83 FR 22546 - Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fees Schedule, Including Connectivity Fees, in Connection with its Technology Migration
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 94 (May 15, 2018)
Federal Register Volume 83, Issue 94 (May 15, 2018)
| Page Range | 22546-22550 | |
| FR Document | 2018-10261 |
[Federal Register Volume 83, Number 94 (Tuesday, May 15, 2018)] [Notices] [Pages 22546-22550] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-10261] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83201; File No. SR-C2-2018-006] Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend its Fees Schedule, Including Connectivity Fees, in Connection with its Technology Migration May 9, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on April 27, 2018, Cboe C2 Exchange, Inc. (``Exchange'' or ``C2'') 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 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. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Fees Schedule in connection with the technology migration of C2 onto the options platform of the Exchange's affiliated options exchanges, Cboe EDGX Exchange, Inc. (``EDGX'' or ``EDGX Options'') and Cboe BZX Exchange, Inc. (``BZX'' or ``BZX Options''). The text of the proposed rule change is also available on the Exchange's website (http://www.c2exchange.com/Legal/), at the 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 aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose In 2016, the Exchange's parent company, Cboe Global Markets, Inc., which is also the parent company of Cboe Exchange, Inc. (``Cboe Options''), acquired EDGX and BZX and its affiliated exchanges, Cboe EDGA Exchange, Inc. (``EDGA'') and Cboe BYX Exchange, Inc. (``BYX''). C2 intends to migrate its technology onto the same trading platform as BZX, BYX, EDGA and BZX (``Affiliated Exchanges'') on May 14, 2018 (the ``migration''). The Exchange proposes to amend certain fees in the Fees Schedule and adopt new connectivity fees, effective May 1, 2018. [[Page 22547]] Physical Connectivity A physical port is utilized by a Trading Permit Holder (``TPH'') or non-TPH to connect to the Exchange at the data centers where the Exchange's servers are located. The Exchange currently assesses fees for Network Access Ports for these physical connections to the Exchange. Specifically, TPHs and non-TPHs can elect to connect to C2's trading system via either a 1 gigabit per second (``Gbps'') Network Access Port or a 10 Gbps Network Access Port. The Exchange currently assesses a monthly fee of $500 per port for 1 Gbps Network Access Ports and a monthly fee of $1,000 per port for 10 Gbps Network Access Ports. Through June 30, 2018, C2 market participants will continue to have the ability to connect to C2's trading system via the current Network Access Ports. For the month of May 2018, the Exchange will continue to assess the current fee for any Network Access Port a TPH or non-TPH uses during the month of May. Effective May 14, 2018, in connection with the migration, TPHs and non-TPHs may alternatively elect to connect to C2 via new Physical Ports.\3\ The new Physical Ports will similarly allow TPHs and non-TPHs the ability to connect to the Exchange at the data centers where the Exchange's servers are located and TPHs and non-TPHs will have the option to connect via 1 Gbps or 10 Gbps Physical Ports. The Exchange proposes to assess a monthly fee of $2,000 per port for 1 Gbps Physical Ports and a monthly fee of $7,000 per port for 10 Gbps Physical Ports. The new Physical Port fees will be prorated based on the remaining trading days in the calendar month. The Exchange notes that the new Physical Ports may also be used to connect to BZX, BYX, EDGX, and EDGA. The Exchange proposes to provide that market participants will only be assessed a single fee for any Physical Port that also accesses these exchanges.\4\ The Exchange will pass-through in full any fees or costs in excess of $1,000 incurred by the Exchange to complete a cross- connect between exchanges. The Exchange notes that the proposed physical connectivity ports and corresponding fees are identical to the ports and fees assessed by its Affiliated Exchanges.\5\ --------------------------------------------------------------------------- \3\ As previously noted, market participants will continue to have the option of connecting to C2 via a 1 Gbps or 10 Gbps Network Access Port and would be assessed current rates of $500 and $1,000 per port, respectively. \4\ For example, if a market participant uses only one 10 Gbps port to connect to both EDGX and C2, the market participant would only be assessed one monthly fee of $7,000. \5\ See Cboe EDGA U.S. Equities Exchange Fee Schedule, Physical Connectivity Fees; Cboe EDGX U.S. Equities Exchange Fee Schedule, Physical Connectivity Fees; Cboe BZX U.S. Equities Exchange Fee Schedule, Physical Connectivity Fees; Cboe BYX U.S. Equities Exchange Fee Schedule, Physical Connectivity Fees; Cboe EDGX Options Exchange Fee Schedule, Physical Connectivity Fees; and Cboe BZX Options Exchange Fee Schedule, Physical Connectivity Fees (collectively, ``Affiliated Exchange Fee Schedules''). --------------------------------------------------------------------------- Logical Connectivity Next, the Exchange proposes to amend its login fees. Currently, C2 market participants may access Cboe Command via either a CMI or a FIX Port, depending on how their systems are configured. The Exchange currently assesses monthly fees for each CMI and FIX Login ID a market participant has. Specifically, the Exchange assesses $550 per Login ID, per month for CMI Login IDs and FIX Login IDs. Effective May 14, 2018, market participants will no longer be able to use CMI and FIX Login IDs. Rather, the Exchange will utilize a variety of logical connectivity ports as further described below. Similar to the legacy CMI and FIX Login IDs, a logical port provides users with the ability within the Exchange's system to accomplish a specific function through a connection, such as order entry, data receipt, or access to information. In light of the upcoming discontinuation of CMI and FIX Login IDs, the Exchange proposes to eliminate the fees associated with the login IDs effective May 1, 2018 and adopt the below pricing for logical connectivity in it [sic] place. ------------------------------------------------------------------------ Service Cost per month ------------------------------------------------------------------------ Logical Ports (BOE, FIX, Drop)............ $650 per port Bulk BOE Ports 1-5........................ 1,500 per port Bulk BOE Ports >5......................... 2,500 per port Purge ports............................... 750 per port GRP Ports................................. 650/primary (A or C Feed) Multicast PITCH/Top Spin Server Ports..... 650/set of primary (A or C feed) ------------------------------------------------------------------------ Logical Ports (BOE, FIX, Drop): The new Logical Ports represents ports established by the Exchange within the Exchange's system for trading purposes. Each Logical Port established is specific to a TPH or non-TPH and grants that TPH or non-TPH the ability to operate a specific application, such as order entry (FIX and BOE Ports) or drop copies (Drop Ports). Logical Port fees are limited to Logical Ports in the Exchange's primary data center and no Logical Port fees are assessed for redundant secondary data center ports. The Exchange proposes to set the monthly port fee at $650 per port. Each BOE or FIX Logical Port will incur the logical port fee indicated in the table above when used to enter up to 20,000 orders per trading day per logical port as measured on average in a single month. Each incremental usage of up to 20,000 per day per logical port will incur an additional logical port fee of $650 per month. Incremental usage will be determined on a monthly basis based on the average orders per day entered in a single month across all of a market participant's subscribed BOE and FIX Logical Ports.\6\ The Exchange believes that the pricing implications of going beyond 20,000 orders per trading day per Logical Port encourage users to mitigate message traffic as necessary. The Exchange notes that the proposed fee of $650 per port is in line with the fee assessed for similar ports on BZX Options.\7\ --------------------------------------------------------------------------- \6\ For May 2018, average daily order quantities used to determine incremental usage will be determined based on the number of trading days between May 14th and May 31st. \7\ See Cboe BZX Options Exchange Fee Schedule, Options Logical Port Fees. --------------------------------------------------------------------------- BOE Bulk Logical Ports: Post-migration, the Exchange will also offer BOE Bulk Logical Ports, which provide users with the ability to submit single and bulk order messages to enter, modify, or cancel orders designated as Post Only Orders with a Time-in-Force of Day or GTD with an expiration time on that trading day. As indicated above, BOE Bulk Logical Ports are assessed $1,500 per port, per month for the first 5 BOE Bulk Logical Ports and thereafter assessed $2,500 per port, per month for each additional BOE Bulk Logical Port. Each Bulk BOE Logical Port will incur the logical port fee indicated in the table above when used to enter up to 30,000,000 orders per trading day per logical port as measured on average in a single month. Each incremental usage of up to 30,000,000 orders per day per BOE Bulk Logical Port will incur an additional logical port fee of $2,500 per month. Incremental usage will be determined on a monthly basis based on the average orders per day entered in a single month across all of a market participant's subscribed BOE Bulk Logical Ports.\8\ The Exchange believes that the pricing implications of going beyond 30,000,000 orders per trading day per BOE Bulk Logical Port encourage users to mitigate message [[Page 22548]] traffic as necessary. The Exchange notes that the proposed BOE Bulk Logical Port fees are similar to the fees assessed for these ports by BZX Options.\9\ --------------------------------------------------------------------------- \8\ For May 2018, average daily order quantities used to determine incremental usage will be determined based on the number of trading days between May 14th and May 31st. \9\ See Cboe BZX Options Exchange Fee Schedule, Options Logical Port Fees. --------------------------------------------------------------------------- Purge Ports: As part of the migration, C2 will be introducing Purge Ports to provide TPHs additional risk management and open order control functionality. The proposed ports are designed to assist TPHs, in the management of, and risk control over, their quotes, particularly if the TPH is dealing with a large number of options. Particularly, Purge Ports will allow TPHs to submit a cancelation for all open orders, or a subset thereof, across multiple sessions under the same Executing Firm ID (``EFID''). As indicated in the table above, the Exchange proposes to assess a monthly charge of $750 per Purge Port. The Exchange notes that the proposed fee is identical to the fee assessed by BZX Options and EDGX Options for Purge Ports.\10\ --------------------------------------------------------------------------- \10\ See Cboe EDGX Options Exchange Fee Schedule, Options Logical Port Fees; and Cboe BZX Options Exchange Fee Schedule, Options Logical Port Fees. --------------------------------------------------------------------------- Multicast PITCH/Top Spin Server and GRP Ports: In connection with the migration, the Exchange will also offer Multicast PITCH/Top Spin Server and GRP ports and proposes to assess $750 per month, per port. Multicast PITCH/Top Spin Server Ports and GRP Ports are used to request and receive a retransmission of data from the Exchange's Multicast PITCH/Top data feed. The Exchange's Multicast PITCH/Top data feed is available from two primary feeds, identified as the ``A feed'' and the ``C feed'', which contain the same information but differ only in the way such feeds are received. The Exchange also offers two redundant feeds, identified as the ``B feed'' and the ``D feed.'' All secondary feed Multicast PITCH/Top Spin Server and GRP Ports will be provided for redundancy at no additional cost. The Exchange notes that the proposed fee is in line with the fee assessed for the same ports on BZX Options.\11\ --------------------------------------------------------------------------- \11\ See Cboe BZX Options Exchange Fee Schedule, Options Logical Port Fees. --------------------------------------------------------------------------- The Exchange proposes to provide for each of the logical connectivity fees that new requests will be prorated for the first month of service. Cancellation requests are billed in full month increments as firms are required to pay for the service for the remainder of the month, unless the session is terminated within the first month of service. The Exchange notes that the proration policy is the same on its Affiliated Exchanges.