83 FR 12995 - Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Expand an Offering Known as Cboe Connect To Provide Connectivity to Single-Dealer Platforms Connected to the Exchange's Network and To Propose a Per Share Executed Fee for Such Service

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 58 (March 26, 2018)

Page Range		12995-12997
FR Document		2018-06011
Federal Register, Volume 83 Issue 58 (Monday, March 26, 2018)
[Federal Register Volume 83, Number 58 (Monday, March 26, 2018)]
[Notices]
[Pages 12995-12997]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-06011]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82904; File No. SR-CboeEDGA-2018-004]


Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Expand an Offering Known as Cboe Connect To Provide Connectivity to 
Single-Dealer Platforms Connected to the Exchange's Network and To 
Propose a Per Share Executed Fee for Such Service

March 20, 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 14, 2018, Cboe EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it 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).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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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 expand an offering known as Cboe 
Connect to provide connectivity to single-dealer platforms connected to 
the Exchange's network and to propose a per share executed fee for such 
service.
    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
    Cboe Connect is an optional communication service that provides 
Members \5\ an additional means to receive market data from and route 
orders to any destination connected to the Exchange's network.\6\ Cboe 
Connect is offered by the Exchange on a voluntary basis in a capacity 
similar to a vendor. The servers of the participant need not be located 
in the same facilities as the Exchange in order to subscribe to Cboe 
Connect. Participants may also seek to utilize Cboe Connect in the 
event of a market disruption where other alternative connection methods 
become unavailable.
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    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer, or any person associated with a registered broker or dealer, 
that has been admitted to membership in the Exchange. A Member will 
have the status of a ``member'' of the Exchange as that term is 
defined in Section 3(a)(3) of the Act.'' See Exchange Rule 1.5(n).
    \6\ See Exchange Rule 13.9. See also Securities Exchange Act 
Release Nos. 75112 (June 5, 2015), 80 FR 33316 (June 11, 2015) (SR-
EDGA-2015-20) (proposal adopting Cboe Connect (f/k/a Bats Connect); 
and 34753 (June 11, 2015), 80 FR 34753 (June 17, 2015) (SR-EDGA-
2015-24) (proposal adopting fees for Cboe Connect).
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    Today, market participants are able to send orders directly to 
broker-dealers that operate single-dealer platforms, where broker-
dealers would execute orders received on a principal basis or return 
the unexecuted order (or portion thereof) back to their customers. To 
connect to a single-dealer platform, the broker-dealer's customer must 
purchase connectivity and perform the necessary infrastructure work to 
be able to send orders to that single-dealer platform. Cboe Connect 
allows participants to send orders to other exchanges and market 
centers that are connected to the Exchange's network. Market centers on 
the Exchange's network include Alternative Trading Systems operated by 
broker-dealers, but do not currently include single-dealer platforms. 
The Exchange proposes to expand Cboe Connect to now provide optional 
connectivity by which market participant may send orders to these 
single-dealer trading platforms connected to the Exchange's network. 
The exchange proposes to refer to this connectivity option under Cboe 
Connect as C-LNK.
    Orders routed via Cboe Connect to a single-dealer platform would be 
treated the same as orders routed today via Cboe Connect to an exchange 
or market center connected to the Exchange's network. Cboe Connect does 
not effect trade executions and would not report trades to the relevant 
Securities Information Processor and the Exchange does not propose to 
do so for orders sent to single-dealer platforms. An order sent via the 
service to a single-dealer platform would be handled by the Exchange's 
affiliated broker-dealer, Cboe Trading, Inc., and bypass the EDGA Book 
before going to a market center outside of the Exchange (i.e., a 
participant could choose to route an order directly to any single-
dealer platform on the Exchange's network). A participant would be 
responsible for identifying the single-dealer platform for any orders 
sent through the service and for ensuring that it had authority to 
access the selected destination; the Exchange would merely provide the 
connectivity by which orders (and associated messages) could be sent by 
a participant to the single-dealer platform and from the destination 
back to the participant.
    The Exchange notes that Users sending orders to single-dealer 
platforms via the C-LNK connectivity service would be subject to any 
transaction related rates applied by the single-dealer platform 
executing their order.\7\ This is not unique to C-LNK or Cboe Connect 
as market participants who chose another method to connect to a single-
dealer platform would also be required to pay any transaction related 
fees directly to that single-dealer platform. In addition, market 
participants who send orders through Cboe Connect are subject to 
separate per transaction rates (fees/rebates) provided directly by the 
other exchanges and

