83 FR 1391 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Market Data Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 8 (January 11, 2018)

Page Range		1391-1396
FR Document		2018-00309

Federal Register, Volume 83 Issue 8 (Thursday, January 11, 2018)

[Federal Register Volume 83, Number 8 (Thursday, January 11, 2018)]
[Notices]
[Pages 1391-1396]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-00309]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82450; File No. SR-CboeBZX-2017-019]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Market Data Fees

January 5, 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 December 28, 2017, Cboe BZX Exchange, Inc. (the

[[Page 1392]]

``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 Market Data section of
its fee schedule to lower the Internal Distribution \5\ fees and to
adopt per User fees for two market data products, the Cboe One Summary
Feed and the ETF Implied Liquidity Feed.
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\5\ A ``Distributor'' is defined as ``any entity that receives
the Exchange Market Data product directly from the Exchange or
indirectly through another entity and then distributes it internally
or externally to a third party.'' See the Exchange's fee schedule
available at http://markets.cboe.com/us/equities/membership/fee_schedule/bzx/. An ``Internal Distributor'' is defined as ``a
Distributor that receives the Exchange Market Data product and then
distributes that data to one or more Users within the Distributor's
own entity.'' Id.
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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 Market Data section of its fee
schedule to lower the fee for Internal Distribution and to adopt
separate fees for Professional \6\ and Non-Professional Users \7\ for
the Cboe One Summary Feed and the ETF Implied Liquidity Feed.\8\
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\6\ A ``Professional User'' is defined as ``any User other than
a Non-Professional User.'' See the Exchange's fee schedule available
at http://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
\7\ A ``Non-Professional User'' is currently defined as ``a
natural person who is not: (i) Registered or qualified in any
capacity with the Commission, the Commodity Futures Trading
Commission, any state securities agency, any securities exchange or
association, or any commodities or futures contract market or
association; (ii) engaged as an ``investment adviser'' as that term
is defined in Section 202(a)(11) of the Investment Advisers Act of
1940 (whether or not registered or qualified under that Act); or
(iii) employed by a bank or other organization exempt from
registration under federal or state securities laws to perform
functions that would require registration or qualification if such
functions were performed for an organization not so exempt.'' Id.
See SR-CboeBZX-2017-016 (filed December 15, 2017) (amending the
definition of Non-Professional User to harmonize it with that of its
affiliate exchanges, Cboe Exchange, Inc. and C2 Exchange, Inc. as of
January 2, 2018).
\8\ This Exchange initially filed the proposed rule change on
December 15, 2017 (SR-CboeBZX-2017-017). On December 18, 2018 the
Exchange withdrew SR-CboeBZX-2017-017 and submitted this filing.
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Cboe One Feed
The Cboe One Feed is an optional data feed that disseminates, on a
real-time basis, the aggregate best bid and offer (``BBO'') of all
displayed orders for securities traded on BZX and its affiliated
exchanges \9\ and for which they report quotes under the Consolidated
Tape Association (``CTA'') Plan or the Nasdaq/UTP Plan.\10\ The Cboe
One Feed also contains the individual last sale information for the
Cboe Equity Exchanges (collectively with the aggregate BBO, the ``Cboe
One Summary Feed''). In addition, the Cboe One Feed contains optional
functionality which enables recipients to receive aggregated two-sided
quotations from the Cboe Equity Exchanges for up to five (5) price
levels (``Cboe One Premium Feed'').
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\9\ BZX's affiliated exchanges are Cboe EDGA Exchange, Inc.
(``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX''), and Cboe BYX
Exchange, Inc. (``BYX'', together with EDGX, EDGA, and BZX, the
``Cboe Equity Exchanges'').
\10\ See Exchange Rule 11.22(j). See also Securities Exchange
Act Release No. 73918 (December 23, 2014), 79 FR 78920 (December 31,
2014) (File Nos. SR-EDGX-2014-25; SR-EDGA-2014-25; SR-BATS-2014-055;
SR-BYX-2014-030) (Notice of Amendment No. 2 and Order Granting
Accelerated Approval to Proposed Rule Changes, as Modified by
Amendments Nos. 1 and 2, to Establish a New Market Data Product
called the Cboe One Feed) (``Cboe One Approval Order'').
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The Exchange proposes to amend its fee schedule to lower the fee
for Internal Distribution for the Cboe One Summary Feed and to adopt
separate fees for Professional and Non-Professional Users.\11\ The
Exchange does not propose to amend the fees for the Cboe One Premium
Feed.
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\11\ The Exchange also proposes a non-substantive, immaterial
change to the fee table headings to conform to other heading within
the Market Data Section of the fee schedule. In particular, the
Exchange proposes to change the term ``Distributor'' to
``Distribution'' in both the Internal Distributor and External
Distributor headings under the Cboe One Feed.
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Distribution Fees. Currently, each Internal Distributor that
receives the Cboe One Summary Feed is charged a fee of $10,000 per
month. The Exchange now proposes to lower the fee for Internal
Distribution to $1,500 per month.
User Fees. Like it does today for External Distributors, the
Exchange proposes to adopt per User fees for Internal Distributors that
receive the Cboe One Summary Feed. The Exchange currently charges
External Distributors that redistribute the Cboe One Summary Feed
different fees for their Professional Users and Non-Professional Users.
Those fees are $10.00 per month for each Professional Users and $0.25
per month for each Non-Professional Users. To date, the Exchange has
not charged per User fees to Internal Distributors for the Cboe One
Summary Feed. To offset the proposed reduction to the monthly Internal
Distribution fee, the Exchange proposes to adopt per User fees for
Internal Distribution, the amounts of each fee would be the same as the
per User fees currently charged to External Distributors described
above.
The Exchange also proposes to extend the current $50,000 per month
Enterprise Fee available to External Distributors of the Cboe One
Summary Feed to Internal Distributors. In lieu of per User fees, the
Enterprise fee will permit Internal Distributors who redistribute the
Cboe One Summary Feed to an unlimited number of internal Professional
and Non-Professional Users for a set fee of $50,000 per month. For
example, if an Internal Distributor had 15,000 Professional Users who
each receive the Cboe One Summary Feed at $10.00 per month, then that
Internal Distributor will pay $150,000 per month in Professional Users
fees. Under the proposed Enterprise Fee, the Internal Distributor will
pay a flat fee of $50,000 for an unlimited number of internal

