83_FR_28804 83 FR 28685 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Physical Port Fees for BZX Options

83 FR 28685 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Physical Port Fees for BZX Options

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 119 (June 20, 2018)

Page Range28685-28687
FR Document2018-13159

Federal Register, Volume 83 Issue 119 (Wednesday, June 20, 2018)
[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)]
[Notices]
[Pages 28685-28687]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-13159]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83429; File No. SR-CboeBZX-2018-038]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Related to 
Physical Port Fees for BZX Options

June 14, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 28686]]

(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 1, 2018, Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') 
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).
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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 its fees and rebates 
applicable to Members \5\ and non-Members of the Exchange pursuant to 
BZX Rule 15.1(a) and (c) to modify its fees for physical ports.
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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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to implement proposed changes to its fee 
schedule for its equity options platform (``BZX Options'') relating to 
physical connectivity fees, effective June 1, 2018. By way of 
background, a physical port is utilized by a Member or non-Member to 
connect to the Exchange at the data centers where the Exchange's 
servers are located. The Exchange currently maintains a presence in two 
third-party data centers: (i) The primary data center where the 
Exchange's business is primarily conducted on a daily basis, and (ii) a 
secondary data center, which is predominantly maintained for business 
continuity purposes. The Exchange currently assesses the following 
physical connectivity fees for Members and non-Members on a monthly 
basis: $2,000 per physical port for a 1 gigabyte circuit and $7,000 per 
physical port for a 10 gigabyte circuit. The Exchange proposes to 
increase the fees per physical ports from (i) $2,000 to $2,500 per 
month, per port for a 1 gigabyte circuit and (ii) $7,000 to $7,500 per 
month, per port for a 10 gigabyte circuit. The Exchange notes the 
proposed fees enable it to continue to maintain and improve its market 
technology and services and also notes that the proposed fee changes 
are in line with the amounts assessed by other exchanges for similar 
connections.\6\
---------------------------------------------------------------------------

    \6\ See e.g., NYSE Arca Equities Fees and Charges, NYSE Arca 
Marketplace: Other Fees and Charges, Connectivity Fees. See also, 
Nasdaq Phlx LLC Pricing Schedule, Section XI, Direct Connectivity to 
Phlx.
---------------------------------------------------------------------------

    The Exchange also proposes to adopt separate physical port fees for 
connection to its secondary data center, which is predominantly 
maintained for business continuity purposes (``Disaster Recovery 
Systems''). Particularly, the Disaster Recovery Systems can be accessed 
via physical ports in Chicago. Members and Non-Members may maintain 
physical ports in order to be able to connect to the Disaster Recovery 
Systems in case of a disaster. Currently, physical ports that are used 
to connect to the Disaster Recovery Systems are assessed the same fees 
as physical ports used to connect to the Exchange's trading system. The 
Exchange proposes to establish separate pricing for physical ports that 
are used to connect to the Disaster Recovery Systems (``Disaster 
Recovery Physical Ports''). Specifically, the Exchange proposes to 
assess a monthly fee of $2,000 per 1 gigabyte Disaster Recovery 
Physical Port and a monthly fee of $6,000 per 10 gigabyte Disaster 
Recovery Physical Port. This amount will continue to enable the 
Exchange to maintain the Disaster Recovery Physical Ports in case they 
become necessary. The Exchange notes that the Disaster Recovery 
Physical Ports may also be used to access the Disaster Recovery Systems 
for the following affiliate exchanges Cboe EDGX Exchange, Inc., Cboe 
BYX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe C2 Exchange, Inc., 
Cboe Exchange, Inc. and Cboe Futures Exchange, LLC as well. The 
Exchange proposes to provide that market participants will only be 
assessed a single fee for any Disaster Recovery Physical Port that also 
accesses the Disaster Recover Systems for these exchanges.\7\
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    \7\ For example, if a market participant uses a 1 gigabyte 
Disaster Recovery Physical Port to connect to the Disaster Recovery 
Systems for both BZX and EDGX, the market participant would only be 
assessed one monthly fee of $2,000.
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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,\8\ in general, and 
furthers the objectives of Section 6(b)(4),\9\ 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. The Exchange also notes that it operates in a highly-
competitive market in which market participants can readily direct 
order flow to competing venues if they deem fee levels at a particular 
venue to be excessive. The proposed rule change reflects a competitive 
pricing structure designed to incent market participants to direct 
their order flow to the Exchange.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes are equitable and 
non-discriminatory in that it applies uniformly to all Members. Members 
and non-Members will continue to choose whether they want more than one 
physical port and/or Disaster Recovery Physical Port and choose the 
method of connectivity based on their specific needs. All Members that 
voluntarily select various service options will be charged the same 
amount for the same services.
    The Exchange believes that the proposal represents an equitable 
allocation of reasonable dues, fees, and other charges as its fees for 
physical connectivity are reasonably constrained by competitive 
alternatives. If a particular exchange charges excessive fees for 
connectivity, affected Members and non-Members may opt to terminate 
their connectivity arrangements with that exchange, and adopt a 
possible range of alternative strategies, including routing to the 
applicable exchange

