83 FR 15427 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Market Data Fees
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 69 (April 10, 2018)
Federal Register Volume 83, Issue 69 (April 10, 2018)
| Page Range | 15427-15431 | |
| FR Document | 2018-07242 |
[Federal Register Volume 83, Number 69 (Tuesday, April 10, 2018)] [Notices] [Pages 15427-15431] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-07242] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82991; File No. SR-CBOE-2018-026] Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Market Data Fees April 4, 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 28, 2018, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') 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. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Cboe Data Services (``CDS'') fee schedule to establish an optional Enhanced Controlled Data Distribution Fee to further the distribution of the BBO,\5\ Book Depth,\6\ and Complex Order Book \7\ (``COB'') data feeds (collectively, ``Cboe Options Data Feeds'').\8\ --------------------------------------------------------------------------- \5\ The BBO Data Feed is a real-time data feed that includes the following information: (i) Outstanding quotes and standing orders at the best available price level on each side of the market; (ii) executed trades time, size, and price; (iii) totals of customer versus non-customer contracts at the best bid and offer (``BBO''); (iv) all-or-none contingency orders priced better than or equal to the BBO; (v) expected opening price and expected opening size; (vi) end-of-day summaries by product, including open, high, low, and closing price during the trading session; (vi) recap messages any time there is a change in the open, high, low or last sale price of a listed option; (vii) COB information; and (viii) product IDs and codes for all listed options contracts. The quote and last sale data contained in the BBO data feed is identical to the data sent to the Options Price Reporting Authority (``OPRA'') for redistribution to the public. \6\ The Book Depth Data Feed is a real-time, low latency data feed that includes all data contained in the BBO Data Feed described above plus outstanding quotes and standing orders up to the first four price levels on each side of the market, with aggregate size. \7\ The COB Data Feed is a real-time data feed that includes data regarding the Exchange's Complex Order Book and related complex order information. The COB Data Feed contains the following information for all Exchange-traded complex order strategies (multi- leg strategies such as spreads, straddles and buy-writes): (i) Outstanding quotes and standing orders on each side of the market with aggregate size, (ii) data with respect to executed trades (``last sale data''), and (iii) totals of customer versus non- customer contracts. \8\ The ECDD Fee is based on The Nasdaq Stock Market LLC's (``Nasdaq'') Enhanced Display Solution fee. See Nasdaq Rule 7026(a). See also Securities Exchange Act Release Nos. 66165 (January 17, 2012), 77 FR 3313 (January 23, 2012) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Establish an Enhanced Display Distributor Fee); and 73807 (December 10, 2014), 79 FR 74784 (December 16, 2014) (SR-Nasdaq-2014-117). --------------------------------------------------------------------------- The text of the proposed rule change is also available on the Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the [[Page 15428]] Exchange's Office of the Secretary, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant 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 proposed to amend the CDS fee schedule to establish an optional ECDD Fee to further the distribution of the Cboe Options Data Feeds. The new data distribution model (an ``Enhanced Controlled Data Distribution'' or ``ECDD'') offers a delivery method available to firms seeking simplified market data administration and may be offered by Customers to external subscribers that are using the Cboe Options Data Feeds internally. The proposed optional ECDD Fee is intended to provide a new pricing option for Customers \9\ who provide a controlled display or entitlement product along with an Application Programming Interface (``API'') or similar solution to subscribers. Non-display use is not permitted under the ECDD Fee structure. To ensure compliance with this new fee, Customers must monitor for any non-display or excessive use suggesting that the subscriber is not in compliance. The Customer is liable for any unauthorized use by the ECDD subscribers under the ECDD. This proposed optional new fee only applies to Customer who distribute Cboe Options Data Feeds externally and who opt for the ECDD option. --------------------------------------------------------------------------- \9\ A ``Customer'' is any person, company or other entity that, pursuant to a market data agreement with CDS, is entitled to receive data, either directly from CDS or through an authorized redistributor (i.e., a Customer or an extranet service provider), whether that data is distributed externally or used internally. The CDS fee schedule for Exchange data is located at https://www.cboe.org/general-info/pdfframed?content=/publish/mdxfees/cboe-cds-fees-schedule-for-cboe-datafeeds.pdf§ion=SEC_MDX_CSM&title=Cboe%20CDS%20Fees%20Schedule. --------------------------------------------------------------------------- This new pricing and administrative option is in response to industry demand, as well as due to changes in the technology to distribute market data. By providing this new fee option, Customers will have more administrative flexibility in their receipt and distribution of the Cboe Options Data Feeds. Customers opting for the ECDD Fee would still be fee liable for the applicable user fees for Cboe BBO, Book Depth, and COB data feeds, as described in the CDS fee schedule.