[[Page 1393]]

Professional and Non-Professional Users of the Cboe One Summary Feed.
An Internal Distributor that pays the Enterprise Fee will not have to
report its number of such Users (as set forth below) on a monthly
basis. However, every six months, an Internal Distributor must provide
the Exchange with a count of the total number of natural person users
of each product, including both Professional and Non-Professional
Users. Like for External Distributors, the Enterprise Fee for Internal
Distributors would be in addition to the applicable Distribution Fee.
ETF Implied Liquidity Feed
The ETF Implied Liquidity feed is an optional data feed that
provides the Exchange's proprietary calculation of the implied
liquidity and the aggregate best bid and offer (``BBO'') of all
displayed orders on the Cboe Equity Exchange for all standard, non-
leveraged U.S. equity Exchange Traded Funds (``ETFs'') \12\ traded on
the System.\13\ An ETF's implied liquidity disseminated via the
proposed feed would consist of the ETF's implied BBO (including the
implied size) calculated via a proprietary methodology based on the
national best bid and offer (``NBBO''), the number of shares of
securities underlying one creation unit of the ETF, and the estimated
cash included in one creation unit of the ETF.
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\12\ The securities underlying each of the U.S. equity ETFs
included in the feed must be considered NMS Securities as defined
under Rule 600(b)(46) of Regulation NMS. 17 CFR 242.600(b)(46).
\13\ See Exchange Rule 11.22(n). See also Securities Exchange
Act Release No. 80580 (May 3, 2017) (SR-BatsBZX-2017-25) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Amend Rule 11.22, Data Products, to Adopt a New Market Data Product
Known as the ETF Implied Liquidity Feed).
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Similar to as proposed above for the Cboe One Summary Feed, the
Exchange proposes to amend its fee schedule to lower the fee for
Internal Distribution and to adopt separate fees for Professional and
Non-Professional Users.
Distribution Fees. Currently, each Internal Distributor that
receives the ETF Implied Liquidity Feed is charged a fee of $5,000 per
month. The Exchange now proposes to lower the fee for Internal
Distribution to $1,500 per month. Like it does for External
Distributors today, the Exchange proposes to waive the Distribution fee
for Internal Distributors of the ETF Implied Liquidity Feed that also
receive the Cboe One Feed. The ETF Implied Liquidity Feed and the Cboe
One Feed are similar in that both include the aggregate BBO for all
displayed orders on the Cboe Equity Exchanges. The key difference here
is that the ETF Implied Liquidity Feed also contains the Exchange's
proprietary calculation of the ETF's implied liquidity. As such, the
Exchange believes it is reasonable to waive the Distributor fee for
Internal Distributors of the ETF Implied Liquidity Feed where that
Internal Distributor also receives and is charged the Internal
Distributor fee for the Cboe One Feed. The Exchange notes that the
proposed lower Internal Distribution fee for the ETF Implied Liquidity
Feed of $1,500 per month would equal the proposed Internal Distribution
fee for Cboe One Summary and less than the existing $15,000 per month
Internal Distribution fee for Cboe One Premium.
User Fees. Like it does today for External Distributors, the
Exchange proposes to charge per User fees to Internal Distributors that
receive the ETF Implied Liquidity Feed. The Exchange currently charges
External Distributors that redistribute the ETF Implied Liquidity Feed
different fees for their Professional Users and Non-Professional Users.
Those fees are $25.00 per month for each Professional Users and $1.00
per month for each Non-Professional Users. To date, the Exchange has
not charged per User fees to Internal Distributors. To offset the
proposed reduction to the monthly Internal Distribution fee, the
Exchange proposes to adopt per User fees for Internal Distribution, the
amounts of each would be the same as the per User fees currently
charged to External Distributors.
User Count Policy
Like External Distributors of the Cboe One Summary Feed and the ETF
Implied Liquidity Feed, Internal Distributors that receive the Cboe One
Summary Feed and/or ETF Implied Liquidity Feed will be required to
count every Professional User and Non-Professional User to which they
provide the Cboe One Summary Feed and/or ETF Implied Liquidity Feed,
the requirements for which are identical to that currently in place for
External Distributors of the Cboe One Summary Feed and ETF Implied
Liquidity Feed, as well as other market data products offered by the
Exchange.\14\ Thus, the Internal Distributor's count will include every
person and device that accesses the data regardless of the purpose for
which the individual or device uses the data. Internal Distributors
must report all Professional and Non-Professional Users in accordance
with the following:
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\14\ See Securities Exchange Act Release Nos. 74285 (February
18, 2015); 80 FR 9828 (February 24, 2015) (SR-BATS-2015-11)
(proposing fees for the Cboe One Feed); 75406 (July 9, 2015), 80 FR
41522 (July 15, 2015) (SR-BATS-2015-48) (proposing user fees for the
BZX Top and Last Sale data feeds); 75785 (August 28, 2015), 80 FR
53360 (September 3, 2015) (SR-BATS-2015-64) (proposing fees for BZX
Book Viewer); and 79636 (December 21, 2016), 81 FR 95693 (December
28, 2016) (SR-BatsBZX-2016-87) (proposing fees for BZX Summary
Depth).
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In connection with an Internal Distributor's distribution
of the Cboe One Summary Feed and/or ETF Implied Liquidity Feed, the
Internal Distributor must count as one User each unique User that the
Internal Distributor has entitled to have access to the Cboe One
Summary Feed and/or ETF Implied Liquidity Feed. However, where a device
is dedicated specifically to a single individual, the Internal
Distributor must count only the individual and need not count the
device.
The Internal Distributor must identify and report each
unique User. If a User uses the same unique method to gain access to
the Cboe One Summary Feed and/or ETF Implied Liquidity Feed, the
Internal Distributor must count that as one User. However, if a unique
User uses multiple methods to gain access to the Cboe One Summary Feed
and/or the ETF Implied Liquidity Feed (e.g., a single User has multiple
passwords and user identifications), the Internal Distributor must
report each of those methods as an individual User.
Internal Distributors must report each unique individual
person who receives access through multiple devices as one User so long
as each device is dedicated specifically to that individual.
If an Internal Distributor entitles one or more
individuals to use the same device, the Distributor must include only
the individuals, and not the device, in the count.
Implementation Date
The Exchange intends to implement the proposed fees on January 2,
2018.
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 recipients of
Exchange data. The Exchange believes that the proposed rates are
equitable and non-discriminatory in that they apply