[[Page 28687]]

through another participant or market center or taking that exchange's 
data indirectly. Accordingly, if the Exchange charges excessive fees, 
it would stand to lose not only connectivity revenues but also revenues 
associated with the execution of orders routed to it, and, to the 
extent applicable, market data revenues. The Exchange believes that 
this competitive dynamic imposes powerful restraints on the ability of 
any exchange to charge unreasonable fees for connectivity.
    Furthermore, the proposed rule change is also an equitable 
allocation of reasonable dues, fees, and other charges as the Exchange 
believes that the proposed increased physical port fees will enable it 
to cover its infrastructure costs associated with establishing physical 
ports to connect to the Exchange's systems. The additional revenue from 
the increased fees will also enable the Exchange to continue to 
maintain and improve its market technology and services. Similarly, the 
Exchange believes the proposed fees for the Disaster Recovery Physical 
Ports will allow the Exchange to maintain the Disaster Recovery 
Physical Ports in case they become necessary.
    Lastly, the Exchange believes the fees remain competitive with 
those charged by other venues and therefore continue to be reasonable 
and equitably allocated to Members.\10\
---------------------------------------------------------------------------

    \10\ See e.g., NYSE Arca Equities Fees and Charges, NYSE Arca 
Marketplace: Other Fees and Charges, Connectivity Fees. See also, 
Nasdaq Phlx LLC Pricing Schedule, Section XI, Direct Connectivity to 
Phlx.
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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. As discussed above, the 
Exchange believes that fees for connectivity are constrained by the 
robust competition for order flow among exchanges and non-exchange 
markets. The Exchange does not believe that the proposed changes 
represent a significant departure from previous pricing offered by the 
Exchange or pricing offered by the Exchange's competitors. 
Additionally, Members may opt to disfavor the Exchange's pricing if 
they believe that alternatives offer them better value. Further, 
excessive fees for connectivity would serve to impair an exchange's 
ability to compete for order flow 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 unsolicited written comments from Members or other interested 
parties.

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 \11\ and paragraph (f) of Rule 19b-4 
thereunder.\12\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CboeBZX-2018-038 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-2018-038. 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 such 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-2018-038, and should be 
submitted on or before July 11, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-13159 Filed 6-19-18; 8:45 am]
BILLING CODE 8011-01-P



                                                                             Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices                                                      28685