\10\ Cboe proposes to permit Customers to select the ECDD Fee at a minimum rate of $500 per user/per month each for the first 5 users, $200 per user/per month each for the 6th to the 20th user, and $50 per User/per month each for the 21st or more users. The ECDD Fee is independent from the applicable per user fees for each of the individual Cboe Options Data Feeds as described above. However, a single per user fee under the ECDD Fee would allow access to each of the Cboe Options Data Feeds. These new ECDD Fees will become fee liable for the billing month of April 2018. --------------------------------------------------------------------------- \10\ Customers redistributing the Cboe Options Data Feeds under the proposed fee change will pay underlying rates applicable to the Cboe Data Feed as set forth in the CDS fee schedule. --------------------------------------------------------------------------- This delivery option assesses a new fee schedule to Customers of the Cboe Options Data Feeds that provide an API or similar solution. Customers may either control the display of the data or offer APIs that power third party software display applications where the Customer controls the entitlement but not the display of data. The Customer must first agree to reformat, redisplay and/or alter the Cboe Options Data Feeds prior to retransmission, but not to affect the integrity of the Cboe Options Data Feeds and not to render it inaccurate, unfair, uninformative, fictitious, misleading or discriminatory. An ECDD is any controlled display product or entitlement containing the Cboe Data Feed where the Customer controls a display of the Cboe Data Feed or offer APIs that power third party software display applications where the Customer controls the entitlement but not the display of data. The user of an ECDD display may use the Cboe Data Feed for the user's own purposes and may not redistribute the information outside of their organization. The user may not redistribute the data internally to other users in the same organization. In the past, Cboe has considered this type of retransmission to be an uncontrolled display since the Customer does not control the entitlements or the display of the information. Over the last 16 years, Customers have improved the technical delivery and monitoring of data and the ECDD offering responds to an industry need to administer these new types of technical deliveries. Some Customers believe that an API or other distribution from a display is a better controlled product than a data feed and as such should not be subject to the same rates as a data feed. The offering of a new pricing option for an ECDD would not only result in Cboe offering lower fees for certain existing Customers, but will allow new Customers to deliver ECDD to new clients, thereby increasing transparency of the market. Accordingly, Cboe is establishing the ECDD Fee for Customers who are seeking simplified market data administration and would like to offer the Cboe Options Data Feeds to users that are using the Cboe Options Data Feeds internally. The Cboe ECDD Fee is optional for firms providing a display product containing the Cboe Options Data Feeds where the Customer controls a display of the Cboe Data Feed or offer APIs that power third party software display applications where the Customer controls the entitlement but not the display of data since these firms can choose to pay the data feed fees. The new Cboe ECDD Fee is designed to allow Cboe Data Feed subscribers to redistribute data via a terminal without paying a higher fee for an attached API. As a result, it does not impact individual usage fees for the Cboe Options Data Feeds or in any way increase the costs of any user of the Cboe Options Data Feeds. For Customers wanting to use this same functionality for other products, they would be able to do so by paying the applicable Cboe Data Feed rates. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,\11\ in general, and furthers the objectives of Section 6(b)(4),\12\ 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 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. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78f. \12\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- [[Page 15429]] The Exchange believes that the proposed rule change is consistent with Section 11(A) of the Act \13\ 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,\14\ 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. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78k-1. \14\ 17 CFR 242.603. --------------------------------------------------------------------------- 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 above data feeds will be subject to the proposed fees. The above data feeds 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 above data feeds 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 above data feeds provide 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 for the above data feeds, 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.\15\ --------------------------------------------------------------------------- \15\ 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). --------------------------------------------------------------------------- Cboe believes that this proposal is in keeping with those principles by promoting increased transparency through the offering of a new pricing option for an ECDD, which would not only result in Cboe offering lower fees for certain existing Customers, but will allow new Customers to deliver ECDDs to new clients, thereby increasing transparency of the market. Additionally, the proposal provides for simplified market data administration and may be offered by Customers to external users that are using the Cboe Options Data Feeds internally. Cboe notes also that this filing proposes to distribute no additional data elements and that the ECDD Fee is optional. Accordingly, Customers and users can discontinue use at any time and for any reason, including due to an assessment of the reasonableness of fees charged. Lastly, Cboe notes that the ECDD fee is based on Nasdaq's Enhanced Display Solution fee.