82 FR 53534 - Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on Cboe BYX Exchange, Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 220 (November 16, 2017)

Page Range		53534-53536
FR Document		2017-24780
Federal Register, Volume 82 Issue 220 (Thursday, November 16, 2017)
[Federal Register Volume 82, Number 220 (Thursday, November 16, 2017)]
[Notices]
[Pages 53534-53536]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-24780]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82048; File No. SR-BatsBYX-2017-29]


Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Related to 
Fees for Use on Cboe BYX Exchange, Inc.

November 9, 2017.
    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 31, 2017, Cboe BYX Exchange, Inc. (the ``Exchange'' or 
``BYX'') (formerly known as Bats BYX Exchange, Inc.) 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 Exchange pursuant to BYX 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 
Web site 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 its fee schedule to amend Tier 7 
under footnote 1, Add/Remove Volume Tiers. The Exchange currently 
offers eight tiers under footnote 1 that offer reduced fees for 
displayed orders that yield fee codes B,\6\ V \7\ and Y,\8\ and an 
enhanced rebate for orders that remove liquidity yielding fee codes 
BB,\9\ N \10\ and W.\11\ The Exchange proposes to amend Tier 7 under 
footnote 1, under which a Member currently receives an enhanced rebate 
of $0.0015 per share on orders that yield fee codes BB, N or W, where 
that Member has an ADV \12\ equal to or greater than 0.05%of the 
TCV.\13\ The Exchange proposes to increase the tier's criteria by also 
requiring that the Member have an ADAV \14\ equal to or

[[Page 53535]]

greater than 500,000 shares to receive the tier's enhanced rebate. The 
Exchange does not proposes [sic] to amend the tier's rebate. The 
Exchange proposes to implement the above changes to its fee schedule on 
November 1, 2017.
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    \6\ Fee code B is appended to displayed orders that add 
liquidity to BYX (Tape B) and is assessed a fee of $0.0018 per 
share. See the Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/byx/.
    \7\ Fee code V is appended to displayed orders that add 
liquidity to BYX (Tape A) and is assessed a fee of $0.0018 per 
share. Id.
    \8\ Fee code Y is appended to displayed orders that add 
liquidity to BYX (Tape C) and is assessed a fee of $0.0018 per 
share. Id.
    \9\ Fee code BB is appended to orders that remove liquidity from 
BYX (Tape B) and is assessed a rebate of $0.0010 [sic] per share. 
Id.
    \10\ Fee code N is appended to orders that remove liquidity from 
BYX (Tape C) and is assessed a rebate of $0.0010 [sic] per share. 
Id.
    \11\ Fee code W is appended to orders that remove liquidity from 
BYX (Tape A) and is assessed a rebate of $0.0010 [sic] per share. 
See the Exchange's fee schedule available at http://www.bats.com/us/equities/membership/fee_schedule/byx/.
    \12\ ADV is defined as average daily volume calculated as the 
number of shares added or removed, combined, per day. Id.
    \13\ TCV is defined as the 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.
    \14\ ADAV is defined as the average daily volume calculated as 
the number of shares added per day. See the Exchange fee schedule 
available at http://www.bats.com/us/equities/membership/fee_schedule/byx/.
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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,\15\ in general, and 
furthers the objectives of Section 6(b)(4),\16\ 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 believes that the proposed amendment to Tier 7 
under footnote 1 is equitable and reasonable because such pricing 
programs reward a Member's growth pattern on the Exchange and such 
increased volume will allow the Exchange to continue to provide and 
potentially expand the [sic] its incentive programs. The Exchange 
believes that providing the enhanced rebate to Members under proposed 
Tiers 7 continues to be reasonable compared to the proposed more 
stringent requirements because the amended criteria reflects the 
difficulty to achieve the tier, especially as the amount of trading 
activity on the Exchange has increased over time. The increased 
criteria should incentive Members to provide additional liquidity on 
the Exchange in order to achieve the tier's enhanced rebate. The 
Exchange further believes that the proposal is reasonable, fair and 
equitable because the liquidity from the proposed changes would benefit 
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. These pricing programs 
are also not unfairly discriminatory in that it is available to all 
Members.
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    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(4).
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    In addition, volume-based fees such as that proposed herein have 
been widely adopted by exchanges 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) the introduction of higher volumes of orders into 
the price and volume discovery processes. The Exchange believes that 
the proposal is a reasonable, fair and equitable, and not an unfairly 
discriminatory allocation of fees and rebates, because it will provide 
Members with an additional incentive to add more liquidity on the 
Exchange to achieve the tier's increased criteria to receive the 
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 not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that this change represents a significant departure from previous 
pricing offered by the Exchange or from pricing offered by the 
Exchange's competitors. The proposal would apply uniformly to all 
Members, and Members may opt to disfavor the Exchange's pricing if they 
believe that alternatives offer them better value. Accordingly, the 
Exchange does not believe that the proposed change will impair the 
ability of Members or competing venues to maintain their competitive 
standing in the financial markets. Further, excessive rates would serve 
to impair an exchange's ability to compete for order flow and members 
rather than burdening competition. The Exchange believes that its 
proposal would not burden intramarket competition because the proposal 
would apply uniformly to all Members.