[[Page 1394]]

uniformly to all recipients of Exchange data. The Exchange believes the
proposed fees are competitive with those charged by other venues and,
therefore, reasonable and equitably allocated to recipients.
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\15\ 15 U.S.C. 78f.
\16\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed rule change is consistent
with Section 11(A) of the Act \17\ in that it supports (i) fair
competition among brokers and dealers, among exchange markets, and
between exchange markets and markets other than exchange markets and
(ii) the availability to brokers, dealers, and investors of information
with respect to quotations for and transactions in securities.
Furthermore, the proposed rule change is consistent with Rule 603 of
Regulation NMS,\18\ which provides that any national securities
exchange that distributes information with respect to quotations for or
transactions in an NMS stock do so on terms that are not unreasonably
discriminatory. In adopting Regulation NMS, the Commission granted
self-regulatory organizations and broker-dealers increased authority
and flexibility to offer new and unique market data to the public. It
was believed that this authority would expand the amount of data
available to consumers, and also spur innovation and competition for
the provision of market data.
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\17\ 15 U.S.C. 78k-1.
\18\ 17 CFR 242.603.
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In addition, the proposed fees would not permit unfair
discrimination because all of the Exchange's customers and market data
vendors who subscribe to the Cboe One Summary Feed and ETF Implied
Liquidity Feed will be subject to the proposed fees. The Cboe One
Summary Feed and ETF Implied Liquidity Feed are distributed and
purchased on a voluntary basis, in that neither the Exchange nor market
data distributors are required by any rule or regulation purchase this
data or to make this data available. Accordingly, Distributors and
Users can discontinue use at any time and for any reason, including due
to an assessment of the reasonableness of fees charged. Firms have a
wide variety of alternative market data products from which to choose,
such as similar proprietary data products offered by other exchanges
and consolidated data. Moreover, the Exchange is not required to make
any proprietary data products available or to offer any specific
pricing alternatives to any customers.
In addition, the fees that are the subject of this rule filing are
constrained by competition. As explained below in the Exchange's
Statement on Burden on Competition, the existence of alternatives to
the Cboe One Summary Feed and ETF Implied Liquidity Feed further ensure
that the Exchange cannot set unreasonable fees, or fees that are
unreasonably discriminatory, when vendors and subscribers can elect
such alternatives. That is, the Exchange competes with other exchanges
(and their affiliates) that provide similar market data products. For
example, the Cboe One Summary Feed and/or ETF Implied Liquidity Feed
provides investors with alternative market data and competes with
similar market data product currently offered by other exchanges. If
another exchange (or its affiliate) were to charge less to distribute
its similar product than the Exchange charges to create the Cboe One
Summary Feed and/or ETF Implied Liquidity Feed, prospective Users
likely would not subscribe to, or would cease subscribing to either
market data product.
The Exchange notes that the Commission is not required to undertake
a cost-of-service or rate-making approach. The Exchange believes that,
even if it were possible as a matter of economic theory, cost-based
pricing for non-core market data would be so complicated that it could
not be done practically.\19\
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\19\ The Exchange believes that cost-based pricing would be
impractical because it would create enormous administrative burdens
for all parties, including the Commission, to cost-regulate a large
number of participants and standardize and analyze extraordinary