\16\ The proposed rates are also equitable and reasonable because they are lower than that currently charged by Nasdaq, which charges at a minimum rate of $4,000 per month for up to 399 subscribers, $7,500 per month for up to 400-999 subscribers, and $15,000 per month for 1,000 or more subscribers.\17\ --------------------------------------------------------------------------- \16\ See supra note 8. \17\ See Nasdaq Rule 7026(a). --------------------------------------------------------------------------- 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 ECDD is constrained by: (i) Competition among exchanges 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. An exchange's ability to price its proprietary data feed products is constrained by (1) the existence of actual competition for the sale of such data, (2) the joint product nature of exchange platforms, and (3) the existence of alternatives to proprietary data. The Existence of Actual Competition. The Exchange believes competition provides an effective constraint on the market data fees that the Exchange, through CDS, has the ability and the incentive to charge. The Exchange has a compelling need to attract order flow from market participants in order to maintain its share of trading volume. This compelling need to attract order flow imposes significant pressure on the Exchange to act reasonably in setting its fees for market data, particularly given that the market participants that will pay such fees often will be the same market participants from whom the Exchange must attract order flow. These market participants include broker-dealers that control the handling of a large volume of customer and proprietary order flow. Given the portability of order flow from one exchange to another, any exchange that sought to charge unreasonably high data [[Page 15430]] fees would risk alienating many of the same customers on whose orders it depends for competitive survival. The Exchange currently competes with fourteen options exchanges (including its affiliate, C2) for order flow.\18\ --------------------------------------------------------------------------- \18\ The Commission has previously made a finding that the options industry is subject to significant competitive forces. See e.g., Securities Exchange Act Release No. 59949 (May 20, 2009), 74 FR 25593 (May 28, 2009) (SR-ISE-2009-97) [sic] (order approving ISE's proposal to establish fees for a real-time depth of market data offering). --------------------------------------------------------------------------- In addition, in the case of products that are distributed through market data vendors, the market data vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Internet portals, such as Google, impose price discipline by providing only data that they believe will enable them to attract ``eyeballs'' that contribute to their advertising revenue. Similarly, Customers will not offer ECDD unless these products will help them maintain current users or attract new ones. All of these operate as constraints on pricing proprietary data products. Joint Product Nature of Exchange Platform. Transaction execution and proprietary data products are complementary in that market data is both an input and a byproduct of the execution service. In fact, market data and trade executions are a paradigmatic example of joint products with joint costs. The decision whether and on which platform to post an order will depend on the attributes of the platforms where the order can be posted, including the execution fees, data quality, and price and distribution of their data products. The more trade executions a platform does, the more valuable its market data products become. The costs of producing market data include not only the costs of the data distribution infrastructure, but also the costs of designing, maintaining, and operating the exchange's transaction execution platform and the cost of regulating the exchange to ensure its fair operation and maintain investor confidence. The total return that a trading platform earns reflects the revenues it receives from both products and the joint costs it incurs. Moreover, an exchange's broker- dealer customers view the costs of transaction executions and market data as a unified cost of doing business with the exchange. Analyzing the cost of market data product production and distribution in isolation from the cost of all of the inputs supporting the creation of market data and market data products will inevitably underestimate the cost of the data and data products. Thus, because it is impossible to obtain the data inputs to create market data products without a fast, technologically robust, and well-regulated execution system, system costs and regulatory costs affect the price of both obtaining the market data itself and creating and distributing market data products. It would be equally misleading, however, to attribute all of an exchange's costs to the market data portion of an exchange's joint products. Rather, all of an exchange's costs are incurred for the unified purposes of attracting order flow, executing and/or routing orders, and generating and selling data about market activity. The total return that an exchange earns reflects the revenues it receives from the joint products and the total costs of the joint products. The level of competition and contestability in the market is evident in the numerous alternative venues that compete for order flow, including 15 options self-regulatory organization (``SRO'') markets, as well as internalizing broker-dealers (``BDs'') and various forms of alternative trading systems (``ATSs''), including dark pools and electronic communication