(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 \17\ and paragraph (f) of Rule 19b-4 
thereunder.\18\ 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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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BatsBYX-2017-29 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BatsBYX-2017-29. 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 Web site (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 Web site 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 the filing also will 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 Number SR-BatsBYX-2017-29 and should 
be submitted on or before December 7, 2017.


[[Page 53536]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-24780 Filed 11-15-17; 8:45 am]
 BILLING CODE 8011-01-P
53536 Federal Register / Vol. 82, No. 220 / Thursday, November 16, 2017 / Notices

For the Commission, by the Division of A. Clearing Agency’s Statement of the Under this approach, RWR would
Trading and Markets, pursuant to delegated Purpose of, and Statutory Basis for, the never completely offset WWR and
authority.19 Proposed Rule Change instead would be discounted based on
Eduardo A. Aleman, the average of observed correlations of
Assistant Secretary.
1. Purpose
CDS credit spreads in respect of
[FR Doc. 2017–24780 Filed 11–15–17; 8:45 am] The WWR component of the European and U.S. financial
BILLING CODE 8011–01–P
Framework is designed to cover the institutions. LCH SA believes that this
anticipated financial contagion effect change rationalizes the WWR currency
that would arise in case of a clearing offset and results in a more conservative
SECURITIES AND EXCHANGE member being declared in default. The WWR margin calculation.
COMMISSION current WWR margin formula
acknowledges offsets as between 2. Statutory Basis
[Release No. 34–82043; File No. SR–LCH currencies by allowing offset between LCH SA believes that the proposed
SA–2017–009]
WWR and right way risk (‘‘RWR’’). rule change is consistent with the
Self-Regulatory Organizations; LCH Specifically, a WWR currency offset is requirements of Section 17A of the
SA; Notice of Filing of Proposed Rule applied as the greater of: (x) the WWR Securities Exchange Act of 1934 3 (the
Change, Security-Based Swap amount in Euros minus the RWR ‘‘Act’’) and the regulations thereunder,
Submission, or Advance Notice amount in Euros, where non-Euro including the standards under Rule
Relating to Wrong Way Risk Margin amounts are converted to Euros using a 17Ad–22(b)(1) and (2).4 Specifically, in
foreign exchange (‘‘FX’’) rate plus or accordance with Section 17(A)(b)(3)(F),5
November 9, 2017. minus a haircut; and (y) the WWR LCH SA believes that the proposed rule
Pursuant to Section 19(b)(1) of the amount in Euros multiplied by 1 minus change will assure the safeguarding of
Securities Exchange Act of 1934 a factor, which represents the securities and funds which are in the
(‘‘Act’’) 1 and Rule 19b–4 thereunder 2 correlation between European and U.S. custody or control of the clearing agency
notice is hereby given that on October financial institutions by calculating the or for which it is responsible, in that the
30, 2017, Banque Centrale de average historical cross correlation of proposed rule change is designed to
Compensation, which conducts credit spreads on credit default swaps rationalize the WWR currency offset and
business under the name LCH SA (‘‘LCH (‘‘CDS’’) in respect of all pairs of more conservatively calculate the WWR
SA’’), filed with the Securities and European and U.S. financial institutions margin with respect to a clearing
Exchange Commission (‘‘Commission’’) that are clearing members. Under the member. Therefore, LCH SA believes
the proposed rule change described in current calculation, if one currency has that the proposed rule change is
Items I, II, and III below, which Items WWR and the other has RWR, LCH SA consistent with the requirement of
