[Federal Register Volume 83, Number 50 (Wednesday, March 14, 2018)]
[Notices]
[Pages 11252-11254]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-05079]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82834; File No. SR-CboeBZX-2018-015]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Transaction Fees
March 8, 2018.
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 March 1, 2018, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') 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
Exchange has designated the proposed rule change as one establishing or
changing a member due, fee, or other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend the fee schedule applicable
to Members \5\ and non-Members of the
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Exchange pursuant to BZX Rules 15.1(a) and (c).
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\5\ The term ``Member'' is defined as ``any registered broker or
dealer that has been admitted to membership in the Exchange.'' See
Exchange Rule 1.5(n).
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The text of the proposed rule change is available at the Exchange's
website at www.markets.cboe.com, at the principal office of the
Exchange, 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 parts 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 the fee schedule applicable to its
equities trading platform (``BZX Equities'') to add a second Step-Up
Tier under footnote 2. The Exchange currently offers one Step-Up Tier
that provides Members with an additional way to qualify for an enhanced
rebate where they increase their liquidity each month over a
predetermined baseline. Under the current Step-Up Tier, a Member
receives a rebate of $0.0030 per share for qualifying orders which
yield fee codes B,\6\ V,\7\ or Y \8\ where their: (1) Step-Up Add TCV
\9\ from April 2016 is equal to or greater than 0.15%; and (2) ADAV
\10\ as a percentage of TCV \11\ is equal to or greater than 0.20%.
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\6\ Fee code B is appended to displayed orders which add
liquidity to Tape B and is provided a rebate of $0.0025 per share.
\7\ Fee code V is appended to displayed orders which add
liquidity to Tape A and is provided a rebate of $0.0020 per share.
\8\ Fee code Y is appended to displayed orders which add
liquidity to Tape C and is provided a rebate of $0.0020 per share.
\9\ ``Step-Up Add TCV'' means ADAV as a percentage of TCV in the
relevant baseline month subtracted from current ADAV as a percentage
of TCV. See the BZX Equities fee schedule available at http://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
\10\ ``ADAV'' means average daily added volume calculated as the
number of shares added per day and ``ADV'' means average daily
volume calculated as the number of shares added or removed,
combined, per day. ADAV and ADV are calculated on a monthly basis.
Id.
\11\ ``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. Id.
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The Exchange now proposes to amend footnote 2 to add a second Step-
Up Tier under which the volume measured to determine whether a Member
qualifies is performed on a Member Participant Identifier (``MPID'') by
MPID basis.\12\ Under the proposed Tier 2, a Member would receive a
rebate of $0.0031 per share for their qualifying orders which yield fee
codes B, V, or Y where their individual MPID has: (1) A Step-Up Add TCV
from January 2018 equal to or greater than 0.30%; and (2) an ADAV as a
percentage of TCV equal to or greater than 0.45%. The Exchange proposes
to implement this amendments to its fee schedule on March 1, 2018.
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\12\ The Exchange proposes to number the existing tier as Tier
1.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\13\ in general, and
furthers the objectives of Section 6(b)(4),\14\ in particular, 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. The Exchange 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. The proposed rule change reflects a competitive pricing
structure designed to incent market participants to direct their order
flow to the Exchange. The Exchange believes that the proposed tier is
equitable and non-discriminatory in it would apply uniformly to all
Members.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4).
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Volume-based rebates such as that proposed herein have been widely
adopted by exchanges, including the Exchange, and are equitable 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; (ii) associated higher levels of market
activity, such as higher levels of liquidity provision and/or growth
patterns; and (iii) introduction of higher volumes of orders into the
price and volume discovery processes. The Exchange believes that the
proposed tier is a reasonable, fair and equitable, and not unfairly
discriminatory allocation of fees and rebates because it will continue
to provide Members with an incentive to reach certain thresholds on the
Exchange.
In particular, the Exchange believes the proposed Step-Up Tier is a
reasonable means to encourage Members to increase their liquidity on
the Exchange based on increasing their volume above a predetermined
baseline. The Exchange further believes that the proposed Step-Up Tier
represents an equitable allocation of reasonable dues, fees, and other
charges because the thresholds necessary to achieve the tier encourages
Members to add increased liquidity to the BZX Book \15\ each month. The
increased liquidity benefits all investors by deepening the Exchange's
liquidity pool, offering additional flexibility for all investors to
enjoy cost savings, supporting the quality of price discovery,
promoting market transparency and improving investor protection. The
Exchange also believes that proposed rebate is reasonable based on the
difficulty of satisfying the tier's criteria as compared to the
existing Step-Up Tier, which provides a lower rebate and less stringent
criteria. By applying the tier on a single MPID rather than across a
Member's entire trading activity, the Exchange is also allowing more
Members to potentially receive the enhanced rebates for their trading
activity related to that individual MPID's liquidity provisioning.
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\15\ See Exchange Rule 1.5(e).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe its proposed tier would 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 tier represents a significant departure from previous
pricing offered by the Exchange or pricing offered by the Exchange's
competitors. Additionally, Members may opt to disfavor the Exchange's
pricing if they believe that alternatives offer them better value. The
Exchange does not believe that the proposed tier would burden
competition, but instead, enhance competition, as it is intended to
increase the competitiveness of and draw additional volume to the
Exchange. The Exchange does not believe the proposed tier would burden
intramarket competition as it would apply to all Members uniformly.
Accordingly, the Exchange does not believe that the proposed change
will impair the ability of Members or competing venues to
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maintain their competitive standing in the financial markets.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from Members or other interested
parties.
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 \16\ and paragraph (f) of Rule 19b-4
thereunder.\17\ 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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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 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 proposal is
consistent with the Act. Comments may be submitted by any of the
following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File No. SR-CboeBZX-2018-015 on the subject line.
Paper Comments
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 No. SR-CboeBZX-2018-015. 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 (http://www.sec.gov/rules/sro.shtml).
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 10:00 a.m. and
3:00 p.m. Copies of such filing will also be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File No. SR-CboeBZX-2018-XXX and should be submitted on
or before April 4, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-05079 Filed 3-13-18; 8:45 am]
BILLING CODE 8011-01-P