[[Page 12996]]

market centers to which they send their orders for execution.
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    \7\ Like alternative trading systems, single-dealer platforms 
are operated by broker-dealers and any transaction related rates are 
presumed to be similarly pre-negotiated between the broker-dealer 
and their customer.
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    Today, the Exchange charges a monthly connectivity fee to 
subscribers utilizing Cboe Connect to route orders to other exchanges 
and broker-dealers that are connected to the Exchange's network. The 
amount of the connectivity fee varies based on the bandwidth selected 
by the subscriber.\8\ Rather than charging a set connectivity fee based 
on bandwidth, the Exchange proposes to charge a fee of $0.0002 for each 
share executed by a single dealer platform for orders routed via Cboe 
Connect. The Exchange proposes a per share rate, as opposed to a 
monthly bandwidth related charge, because C-LNK is a new service and 
the Exchange believes a monthly bandwidth charge may prove a deterrent 
to attracting usage based on the anticipated preliminary volumes. The 
Exchange, therefore, believes it is appropriate to charge a per share 
fee at this time so that Users may evaluate the efficacy of C-LNK and 
the connectivity it provides.
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    \8\ Specifically, the Exchange charges $500 for 1 Mb, $1,000 for 
5 Mb, $1,250 for 10 Mb, $1,500 for 25 Mb, $2,500 for 50 Mb, and 
$3,500 for 100 Mb. See the Exchange's fee schedule available at 
http://markets.cboe.com/us/equities/membership/fee_schedule/edga/.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \9\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \10\ in particular, in that it is designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in 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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    C-LNK removes impediments to and perfects the mechanism of a free 
and open market and a national market system because it provides users 
with optional connectivity method by which market participant may send 
orders to these single-dealer trading platforms. The proposed 
connectivity would be provided on a voluntary basis and no rule or 
regulation requires that the Exchange offer it. Nor does any rule or 
regulation require market participants to send orders to single-dealer 
platforms generally, let alone through a connection like that proposed 
herein. The proposed connectivity to single-dealer platforms would 
operate in the same manner as connectively provided today to other 
exchanges and market centers via Cboe Connect.
    The Exchange believes that the proposed fee is consistent Section 
6(b)(4) \11\ of the Act because it would provide for the equitable 
allocation of reasonable dues, fees and other charges among its Members 
and other persons using its facilities. The Exchange proposes to charge 
a per share fee for each order sent via C-LNK to a single-dealer 
platform that is connected to the Exchange's network. The proposed a 
per share fee is appropriate, as opposed to a monthly bandwidth related 
charge, because C-LNK is a new service and the Exchange believes a 
monthly bandwidth charge may prove a deterrent to attracting usage 
based on the anticipated preliminary volumes. A per share fee is 
intended to encourage use of C-LNK at a rate that would enable users to 
evaluate its efficacy and the connectivity it provides. Furthermore, 
the proposed fee is designed to cover the Exchange's costs related to 
providing the connectivity and performing the necessary infrastructure 
work to be able send orders to each single-dealer platform connected to 
the Exchange's network. The Exchange notes that, like all connectivity 
provide via Cboe Connect, C-LNK would be an optional service provided 
on a voluntary basis. Therefore, users may decide to not send orders 
via C-LNK due to the reasonableness of the fee charged.
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    \11\ 15 U.S.C. 78f(b)(4).
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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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
rule change is a service that is designed to provide market 
participants with an alternative connectivity to additional pools of 
liquidity and is not intended have a competitive impact. Therefore, the 
Exchange does not believe the proposed rule change will have any effect 
on competition.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and the text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.
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    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

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-CboeEDGA-2018-004 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 Number SR-CboeEDGA-2018-004. 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

[[Page 12997]]

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 
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-
CboeEDGA-2018-004 and should be submitted on or before April 16, 2018.