\12\ The Exchange also proposes to make clear in the Fees Schedule that port fees for BOE, FIX, BOE Bulk and Drop ports will be assessed the full month rates for May for ports available for use on the new trading platform beginning May 14, 2018. The port fees for BOE, FIX, BOE BULK and Drop ports added on or after May 15, 2018, will be pro-rated. The Exchange notes that BOE, FIX, Drop and BOE Bulk ports offer similar functionality as current CMI and FIX Login Ids. As such, in lieu of assessing the current CMI and FIX Login Id fees for the month of May, the Exchange proposes to assess the proposed Logical Ports and BOE Bulk Port fees at the full rate for the month of May for any of these ports subscribed to on the date of the migration (May 14, 2018). --------------------------------------------------------------------------- \12\ See Affiliated Exchange Fee Schedules, Logical Port Fees. --------------------------------------------------------------------------- Access Fees Currently, the Exchange assesses $5,000 per month for a Market- Maker Permit and $1,000 per month for an Electronic Access Permit. Market-Maker Permits entitle the holder to act as a Market-Maker and also provides an appointment credit, quote and order bandwidth allowance and a login allowance. Electronic Access Permits entitle the holder to access the Exchange and also provides an order entry bandwidth allowance and a login allowance. The Exchange notes that post-Migration, bandwidth allocation and logins will not be tied to a Permit, and as such, TPHs will no longer need to have multiple Permits for each type of Permit (i.e., multiple Market-Maker Permits and/or and Electronic Access Permits).\13\ The Exchange therefore proposes to provide that TPHs will only be assessed the monthly fee for each type of Permit once (e.g., a TPH that holds only two Market-Maker Permits during the month of May would be assessed a total of $5,000 as and for Permit fees in May). --------------------------------------------------------------------------- \13\ The Exchange notes that TPHs do not need more than one Market-Maker Permit to accommodate all of the available appointments (i.e., a Market-Maker may have appointments in each class offered on C2 and still be below the appointment cost of one Trading Permit). --------------------------------------------------------------------------- Bandwidth Packets As described above, post-migration, the Exchange will utilize a variety of logical ports. Part of this functionality is similar to bandwidth packets currently available on C2. Bandwidth packets restrict the maximum number of orders and quotes per second. Post-migration, market participants may similarly have multiple Logical Ports and/or BOE Bulk Ports as they may have bandwidth packets to accommodate their order and quote entry needs. As such, the Exchange proposes to eliminate its current Supplemental Bandwidth Packet fees, effective May 1, 2018. The Exchange believes that the proposed pricing implications of going beyond specified bandwidth described above in the logical connectivity fees section will be able to otherwise mitigate message traffic as necessary. CAS Servers By way of background, in order to connect to Cboe Command, which allows a TPH to trade on the C2 System, a TPH must connect via either a CMI or FIX interface (depending on the configuration of the TPH's own systems). For TPHs that connect via a CMI interface, they must use CMI CAS Servers. In order to ensure that a CAS Server is not overburdened by quoting activity for Market-Makers, the Exchange currently allots each Market-Maker a certain number of CASs (in addition to the shared backups) based on the amount of quoting bandwidth that they have. Post- migration, the Exchange will no longer use CAS Servers. In light of the upcoming elimination of CAS Servers, the Exchange proposes to eliminate the CAS Server allotment table and extra CAS Server fee, effective May 1, 2018. Exchange Data Reports The Exchange proposes to eliminate Exchange Data Reports Fees as it no longer wishes to assess such fees. The Exchange notes that requests for reports and data from TPHs and non-TPHs will continue to be treated in a fair and efficient manner. Miscellaneous Changes The Exchange proposes to renumber the sections in the Fees Schedule in light of the elimination of certain sections (e.g., Bandwidth Packet Fees and Exchange Data Reports). The Exchange also proposes to eliminate the Firm Designated Examining Authority Fee. The Exchange notes that C2 is not a Designated Examining Authority and as such the fee could not be assessed to firms. The Exchange proposes to eliminate the fee from the Fees Schedule to avoid potential confusion. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ``Act'') and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of [[Page 22549]] Section 6(b) of the Act.\14\ Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(4) of the Act,\15\ which provides that Exchange rules may provide for the equitable allocation of reasonable dues, fees, and other charges among its Permit Holders and other persons using its facilities. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \16\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b). \15\ 15 U.S.C. 78f(b)(4). \16\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- Physical Connectivity The Exchange believes it's reasonable, equitable and not unfairly discriminatory to assess Network Access Port fees through May as market participants will still be able to utilize these ports throughout the month of May and the fee will apply to all TPHs and non-TPHs who use a Network Access Port. The Exchange believes the proposed post-migration Physical Port fees are reasonable because the Exchange is expending significant resources setting up physical connectivity in connection with the migration and will have ongoing costs associated with maintaining connectivity. The Exchange also notes that the proposed amounts are in line with the costs of physical connectivity at its Affiliated Exchanges.