                                                non-Members will continue to choose                     necessary or appropriate in furtherance                    Commission, 100 F Street NE,
                                                whether they want more than one                         of the purposes of the Act. As discussed                   Washington, DC 20549–1090.
                                                physical port and/or Disaster Recovery                  above, the Exchange believes that fees                     All submissions should refer to File
                                                Physical Port and choose the method of                  for connectivity are constrained by the                    Number SR–CboeBYX–2018–006. This
                                                connectivity based on their specific                    robust competition for order flow among                    file number should be included on the
                                                needs. All Members that voluntarily                     exchanges and non-exchange markets.                        subject line if email is used. To help the
                                                select various service options will be                  The Exchange does not believe that the                     Commission process and review your
                                                charged the same amount for the same                    proposed changes represent a significant                   comments more efficiently, please use
                                                services.                                               departure from previous pricing offered                    only one method. The Commission will
                                                   The Exchange believes that the                       by the Exchange or pricing offered by                      post all comments on the Commission’s
                                                proposal represents an equitable                        the Exchange’s competitors.                                internet website (http://www.sec.gov/
                                                allocation of reasonable dues, fees, and                Additionally, Members may opt to                           rules/sro.shtml). Copies of the
                                                other charges as its fees for physical                  disfavor the Exchange’s pricing if they                    submission, all subsequent
                                                connectivity are reasonably constrained                 believe that alternatives offer them                       amendments, all written statements
                                                by competitive alternatives. If a                       better value. Further, excessive fees for                  with respect to the proposed rule
                                                particular exchange charges excessive                   connectivity would serve to impair an                      change that are filed with the
                                                fees for connectivity, affected Members                 exchange’s ability to compete for order                    Commission, and all written
                                                and non-Members may opt to terminate                    flow rather than burdening competition.                    communications relating to the
                                                their connectivity arrangements with                                                                               proposed rule change between the
                                                that exchange, and adopt a possible                     C. Self-Regulatory Organization’s
                                                                                                        Statement on Comments on the                               Commission and any person, other than
                                                range of alternative strategies, including                                                                         those that may be withheld from the
                                                routing to the applicable exchange                      Proposed Rule Change Received From
                                                                                                        Members, Participants, or Others                           public in accordance with the
                                                through another participant or market                                                                              provisions of 5 U.S.C. 552, will be
                                                center or taking that exchange’s data                     The Exchange has not solicited, and                      available for website viewing and
                                                indirectly. Accordingly, if the Exchange                does not intend to solicit, comments on                    printing in the Commission’s Public
                                                charges excessive fees, it would stand to               this proposed rule change. The                             Reference Room, 100 F Street NE,
                                                lose not only connectivity revenues but                 Exchange has not received any                              Washington, DC 20549, on official
                                                also revenues associated with the                       unsolicited written comments from                          business days between the hours of
                                                execution of orders routed to it, and, to               Members or other interested parties.                       10:00 a.m. and 3:00 p.m. Copies of this
                                                the extent applicable, market data
                                                                                                        III. Date of Effectiveness of the                          filing will also be available for
                                                revenues. The Exchange believes that
                                                                                                        Proposed Rule Change and Timing for                        inspection and copying at the principal
                                                this competitive dynamic imposes
                                                                                                        Commission Action                                          office of the Exchange. All comments
                                                powerful restraints on the ability of any
                                                                                                                                                                   received will be posted without change.
                                                exchange to charge unreasonable fees                       The foregoing rule change has become                    Persons submitting comments are
                                                for connectivity.                                       effective pursuant to Section 19(b)(3)(A)
                                                   Furthermore, the proposed rule                                                                                  cautioned that we do not redact or edit
                                                                                                        of the Act 11 and paragraph (f) of Rule                    personal identifying information from
                                                change is also an equitable allocation of               19b–4 thereunder.12 At any time within
                                                reasonable dues, fees, and other charges                                                                           comment submissions. You should
                                                                                                        60 days of the filing of the proposed rule                 submit only information that you wish
                                                as the Exchange believes that the                       change, the Commission summarily may
                                                proposed increased physical port fees                                                                              to make available publicly. All
                                                                                                        temporarily suspend such rule change if                    submissions should refer to File
                                                will enable it to cover its infrastructure              it appears to the Commission that such
                                                costs associated with establishing                                                                                 Number SR–CboeBYX–2018–006 and
                                                                                                        action is necessary or appropriate in the                  should be submitted on or before July
                                                physical ports to connect to the                        public interest, for the protection of
                                                Exchange’s systems. The additional                                                                                 11, 2018.
                                                                                                        investors, or otherwise in furtherance of
                                                revenue from the increased fees will                    the purposes of the Act.                                     For the Commission, by the Division of
                                                also enable the Exchange to continue to                                                                            Trading and Markets, pursuant to delegated
                                                maintain and improve its market                         IV. Solicitation of Comments                               authority.13
                                                technology and services. Similarly, the                   Interested persons are invited to                        Eduardo A. Aleman,
                                                Exchange believes the proposed fees for                 submit written data, views, and                            Assistant Secretary.
                                                the Disaster Recovery Physical Ports                    arguments concerning the foregoing,                        [FR Doc. 2018–13167 Filed 6–19–18; 8:45 am]
                                                will allow the Exchange to maintain the                 including whether the proposed rule                        BILLING CODE 8011–01–P
                                                Disaster Recovery Physical Ports in case                change is consistent with the Act.
                                                they become necessary.                                  Comments may be submitted by any of
                                                   Lastly, the Exchange believes the fees               the following methods:                                     SECURITIES AND EXCHANGE
                                                remain competitive with those charged                                                                              COMMISSION
                                                by other venues and therefore continue                  Electronic Comments
                                                to be reasonable and equitably allocated                                                                           [Release No. 34–83429; File No. SR–
                                                                                                          • Use the Commission’s internet                          CboeBZX–2018–038]
                                                to Members.10                                           comment form (http://www.sec.gov/
                                                B. Self-Regulatory Organization’s                       rules/sro.shtml); or                                       Self-Regulatory Organizations; Cboe
                                                Statement on Burden on Competition                        • Send an email to rule-comments@                        BZX Exchange, Inc.; Notice of Filing
                                                                                                        sec.gov. Please include File Number SR–                    and Immediate Effectiveness of
                                                  The Exchange does not believe that
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                                                                                                        CboeBYX–2018–006 on the subject line.                      Proposed Rule Change Related to
                                                the proposed rule change will impose
                                                any burden on competition not                           Paper Comments                                             Physical Port Fees for BZX Options
                                                                                                          • Send paper comments in triplicate                      June 14, 2018.
                                                  10 See e.g., NYSE Arca Equities Fees and Charges,
                                                                                                        to Secretary, Securities and Exchange                        Pursuant to Section 19(b)(1) of the
                                                NYSE Arca Marketplace: Other Fees and Charges,
                                                Connectivity Fees. See also, Nasdaq Phlx LLC                                                                       Securities Exchange Act of 1934
                                                                                                          11 15   U.S.C. 78s(b)(3)(A).
                                                Pricing Schedule, Section XI, Direct Connectivity to
                                                Phlx.                                                     12 17   CFR 240.19b–4(f).                                  13 17   CFR 200.30–3(a)(12).



