Notice2025-08843
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule by Revising the Shares Component Applicable to Add/Remove Volume Tiers 1-3
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Published
May 19, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 95 (Monday, May 19, 2025)</title>
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[Federal Register Volume 90, Number 95 (Monday, May 19, 2025)]
[Notices]
[Pages 21377-21381]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-08843]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103029; File No. SR-CboeEDGX-2025-034]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule by Revising the Shares Component Applicable to
Add/Remove Volume Tiers 1-3
May 13, 2025.
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 May 1, 2025, Cboe EDGX Exchange, Inc.
[[Page 21378]]
(``Exchange'' or ``EDGX'') filed with the Securities and Exchange
Commission (``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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
amend its Fee Schedule by revising the shares component applicable to
Add/Remove Volume Tiers 1-3. 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/options/regulation/rule_filings/edgx/">http://markets.cboe.com/us/options/regulation/rule_filings/edgx/</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
Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
amend its Fee Schedule by revising the shares component applicable to
Add/Remove Volume Tiers 1-3.
The Exchange first notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of 16 registered equities exchanges, as well as a
number of alternative trading systems and other off-exchange venues
that do not have similar self-regulatory responsibilities under the
Act, to which market participants may direct their order flow. Based on
publicly available information,\3\ no single registered equities
exchange has more than 15% of the market share. Thus, in such a low-
concentrated and highly competitive market, no single equities exchange
possesses significant pricing power in the execution of order flow. The
Exchange in particular operates a ``Maker-Taker'' model whereby it pays
rebates to members that add liquidity and assesses fees to those that
remove liquidity. The Exchange's Fee Schedule sets forth the standard
rebates and rates applied per share for orders that provide and remove
liquidity, respectively. Currently, for orders in securities priced at
or above $1.00, the Exchange provides a standard rebate of $0.00160 per
share for orders that add liquidity and assesses a fee of $0.0030 per
share for orders that remove liquidity.\4\ For orders in securities
priced below $1.00, the Exchange provides a standard rebate of $0.00003
per share for orders that add liquidity and assesses a fee of 0.30% of
the total dollar value for orders that remove liquidity.\5\
Additionally, in response to the competitive environment, the Exchange
also offers tiered pricing which provides Members opportunities to
qualify for higher rebates or reduced fees where certain volume
criteria and thresholds are met. Tiered pricing provides an incremental
incentive for Members to strive for higher tier levels, which provides
increasingly higher benefits or discounts for satisfying increasingly
more stringent criteria.
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\3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (April 25, 2025), available at <a href="https://www.cboe.com/us/equities/market_statistics/">https://www.cboe.com/us/equities/market_statistics/</a>.
\4\ See EDGX Equities Fee Schedule, Standard Rates.
\5\ Id.
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Add/Remove Volume Tiers
Under footnote 1 of the Fee Schedule, the Exchange currently offers
various Add/Remove Volume Tiers. In particular, the Exchange offers
nine Add/Remove Volume Tiers (Tier 1 through Tier 9) that each pay
Members an enhanced rebate for qualifying orders yielding fee codes
B,\6\ V,\7\ Y,\8\ 3,\9\ or 4,\10\ when a Member reaches certain add or
remove volume-based criteria. The Exchange now proposes to update the
shares component for Add/Remove Volume Tiers 1-3. Currently, the
criteria for Add/Remove Volume Tiers 1-3 is as follows:
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\6\ Fee code B is appended to orders that add liquidity to EDGX
in Tape B securities.
\7\ Fee code V is appended to orders that add liquidity to EDGX
in Tape A securities.
\8\ Fee code Y is appended to orders that add liquidity to EDGX
in Tape C securities.
\9\ Fee code 3 is appended to orders that add liquidity to EDGX
in the pre and post market in Tape A or Tape C securities.
\10\ Fee code 4 is appended to orders that add liquidity to EDGX
in the pre and post market in Tape B securities.
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<bullet> Add/Remove Volume Tier 1 provides an enhanced rebate of
$0.0020 per share for qualifying orders (i.e., orders yielding fee
codes B, V, Y, 3, or 4) where: (1) Member adds an ADV \11\ (excluding
fee codes ZA \12\ and ZO \13\) greater than or equal to 0.15% of the
TCV; \14\ or (2) Member adds an ADV (excluding fee codes ZA and ZO)
greater than or equal to 16,000,000 shares.
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\11\ ADV means average daily volume calculated as the number of
shares added to, removed from, or routed by, the Exchange, or any
combination or subset thereof, per day. ADV is calculated on a
monthly basis.
\12\ Fee code ZA is appended to Retail Orders that add liquidity
to EDGX.
\13\ Fee code ZO is appended to Retail Orders that add liquidity
to EDGX in the pre and post market.