\17\ Indeed, the Exchange also believes that it is reasonable and in the interest of the public and investors to harmonize the Exchange's connectivity options and connectivity fees once the Exchange is on a common platform of its Affiliated Exchanges. The Exchange believes it's reasonable, equitable and not unfairly discriminatory to assess a Physical Port fee only once if it connects with another affiliate exchange because only one port is being used and the Exchange does not wish to charge multiple fees for the same port. The Exchange also believes it's reasonable to pass-through in full any fees or costs in excess of $1,000.00 incurred by the Exchange to complete a cross-connect, because the Exchange is still subsidizing costs to enable cross-connects, just not amounts in excess of $1,000. --------------------------------------------------------------------------- \17\ See Affiliated Exchange Fee Schedules, Physical Connectivity Fees. --------------------------------------------------------------------------- Logical Connectivity The Exchange believes it's reasonable to eliminate certain fees associated with legacy options for connecting to the Exchange and to replace them with fees associated with new options for connecting to the Exchange that are similar to those offered at its Affiliated Exchanges. In particular, the Exchange believes it's reasonable to no longer assess fees for CMI and FIX Login IDs because the Login IDs will be retired and obsolete upon migration and because the Exchange is proposing to replace them with fees associated with the new logical connectivity options. The Exchange believes the proposed change is equitable and not unfairly discriminatory because it applies uniformly to market participants. The Exchange believes it's reasonable to assess the proposed fees for each of the new logical connectivity ports described above as the proposed fees help recoup costs setting up logical connectivity and also enables the Exchange to continue to maintain and improve its market technology and services. Additionally, the Exchange notes the proposed fees are the same as, or in line with, the fees assessed on its Affiliated Exchanges for similar connectivity.\18\ As noted above, the Exchange also believes that it is reasonable and in the interest of the public and investors to harmonize the Exchange's logical connectivity options and corresponding connectivity fees once the Exchange is on a common platform as its Affiliated Exchanges. The proposed logical connectivity fees are also equitable and not unfairly discriminatory because the Exchange will apply the same fees to all market participants that use the same respective connectivity options. --------------------------------------------------------------------------- \18\ See Affiliated Exchange Fee Schedules, Logical Port Fees. --------------------------------------------------------------------------- Access Fees The Exchange believes it's reasonable, equitable and not unfairly discriminatory to assess an access fee only once for each kind of Permit, notwithstanding the number of Permits a TPH currently holds, because TPHs will be paying lower fees for access and the proposed change will apply uniformly to all TPHs. Additionally, the Exchange notes that currently, TPHs request additional Permits because of bandwidth and/or login needs. As described above, upon migration on May 14, 2018, bandwidth and logins will no longer be tied to Permits and as such, the need to hold multiple permits will be obsolete. Through May 14, 2018 however, TPHs may still need additional Permits and the Exchange does not wish to charge for those additional Permits. Bandwidth Packets and CMI CAS Server Fees The Exchange believes it's reasonable to eliminate Supplemental Bandwidth Packet fees and the CMI CAS Server fee because TPHs will not pay fees for these connectivity options and because bandwidth packets and CAS Servers will be retired and obsolete upon the upcoming migration. The Exchange believes that even though it will be discontinuing Supplemental Bandwidth Packets, the proposed incremental pricing for Logical Ports and BOE Bulk Ports will continue to encourage users to mitigate message traffic. The proposed change is equitable and not unfairly discriminatory because it will apply uniformly to all TPHs. Exchange Data Reports The Exchange believes eliminating fees for Exchange Data Reports is reasonable, equitable and not unfairly discriminatory because TPHs and non-TPHs no longer have to pay fees for these reports and it applies to TPHs and non-TPHs uniformly. As noted above, requests for reports and data from TPHs and non-TPHs will continue to be treated in a fair and efficient manner. Miscellaneous Changes The Exchange believes the proposed rule change to renumber the sections in light of the elimination of certain sections (e.g., Bandwidth Packet Fees and Exchange Data Reports) alleviates potential confusion. Similarly, the Exchange believes deleting the Firm Designated Examining Authority Fee from the Fees Schedule alleviates confusion as it eliminates a fee that is moot because it cannot be charged (as discussed, C2 is not a Designated Examining Authority). The alleviation of confusion removes impediments to and perfects the mechanism of a free and open market and a national market system. 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 that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed change represents a significant departure from pricing offered by the Exchange's affiliates. Additionally, TPHs may opt to disfavor the Exchange's pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed change will impair the ability of TPHs or competing venues to maintain their competitive [[Page 22550]] standing in the financial markets. The Exchange believes that fees for connectivity are constrained by the robust competition for order flow among exchanges and non-exchange markets. Further, excessive fees for connectivity, would serve to impair an exchange's ability to compete for order flow rather than burdening competition. The Exchange also does not believe the proposed rule change would impact intramarket competition as it would apply to all TPHs and non-TPHs equally. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received 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 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-C2-2018-006 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-C2-2018-006. 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-C2-2018-006 and should be submitted on or before June 5, 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. 2018-10261 Filed 5-14-18; 8:45 am] BILLING CODE 8011-01-P
![22546 Federal Register / Vol. 83, No. 94 / Tuesday, May 15, 2018 / Notices
Act 19 normally does not become number should be included on the 2018, Cboe C2 Exchange, Inc.