networks (``ECNs''). Competition among trading platforms can be expected to constrain the aggregate return that each platform earns from the sale of its joint products, but different platforms may choose from a range of possible, and equally reasonable, pricing strategies as the means of recovering total costs. For example, some platforms may choose to pay rebates to attract orders, charge relatively low prices for market data products (or provide market data products free of charge), and charge relatively high prices for accessing posted liquidity. Other platforms may choose a strategy of paying lower rebates (or no rebates) to attract orders, setting relatively high prices for market data products, and setting relatively low prices for accessing posted liquidity. In this environment, there is no economic basis for regulating maximum prices for one of the joint products in an industry in which suppliers face competitive constraints with regard to the joint offering. The Existence of Alternatives. The Exchange is constrained in pricing ECDD by the availability to market participants of alternatives to purchasing these products. The Exchange must consider the extent to which market participants would choose one or more alternatives instead of purchasing the exchange's data. Other options exchanges can and have produced their enhanced display products, and thus are sources of potential competition for CDS. For example, as noted above, Nasdaq offers an enhanced display product that will compete with ECDD. The large number of SROs, BDs, and ATSs that currently produce proprietary data or are currently capable of producing it provides further pricing discipline for proprietary data products. Each SRO, ATS, and BD is currently permitted to produce proprietary data products, and many currently do. In addition, the OPRA data feed is a significant competitive alternative to the BBO and last sale data included in the BBO and Book Depth Data Feeds. The existence of numerous alternatives to the Exchange's products, including proprietary data from other sources, 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. 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 \19\ and paragraph (f) of Rule 19b-4 \20\ thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule [[Page 15431]] change should be approved or disapproved. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78s(b)(3)(A). \20\ 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 CommentsUse 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-CBOE-2018-026 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-CBOE-2018-026. 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-CBOE-2018-026 and should be submitted on or before May 1, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-07242 Filed 4-9-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 69 / Tuesday, April 10, 2018 / Notices 15427
the market for Bitcoin Futures rules/sro.shtml). Copies of the The Exchange has designated the
Contracts? submission, all subsequent proposed rule change as one
9. What are commenters’ views on amendments, all written statements establishing or changing a member due,
possible factors that might impair the with respect to the proposed rule fee, or other charge imposed by the
ability of the arbitrage mechanism to change that are filed with the Exchange under Section 19(b)(3)(A)(ii)
keep the trading price of the Shares tied Commission, and all written of the Act 3 and Rule 19b–4(f)(2)
to the NAV of each Fund? With respect communications relating to the thereunder,4 which renders the
to the market for Bitcoin Futures proposed rule change between the proposed rule change effective upon
Contracts, what are commenters’ views Commission and any person, other than filing with the Commission. The
on the potential impact on the arbitrage those that may be withheld from the Commission is publishing this notice to
mechanism of the price volatility and public in accordance with the solicit comments on the proposed rule
the potential for trading halts? What are provisions of 5 U.S.C. 552, will be change from interested persons.
commenters’ views on whether or how available for website viewing and
I. Self-Regulatory Organization’s
these potential impairments of the printing in the Commission’s Public
Statement of the Terms of Substance of
arbitrage mechanism may affect the Reference Room, 100 F Street NE,
the Proposed Rule Change
Funds’ ability to ensure adequate Washington, DC 20549, on official
participation by Authorized business days between the hours of The Exchange proposes to amend the
Participants? What are commenters’ 10:00 a.m. and 3:00 p.m. Copies of the Cboe Data Services (‘‘CDS’’) fee
views on the potential effects on filing also will be available for schedule to establish an optional
investors if the arbitrage mechanism is inspection and copying at the principal Enhanced Controlled Data Distribution
impaired? office of the Exchange. All comments Fee to further the distribution of the
10. What are commenters’ views on received will be posted without change. BBO,5 Book Depth,6 and Complex Order
the risks of price manipulation and Persons submitting comments are Book 7 (‘‘COB’’) data feeds (collectively,
fraud in the underlying bitcoin trading cautioned that we do not redact or edit ‘‘Cboe Options Data Feeds’’).8
platforms and how these risks might personal identifying information from The text of the proposed rule
affect the Bitcoin Futures Contracts comment submissions. You should change is also available on the
market or the Bitcoin Swaps? What are submit only information that you wish Exchange’s website (http://
commenters’ views on how these risks to make available publicly. All www.cboe.com/AboutCBOE/CBOELegal
might affect trading in the Shares of the submissions should refer to File No. RegulatoryHome.aspx), at the
Funds? SR–CboeBZX–2018–001 and should be
3 15 U.S.C. 78s(b)(3)(A)(ii).