\14\ TCV means total consolidated volume calculated as the
volume reported by all exchanges and trade reporting facilities to a
consolidated transaction reporting plan for the month for which the
fees apply. The Exchange excludes from its calculation of TCV volume
on any day that the Exchange experiences an Exchange System
Disruption, on any day with a scheduled early market close, and the
Russell Reconstitution Day.
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<bullet> Add/Remove Volume Tier 2 provides an enhanced rebate of
$0.0025 per share for qualifying orders (i.e., orders yielding fee
codes B, V, Y, 3, or 4) where: (1) Member adds an ADV (excluding fee
codes ZA and ZO) greater than or equal to 0.18% of the TCV; or (2)
Member adds an ADV (excluding fee codes ZA and ZO) greater than or
equal to 20,000,000 shares.
<bullet> Add/Remove Volume Tier 3 provides an enhanced rebate of
$0.0027 per share for qualifying orders (i.e., orders yielding fee
codes B, V, Y, 3, or 4) where: (1) Member adds an ADV (excluding fee
codes ZA and ZO) greater than or equal to 0.25% of the TCV; or (2)
Member adds an ADV (excluding fee codes ZA and ZO) greater than or
equal to 30,000,000 shares.
The Exchange proposes to update the shares component of Add/Remove
Volume Tiers 1-3, as follows:
<bullet> Proposed Add/Remove Volume Tier 1 provides an enhanced
rebate of $0.0020 per share for qualifying orders (i.e., orders
yielding fee codes B, V, Y, 3, or 4) when: (1) Member adds an ADV
(excluding fee codes ZA and ZO) greater than or equal to 0.15% of the
TCV; or (2) Member adds an ADV (excluding fee codes ZA and ZO) greater
than or equal to 20,000,000 shares.
<bullet> Proposed Add/Remove Volume Tier 2 provides an enhanced
rebate of $0.0025 per share for qualifying orders (i.e., orders
yielding fee codes B, V, Y,
[[Page 21379]]
3, or 4) when: (1) Member adds an ADV (excluding fee codes ZA and ZO)
greater than or equal to 0.18% of the TCV; or (2) Member adds an ADV
(excluding fee codes ZA and ZO) greater than or equal to 30,000,000
shares.
<bullet> Proposed Add/Remove Volume Tier 3 provides an enhanced
rebate of $0.0027 per share for qualifying orders (i.e., orders
yielding fee codes B, V, Y, 3, or 4) when: (1) Member adds an ADV
(excluding fee codes ZA and ZO) greater than or equal to 0.25% of the
TCV; or (2) Member adds an ADV (excluding fee codes ZA and ZO) greater
than or equal to 45,000,000 shares.
The proposed modification to the shares component of Add/Remove
Volume Tiers 1-3 represents a modest increase in difficulty of one
prong of criteria to achieve the applicable tier threshold in response
to higher market volumes while maintaining an existing prong of
criteria and the existing rebates. The Exchange believes that the
proposed criteria continues to be commensurate with the rebate received
for each tier and will encourage Members to grow their volume on the
Exchange. Increased volume on the Exchange contributes to a deeper and
more liquid market, which benefits all market participants and provides
greater execution opportunities on the Exchange.
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.\15\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \16\ 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) \17\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
\17\ Id.
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As described above, the Exchange operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. The Exchange believes that
its proposal to modify Add/Remove Volume Tiers 1-3 reflects a
competitive pricing structure designed to incentivize market
participants to direct their order flow to the Exchange, which the
Exchange believes would enhance market quality to the benefit of all
Members. Specifically, the Exchange's proposal to introduce a slightly
higher share component to Add/Remove Volume Tiers 1-3 in response to
higher market volumes is not a significant departure from existing
criteria, is reasonably correlated to the enhanced rebates offered by
the Exchange and other competing exchanges,\18\ and will continue to
incentivize Members to submit order flow to the Exchange. Additionally,
the Exchange notes that relative volume-based incentives and discounts
have been widely adopted by exchanges,\19\ including the Exchange,\20\
and are reasonable, equitable and non-discriminatory because they are
open to all Members on an equal basis and provide additional benefits
or discounts that are reasonably related to (i) the value to an
exchange's market quality and (ii) associated higher levels of market
activity, such as higher levels of liquidity provision and/or growth
patterns. Competing equity exchanges offer similar tiered pricing
structures, including schedules or rebates and fees that apply based
upon members achieving certain volume and/or growth thresholds, as well
as assess similar fees or rebates for similar types of orders, to that
of the Exchange.
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\18\ See Nasdaq Price List, Rebate to Add Displayed Liquidity,
Shares Executed at or Above $1.00 available at <a href="https://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2">https://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2</a>; see also NYSE
Arca Equities Fees and Charges, Adding Tiers, available at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf</a>.
\19\ See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove
Volume Tiers.