have been prepared primarily by LCH would compare the WWR amount as safeguarding securities and funds in
SA. The Commission is publishing this offset by the RWR to the WWR amount Section 17(A)(b)(3)(F) of the Act and the
notice to solicit comments on the as reduced by taking the correlation requirements of maintaining margin and
proposed rule change from interested factor into account and take the greater limiting a clearing agency’s exposures to
persons. of the two. As a result, either the full potential losses from participants’
amount of RWR is considered as defaults under normal market
I. Clearing Agency’s Statement of the offsetting the WWR, or only a portion of
Terms of Substance of the Proposed conditions in Rule 17Ad–22(b)(1) and
the WWR is taken into account without (2).6
Rule Change any regard to the expected amount of Moreover, LCH SA believes that the
LCH SA is proposing to amend its RWR. proposed rule change is consistent with
Reference Guide: CDS Margin LCH SA believes that it is appropriate the requirements in Rule 17Ad–
Framework (‘‘CDSClear Margin to consider the offset between the WWR 22(e)(6).7 Rule 17Ad–22(e)(6)(i) and (v)
Framework’’ or ‘‘Framework’’) to adjust amount and RWR amount but it would require a covered clearing agency that
the wrong way risk (‘‘WWR’’) margin not be appropriate to apply the provides central counterparty services
component of the Framework to more correlation factor to discount the WWR
to cover its credit exposures to its
appropriately address offsets between amount while also allowing the RWR to
participants by establishing a risk-based
currencies when calculating WWR offset the WWR amount to its full
margin system that, among other things,
margin. extent. To be conservative, LCH SA
considers and produces margin levels
believes that it is appropriate to apply
II. Clearing Agency’s Statement of the commensurate with, the risks and
the correlation factor to the RWR
Purpose of, and Statutory Basis for, the particular attributes of each relevant
amount when using RWR to offset the
Proposed Rule Change product, portfolio, and market, and uses
WWR amount. Accordingly, LCH SA
an appropriate method for measuring
In its filing with the Commission, proposes to modify the WWR currency
credit exposure that accounts for
LCH SA included statements concerning offset formula in the Framework to be
the greater of: (i) the WWR amount in relevant product risk factors and
the purpose of and basis for the portfolio effects across products.8 WWR
proposed rule change and discussed any Euros, where such amounts are
converted to Euros using an FX rate plus is an important risk factor for clearing
comments it received on the proposed CDS products. As noted above, the
rule change. The text of these statements or minus a haircut, minus (ii) the RWR
proposed rule change rationalizes the
asabaliauskas on DSKBBXCHB2PROD with NOTICES

may be examined at the places specified amount multiplied by the 10-year
average historical correlation of credit WWR currency offset and more
in Item IV below. LCH SA has prepared conservatively calculates WWR margin.
summaries, set forth in sections A, B, spreads on CDS in respect of European
and C below, of the most significant and U.S. financial institutions; and zero. 3 15 U.S.C. 78q–1.
aspects of these statements. As of April 2016, the 10-year average 4 17 CFR 240.17Ad–22(b)(1) and (2).
historical correlation of credit spreads 5 15 U.S.C. 78q–1(b)(3)(F).
19 17 CFR 200.30–3(a)(12). on CDS in respect of European and U.S. 6 17 CFR 240.17Ad–22(b)(1) and (2).
1 15 U.S.C. 78s(b)(1). financial institutions was set to 48 7 17 CFR 240.17Ad–22(e)(6).
2 17 CFR 240.19b–4. percent. 8 17 CFR 240.17Ad–22(e)(6)(i) and (v).

VerDate Sep<11>2014 16:52 Nov 15, 2017 Jkt 244001 PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 E:\FR\FM\16NON1.SGM 16NON1
Document Created: 2017-11-16 03:53:42
Document Modified: 2017-11-16 03:53:42
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		82 FR 53534