11. What are commenters’ views on submitted by May 1, 2018. Rebuttal 4 17 CFR 240.19b–4(f)(2).
how an investor may evaluate the price comments should be submitted by May 5 The BBO Data Feed is a real-time data feed that
of the Shares in light of the risk of 15, 2018. includes the following information: (i) Outstanding
potential price manipulation and fraud For the Commission, by the Division of quotes and standing orders at the best available
in the underlying bitcoin trading Trading and Markets, pursuant to delegated price level on each side of the market; (ii) executed
trades time, size, and price; (iii) totals of customer
platforms and in light of the potentially authority.17
versus non-customer contracts at the best bid and
significant spread between the price of Eduardo A. Aleman, offer (‘‘BBO’’); (iv) all-or-none contingency orders
the Bitcoin Futures Contracts or the Assistant Secretary. priced better than or equal to the BBO; (v) expected
Bitcoin Swaps and the spot price of opening price and expected opening size; (vi) end-
[FR Doc. 2018–07263 Filed 4–9–18; 8:45 am] of-day summaries by product, including open, high,
bitcoin? BILLING CODE 8011–01–P low, and closing price during the trading session;
12. What are commenters’ views on (vi) recap messages any time there is a change in
whether the two bitcoin futures the open, high, low or last sale price of a listed
exchanges represent a significant option; (vii) COB information; and (viii) product IDs
SECURITIES AND EXCHANGE and codes for all listed options contracts. The quote
market, i.e., a market of significant size? COMMISSION and last sale data contained in the BBO data feed
Comments may be submitted by any is identical to the data sent to the Options Price
of the following methods: [Release No. 34–82991; File No. SR–CBOE– Reporting Authority (‘‘OPRA’’) for redistribution to
2018–026] the public.
Electronic Comments 6 The Book Depth Data Feed is a real-time, low
• Use the Commission’s internet Self-Regulatory Organizations; Cboe latency data feed that includes all data contained
comment form (http://www.sec.gov/ Exchange, Inc.; Notice of Filing and in the BBO Data Feed described above plus
Immediate Effectiveness of a Proposed outstanding quotes and standing orders up to the
rules/sro.shtml); or first four price levels on each side of the market,
• Send an email to rule-comments@ Rule Change Relating to Market Data with aggregate size.
sec.gov. Please include File No. SR– Fees 7 The COB Data Feed is a real-time data feed that
CboeBZX–2018–001 on the subject line. includes data regarding the Exchange’s Complex
April 4, 2018. Order Book and related complex order information.
Paper Comments Pursuant to Section 19(b)(1) of the The COB Data Feed contains the following
Securities Exchange Act of 1934 (the information for all Exchange-traded complex order
• Send paper comments in triplicate ‘‘Act’’),1 and Rule 19b–4 thereunder,2 strategies (multi-leg strategies such as spreads,
to Secretary, Securities and Exchange straddles and buy-writes): (i) Outstanding quotes
notice is hereby given that on March 28, and standing orders on each side of the market with
Commission, 100 F Street NE, 2018, Cboe Exchange, Inc. (the aggregate size, (ii) data with respect to executed
Washington, DC 20549–1090. ‘‘Exchange’’ or ‘‘Cboe Options’’) filed trades (‘‘last sale data’’), and (iii) totals of customer
All submissions should refer to File No. with the Securities and Exchange versus non-customer contracts.