\20\ See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
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In particular, the Exchange believes its proposal to modify Add/
Remove Volume Tiers 1-3 is reasonable because the revised tiers will be
available to all Members and provide all Members with an opportunity to
receive an enhanced rebate. The Exchange further believes its proposal
to modify Add/Remove Volume Tiers 1-3 will provide a reasonable means
to encourage liquidity adding displayed orders in Members' order flow
to the Exchange and to incentivize Members to continue to provide
liquidity adding volume to the Exchange by offering them an opportunity
to receive an enhanced rebate on qualifying orders. An overall increase
in activity would deepen the Exchange's liquidity pool, offer
additional cost savings, support the quality of price discovery,
promote market transparency and improve market quality, for all
investors.
The Exchange believes that its proposal to modify Add/Remove Volume
Tiers 1-3 is reasonable as the proposed criteria does not represent a
significant departure from the criteria currently offered in the Fee
Schedule. The Exchange also believes that the proposal represents an
equitable allocation of fees and rebates and is not unfairly
discriminatory because all Members continue to be eligible for the
proposed Add/Remove Volume Tiers 1-3 and have the opportunity to meet
the tiers' criteria and receive the corresponding enhanced rebate if
such criteria is met. Without having a view of activity on other
markets and off-exchange venues, the Exchange has no way of knowing
whether this proposed rule change would definitely result in any
Members qualifying for proposed Add/Remove Volume Tier 1-3. While the
Exchange has no way of predicting with certainty how the proposed
changes will impact Member activity, based on the prior month's volume,
the Exchange anticipates that at least two Members will be able to
satisfy proposed Add/Remove Volume Tier 1, no Members will be able to
satisfy proposed Add/Remove Volume Tier 2, and at least two Members
will be able to satisfy proposed Add/Remove Volume Tier 3. The Exchange
also notes that proposed changes will not adversely impact any Member's
ability to qualify for enhanced rebates offered under other tiers.
Should a Member not meet the proposed new criteria, the Member will
merely not receive that corresponding enhanced rebate.
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. Rather, as discussed above,
the Exchange believes that the proposed changes would encourage the
submission of additional order flow to a public exchange, thereby
promoting market depth, execution incentives and enhanced execution
opportunities, as well as price discovery
[[Page 21380]]
and transparency for all Members. As a result, the Exchange believes
that the proposed changes further the Commission's goal in adopting
Regulation NMS of fostering competition among orders, which promotes
``more efficient pricing of individual stocks for all types of orders,
large and small.''
The Exchange believes the proposed rule changes do not impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Particularly, the Exchange's
proposal to modify Add/Remove Volume Tiers 1-3 will apply to all
Members equally in that all Members are eligible for the modified
tiers, have a reasonable opportunity to meet the proposed tiers'
criteria and will receive the enhanced rebate on their qualifying
orders if such criteria is met. The Exchange does not believe the
proposed changes burden competition, but rather, enhance competition as
they are intended to increase the competitiveness of EDGX by amending
existing pricing incentives in order to attract order flow and
incentivize participants to increase their participation on the
Exchange, providing for additional execution opportunities for market
participants and improved price transparency. Greater overall order
flow, trading opportunities, and pricing transparency benefits all
market participants on the Exchange by enhancing market quality and
continuing to encourage Members to send orders, thereby contributing
towards a robust and well-balanced market ecosystem.
Next, the Exchange believes the proposed rule changes does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the
Exchange represents a small percentage of the overall market. Based on
publicly available information, no single equities exchange has more
than 15% of the market share.\21\ Therefore, no exchange possesses
significant pricing power in the execution of order flow. Indeed,
participants can readily choose to send their orders to other exchange
and off-exchange venues if they deem fee levels at those other venues
to be more favorable. Moreover, the Commission has repeatedly expressed
its preference for competition over regulatory intervention in
determining prices, products, and services in the securities markets.
Specifically, 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.'' \22\ The fact that this market is competitive has also
long been recognized by the courts. In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .''.\23\ Accordingly, the Exchange does not believe its
proposed fee change imposes any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
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\21\ Supra note 3.
\22\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
\23\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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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 \24\ and paragraph (f) of Rule 19b-4 \25\
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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\24\ 15 U.S.C. 78s(b)(3)(A).
\25\ 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#0e7c7b626b236d6163636b607a7d4e7d6b6d20696178"><span class="__cf_email__" data-cfemail="5725223b327a34383a3a323923241724323479303821">[email protected]</span></a>. Please include
file number SR-CboeEDGX-2025-034 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-CboeEDGX-2025-034. 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-CboeEDGX-2025-034 and should
be submitted on or before June 9, 2025.
[[Page 21381]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-08843 Filed 5-16-25; 8:45 am]
BILLING CODE 8011-01-P
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