboe.com/us/options/market_statistics/</a>.
\12\ 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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The Exchange believes that the proposed incentive program for any
Member or non-Member who purchases Historical Depth Reports is
reasonable because such purchasers would receive a 20% discount for
purchasing $20,000 or more worth of Historical Depth Reports. The
Exchange believes the proposed discount is reasonable as it will give
purchasers the ability to use and test the Historical Depth Reports at
a discounted rate, prior to purchasing additional months or a monthly
subscription, and will therefore encourage and promote users to
purchase the Historical Depth Reports. Further, the proposed discount
is intended to promote increased use of the Exchange's Historical Depth
Reports by defraying some of the costs a purchaser would ordinarily
have to expend before using the data product. The Exchange believes
that the proposed discount is equitable and not unfairly discriminatory
because it will apply equally to all Trading Permit Holders and non-
Trading Permit Holders who purchase Historical Depth Reports. Lastly,
the purchase of this data product is discretionary and not compulsory.
Indeed, no market participant is required to purchase the Historical
Depth Reports, and the Exchange is not required to make Historical
Depth Reports available to all investors. Potential purchasers may
request the data at any time if they believe it to be valuable or may
decline to purchase such data. As noted above, the Exchange has
previously adopted this discount program at other times.\13\
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\13\ See Securities Exchange Act Release No. 99028 (November 28,
2023), 88 FR 84002 (December 1, 2023) (SR-CBOE-2023-061) and
Securities Exchange Act Release No. 100370 (June 18, 2024), 89 FR
53148 (June 25, 2024) (SR-CBOE-2024-025).
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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 operates in a
highly competitive environment in which the Exchange must continually
adjust its fees to remain competitive. Because competitors are free to
modify their own
[[Page 87708]]
fees in response, including the adoption of similar discounts to those
fees, the Exchange believes that the degree to which fee changes
(including discounts and rebates) in this market may impose any burden
on competition is extremely limited. As discussed above, the Exchange's
Historical Depth Reports offering is subject to direct competition from
several other options exchanges that offer similar data products.
Moreover, purchase of Historical Depth Reports is optional. It is
designed to help investors understand underlying market trends to
improve the quality of investment decisions, but is not necessary to
execute a trade.
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 this proposed rule change permits fair competition
among national securities exchanges. Further, the Exchange believes
that these changes will not cause any unnecessary or inappropriate
burden on intermarket competition, as the proposed incentive program
applies uniformly to any purchaser of Historical Depth Reports.
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 \14\ and paragraph (f) of Rule 19b-4 \15\
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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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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#8efcfbe2eba3ede1e3e3ebe0fafdcefdebeda0e9e1f8"><span class="__cf_email__" data-cfemail="b9cbccd5dc94dad6d4d4dcd7cdcaf9cadcda97ded6cf">[email protected]</span></a>. Please include
file number SR-CBOE-2024-048 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-2024-048. 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-2024-048 and should be
submitted on or before November 25, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-25536 Filed 11-1-24; 8:45 am]
BILLING CODE 8011-01-P
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