83 FR 16412 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on the Exchange's Equity Options Platform

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 73 (April 16, 2018)

[Federal Register Volume 83, Number 73 (Monday, April 16, 2018)]
[Notices]
[Pages 16412-16413]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-07811]



[[Page 16412]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83031; File No. SR-CboeBZX-2018-027]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Related to 
Fees for Use on the Exchange's Equity Options Platform

April 10, 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 April 5, 2018, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Exchange. The 
Exchange has designated the proposed rule change as one establishing or 
changing a member due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend the fee schedule applicable 
to Members \5\ and non-Members of the Exchange pursuant to BZX Rules 
15.1(a) and (c).
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    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer that has been admitted to membership in the Exchange.'' See 
Exchange Rule 1.5(n).
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    The text of the proposed rule change is available at the Exchange's 
website at www.markets.cboe.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its fee schedule for its equity 
options platform (``BZX Options'') to modify pricing for certain orders 
routed away from the Exchange and executed at various away options 
exchanges.\6\ Particularly, the Exchange proposes to amend routing fees 
for Directed ISO orders (as defined below), routed Non-Customer \7\ 
orders in Penny Pilot Securities and routed Customer orders to ARCA, 
C2, ISE, ISE Gemini, MIAX Pearl or NOM in Penny and Non-Penny Pilot 
Securities. The Exchange currently charges the following rates for 
these orders: (i) Directed Intermarket Sweep Orders (``ISOs'') (that 
are not otherwise specified in the Fee Schedule), which yield fee code 
D4, are charged $0.75 per contract, (ii) Non-Customer orders in Penny 
Pilot Securities, which yield fee code RN, are charged $0.85 per 
contract; (iii) Customer orders to ARCA, C2, ISE, ISE Gemini, MIAX 
Pearl or NOM in Penny Pilot Securities, which yield fee code RQ, are 
charged $0.70 per contract; and (iv) Customer orders to ARCA, C2, ISE, 
ISE Gemini, MIAX Pearl or NOM in Non-Penny Pilot Securities, which 
yield fee code RR, are charged $1.10 per contract. The Exchange is 
proposing to amend those rates as follows: (i) The fee for Directed ISO 
Orders would be increased to $0.85 per contract; (ii) the fee for Non-
Customer Orders in Penny Pilot Securities would be increased to $0.90 
per contract; (iii) the fee for Customer orders to ARCA, C2, ISE, ISE 
Gemini, MIAX Pearl or NOM in Penny Pilot Securities would be increased 
to $0.85 and (iv) the fee for Customer orders to ARCA, C2, ISE, ISE 
Gemini, MIAX Pearl or NOM in Non-Penny Pilot Securities would be 
increased to $1.25. The Exchange notes that the proposed amounts are in 
line with amounts assessed for similar transaction on other 
exchanges.\8\
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    \6\ The Exchange initially filed the proposed fee changes on 
April 2, 2018 (SR-CboeBZX-2018-024) for April 2, 2018 effectiveness. 
On business date April 4, 2018 [sic], the Exchange withdrew that 
filing and submitted this filing.
    \7\ ``Non-Customer'' applies to any transaction that is not a 
Customer Order. ``Customer'' applies to any transaction identified 
by a Member for clearing in the Customer range at the OCC, excluding 
any transaction for a Broker Dealer or a ``Professional'' as defined 
in Exchange Rule 16.1.
    \8\ See e.g., NYSE Arca Options Fees and Charges, Routing Fees.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\9\ in general, and 
furthers the objectives of Section 6(b)(4),\10\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and other persons using its 
facilities.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
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    Particularly, the Exchange believes its proposed fees are 
reasonable taking into account routing costs and also notes that the 
proposed changes are in line with amounts assessed by other 
exchanges.\11\ The Exchange believes the proposed changes to its fees 
are equitable and not unfairly discriminatory because the proposed 
changes apply equally to all Members. The Exchange notes that routing 
through the Exchange is voluntary and also notes that it operates in a 
highly competitive market in which market participants can readily 
direct order flow to competing venues or providers of routing services 
if they deem fee levels to be excessive.
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    \11\ See e.g., NYSE Arca Options Fees and Charges, Routing Fees.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes the 
proposed routing fees will not impose an undue burden on competition 
because the Exchange will uniformly assess the affected routing fees on 
all Members. Additionally, Members may opt to disfavor the Exchange's 
pricing if they believe that alternatives offer them better value or if 
they view the proposed fee as excessive. Further, excessive fees for 
participation would serve to impair an exchange's ability to compete 
for order flow and members rather than burdening competition.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any written comments from members or other interested parties.

[[Page 16413]]

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 \12\ and paragraph (f) of Rule 19b-4 \13\ 
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 change should be approved or 
disapproved.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CboeBZX-2018-027 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-CboeBZX-2018-027. 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-2018-027 and should be submitted 
on or before May 7, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-07811 Filed 4-13-18; 8:45 am]
 BILLING CODE 8011-01-P