amounts of information, accounts, and reports. In addition, it is
impossible to regulate market data prices in isolation from prices
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort
incentives, including those to minimize costs and to innovate,
leading to further waste. Under cost-based pricing, the Commission
would be burdened with determining a fair rate of return, and the
industry could experience frequent rate increases based on
escalating expense levels. Even in industries historically subject
to utility regulation, cost-based ratemaking has been discredited.
As such, the Exchange believes that cost-based ratemaking would be
inappropriate for proprietary market data and inconsistent with
Congress's direction that the Commission use its authority to foster
the development of the national market system, and that market
forces will continue to provide appropriate pricing discipline. See
Appendix C to NYSE's comments to the Commission's 2000 Concept
Release on the Regulation of Market Information Fees and Revenues,
which can be found on the Commission's website at http://www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities
Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200
(December 17, 2014) (SR-NYSE-2014-64) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change to Establish an
Access Fee for the NYSE Best Quote and Trades Data Feed, Operative
December 1, 2014).
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The Exchange believes that lowering the Internal Distribution fee
for both the Cboe One Summary Feed and the ETF Implied Liquidity Feed
is equitable and reasonable because the lower fee coupled with the
adoption of per User fees is designed to provide a price structure for
Internal Distributors that is competitive and attracts additional
subscribers to each market data feed. The Exchange also believes that
it is reasonable to charge a lower fee to Internal Distributors than
External Distributors because External Distributors redistribute the
data to their subscribers for a fee while Internal Distributors do not.
The Exchange believes it is reasonable to waive the Distributor fee
for Internal Distributors of the ETF Implied Liquidity Feed that also
receive the Cboe One Feed as both include the aggregate BBO for all
displayed orders on the Cboe Equity Exchanges and an identical waiver
is currently granted to External Distributors. The key difference here
is that the ETF Implied Liquidity Feed also contains the Exchange's
proprietary calculation of the ETF's implied liquidity. Waiver of the
Distributor fee for Internal Distributors that also receive and pay the
Internal Distributor for the Cboe One Feed is equitable and reasonable
because those Internal Distributors are being charged the Internal
Distributor fees for the Cboe One Feed, which would be charged the
proposed rate of $1,500 per month for Cboe One Summary and the existing
rate of $15,000 per month for Cboe One Premium. The fee waiver here is
equitable due to both products providing the same key data element--the
aggregated BBO of the Cboe Equity Exchanges. While the ETF Implied
Liquidity Feed also includes the Exchange's proprietary calculation of
an ETF's implied liquidity, the Exchange notes that Internal
Distributors of the ETF Implied Liquidity Feed would now be subject to
the per User fees. Therefore, the Exchange believes it is equitable and
reasonable to waive the Internal Distributor fees in such case. The
Exchange did not previously extend this waiver to Internal Distributors
because Internal Distributors of the Cboe One Feed were not charged
User fees like External Distributors. Since that is no longer the case,
the Exchange believes it is reasonable to extend the waiver to Internal
Distributors as proposed herein.
The Exchange believes that implementing the Professional and Non-
Professional User fees for the Cboe One Summary Feed and the ETF
Implied Liquidity Feed are equitable and reasonable because they will
result in greater availability to Professional and Non-Professional
Users. The addition of per User fees also enables the fee for

