Notice2024-27215
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fees Schedule
Primary source
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Published
November 21, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 225 (Thursday, November 21, 2024)</title>
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[Federal Register Volume 89, Number 225 (Thursday, November 21, 2024)]
[Notices]
[Pages 92235-92238]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-27215]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101634; File No. SR-CBOE-2024-050]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fees Schedule
November 15, 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 November 1, 2024, Cboe Exchange, Inc. (the
[[Page 92236]]
``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
November 1, 2024.
The Exchange first proposes to amend a fee related to transactions
in Mini-SPX Index (``XSP'') options, as set forth in the Rate Table for
All Products Excluding Underlying Symbol List A. Specifically, the
proposed rule change amends 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 $0.30 per
contract, to assess a fee of $0.50 per contract.
Next, the Exchange proposes clarifying changes to fees related to
certain orders and auction responses executed in S&P 500 Index
(``SPX''), SPX Weekly (``SPXW''), S&P 500 ESG Index (``SPESG'') and
Cboe Volatility Index (``VIX'') options in the Automated Improvement
Mechanism (``AIM'') Auction.
By way of background, AIM includes functionality in which a Trading
Permit Holder (``TPH'') (an ``Initiating TPH'') may electronically
submit for execution an order it represents as agent on behalf of a
customer,\3\ broker dealer, or any other person or entity (``Agency
Order'') against any other order it represents as agent, as well as
against principal interest in AIM (an ``Initiating Order''), provided
it submits the Agency Order for electronic execution into an AIM
Auction.\4\ The Exchange may designate any class of options traded on
Cboe Options as eligible for AIM. The Exchange notes that all Users,
other than the Initiating TPH, may submit responses to an Auction
(``AIM Responses''). AIM Auctions take into account AIM Responses to
the applicable Auction as well as contra interest resting on the Cboe
Options Book at the conclusion of the Auction (``unrelated orders''),
regardless of whether such unrelated orders were already present on the
Book when the Agency Order was received by the Exchange or were
received after the Exchange commenced the applicable Auction. If
contracts remain from one or more unrelated orders at the time the
Auction ends, they are considered for participation in the AIM order
allocation process.
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\3\ The term ``customer'' means a Public Customer or a broker-
dealer. The term ``Public Customer'' means a person that is not a
broker-dealer. See Rule 1.1.
\4\ See Rule 5.37 (AIM); Rule 5.38 (Complex AIM); and Rule 5.73
(FLEX AIM).
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Certain AIM-related surcharges under the Rate Table for Underlying
Symbol List A apply when the Exchange is operating in a hybrid
environment (i.e., the trading floor is operable). Specifically, the
SPX AIM Hybrid Surcharge of $0.50 per contract applies to all Joint
Back-Office (capacity ``J''), Market-Maker (capacity ``M''), Broker-
Dealer (capacity ``B''), Non-TPH Market-Maker (capacity ``N'') and
Professional (capacity ``U'') (collectively, ``Non-Customers) orders in
SPX/SPXW options executed in AIM, while the SPX AIM Hybrid Surcharge of
$0.39 per contract applies to all Clearing TPHs (capacity ``F'') and
for Non-Clearing TPH Affiliates (capacity ``L'') (collectively,
``Firms'') orders in SPX/SPXW options executed in AIM. The SPX AIM
Hybrid Originator Surcharge of $0.10 per contract applies to all SPX/
SPXW Agency/Primary orders. Footnote 26 is appended to the
aforementioned surcharges and provides that the SPX AIM Hybrid
Surcharges, including the Originator Surcharge, apply only to SPX/SPXW
orders executed in AIM and C-AIM during Regular Trading Hours (``RTH'')
when the Exchange is operating in a hybrid environment (i.e., the
trading floor is operable). Footnote 26 further provides the SPX AIM
Hybrid Surcharge will apply to all SPX/SPXW AIM Agency/Primary, Contra
and Response orders; and the SPX AIM Hybrid Originator Surcharge will
apply to all SPX/SPXW Agency/Primary orders and such fee will be
invoiced to the executing TPH.\5\
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\5\ See Securities Exchange Act Release No. 91252 (March 3,
2021), 86 FR 13598 (March 9, 2021) (SR-CBOE-2021-021[sic]), wherein
the Exchange adopted these surcharges.
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In contrast, the Exchange notes that the Rate Table for Underlying
Symbol List A includes the following fees, which apply when the
Exchange trading floor is inoperable: AIM Response Surcharge Fee (for
SPX/SPXW and SPESG) of $0.05 per contract, AIM Contra Surcharge Fee
(for SPX/SPXW and SPESG) of $0.10 per contract, and AIM Agency/Primary
Surcharge Fee (for SPX/SPXW) of $0.10 per contract and (for VIX) of
$0.04 per contract.\6\
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\6\ See Securities Exchange Act Release No. 88883 (May 15,
2020), 85 FR 31012 (May 21, 2020) (SR-CBOE-2020-045), wherein the
Exchange adopted the AIM Contra Surcharge and the AIM Response
Surcharge. See also Securities Exchange Act Release No. 88426 (March
19, 2020), 85 FR 16978 (March 25, 2020) (SR-CBOE-2020-021), wherein
the Exchange adopted the AIM Execution Surcharge for SPX/SPXW/VIX
AIM Agency/Primary Orders (later re-named the AIM Agency/Primary
Surcharge Fee).
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Each of the aforementioned fees has appended to it Footnote 12,
which governs pricing changes in the event the Exchange trading floor
becomes inoperable. Particularly, in the event the trading floor
becomes inoperable, the Exchange will continue to operate in a screen-
based only environment using a floorless configuration of the System
that is operational while the trading floor facility is inoperable. The
Exchange will operate using that configuration only until the
Exchange's trading floor facility becomes operational. Open outcry
trading will not be available in the event the trading floor becomes
inoperable.