8 The ECDD Fee is based on The Nasdaq Stock
SR–CboeBZX–2018–001. The file Commission (‘‘Commission’’) the
daltland on DSKBBV9HB2PROD with NOTICES
Market LLC’s (‘‘Nasdaq’’) Enhanced Display
number should be included on the proposed rule change as described in Solution fee. See Nasdaq Rule 7026(a). See also
subject line if email is used. To help the Items I, II and III below, which Items Securities Exchange Act Release Nos. 66165
Commission process and review your have been prepared by the Exchange. (January 17, 2012), 77 FR 3313 (January 23, 2012)
comments more efficiently, please use (Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change to Establish an Enhanced
only one method. The Commission will 17 17 CFR 200.30–3(a)(57). Display Distributor Fee); and 73807 (December 10,
post all comments on the Commission’s 1 15 U.S.C. 78s(b)(1). 2014), 79 FR 74784 (December 16, 2014) (SR–
internet website (http://www.sec.gov/ 2 17 CFR 240.19b–4. Nasdaq–2014–117).
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![15430 Federal Register / Vol. 83, No. 69 / Tuesday, April 10, 2018 / Notices
fees would risk alienating many of the and market data as a unified cost of purchasing these products. The
same customers on whose orders it doing business with the exchange. Exchange must consider the extent to
depends for competitive survival. The Analyzing the cost of market data which market participants would
Exchange currently competes with product production and distribution in choose one or more alternatives instead
fourteen options exchanges (including isolation from the cost of all of the of purchasing the exchange’s data. Other
its affiliate, C2) for order flow.18 inputs supporting the creation of market options exchanges can and have
In addition, in the case of products data and market data products will produced their enhanced display
that are distributed through market data inevitably underestimate the cost of the products, and thus are sources of
vendors, the market data vendors data and data products. Thus, because it potential competition for CDS. For
themselves provide additional price is impossible to obtain the data inputs example, as noted above, Nasdaq offers
discipline for proprietary data products to create market data products without an enhanced display product that will
because they control the primary means a fast, technologically robust, and well- compete with ECDD. The large number
of access to certain end users. These regulated execution system, system of SROs, BDs, and ATSs that currently
vendors impose price discipline based costs and regulatory costs affect the produce proprietary data or are
upon their business models. For price of both obtaining the market data currently capable of producing it
example, vendors that assess a itself and creating and distributing provides further pricing discipline for
surcharge on data they sell are able to market data products. It would be proprietary data products. Each SRO,
refuse to offer proprietary products that equally misleading, however, to ATS, and BD is currently permitted to
their end users do not or will not attribute all of an exchange’s costs to the produce proprietary data products, and
purchase in sufficient numbers. Internet market data portion of an exchange’s many currently do. In addition, the
portals, such as Google, impose price joint products. Rather, all of an
OPRA data feed is a significant
discipline by providing only data that exchange’s costs are incurred for the
competitive alternative to the BBO and
they believe will enable them to attract unified purposes of attracting order
last sale data included in the BBO and
flow, executing and/or routing orders,
‘‘eyeballs’’ that contribute to their Book Depth Data Feeds.
and generating and selling data about
advertising revenue. Similarly, The existence of numerous
market activity. The total return that an
Customers will not offer ECDD unless alternatives to the Exchange’s products,
exchange earns reflects the revenues it
these products will help them maintain including proprietary data from other
receives from the joint products and the
current users or attract new ones. All of sources, ensures that the Exchange
total costs of the joint products.
these operate as constraints on pricing The level of competition and cannot set unreasonable fees, or fees
proprietary data products. contestability in the market is evident in that are unreasonably discriminatory,
Joint Product Nature of Exchange the numerous alternative venues that when vendors and subscribers can elect
Platform. Transaction execution and compete for order flow, including 15 these alternatives or choose not to
proprietary data products are options self-regulatory organization purchase a specific proprietary data
complementary in that market data is (‘‘SRO’’) markets, as well as product if its cost to purchase is not
both an input and a byproduct of the internalizing broker-dealers (‘‘BDs’’) and justified by the returns any particular
execution service. In fact, market data various forms of alternative trading vendor or subscriber would achieve
and trade executions are a paradigmatic systems (‘‘ATSs’’), including dark pools through the purchase.
example of joint products with joint and electronic communication networks
costs. The decision whether and on (‘‘ECNs’’). Competition among trading C. Self-Regulatory Organization’s
which platform to post an order will platforms can be expected to constrain Statement on Comments on the
depend on the attributes of the the aggregate return that each platform Proposed Rule Change Received From
platforms where the order can be earns from the sale of its joint products, Members, Participants or Others
posted, including the execution fees, but different platforms may choose from
data quality, and price and distribution The Exchange has neither solicited
a range of possible, and equally
of their data products. The more trade nor received written comments on the
reasonable, pricing strategies as the
executions a platform does, the more proposed rule change.