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Internal Distribution, thereby lowering their overall costs where the
number of Users they account for is low. Moreover, introducing a modest
Non-Professional User fee is reasonable because it provides an
additional method for Non-Professional investors to access the data by
providing the same data that is available to Professional Users. The
Exchange believes that the proposed fees are equitable and not unfairly
discriminatory because they will be charged uniformly to Internal
Distributors and Users. The Exchange notes that the amount of the per
User fees for Internal Distribution equal those charged for External
Distribution for both the Cboe One Summary Feed and ETF Implied
Liquidity Feed.
The fee structure of differentiated Professional and Non-
Professional fees is utilized by the Exchange for the Cboe One Feed and
has long been used by other exchanges for their proprietary data
products, and by the Nasdaq UTP and the CTA and CQ Plans in order to
reduce the price of data to retail investors and make it more broadly
available.\20\ Offering the Cboe One Summary Feed and ETF Implied
Liquidity Feed to Non-Professional Users with the same data available
to Professional Users results in greater equity among data recipients.
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\20\ See Securities Exchange Act Release Nos. 74285 (February
18, 2015), 80 FR 9828 (February 24, 2015) (SR-BATS-2015-11); 74283
(February 18, 2015), 80 FR 9809 (February 24, 2015) (SR-EDGA-2015-
09); 74282 (February 17, 2015), 80 FR 9487 (February 23, 2015) (SR-
EDGX-2015-09); and 74284 (February 18, 2015), 80 FR 9792 (February
24, 2015) (SR-BYX-2015-09) (``Initial Cboe One Feed Fee Filings'').
See also, e.g., Securities Exchange Act Release No. 20002, File No.
S7-433 (July 22, 1983) (establishing nonprofessional fees for CTA
data); and Nasdaq Rules 7023(b) and 7047.
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The proposed expansion of the Enterprise Fee to Internal
Distributors of the Cboe One Summary Feed is reasonable because it
could result in a fee reduction for Internal Distributors with a large
number of Professional and Non-Professional Users. If an Internal
Distributor has a smaller number of Professional Users of the Cboe One
Summary Feed, then it may continue using the per User structure. By
reducing prices for Internal Distributors with a large number of
Professional and Non-Professional Users, the Exchange believes that
more Internal Distributors may choose to receive and to distribute the
Cboe One Summary Feed, thereby expanding the distribution of this
market data for the benefit of investors.
The Exchange further believes that the proposed Enterprise Fee is
reasonable because it will simplify reporting for certain Internal
Distributors that have large numbers of Professional and Non-
Professional Users. Internal Distributors that pay the proposed
Enterprise Fee will not have to report the number of Users on a monthly
basis as they currently do, but rather will only have to count natural
person users every six months, which is a significant reduction in
administrative burden. Finally, the Exchange believes that it is
equitable and not unfairly discriminatory to establish an Enterprise
Fee because it reduces the Exchange's costs and the Distributor's
administrative burdens in tracking and auditing large numbers of Users.