The Exchange proposes to amend the titles of the AIM Response
Surcharge Fee, the AIM Contra Surcharge Fee, and the AIM Agency/Primary
Surcharge Fee to include ``(Trading Floor Inoperable)'', to further
distinguish between when the
[[Page 92237]]
various surcharges would be applicable.\7\
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\7\ As part of the proposed rule change, the Exchange proposes
to move the AIM-related surcharges applicable when the Exchange
trading floor is inoperable to be listed below the AIM-related
surcharges applicable when the Exchange is operating in its normal
hybrid environment.
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The Exchange also proposes to amend Footnote 12, to provide clarity
as to when such changes would apply. As noted above, in the event the
trading floor becomes inoperable, the Exchange will continue to operate
in a screen-based only environment using a floorless configuration of
the System that is operational while the trading floor facility is
inoperable. To avoid confusion, since the Exchange also operates a
screen-based only environment during its Global Trading Hours (``GTH'')
trading session, the Exchange propose to amended Footnote 12 to specify
that the Exchange will apply the pricing changes in the event the Cboe
Options trading floor becomes inoperable and the Exchange operates in a
screen-based only environment during RTH, for the duration of the time
the Exchange operates in a screen-based only environment during RTH (as
well as for the Curb session immediately following a RTH trading
session in which the Cboe Options trading floor is inoperable and the
Exchange operates in a screen-based only environment). The Exchange
also propose to add references throughout the footnote to note that
such pricing changes apply when the Exchange operates in a screen-based
only environment during RTH.
The Exchange also proposes to amend Footnote 26 to specify that the
SPX AIM Hybrid Surcharges, including the Originator Surcharge, apply
only to SPX/SPXW Orders executed in AIM (and C-AIM) during RTH and Curb
when the Exchange is operating in a hybrid environment (i.e., the
trading floor is operable).
Finally, the Exchange also proposes to rename certain fees under
the Clearing Trading Permit Holder Fee Cap section of the Fees
Schedule. Specifically, the Exchange proposes to rename ``AIM
Facilitation Contra Order'' to ``AIM Contra Order'' and to rename ``AIM
Solicitation Contra Order'' to ``SAM Contra Order'', to more accurately
reflect terminology used by the Exchange throughout the Fees Schedule
and within the Rulebook.
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.\8\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \9\ 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) \10\ 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,\11\ which
requires that Exchange rules provide for the equitable allocation of
reasonable dues, fees, and other charges among its TPHs and other
persons using its facilities.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ Id.
\11\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed fee change for Market-Maker
orders in XSP that are contra to non-customers that remove liquidity
and that are executed electronically is reasonable, equitable and not
unfairly discriminatory. Specifically, the Exchange believes the
proposed change to the fee for Market-Maker orders in XSP contra to
non-customers that remove liquidity and that are executed
electronically is reasonable. The proposed fee, in general, aligns with
current fees for other types of orders in XSP, namely Clearing Trading
Permit Holder Proprietary XSP orders contra to non-customers that
remove liquidity and are executed electronically (which yield fee code
XB). The Exchange believes that the changes are reasonable and that the
fee, even as amended, will continue to incentivize TPHs to send
additional Market-Maker orders to the Exchange.
The Exchange believes that the proposed fee change to the fee for
Market-Maker orders in XSP contra to non-customers that remove
liquidity and that are executed electronically is equitable and not
unfairly discriminatory because the proposed fee will apply
automatically and uniformly to all applicable Market-Maker orders in
XSP which yield fee code MY.
Additionally, the Exchange believes the clarifying changes to the
Fees Schedule will remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general,
will protect investors and the public interest. Specifically, by
amending the names of fees related to certain orders and auction
responses executed in SPX/SPXW, SPESG and VIX via AIM to better
describe when such fees are applicable, the proposed change is designed
to add clarity within the Fees Schedule. Similarly, by renaming certain
fees under the Clearing Trading Permit Holder Fee Cap section of the
Fees Schedule to more accurately reflect terminology used by the
Exchange throughout the Fees Schedule and within the Rulebook, the
proposed change is designed to mitigate any potential confusion
resulting from outdated terminology. Overall, the changes are intended
to add clarity to the Fees Schedule, thereby mitigating any potential
confusing, to the benefit of investors. The Exchange notes that the
proposed clarifying changes do not change the fees (or applicability of
such fees).
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 related to XSP fee code MY will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed fees will apply automatically and uniformly to all applicable
Market-Maker orders in XSP which yield fee code MY. The Exchange does
not believe the proposed clarifying rule changes will impose any burden
on intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as the changes will not result
in any practical changes to the fees, but rather are being added to
eliminate potential confusion.
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 rule change related to a XSP fee code applies to Exchange
proprietary products, which are traded exclusively on the Exchange. To
the extent that the proposed changes
[[Page 92238]]
make Cboe Options a more attractive marketplace for market participants
at other exchanges, such market participants are welcome to become Cboe
Options market participants. The clarifying rule changes are not
intended to have any impact on competition, as they make no substantive
change to the Fees Schedule and will have no impact on trading 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 \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#87f5f2ebe2aae4e8eaeae2e9f3f4c7f4e2e4a9e0e8f1"><span class="__cf_email__" data-cfemail="186a6d747d357b7775757d766c6b586b7d7b367f776e">[email protected]</span></a>. Please include
file number SR-CBOE-2024-050 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-2024-050. 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-2024-050 and should be
submitted on or before December 12, 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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Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024-27215 Filed 11-20-24; 8:45 am]
BILLING CODE 8011-01-P
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