operative for 30 days after the date of its subject line if email is used. To help the (‘‘Exchange’’ or ‘‘C2’’) filed with the
filing. However, Rule 19b–4(f)(6)(iii) 20 Commission process and review your Securities and Exchange Commission
permits the Commission to designate a comments more efficiently, please use (‘‘Commission’’) the proposed rule
shorter time if such action is consistent only one method. The Commission will change as described in Items I, II, and
with the protection of investors and the post all comments on the Commission’s III below, which Items have been
public interest. The Exchange has internet website (http://www.sec.gov/ prepared by the Exchange. The
requested that the Commission waive rules/sro.shtml). Copies of the Commission is publishing this notice to
the 30-day operative delay so that the submission, all subsequent solicit comments on the proposed rule
proposed rule change may become amendments, all written statements change from interested persons.
operative upon filing. The Exchange with respect to the proposed rule
states that waiver of the operative delay change that are filed with the I. Self-Regulatory Organization’s
would allow the Exchange to update its Commission, and all written Statement of the Terms of Substance of
rules to immediately reflect the correct communications relating to the the Proposed Rule Change
operation of zero-bid series on Phlx. proposed rule change between the The Exchange proposes to amend its
Therefore, the Commission believes that Commission and any person, other than Fees Schedule in connection with the
waiver of the 30-day operative delay is those that may be withheld from the technology migration of C2 onto the
consistent with the protection of public in accordance with the options platform of the Exchange’s
investors and the public interest. provisions of 5 U.S.C. 552, will be affiliated options exchanges, Cboe
Accordingly, the Commission hereby available for website viewing and EDGX Exchange, Inc. (‘‘EDGX’’ or
waives the operative delay and printing in the Commission’s Public ‘‘EDGX Options’’) and Cboe BZX
designates the proposed rule change Reference Room, 100 F Street NE, Exchange, Inc. (‘‘BZX’’ or ‘‘BZX
operative upon filing.21 Washington, DC 20549 on official Options’’).
At any time within 60 days of the business days between the hours of The text of the proposed rule change
filing of the proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the is also available on the Exchange’s
Commission summarily may filing also will be available for website (http://www.c2exchange.com/
temporarily suspend such rule change if inspection and copying at the principal Legal/), at the Exchange’s Office of the
it appears to the Commission that such office of the Exchange. All comments Secretary, and at the Commission’s
action is necessary or appropriate in the received will be posted without change. Public Reference Room.
public interest, for the protection of Persons submitting comments are
investors, or otherwise in furtherance of cautioned that we do not redact or edit II. Self-Regulatory Organization’s
the purposes of the Act. If the personal identifying information from Statement of the Purpose of, and
Commission takes such action, the comment submissions. You should Statutory Basis for, the Proposed Rule
Commission shall institute proceedings submit only information that you wish Change
to determine whether the proposed rule to make available publicly. All In its filing with the Commission, the
change should be approved or submissions should refer to File Exchange included statements
disapproved. Number SR–Phlx–2018–35, and should concerning the purpose of and basis for
be submitted on or before June 5, 2018. the proposed rule change and discussed
IV. Solicitation of Comments
For the Commission, by the Division of any comments it received on the
Interested persons are invited to Trading and Markets, pursuant to delegated proposed rule change. The text of these
submit written data, views, and authority.22 statements may be examined at the
arguments concerning the foregoing, Eduardo A. Aleman, places specified in Item IV below. The
including whether the proposed rule Assistant Secretary. Exchange has prepared summaries, set
change is consistent with the Act. [FR Doc. 2018–10255 Filed 5–14–18; 8:45 am] forth in sections A, B, and C below, of
Comments may be submitted by any of BILLING CODE 8011–01–P the most significant aspects of such
the following methods: statements.
