83_FR_28814 83 FR 28695 - Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Physical Port Fees for EDGX Options

83 FR 28695 - Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Physical Port Fees for EDGX Options

SECURITIES AND EXCHANGE COMMISSION

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

Page Range28695-28697
FR Document2018-13160

Federal Register, Volume 83 Issue 119 (Wednesday, June 20, 2018)
[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)]
[Notices]
[Pages 28695-28697]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-13160]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83430; File No. SR-CboeEDGX-2018-017]


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

June 14, 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 June 1, 2018, Cboe EDGX Exchange, Inc. (``Exchange'' or ``EDGX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule

[[Page 28696]]

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

    The Exchange filed a proposal to amend its fees and rebates 
applicable to Members \5\ and non-Members of the Exchange pursuant to 
EDGX Rule 15.1(a) and (c) to modify its fees for physical ports.
---------------------------------------------------------------------------

    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer that has been admitted to membership in the Exchange.'' See 
Exchange Rule 1.5(n).
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    The text of the proposed rule change is available at the Exchange's 
website at www.markets.cboe.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to implement proposed changes to its fee 
schedule for its equity options platform (``EDGX 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\
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    \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 BZX 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 BYX 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 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

[[Page 28697]]

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\
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    \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.
---------------------------------------------------------------------------

(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 [email protected]. Please include 
File Number SR-CboeEDGX-2018-017 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-CboeEDGX-2018-017. 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-CboeEDGX-2018-017 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. 2018-13160 Filed 6-19-18; 8:45 am]
 BILLING CODE 8011-01-P



                                                                             Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices                                                   28695

                                                increase their liquidity on the Exchange,               venues if they deem fee structures to be                comments more efficiently, please use
                                                but also to contribute to the market                    unreasonable or excessive. The                          only one method. The Commission will
                                                quality of the Exchange by offering                     proposed changes are generally                          post all comments on the Commission’s
                                                aggressively priced liquidity. The                      intended to enhance the rebates for                     internet website (http://www.sec.gov/
                                                Exchange further believes that the                      liquidity added to the Exchange, which                  rules/sro.shtml). Copies of the
                                                proposed increased rebate represents an                 is intended to draw additional liquidity                submission, all subsequent
                                                equitable allocation of reasonable dues,                to the Exchange. The Exchange does not                  amendments, all written statements
                                                fees, and other charges because the                     believe the proposed amendments                         with respect to the proposed rule
                                                thresholds necessary to achieve the tiers               would burden intramarket competition                    change that are filed with the
                                                would continue to encourage Members                     as they would be available to all                       Commission, and all written
                                                to add additional liquidity to the                      Members uniformly.                                      communications relating to the
                                                Exchange. The revised additional rebate                                                                         proposed rule change between the
                                                was modestly changed and continues to                   (C) Self-Regulatory Organization’s                      Commission and any person, other than
                                                reasonably reflect the difficulty of                    Statement on Comments on the                            those that may be withheld from the
                                                achieving each tier’s required criteria.                Proposed Rule Change Received From                      public in accordance with the
                                                The proposed change also is not                         Members, Participants or Others                         provisions of 5 U.S.C. 552, will be
                                                unreasonably discriminatory as it                         The Exchange has not solicited, and                   available for website viewing and
                                                applies equally to all Members.                         does not intend to solicit, comments on                 printing in the Commission’s Public
                                                  The Exchange also notes that volume-                  this proposed rule change. The                          Reference Room, 100 F Street NE,
                                                based discounts such as those currently                 Exchange has not received any                           Washington, DC 20549, on official
                                                maintained on the Exchange have been                    unsolicited written comments from                       business days between the hours of
                                                widely adopted by exchanges and are                     Members or other interested parties.                    10:00 a.m. and 3:00 p.m. Copies of the
                                                equitable and non-discriminatory                                                                                filing also will be available for
                                                because they are open to all Members on                 III. Date of Effectiveness of the                       inspection and copying at the principal
                                                an equal basis and provide additional                   Proposed Rule Change and Timing for                     office of the Exchange. All comments
                                                benefits or discounts that are reasonably               Commission Action                                       received will be posted without change.
                                                related to the value of an exchange’s                      The foregoing rule change has become                 Persons submitting comments are
                                                market quality associated with higher                   effective pursuant to Section 19(b)(3)(A)               cautioned that we do not redact or edit
                                                levels of market activity, such as higher               of the Act 9 and paragraph (f) of Rule                  personal identifying information from
                                                levels of liquidity provision and/or                    19b–4 thereunder.10 At any time within                  comment submissions. You should
                                                growth patterns, and introduction of                    60 days of the filing of the proposed rule              submit only information that you wish
                                                higher volumes of orders into the price                 change, the Commission summarily may                    to make available publicly. All
                                                and volume discovery processes. While                   temporarily suspend such rule change if                 submissions should refer to File
                                                the proposed modification to the criteria               it appears to the Commission that such                  Number SR–CboeBZX–2018–039 and
                                                set forth in NBBO Setter Tiers 1 and 2                  action is necessary or appropriate in the               should be submitted on or before July
                                                makes such tiers slightly more difficult                public interest, for the protection of                  11, 2018.
                                                to attain, it is intended to incentivize                investors, or otherwise in furtherance of                 For the Commission, by the Division of
                                                Members to send additional volume and                   the purposes of the Act.                                Trading and Markets, pursuant to delegated
                                                aggressively priced liquidity, in an effort                                                                     authority.11
                                                to qualify or continue to qualify for the               IV. Solicitation of Comments
                                                                                                                                                                Eduardo A. Aleman,
                                                rebates made available by the tiers. As                   Interested persons are invited to                     Assistant Secretary.
                                                such, the Exchange also believes that                   submit written data, views, and                         [FR Doc. 2018–13164 Filed 6–19–18; 8:45 am]
                                                the proposed changes are reasonable.                    arguments concerning the foregoing,
                                                                                                                                                                BILLING CODE 8011–01–P
                                                The Exchange notes that increased                       including whether the proposed rule
                                                volume on the Exchange provides                         change is consistent with the Act.
                                                greater trading opportunities for all                   Comments may be submitted by any of                     SECURITIES AND EXCHANGE
                                                market participants.                                    the following methods:                                  COMMISSION
                                                (B) Self-Regulatory Organization’s                      Electronic Comments                                     [Release No. 34–83430; File No. SR–
                                                Statement on Burden on Competition
                                                                                                          • Use the Commission’s internet                       CboeEDGX–2018–017]
                                                   The Exchange does not believe that                   comment form (http://www.sec.gov/
                                                the proposed rule change will impose                                                                            Self-Regulatory Organizations; Cboe
                                                                                                        rules/sro.shtml); or
                                                any burden on competition not                             • Send an email to rule-comments@                     EDGX Exchange, Inc.; Notice of Filing
                                                necessary or appropriate in furtherance                 sec.gov. Please include File Number SR–                 and Immediate Effectiveness of a
                                                of the purposes of the Act. The                         CboeBZX–2018–039 on the subject line.                   Proposed Rule Change Related to
                                                Exchange does not believe that any of                                                                           Physical Port Fees for EDGX Options
                                                the proposed change to the Exchange’s                   Paper Comments
                                                                                                                                                                June 14, 2018.
                                                tiered pricing structure burden                            • Send paper comments in triplicate                     Pursuant to Section 19(b)(1) of the
                                                competition, but instead, that they                     to Secretary, Securities and Exchange                   Securities Exchange Act of 1934
                                                enhance competition as they are                         Commission, 100 F Street NE,                            (‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                intended to increase the                                Washington, DC 20549–1090.                              notice is hereby given that on June 1,
                                                competitiveness of BZX by modifying
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                        All submissions should refer to File                    2018, Cboe EDGX Exchange, Inc.
                                                pricing incentives in order to attract                  Number SR–CboeBZX–2018–039. This                        (‘‘Exchange’’ or ‘‘EDGX’’) filed with the
                                                order flow and incentivize participants                 file number should be included on the                   Securities and Exchange Commission
                                                to increase their participation on the                  subject line if email is used. To help the              (‘‘Commission’’) the proposed rule
                                                Exchange. The Exchange notes that it                    Commission process and review your
                                                operates in a highly competitive market                                                                           11 17 CFR 200.30–3(a)(12).
                                                in which market participants can                          9 15 U.S.C. 78s(b)(3)(A).                               1 15 U.S.C. 78s(b)(1).
                                                readily direct order flow to competing                    10 17 CFR 240.19b–4(f).                                 2 17 CFR 240.19b–4.