means of recovering total costs. For
valuable its market data products example, some platforms may choose to III. Date of Effectiveness of the
become. The costs of producing market pay rebates to attract orders, charge Proposed Rule Change and Timing for
data include not only the costs of the relatively low prices for market data Commission Action
data distribution infrastructure, but also products (or provide market data
the costs of designing, maintaining, and products free of charge), and charge The foregoing rule change has become
operating the exchange’s transaction relatively high prices for accessing effective pursuant to Section 19(b)(3)(A)
execution platform and the cost of posted liquidity. Other platforms may of the Act 19 and paragraph (f) of Rule
regulating the exchange to ensure its fair choose a strategy of paying lower 19b–4 20 thereunder. At any time within
operation and maintain investor rebates (or no rebates) to attract orders, 60 days of the filing of the proposed rule
confidence. The total return that a setting relatively high prices for market change, the Commission summarily may
trading platform earns reflects the data products, and setting relatively low temporarily suspend such rule change if
revenues it receives from both products prices for accessing posted liquidity. In it appears to the Commission that such
and the joint costs it incurs. Moreover, this environment, there is no economic action is necessary or appropriate in the
an exchange’s broker-dealer customers basis for regulating maximum prices for public interest, for the protection of
view the costs of transaction executions one of the joint products in an industry investors, or otherwise in furtherance of
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in which suppliers face competitive the purposes of the Act. If the
18 The Commission has previously made a finding constraints with regard to the joint Commission takes such action, the
that the options industry is subject to significant offering. Commission will institute proceedings
competitive forces. See e.g., Securities Exchange The Existence of Alternatives. The to determine whether the proposed rule
Act Release No. 59949 (May 20, 2009), 74 FR 25593
(May 28, 2009) (SR–ISE–2009–97) [sic] (order
Exchange is constrained in pricing
approving ISE’s proposal to establish fees for a real- ECDD by the availability to market 19 15 U.S.C. 78s(b)(3)(A).
time depth of market data offering). participants of alternatives to 20 17 CFR 240.19b–4(f).
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![Federal Register / Vol. 83, No. 69 / Tuesday, April 10, 2018 / Notices 15431
change should be approved or For the Commission, by the Division of ADDRESSES: Secretary, U.S. Securities
disapproved. Trading and Markets, pursuant to delegated and Exchange Commission, 100 F Street
authority.21 NE, Washington, DC 20549–1090;
IV. Solicitation of Comments Eduardo A. Aleman, Applicants: Angel Oak Strategic Credit
Assistant Secretary. Fund and Angel Oak Capital Advisors,
Interested persons are invited to
submit written data, views, and [FR Doc. 2018–07242 Filed 4–9–18; 8:45 am] LLC, One Buckhead Plaza, 3060
arguments concerning the foregoing, BILLING CODE 8011–01–P Peachtree Road NW, Suite 500, Atlanta,
including whether the proposed rule Georgia 30305.
change is consistent with the Act. FOR FURTHER INFORMATION CONTACT: Nick
SECURITIES AND EXCHANGE Cordell, Senior Counsel, at (202) 551–
Comments may be submitted by any of COMMISSION
the following methods: 5496, or Holly Hunter-Ceci, Assistant
[Investment Company Act Release No. Chief Counsel, at (202) 551–6825
Electronic Comments 33066; File No. 812–14851] (Division of Investment Management,
Chief Counsel’s Office).
• Use the Commission’s internet Angel Oak Strategic Credit Fund and SUPPLEMENTARY INFORMATION: The
comment form (http://www.sec.gov/ Angel Oak Capital Advisors, LLC following is a summary of the
rules/sro.shtml); or application. The complete application
April 5, 2018.
• Send an email to rule-comments@ may be obtained via the Commission’s
AGENCY: Securities and Exchange
sec.gov. Please include File Number SR– website by searching for the file
Commission (‘‘Commission’’).
CBOE–2018–026 on the subject line. number, or for an applicant using the
ACTION: Notice.