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-06011 Filed 3-23-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 58 / Monday, March 26, 2018 / Notices 12997

post all comments on the Commission’s 19b–4 thereunder,2 proposed rule ‘‘Wind-down Rule’’ and ‘‘Force Majeure
internet website (http://www.sec.gov/ change SR–FICC–2017–021 to adopt a Rule,’’ respectively). FICC proposes to
rules/sro.shtml). Copies of the recovery and wind-down plan and make conforming changes to existing
submission, all subsequent related rules (‘‘Proposed Rule rules to incorporate the proposed Wind-
amendments, all written statements Change’’).3 The Proposed Rule Change down Rule and proposed Force Majeure
with respect to the proposed rule was published for comment in the Rule.11
change that are filed with the Federal Register on January 8, 2018.4 FICC states that the R&W Plan is
Commission, and all written The Commission did not receive any intended to be used by FICC’s Board of
communications relating to the comments on the Proposed Rule Directors and management in the event
proposed rule change between the Change. On February 8, 2018, pursuant that FICC encounters scenarios that
Commission and any person, other than to Section 19(b)(2)(A)(ii)(I) of the Act,5 could potentially prevent it from being
those that may be withheld from the the Commission designated a longer able to provide its critical services as a
public in accordance with the period within which to approve, going concern.12 The R&W Plan would
provisions of 5 U.S.C. 552, will be disapprove, or institute proceedings to be structured to provide a roadmap,
available for website viewing and determine whether to approve or define the strategy, and identify the
printing in the Commission’s Public disapprove the Proposed Rule Change.6 tools available to FICC to either (i)
Reference Room, 100 F Street NE, This order institutes proceedings, recover in the event it experiences
Washington, DC 20549, on official pursuant to Section 19(b)(2)(B) of the losses that exceed its prefunded
business days between the hours of Act,7 to determine whether to approve resources or (ii) wind-down its business
10:00 a.m. and 3:00 p.m. Copies of the or disapprove the Proposed Rule in a manner designed to permit the
filing also will be available for Change. continuation of its critical services in
inspection and copying at the principal the event that such recovery efforts are
II. Summary of the Proposed Rule not successful.13 The R&W Plan would
office of the Exchange. All comments
Change include tools that are provided for in
received will be posted without change.
Persons submitting comments are As described in the Notice,8 FICC FICC’s existing rules, policies,
cautioned that we do not redact or edit proposes to (i) adopt a Recovery & procedures, and contractual
personal identifying information from Wind-down Plan (‘‘R&W Plan’’), (ii) arrangements,14 as well as the proposed
comment submissions. You should adopt rules to facilitate the Wind-down Rule and the proposed
submit only information that you wish implementation of the R&W Plan, and Force Majeure Rule.15
to make available publicly. All (iii) make conforming changes to FICC states that the proposed Wind-
submissions should refer to File existing rules. Specifically, to facilitate down Rule and the proposed Force
Number SR–CboeEDGA–2018–004 and the implementation of the R&W Plan, Majeure Rule are designed to (i)
FICC proposes to adopt a proposed facilitate the implementation of the
should be submitted on or before April
wind-down rule and a proposed market R&W Plan when necessary; (ii) provide
16, 2018.
disruption and force majeure rule to Members and Limited Members with
For the Commission, by the Division of transparency around critical provisions
Trading and Markets, pursuant to delegated both FICC’s Government Securities
Division (‘‘GSD’’) Rulebook (‘‘GSD of the R&W Plan that relate to their
authority.14 rights, responsibilities, and