(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, as amended. The
Exchange's ability to price the Cboe One Summary Feed and the ETF
Implied Liquidity Feed is constrained by: (i) Competition among
exchanges, other trading platforms, and Trade Reporting Facilities
(``TRF'') that compete with each other in a variety of dimensions; (ii)
the existence of inexpensive real-time consolidated data and market-
specific data and free delayed data; and (iii) the inherent
contestability of the market for proprietary data.
The Exchange and its market data products are subject to
significant competitive forces and the proposed fees represent
responses to that competition. To start, the Exchange competes
intensely for order flow. It competes with the other national
securities exchanges that currently trade equities, with electronic
communication networks, with quotes posted in FINRA's Alternative
Display Facility, with alternative trading systems, and with securities
firms that primarily trade as principal with their customer order flow.
The Cboe One Summary Feed will enhance competition because it not only
provides content that is competitive with the similar products offered
by other exchanges, but will provide pricing that is competitive as
well. The Cboe One Summary Feed provides investors with an alternative
option for receiving market data and competes directly with similar
market data products currently offered by the NYSE and Nasdaq.\21\
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\21\ See Nasdaq Basic, http://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic (data feed offering the BBO and Last Sale
information for all U.S. exchange-listed securities based on
liquidity within the Nasdaq market center, as well as trades
reported to the FINRA/Nasdaq Trade Reporting Facility
(``TRF''));Nasdaq NLS Plus, http://www.nasdaqtrader.com/Trader.aspx?id=NLSplus (data feed providing last sale data as well
as consolidated volume from the following Nasdaq OMX markets for
U.S. exchange-listed securities: Nasdaq, FINRA/Nasdaq TRF, Nasdaq
OMX BX, and Nasdaq OMX PSX); Securities Exchange Act Release No.
73553 (November 6, 2014), 79 FR 67491 (November 13, 2014) (SR-NYSE-
2014-40) (Notice of Amendment No. 1 and Order Granting Accelerated
Approval to a Proposed Rule Change, as Modified by Amendment No.1,
To Establish the NYSE Best Quote & Trades (``BQT'') Data Feed);
https://www.nyse.com/market-data/real-time/nyse-bqt (data feed
providing unified view of BBO and last sale information for the
NYSE, NYSE Arca, and NYSE MKT).
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In addition, when establishing the proposed fees, the Exchange
considered the competitiveness of the market for proprietary data and
all of the implications of that competition. The Exchange believes that
it has considered all relevant factors and has not considered
irrelevant factors in order to establish fair, reasonable, and not
unreasonably discriminatory fees and an equitable allocation of fees
among all Users. The existence of alternatives to the Cboe One Summary
Feed and the ETF Implied Liquidity Feed ensures that the Exchange
cannot set unreasonable fees, or fees that are unreasonably
discriminatory, when vendors and subscribers can elect these
alternatives or choose not to purchase a specific proprietary data
product if its cost to purchase is not justified by the returns any
particular vendor or subscriber would achieve through the purchase.
Lastly, the Exchange represents that the proposed pricing of the
Cboe One Summary Feed and the ETF Implied Liquidity Feed provides
investors with alternative market data and competes with similar market
data product currently offered by other exchanges.\22\ In addition, the
Exchange notes the concerns regarding whether a competing vendor could
create a similar product on the same price basis as the Exchange