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                                                28686                        Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices

                                                (‘‘Act’’) 1 and Rule 19b–4 thereunder,2                 its equity options platform (‘‘BZX                     that the Disaster Recovery Physical
                                                notice is hereby given that on June 1,                  Options’’) relating to physical                        Ports may also be used to access the
                                                2018, Cboe BZX Exchange, Inc. (‘‘BZX’’                  connectivity fees, effective June 1, 2018.             Disaster Recovery Systems for the
                                                or the ‘‘Exchange’’) filed with the                     By way of background, a physical port                  following affiliate exchanges Cboe
                                                Securities and Exchange Commission                      is utilized by a Member or non-Member                  EDGX Exchange, Inc., Cboe BYX
                                                (‘‘Commission’’) the proposed rule                      to connect to the Exchange at the data                 Exchange, Inc., Cboe EDGA Exchange,
                                                change as described in Items I, II, and                 centers where the Exchange’s servers are               Inc., Cboe C2 Exchange, Inc., Cboe
                                                III below, which Items have been                        located. The Exchange currently                        Exchange, Inc. and Cboe Futures
                                                prepared by the Exchange. The                           maintains a presence in two third-party                Exchange, LLC as well. The Exchange
                                                Exchange has designated the proposed                    data centers: (i) The primary data center              proposes to provide that market
                                                rule change as one establishing or                      where the Exchange’s business is                       participants will only be assessed a
                                                changing a member due, fee, or other                    primarily conducted on a daily basis,                  single fee for any Disaster Recovery
                                                charge imposed by the Exchange under                    and (ii) a secondary data center, which                Physical Port that also accesses the
                                                Section 19(b)(3)(A)(ii) of the Act 3 and                is predominantly maintained for                        Disaster Recover Systems for these
                                                Rule 19b–4(f)(2) thereunder,4 which                     business continuity purposes. The                      exchanges.7
                                                renders the proposed rule change                        Exchange currently assesses the                        2. Statutory Basis
                                                effective upon filing with the                          following physical connectivity fees for
                                                Commission. The Commission is                           Members and non-Members on a                              The Exchange believes that the
                                                publishing this notice to solicit                       monthly basis: $2,000 per physical port                proposed rule change is consistent with
                                                comments on the proposed rule change                    for a 1 gigabyte circuit and $7,000 per                the objectives of Section 6 of the Act,8
                                                from interested persons.                                physical port for a 10 gigabyte circuit.               in general, and furthers the objectives of
                                                                                                        The Exchange proposes to increase the                  Section 6(b)(4),9 in particular, as it is
                                                I. Self-Regulatory Organization’s                                                                              designed to provide for the equitable
                                                Statement of the Terms of Substance of                  fees per physical ports from (i) $2,000
                                                                                                        to $2,500 per month, per port for a 1                  allocation of reasonable dues, fees and
                                                the Proposed Rule Change                                                                                       other charges among its Members and
                                                                                                        gigabyte circuit and (ii) $7,000 to $7,500
                                                   The Exchange filed a proposal to                     per month, per port for a 10 gigabyte                  other persons using its facilities. The
                                                amend its fees and rebates applicable to                circuit. The Exchange notes the                        Exchange also notes that it operates in
                                                Members 5 and non-Members of the                        proposed fees enable it to continue to                 a highly-competitive market in which
                                                Exchange pursuant to BZX Rule 15.1(a)                   maintain and improve its market                        market participants can readily direct
                                                and (c) to modify its fees for physical                                                                        order flow to competing venues if they
                                                                                                        technology and services and also notes
                                                ports.                                                                                                         deem fee levels at a particular venue to
                                                                                                        that the proposed fee changes are in line
                                                   The text of the proposed rule change                                                                        be excessive. The proposed rule change
                                                is available at the Exchange’s website at               with the amounts assessed by other
                                                                                                                                                               reflects a competitive pricing structure
                                                www.markets.cboe.com, at the principal                  exchanges for similar connections.6
                                                                                                                                                               designed to incent market participants
                                                office of the Exchange, and at the                         The Exchange also proposes to adopt