Company name box, at http://
Paper Comments www.sec.gov/search/search.htm or by
Notice of an application under section
• Send paper comments in triplicate 6(c) of the Investment Company Act of calling (202) 551–8090.
to Secretary, Securities and Exchange 1940 (the ‘‘Act’’) for an exemption from Applicants’ Representations
Commission, 100 F Street NE, sections 18(a)(2), 18(c) and 18(i) of the
Act, under sections 6(c) and 23(c) of the 1. The Initial Fund is a Delaware
Washington, DC 20549–1090.
Act for an exemption from rule 23c–3 statutory trust that is registered under
All submissions should refer to File under the Act, and for an order pursuant the Act as a diversified, closed-end
Number SR–CBOE–2018–026. This file to section 17(d) of the Act and rule 17d– management investment company. The
number should be included on the 1 under the Act. Initial Fund’s investment objective is
subject line if email is used. To help the SUMMARY OF APPLICATION: Applicants
total return.
Commission process and review your 2. The Adviser is a Delaware limited
request an order to permit certain
comments more efficiently, please use liability company registered as an
registered closed-end management
only one method. The Commission will investment adviser under the
investment companies to issue multiple
post all comments on the Commission’s Investment Advisers Act of 1940. The
classes of shares and to impose asset-
internet website (http://www.sec.gov/ Adviser serves as investment adviser to
based service and distribution fees, and
rules/sro.shtml). Copies of the the Initial Fund.
early withdrawal charges (‘‘EWCs’’).
submission, all subsequent 3. The applicants seek an order to
APPLICANTS: Angel Oak Strategic Credit permit the Initial Fund to issue multiple
amendments, all written statements Fund (the ‘‘Initial Fund’’) and Angel
with respect to the proposed rule classes of shares, each having its own
Oak Capital Advisors, LLC (the fee and expense structure, and to
change that are filed with the ‘‘Adviser’’).
Commission, and all written impose asset-based distribution and
FILING DATES: The application was filed service fees, and EWCs.
communications relating to the on December 13, 2017 and amended
proposed rule change between the 4. Applicants request that the order
February 9, 2018. also apply to any continuously-offered
Commission and any person, other than
HEARING OR NOTIFICATION OF HEARING: registered closed-end management
those that may be withheld from the
An order granting the requested relief investment company that may be
public in accordance with the
will be issued unless the Commission organized in the future for which the
provisions of 5 U.S.C. 552, will be
orders a hearing. Interested persons may Adviser or any entity controlling,
available for website viewing and
request a hearing by writing to the controlled by, or under common control
printing in the Commission’s Public
Commission’s Secretary and serving with the Adviser, or any successor in
Reference Room, 100 F Street NE,
applicants with a copy of the request, interest to any such entity,1 acts as
Washington, DC 20549, on official
personally or by mail. Hearing requests investment adviser and which operates
business days between the hours of should be received by the Commission
10:00 a.m. and 3:00 p.m. Copies of the as an interval fund pursuant to rule
by 5:30 p.m. on April 30, 2018, and 23c–3 under the Act or provides
filing also will be available for should be accompanied by proof of
inspection and copying at the principal periodic liquidity with respect to its
service on the applicants, in the form of shares pursuant to rule 13e–4 under the
office of the Exchange. All comments an affidavit, or, for lawyers, a certificate
received will be posted without change. Securities Exchange Act of 1934
of service. Pursuant to rule 0–5 under (‘‘Exchange Act’’) (each, a ‘‘Future
Persons submitting comments are the Act, hearing requests should state
cautioned that we do not redact or edit Fund’’ and together with the Initial
the nature of the writer’s interest, any Fund, the ‘‘Funds’’).2
personal identifying information from facts bearing upon the desirability of a
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comment submissions. You should hearing on the matter, the reason for the 1 A successor in interest is limited to an entity
submit only information that you wish request, and the issues contested. that results from a reorganization into another
to make available publicly. All Persons who wish to be notified of a jurisdiction or a change in the type of business
submissions should refer to File hearing may request notification by organization.
2 Any Fund relying on this relief in the future will
Number SR–CBOE–2018–026 and writing to the Commission’s Secretary. do so in a manner consistent with the terms and
should be submitted on or before May conditions of the application. Applicants represent
1, 2018. 21 17 CFR 200.30–3(a)(12). Continued
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Document Created: 2018-04-09 23:51:48
Document Modified: 2018-04-09 23:51:48
| 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 15427 |
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