Eduardo A. Aleman, Rules’’) 9 and FICC’s Mortgage-Backed
Securities Division (‘‘MBSD’’) Clearing obligations; 16 and (iii) provide FICC
Assistant Secretary.
Rules (‘‘MBSD Rules’’) 10 (collectively,
[FR Doc. 2018–06011 Filed 3–23–18; 8:45 am] (Market Disruption and Force Majeure). See Notice,
BILLING CODE 8011–01–P supra note 4, at 872.
2 17 CFR 240.19b–4. 11 FICC proposes to make conforming changes to
3 On December 18, 2017, FICC filed this proposal
GSD Rules, MBSD Rules, and MBSD Electronic Pool
as an advance notice (SR–FICC–2017–805) with the Netting (‘‘EPN’’) Rules (‘‘EPN Rules’’). Specifically,
SECURITIES AND EXCHANGE Commission pursuant to Section 806(e)(1) of the FICC proposes to amend the following GSD Rules
COMMISSION Payment, Clearing, and Settlement Supervision Act and MBSD Rules to incorporate the proposed Wind-
of 2010 (‘‘Clearing Supervision Act’’) and Rule 19b– down Rule and proposed Force Majeure Rule, as
[Release No. 34–82913; File No. SR–FICC– 4(n)(1)(i) of the Act (‘‘Advance Notice’’). On January applicable: GSD Rule 3A (Sponsoring Members and
24, 2018, the Commission extended the review Sponsored Members), GSD Rule 3B (Centrally
2017–021] period of the Advance Notice for an additional 60 Cleared Institutional Triparty Service), GSD Rule 13
days pursuant to Section 806(e)(1)(H) of the (Funds-Only Settlement), and MBSD Rule 3A (Cash
Self-Regulatory Organizations; Fixed Clearing Supervision Act. See 12 U.S.C. 5465(e)(1); Settlement Bank Members). See Notice, supra note
Income Clearing Corporation; Order 17 CFR 240.19b–4(n)(1)(i); 12 U.S.C. 5465(e)(1)(H); 4, at 872, 881–82. Additionally, FICC proposes to
Instituting Proceedings To Determine and Securities Exchange Act Release No. 82580 amend EPN Rule 1 to provide that EPN Users are
(January 24, 2018), 83 FR 4341 (January 30, 2018) bound by proposed MBSD Rule 17B (Wind-down of
Whether To Approve or Disapprove a (SR–FICC–2017–805). the Corporation) and proposed MBSD Rule 40
Proposed Rule Change To Adopt a 4 Securities Exchange Act Release No. 82431
(Market Disruption and Force Majeure). Id.
Recovery & Wind-Down Plan and (January 2, 2018), 83 FR 871 (January 8, 2018) (SR– Capitalized terms not defined herein are defined in
Related Rules FICC–2017–021) (‘‘Notice’’). the GSD Rules, MBSD Rules, and EPN Rules, as
5 15 U.S.C. 78s(b)(2)(A)(ii)(I). applicable, available at http://www.dtcc.com/legal/
March 20, 2018. 6 Securities Exchange Act Release No. 82669 rules-and-procedures.
(February 8, 2018), 83 FR 6653 (February 14, 2018) 12 See Notice, supra note 4, at 872.
I. Introduction (SR–DTC–2017–021; SR–FICC–2017–021; SR– 13 Id. at 873.
NSCC–2017–017). 14 Contractual arrangements include, for example,
On December 18, 2017, Fixed Income 7 15 U.S.C. 78s(b)(2)(B).
FICC’s existing committed or pre-arranged liquidity
Clearing Corporation (‘‘FICC’’) filed
sradovich on DSK3GMQ082PROD with NOTICES

8 The description of the Proposed Rule Change is arrangements.
with the Securities and Exchange based on the statements prepared by FICC in the 15 See Notice, supra note 4, at 872.
Commission (‘‘Commission’’), pursuant Notice. See Notice, supra note 4. 16 Consistent with the Notice, references to

to Section 19(b)(1) of the Securities 9 FICC proposes to adopt GSD Rule 22D (Wind-
‘‘Members’’ refer to GSD Netting Members and
Exchange Act of 1934 (‘‘Act’’) 1 and Rule down of the Corporation) and GSD Rule 50 (Market MBSD Clearing Members. References to ‘‘Limited
Disruption and Force Majeure). See Notice, supra Members’’ refer to participants of GSD or MBSD
note 4, at 872. other than GSD Netting Members and MBSD
14 17 CFR 200.30–3(a)(12). 10 FICC proposes to adopt MBSD Rule 17B (Wind- Clearing Members, including, for example, GSD
1 15 U.S.C. 78s(b)(1). down of the Corporation) and MBSD Rule 40 Continued

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Document Created: 2018-03-24 00:59:51
Document Modified: 2018-03-24 00:59:51
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		83 FR 12995