                                                                                                                                                               to direct their order flow to the
                                                Commission’s Public Reference Room.                     separate physical port fees for
                                                                                                                                                               Exchange.
                                                                                                        connection to its secondary data center,                  The Exchange believes that the
                                                II. Self-Regulatory Organization’s                      which is predominantly maintained for                  proposed changes are equitable and
                                                Statement of the Purpose of, and                        business continuity purposes (‘‘Disaster               non-discriminatory in that it applies
                                                Statutory Basis for, the Proposed Rule                  Recovery Systems’’). Particularly, the                 uniformly to all Members. Members and
                                                Change                                                  Disaster Recovery Systems can be                       non-Members will continue to choose
                                                   In its filing with the Commission, the               accessed via physical ports in Chicago.                whether they want more than one
                                                Exchange included statements                            Members and Non-Members may                            physical port and/or Disaster Recovery
                                                concerning the purpose of and basis for                 maintain physical ports in order to be                 Physical Port and choose the method of
                                                the proposed rule change and discussed                  able to connect to the Disaster Recovery               connectivity based on their specific
                                                any comments it received on the                         Systems in case of a disaster. Currently,              needs. All Members that voluntarily
                                                proposed rule change. The text of these                 physical ports that are used to connect                select various service options will be
                                                statements may be examined at the                       to the Disaster Recovery Systems are                   charged the same amount for the same
                                                places specified in Item IV below. The                  assessed the same fees as physical ports               services.
                                                Exchange has prepared summaries, set                    used to connect to the Exchange’s                         The Exchange believes that the
                                                forth in Sections A, B, and C below, of                 trading system. The Exchange proposes                  proposal represents an equitable
                                                the most significant parts of such                      to establish separate pricing for physical             allocation of reasonable dues, fees, and
                                                statements.                                             ports that are used to connect to the                  other charges as its fees for physical
                                                                                                        Disaster Recovery Systems (‘‘Disaster                  connectivity are reasonably constrained
                                                A. Self-Regulatory Organization’s                       Recovery Physical Ports’’). Specifically,
                                                Statement of the Purpose of, and the                                                                           by competitive alternatives. If a
                                                                                                        the Exchange proposes to assess a                      particular exchange charges excessive
                                                Statutory Basis for, the Proposed Rule
                                                                                                        monthly fee of $2,000 per 1 gigabyte                   fees for connectivity, affected Members
                                                Change
                                                                                                        Disaster Recovery Physical Port and a                  and non-Members may opt to terminate
                                                1. Purpose                                              monthly fee of $6,000 per 10 gigabyte                  their connectivity arrangements with
                                                   The Exchange proposes to implement                   Disaster Recovery Physical Port. This                  that exchange, and adopt a possible
                                                proposed changes to its fee schedule for                amount will continue to enable the                     range of alternative strategies, including
                                                                                                        Exchange to maintain the Disaster
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                                                                               routing to the applicable exchange
                                                  1 15 U.S.C. 78s(b)(1).                                Recovery Physical Ports in case they
                                                  2 17 CFR 240.19b–4.                                   become necessary. The Exchange notes                     7 For example, if a market participant uses a 1
                                                  3 15 U.S.C. 78s(b)(3)(A)(ii).                                                                                gigabyte Disaster Recovery Physical Port to connect
                                                  4 17 CFR 240.19b–4(f)(2).                               6 See e.g., NYSE Arca Equities Fees and Charges,     to the Disaster Recovery Systems for both BZX and
                                                  5 The term ‘‘Member’’ is defined as ‘‘any             NYSE Arca Marketplace: Other Fees and Charges,         EDGX, the market participant would only be
                                                registered broker or dealer that has been admitted      Connectivity Fees. See also, Nasdaq Phlx LLC           assessed one monthly fee of $2,000.
                                                                                                                                                                 8 15 U.S.C. 78f.
                                                to membership in the Exchange.’’ See Exchange           Pricing Schedule, Section XI, Direct Connectivity to
                                                Rule 1.5(n).                                            Phlx.                                                    9 15 U.S.C. 78f(b)(4).