Electronic Comments A. Self-Regulatory Organization’s
SECURITIES AND EXCHANGE
• Use the Commission’s internet COMMISSION
Statement of the Purpose of, and
comment form (http://www.sec.gov/ Statutory Basis for, the Proposed Rule
rules/sro.shtml); or [Release No. 34–83201; File No. SR–C2– Change
• Send an email to rule-comments@ 2018–006]
1. Purpose
sec.gov. Please include File Number SR–
Phlx–2018–35 on the subject line. Self-Regulatory Organizations; Cboe In 2016, the Exchange’s parent
C2 Exchange, Inc.; Notice of Filing and company, Cboe Global Markets, Inc.,
Paper Comments Immediate Effectiveness of a Proposed which is also the parent company of
• Send paper comments in triplicate Rule Change To Amend its Fees Cboe Exchange, Inc. (‘‘Cboe Options’’),
to Secretary, Securities and Exchange Schedule, Including Connectivity Fees, acquired EDGX and BZX and its
Commission, 100 F Street NE, in Connection with its Technology affiliated exchanges, Cboe EDGA
Washington, DC 20549–1090. Migration Exchange, Inc. (‘‘EDGA’’) and Cboe BYX
All submissions should refer to File May 9, 2018. Exchange, Inc. (‘‘BYX’’). C2 intends to
Number SR–Phlx–2018–35. This file Pursuant to Section 19(b)(1) of the migrate its technology onto the same
daltland on DSKBBV9HB2PROD with NOTICES
Securities Exchange Act of 1934 trading platform as BZX, BYX, EDGA
19 17 CFR 240.19b–4(f)(6). (‘‘Act’’),1 and Rule 19b–4 thereunder,2 and BZX (‘‘Affiliated Exchanges’’) on
20 17 CFR 240.19b–4(f)(6)(iii).
notice is hereby given that on April 27, May 14, 2018 (the ‘‘migration’’). The
21 For purposes only of waiving the 30-day
Exchange proposes to amend certain
operative delay, the Commission also has
considered the proposed rule’s impact on
22 17 CFR 200.30–3(a)(12). fees in the Fees Schedule and adopt
efficiency, competition, and capital formation. See 1 15 U.S.C. 78s(b)(1). new connectivity fees, effective May 1,
15 U.S.C. 78c(f). 2 17 CFR 240.19b–4. 2018.
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![Federal Register / Vol. 83, No. 94 / Tuesday, May 15, 2018 / Notices 22547
Physical Connectivity identical to the ports and fees assessed Logical Port fees are assessed for
by its Affiliated Exchanges.5 redundant secondary data center ports.
A physical port is utilized by a The Exchange proposes to set the
Trading Permit Holder (‘‘TPH’’) or non- Logical Connectivity
monthly port fee at $650 per port. Each
TPH to connect to the Exchange at the Next, the Exchange proposes to BOE or FIX Logical Port will incur the
data centers where the Exchange’s amend its login fees. Currently, C2 logical port fee indicated in the table
servers are located. The Exchange market participants may access Cboe above when used to enter up to 20,000
currently assesses fees for Network Command via either a CMI or a FIX orders per trading day per logical port
Access Ports for these physical Port, depending on how their systems as measured on average in a single
connections to the Exchange. are configured. The Exchange currently month. Each incremental usage of up to
Specifically, TPHs and non-TPHs can assesses monthly fees for each CMI and 20,000 per day per logical port will
elect to connect to C2’s trading system FIX Login ID a market participant has. incur an additional logical port fee of
via either a 1 gigabit per second Specifically, the Exchange assesses $550 $650 per month. Incremental usage will
(‘‘Gbps’’) Network Access Port or a 10 per Login ID, per month for CMI Login be determined on a monthly basis based
Gbps Network Access Port. The IDs and FIX Login IDs. Effective May 14, on the average orders per day entered in
Exchange currently assesses a monthly 2018, market participants will no longer a single month across all of a market
fee of $500 per port for 1 Gbps Network be able to use CMI and FIX Login IDs. participant’s subscribed BOE and FIX
Access Ports and a monthly fee of Rather, the Exchange will utilize a Logical Ports.6 The Exchange believes
$1,000 per port for 10 Gbps Network variety of logical connectivity ports as that the pricing implications of going
Access Ports. Through June 30, 2018, C2 further described below. Similar to the beyond 20,000 orders per trading day
market participants will continue to legacy CMI and FIX Login IDs, a logical per Logical Port encourage users to
have the ability to connect to C2’s port provides users with the ability mitigate message traffic as necessary.
trading system via the current Network within the Exchange’s system to The Exchange notes that the proposed
Access Ports. For the month of May accomplish a specific function through fee of $650 per port is in line with the
2018, the Exchange will continue to a connection, such as order entry, data fee assessed for similar ports on BZX
assess the current fee for any Network receipt, or access to information. In light Options.7
Access Port a TPH or non-TPH uses of the upcoming discontinuation of CMI BOE Bulk Logical Ports: Post-
during the month of May. and FIX Login IDs, the Exchange migration, the Exchange will also offer
Effective May 14, 2018, in connection proposes to eliminate the fees associated BOE Bulk Logical Ports, which provide
with the login IDs effective May 1, 2018 users with the ability to submit single
with the migration, TPHs and non-TPHs
and adopt the below pricing for logical and bulk order messages to enter,
may alternatively elect to connect to C2
connectivity in it [sic] place. modify, or cancel orders designated as
via new Physical Ports.3 The new
Post Only Orders with a Time-in-Force
Physical Ports will similarly allow TPHs Cost per
Service of Day or GTD with an expiration time
and non-TPHs the ability to connect to month on that trading day. As indicated above,
the Exchange at the data centers where
BOE Bulk Logical Ports are assessed
the Exchange’s servers are located and Logical Ports (BOE, FIX, $650 per port
Drop). $1,500 per port, per month for the first
TPHs and non-TPHs will have the
Bulk BOE Ports 1–5 .............. 1,500 per port 5 BOE Bulk Logical Ports and thereafter
option to connect via 1 Gbps or 10 Gbps
Bulk BOE Ports >5 ................ 2,500 per port assessed $2,500 per port, per month for
Physical Ports. The Exchange proposes each additional BOE Bulk Logical Port.