[[Page 1396]]

are not present here. The proposed changes are limited to fees for
Internal Distributers who use the data for internal use only and not
for the redistribution and sale to external parties.
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\22\ Id. See also Nasdaq's Global Index Data Service (``GIDS'')
available at http://business.nasdaq.com/intel/indexes/index-data/index.html#!/tcm:5044-12151 (providing on a real-time basis intraday
portfolio values, daily valuation information, such as NAV per
Share, estimated cash per Share, estimated cash per creation unit,
total cash per creation unit and total shares outstanding of the
fund and ETF directory messages designed to provide the symbols of
the ETF valuations). See footnote 28 of Securities Exchange Act
Release No. 77714 (April 26, 2016), 81 FR 26281 (May 2, 2016)
(describing Nasdaq's GIDS within the order approving SR-Nasdaq-2016-
028). See also footnote 29 of Securities Exchange Act Release No.
78592 (August 16, 2016), 81 FR 56729 (August 22, 2016) (describing
Nasdaq's GIDS within the order approving SR-Nasdaq-2016-061). See,
e.g., the NYSE Arca, Inc.'s (``NYSE Arca'') EOD ETF Report available
at http://www.nyxdata.com/Data-Products/NYSE-Arca-EOD-ETF-Report
(providing information such as the ETF's closing trades and quotes
at different key points during the trading day, as well referential
information such as shares outstanding, the primary market, and
NAV).
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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 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

The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \23\ and paragraph (f) of Rule 19b-4
thereunder.\24\ 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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\23\ 15 U.S.C. 78s(b)(3)(A).
\24\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include
File Number SR-CboeBZX-2017-019 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-CboeBZX-2017-019. 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 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-CboeBZX-2017-019 and should be submitted
on or before February 1, 2018.
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\25\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00309 Filed 1-10-18; 8:45 am]
BILLING CODE 8011-01-P

1396 Federal Register / Vol. 83, No. 8 / Thursday, January 11, 2018 / Notices

are not present here. The proposed change that are filed with the 1934 (the ‘‘Exchange Act’’), the
changes are limited to fees for Internal Commission, and all written Investment Company Act of 1940, the
Distributers who use the data for communications relating to the Investment Advisers Act of 1940, and
internal use only and not for the proposed rule change between the certain penalties under the Sarbanes-
redistribution and sale to external Commission and any person, other than Oxley Act of 2002. These amounts are
parties. those that may be withheld from the effective beginning on January 15, 2018,
public in accordance with the and will apply to all penalties imposed
(C) Self-Regulatory Organization’s provisions of 5 U.S.C. 552, will be after that date for violations of the
Statement on Comments on the available for website viewing and aforementioned statutes that occurred
Proposed Rule Change Received from printing in the Commission’s Public after November 2, 2015.
Members, Participants or Others Reference Room, 100 F Street NE, FOR FURTHER INFORMATION CONTACT:
The Exchange has neither solicited Washington, DC 20549, on official James A. Cappoli, Assistant General
nor received written comments on the business days between the hours of Counsel, Office of the General Counsel,
proposed rule change. 10:00 a.m. and 3:00 p.m. Copies of the at (202) 551–7923, or Stephen M. Ng,
filing also will be available for Senior Special Counsel, Office of the
III. Date of Effectiveness of the Proposed
inspection and copying at the principal General Counsel, at (202) 551–7957.
Rule Change and Timing for
office of the Exchange. All comments SUPPLEMENTARY INFORMATION:
Commission Action
received will be posted without change.
The foregoing rule change has become Persons submitting comments are I. Background
effective pursuant to Section 19(b)(3)(A) cautioned that we do not redact or edit This notice is being published
of the Act 23 and paragraph (f) of Rule personal identifying information from pursuant to the 2015 Act,1 which
19b–4 thereunder.24 At any time within comment submissions. You should amended the Federal Civil Penalties
60 days of the filing of the proposed rule submit only information that you wish Inflation Adjustment Act of 1990 (the
change, the Commission summarily may to make available publicly. All ‘‘Inflation Adjustment Act’’).2 The
temporarily suspend such rule change if submissions should refer to File Inflation Adjustment Act previously had
it appears to the Commission that such Number SR–CboeBZX–2017–019 and been amended by the Debt Collection
action is necessary or appropriate in the should be submitted on or before Improvement Act of 1996 (the ‘‘DCIA’’) 3
public interest, for the protection of February 1, 2018. to require that each federal agency adopt
investors, or otherwise in furtherance of For the Commission, by the Division of regulations at least once every four years
the purposes of the Act. Trading and Markets, pursuant to delegated that adjust for inflation the CMPs that
IV. Solicitation of Comments authority.25 can be imposed under the statutes
Eduardo A. Aleman, administered by the agency. Pursuant to
Interested persons are invited to Assistant Secretary. this requirement, the Commission
submit written data, views, and previously adopted regulations in 1996,
[FR Doc. 2018–00309 Filed 1–10–18; 8:45 am]
arguments concerning the foregoing, 2001, 2005, 2009, and 2013 to adjust the
BILLING CODE 8011–01–P
including whether the proposed rule maximum amount of the CMPs that
change is consistent with the Act. could be imposed under the statutes the
Comments may be submitted by any of SECURITIES AND EXCHANGE Commission administers.4
the following methods: COMMISSION The 2015 Act replaces the inflation
Electronic Comments adjustment formula prescribed in the
[Release Nos. 33–10451; 34–82455; IA– DCIA with a new formula for calculating
• Use the Commission’s internet 4842; IC–32963] the inflation-adjusted amount of CMPs.
comment form (http://www.sec.gov/ The 2015 Act requires that agencies use
rules/sro.shtml); or Adjustments to Civil Monetary Penalty
Amounts this new formula to re-calculate the
• Send an email to rule-comments@ inflation-adjusted amounts of the
sec.gov. Please include File Number SR– AGENCY: Securities and Exchange
CboeBZX–2017–019 on the subject line. Commission. 1 Public Law 114–74 Sec. 701, 129 Stat. 599–601