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                                                                             Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices                                                      28687

                                                through another participant or market                   C. Self-Regulatory Organization’s                          Commission and any person, other than
                                                center or taking that exchange’s data                   Statement on Comments on the                               those that may be withheld from the
                                                indirectly. Accordingly, if the Exchange                Proposed Rule Change Received From                         public in accordance with the
                                                charges excessive fees, it would stand to               Members, Participants, or Others                           provisions of 5 U.S.C. 552, will be
                                                lose not only connectivity revenues but                   The Exchange has not solicited, and                      available for website viewing and
                                                also revenues associated with the                       does not intend to solicit, comments on                    printing in the Commission’s Public
                                                execution of orders routed to it, and, to               this proposed rule change. The                             Reference Room, 100 F Street NE,
                                                the extent applicable, market data                      Exchange has not received any                              Washington, DC 20549 on official
                                                revenues. The Exchange believes that                    unsolicited written comments from                          business days between the hours of
                                                this competitive dynamic imposes                        Members or other interested parties.                       10:00 a.m. and 3:00 p.m. Copies of such
                                                powerful restraints on the ability of any                                                                          filing also will be available for
                                                                                                        III. Date of Effectiveness of the                          inspection and copying at the principal
                                                exchange to charge unreasonable fees                    Proposed Rule Change and Timing for                        office of the Exchange. All comments
                                                for connectivity.                                       Commission Action                                          received will be posted without change.
                                                  Furthermore, the proposed rule                           The foregoing rule change has become                    Persons submitting comments are
                                                change is also an equitable allocation of               effective pursuant to Section 19(b)(3)(A)                  cautioned that we do not redact or edit
                                                reasonable dues, fees, and other charges                of the Act 11 and paragraph (f) of Rule                    personal identifying information from
                                                as the Exchange believes that the                       19b–4 thereunder.12 At any time within                     comment submissions. You should
                                                proposed increased physical port fees                   60 days of the filing of the proposed rule                 submit only information that you wish
                                                will enable it to cover its infrastructure              change, the Commission summarily may                       to make available publicly. All
                                                costs associated with establishing                      temporarily suspend such rule change if                    submissions should refer to File
                                                physical ports to connect to the                        it appears to the Commission that such                     Number SR–CboeBZX–2018–038, and
                                                Exchange’s systems. The additional                      action is necessary or appropriate in the                  should be submitted on or before July
                                                revenue from the increased fees will                    public interest, for the protection of                     11, 2018.
                                                also enable the Exchange to continue to                 investors, or otherwise in furtherance of                    For the Commission, by the Division of
                                                maintain and improve its market                         the purposes of the Act.                                   Trading and Markets, pursuant to delegated
                                                technology and services. Similarly, the                 IV. Solicitation of Comments                               authority.13
                                                Exchange believes the proposed fees for                                                                            Eduardo A. Aleman,
                                                                                                          Interested persons are invited to
                                                the Disaster Recovery Physical Ports                    submit written data, views, and                            Assistant Secretary.
                                                will allow the Exchange to maintain the                 arguments concerning the foregoing,                        [FR Doc. 2018–13159 Filed 6–19–18; 8:45 am]
                                                Disaster Recovery Physical Ports in case                including whether the proposed rule                        BILLING CODE 8011–01–P
                                                they become necessary.                                  change is consistent with the Act.
                                                  Lastly, the Exchange believes the fees                Comments may be submitted by any of
                                                                                                        the following methods:                                     SECURITIES AND EXCHANGE
                                                remain competitive with those charged
                                                                                                                                                                   COMMISSION
                                                by other venues and therefore continue                  Electronic Comments
                                                to be reasonable and equitably allocated                                                                           [Release No. 34–83440; File No. SR–
                                                                                                          • Use the Commission’s internet