Purge ports ............................ 750 per port
to assess a monthly fee of $2,000 per GRP Ports ............................. 650/primary Each Bulk BOE Logical Port will incur
port for 1 Gbps Physical Ports and a (A or C the logical port fee indicated in the table
monthly fee of $7,000 per port for 10 Feed) above when used to enter up to
Gbps Physical Ports. The new Physical Multicast PITCH/Top Spin 650/set of pri- 30,000,000 orders per trading day per
Port fees will be prorated based on the Server Ports. mary (A or
logical port as measured on average in
remaining trading days in the calendar C feed)
a single month. Each incremental usage
month. The Exchange notes that the of up to 30,000,000 orders per day per
new Physical Ports may also be used to Logical Ports (BOE, FIX, Drop): The
new Logical Ports represents ports BOE Bulk Logical Port will incur an
connect to BZX, BYX, EDGX, and additional logical port fee of $2,500 per
EDGA. The Exchange proposes to established by the Exchange within the
Exchange’s system for trading purposes. month. Incremental usage will be
provide that market participants will determined on a monthly basis based on
only be assessed a single fee for any Each Logical Port established is specific
to a TPH or non-TPH and grants that the average orders per day entered in a
Physical Port that also accesses these single month across all of a market
exchanges.4 The Exchange will pass- TPH or non-TPH the ability to operate
a specific application, such as order participant’s subscribed BOE Bulk
through in full any fees or costs in Logical Ports.8 The Exchange believes
excess of $1,000 incurred by the entry (FIX and BOE Ports) or drop
copies (Drop Ports). Logical Port fees are that the pricing implications of going
Exchange to complete a cross-connect beyond 30,000,000 orders per trading
between exchanges. The Exchange notes limited to Logical Ports in the
Exchange’s primary data center and no day per BOE Bulk Logical Port
that the proposed physical connectivity encourage users to mitigate message
ports and corresponding fees are 5 See Cboe EDGA U.S. Equities Exchange Fee
6 For May 2018, average daily order quantities
Schedule, Physical Connectivity Fees; Cboe EDGX
daltland on DSKBBV9HB2PROD with NOTICES
3 As previously noted, market participants will U.S. Equities Exchange Fee Schedule, Physical used to determine incremental usage will be
continue to have the option of connecting to C2 via Connectivity Fees; Cboe BZX U.S. Equities determined based on the number of trading days
a 1 Gbps or 10 Gbps Network Access Port and Exchange Fee Schedule, Physical Connectivity between May 14th and May 31st.
would be assessed current rates of $500 and $1,000 Fees; Cboe BYX U.S. Equities Exchange Fee 7 See Cboe BZX Options Exchange Fee Schedule,
per port, respectively. Schedule, Physical Connectivity Fees; Cboe EDGX Options Logical Port Fees.
4 For example, if a market participant uses only Options Exchange Fee Schedule, Physical 8 For May 2018, average daily order quantities
one 10 Gbps port to connect to both EDGX and C2, Connectivity Fees; and Cboe BZX Options Exchange used to determine incremental usage will be
the market participant would only be assessed one Fee Schedule, Physical Connectivity Fees determined based on the number of trading days
monthly fee of $7,000. (collectively, ‘‘Affiliated Exchange Fee Schedules’’). between May 14th and May 31st.
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![22550 Federal Register / Vol. 83, No. 94 / Tuesday, May 15, 2018 / Notices
standing in the financial markets. The All submissions should refer to File Exchange Act of 1934 (‘‘Act’’) 1 and Rule
Exchange believes that fees for Number SR–C2–2018–006. This file 19b–4 thereunder,2 a proposed rule
connectivity are constrained by the number should be included on the change amending Cboe Options’s rules
robust competition for order flow among subject line if email is used. To help the relating to the fungibility of Flexible
exchanges and non-exchange markets. Commission process and review your Exchange Options (‘‘FLEX Options’’).
Further, excessive fees for connectivity, comments more efficiently, please use The proposed rule change was
would serve to impair an exchange’s only one method. The Commission will published for comment in the Federal
ability to compete for order flow rather post all comments on the Commission’s Register on February 8, 2018.3 On
than burdening competition. The internet website (http://www.sec.gov/ March 23, 2018, the Commission
Exchange also does not believe the rules/sro.shtml). Copies of the designated a longer period within which
proposed rule change would impact submission, all subsequent to approve the proposed rule change,
intramarket competition as it would amendments, all written statements disapprove the proposed rule change, or
apply to all TPHs and non-TPHs with respect to the proposed rule institute proceedings to determine
equally. change that are filed with the whether the proposed rule change
Commission, and all written should be disapproved.4 The
C. Self-Regulatory Organization’s communications relating to the Commission received no comment
Statement on Comments on the proposed rule change between the letters on the proposed rule change.
Proposed Rule Change Received From Commission and any person, other than This order approves the proposed rule
Members, Participants, or Others those that may be withheld from the change.