ACTION: Notice of annual inflation (Nov. 2, 2015), codified at 28 U.S.C. 2461 note.
Paper Comments 2 Public Law 101–410, 104 Stat. 890–892 (1990),
adjustment of civil monetary penalties.
• Send paper comments in triplicate codified at 28 U.S.C. 2461 note.
3 Public Law 104–134, Title III, § 31001(s)(1), 110
to Brent J. Fields, Secretary, Securities SUMMARY: The Securities and Exchange Stat. 1321–373 (1996), codified at 28 U.S.C. 2461
and Exchange Commission, 100 F Street Commission (the ‘‘Commission’’) is note.
NE, Washington, DC 20549–1090. publishing this notice pursuant to the 4 See Release Nos. 33–7361, 34–37912, IA–1596,

All submissions should refer to File Federal Civil Penalties Inflation IC–22310, dated November 1, 1996 (effective
Adjustment Act Improvements Act of December 9, 1996), previously found at 17 CFR
Number SR–CboeBZX–2017–019. This 201.1001 and Table I to Subpart E of Part 201;
file number should be included on the 2015 (the ‘‘2015 Act’’). This Act requires Release Nos. 33–7946, 34–43897, IA–1921, IC–
subject line if email is used. To help the all agencies to annually adjust for 24846, dated January 31, 2001 (effective February
Commission process and review your inflation the civil monetary penalties 2, 2001), previously found at 17 CFR 201.1002 and
Table II to Subpart E of Part 201; Release Nos. 33–
comments more efficiently, please use that can be imposed under the statutes 8530, 34–51136, IA–2348, IC–26748, dated
only one method. The Commission will administered by the agency and publish February 9, 2005 (effective February 14, 2005),
post all comments on the Commission’s the adjusted amounts in the Federal previously found at 17 CFR 201.1003 and Table III
internet website (http://www.sec.gov/ Register. This notice sets forth the to Subpart E of Part 201; Release Nos. 33–9009, 34–
srobinson on DSK9F5VC42PROD with NOTICES

59449, IA–2845, IC–28635, dated February 25, 2009
rules/sro.shtml). Copies of the annual inflation adjustment of the (effective March 3, 2009), previously found at 17
submission, all subsequent maximum amount of civil monetary CFR 201.1004 and Table IV to Subpart E of Part 201;
amendments, all written statements penalties (‘‘CMPs’’) administered by the and Release Nos. 33–9387, 34–68994, IA–3557, IC–
Commission under the Securities Act of 30408, dated February 27, 2013 (effective March 5,
with respect to the proposed rule 2013), previously found at 17 CFR 201.1005 and
1933, the Securities Exchange Act of Table V to Subpart E of Part 201. The penalty
23 15 U.S.C. 78s(b)(3)(A). amounts contained in these releases have now been
24 17 CFR 240.19b–4(f). 25 17 CFR 200.30–3(a)(12). consolidated into Table I to 17 CFR 201.1001.

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Document Created: 2018-01-11 04:54:24
Document Modified: 2018-01-11 04:54:24

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 1391