                                                to Members.10                                                                                                      NYSENAT–2018–13]
                                                                                                        comment form (http://www.sec.gov/
                                                B. Self-Regulatory Organization’s                       rules/sro.shtml); or                                       Self-Regulatory Organizations; NYSE
                                                Statement on Burden on Competition                        • Send an email to rule-comments@                        National, Inc.; Notice of Filing and
                                                                                                        sec.gov. Please include File Number SR–                    Immediate Effectiveness of Proposed
                                                   The Exchange does not believe that                   CboeBZX–2018–038 on the subject line.                      Rule Change To Amend Its Schedule of
                                                the proposed rule change will impose                                                                               Fees and Rebates To Extend the
                                                                                                        Paper Comments
                                                any burden on competition not                                                                                      Current Waiver of Certain Adding and
                                                necessary or appropriate in furtherance                    • Send paper comments in triplicate
                                                                                                                                                                   Taking Tier Volume Requirements to
                                                of the purposes of the Act. As discussed                to Secretary, Securities and Exchange
                                                                                                                                                                   July 1, 2018, and Make Non-
                                                above, the Exchange believes that fees                  Commission, 100 F Street NE,
                                                                                                                                                                   Substantive Changes To Eliminate
                                                for connectivity are constrained by the                 Washington, DC 20549–1090.
                                                                                                                                                                   Obsolete Text
                                                robust competition for order flow among                 All submissions should refer to File
                                                exchanges and non-exchange markets.                     Number SR–CboeBZX–2018–038. This                           June 14, 2018.
                                                The Exchange does not believe that the                  file number should be included on the                         Pursuant to Section 19(b)(1) 1 of the
                                                proposed changes represent a significant                subject line if email is used. To help the                 Securities Exchange Act of 1934 (the
                                                departure from previous pricing offered                 Commission process and review your                         ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
                                                by the Exchange or pricing offered by                   comments more efficiently, please use                      notice is hereby given that, on June 6,
                                                the Exchange’s competitors.                             only one method. The Commission will                       2018, NYSE National, Inc. (the
                                                Additionally, Members may opt to                        post all comments on the Commission’s                      ‘‘Exchange’’ or ‘‘NYSE National’’) filed
                                                disfavor the Exchange’s pricing if they                 internet website (http://www.sec.gov/                      with the Securities and Exchange
                                                believe that alternatives offer them                    rules/sro.shtml). Copies of the                            Commission (the ‘‘Commission’’) the
                                                                                                        submission, all subsequent                                 proposed rule change as described in
                                                better value. Further, excessive fees for
                                                                                                        amendments, all written statements                         Items I, II, and III below, which Items
                                                connectivity would serve to impair an
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                        with respect to the proposed rule                          have been prepared by the self-
                                                exchange’s ability to compete for order
                                                                                                        change that are filed with the                             regulatory organization. The
                                                flow rather than burdening competition.
                                                                                                        Commission, and all written                                Commission is publishing this notice to
                                                                                                        communications relating to the
                                                  10 See e.g., NYSE Arca Equities Fees and Charges,

                                                NYSE Arca Marketplace: Other Fees and Charges,
                                                                                                        proposed rule change between the                             13 17 CFR 200.30–3(a)(12).
                                                                                                                                                                     1 15 U.S.C. 78s(b)(1).
                                                Connectivity Fees. See also, Nasdaq Phlx LLC
                                                                                                          11 15   U.S.C. 78s(b)(3)(A).                               2 15 U.S.C. 78a.
                                                Pricing Schedule, Section XI, Direct Connectivity to
                                                Phlx.                                                     12 17   CFR 240.19b–4(f).                                  3 17 CFR 240.19b–4.




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Document Created: 2018-06-20 00:20:30
Document Modified: 2018-06-20 00:20:30
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation83 FR 28685 

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