The Exchange neither solicited nor public in accordance with the
II. Description of the Proposed Rule
received comments on the proposed provisions of 5 U.S.C. 552, will be
Change
rule change. available for website viewing and
printing in the Commission’s Public In its filing, the Exchange proposed to
III. Date of Effectiveness of the Reference Room, 100 F Street NE, amend Interpretation and Policy .02 to
Proposed Rule Change and Timing for Washington, DC 20549, on official Rule 24A.4, which sets forth
Commission Action business days between the hours of requirements relating to a FLEX Option
The foregoing rule change has become 10:00 a.m. and 3:00 p.m. Copies of the that has the same terms as a Non-FLEX
effective pursuant to Section 19(b)(3)(A) filing also will be available for Option.5
of the Act 19 and paragraph (f) of Rule inspection and copying at the principal First, Cboe Options has proposed to
19b–4 20 thereunder. At any time within office of the Exchange. All comments amend the rule to make all FLEX
60 days of the filing of the proposed rule received will be posted without change. Options fungible with Non-FLEX
change, the Commission summarily may Persons submitting comments are Options that have identical terms.6
temporarily suspend such rule change if cautioned that we do not redact or edit Currently, FLEX Options that have
it appears to the Commission that such personal identifying information from quarterly expirations,7 short term
action is necessary or appropriate in the comment submissions. You should expirations,8 weekly expirations,9 and
public interest, for the protection of submit only information that you wish End of Month (‘‘EOM’’) expirations 10
investors, or otherwise in furtherance of to make available publicly. All are not fungible with Non-FLEX Options
the purposes of the Act. If the submissions should refer to File with identical terms.11 The OCC
Commission takes such action, the Number SR–C2–2018–006 and should
1 15 U.S.C. 78s(b)(1).
Commission will institute proceedings be submitted on or before June 5, 2018. 2 17 CFR 240.19b–4.
to determine whether the proposed rule For the Commission, by the Division of 3 See Securities Exchange Act Release No. 82622
change should be approved or Trading and Markets, pursuant to delegated (Feb. 2, 2018), 83 FR 5668 (Feb. 8, 2018) (‘‘Notice’’).
disapproved. authority.21 4 See Securities Exchange Act Release No. 82936
Eduardo A. Aleman, (Mar. 23, 2018), 83 FR 13552 (Mar. 29, 2018).
IV. Solicitation of Comments 5 See Cboe Options Rule 24A.1(q).
Assistant Secretary. 6 See proposed Cboe Options Rule 24A.4.02(a)
Interested persons are invited to [FR Doc. 2018–10261 Filed 5–14–18; 8:45 am] (‘[t]his Interpretation and Policy shall apply to all
submit written data, views, and BILLING CODE 8011–01–P FLEX Options’’).
arguments concerning the foregoing, 7 See Cboe Options Rules 5.5(e), 24.9(a)(2)(B), and
including whether the proposed rule 24.9(c).
change is consistent with the Act. SECURITIES AND EXCHANGE
8 See Cboe Options Rules 5.5(d) and 24.9(a)(2)(A).
9 See Cboe Options Rule 24.9(e). These are
Comments may be submitted by any of COMMISSION currently traded pursuant to the Nonstandard
the following methods: Expirations Pilot Program.
[Release No. 34–83205; File No. SR–CBOE–
10 Id. These are also traded pursuant to the
Electronic Comments 2018–008]
Nonstandard Expiration Pilot Program.
• Use the Commission’s internet Self-Regulatory Organizations; Cboe
11 Cboe Options states in its proposal that FLEX
comment form (http://www.sec.gov/ Exchange, Inc.; Order Approving a
Options with these expirations were not originally
rules/sro.shtml); or intended to be fungible. See Securities Exchange
Proposed Rule Change Relating to Release Act Nos. 62658 (August 5, 2010), 75 FR
• Send an email to rule-comments@ Flexibly Structured Options 49010, 49011 n.8 (August 12, 2010) (SR–CBOE–
sec.gov. Please include File Number SR– 2009–075) (notice). The notice states that FLEX
C2–2018–006 on the subject line. May 9, 2018. Options do not become fungible with subsequently
introduced Non-FLEX structured quarterly and
Paper Comments I. Introduction short term options, and that they will not be with
daltland on DSKBBV9HB2PROD with NOTICES
End of Week (‘‘EOW’’) and EOM expirations
• Send paper comments in triplicate On January 18, 2018, Cboe Exchange, because of their similarities to the quarterly and
to Secretary, Securities and Exchange Inc. (‘‘Exchange’’ or ‘‘Cboe Options’’) short term options. EOW expirations are now called
Commission, 100 F Street NE, filed with the Securities and Exchange weekly expirations as Cboe Options Rule 24.9(e)
Commission (‘‘Commission’’), pursuant was amended to include Monday and Wednesday
Washington, DC 20549–1090. expirations. See also Securities Exchange Release
to Section 19(b)(1) of the Securities Act No. 62911 (September 14, 2010), 75 FR 57539
19 15 U.S.C. 78s(b)(3)(A). (September 21, 2010) (SR–CBOE–2009–075)
20 17 CFR 240.19b–4(f). 21 17 CFR 200.30–3(a)(12). (approval order).
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Document Created: 2018-05-15 00:33:35
Document Modified: 2018-05-15 00:33:35
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 83 FR 22546 |
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