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                                                28696                        Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices

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




                                                                                                                                                               revenues. The Exchange believes that
                                                located. The Exchange currently                         C2 Exchange, Inc., Cboe Exchange, Inc.
                                                                                                        and Cboe Futures Exchange, LLC as                        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 BYX 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                                                      28697

                                                this competitive dynamic imposes                        III. Date of Effectiveness of the                          filing also will be available for
                                                powerful restraints on the ability of any               Proposed Rule Change and Timing for                        inspection and copying at the principal
                                                exchange to charge unreasonable fees                    Commission Action                                          office of the Exchange. All comments
                                                for connectivity.                                          The foregoing rule change has become                    received will be posted without change.
                                                  Furthermore, the proposed rule                        effective pursuant to Section 19(b)(3)(A)                  Persons submitting comments are
                                                change is also an equitable allocation of               of the Act 11 and paragraph (f) of Rule                    cautioned that we do not redact or edit
                                                reasonable dues, fees, and other charges                19b–4 thereunder.12 At any time within                     personal identifying information from
                                                as the Exchange believes that the                       60 days of the filing of the proposed rule                 comment submissions. You should
                                                proposed increased physical port fees                   change, the Commission summarily may                       submit only information that you wish
                                                will enable it to cover its infrastructure              temporarily suspend such rule change if                    to make available publicly. All
                                                costs associated with establishing                      it appears to the Commission that such                     submissions should refer to File
                                                physical ports to connect to the                        action is necessary or appropriate in the                  Number SR–CboeEDGX–2018–017 and
                                                Exchange’s systems. The additional                      public interest, for the protection of                     should be submitted on or before July
                                                revenue from the increased fees will                    investors, or otherwise in furtherance of                  11, 2018.
                                                also enable the Exchange to continue to                 the purposes of the Act.                                     For the Commission, by the Division of
                                                maintain and improve its market                                                                                    Trading and Markets, pursuant to delegated
                                                                                                        IV. Solicitation of Comments                               authority.13
                                                technology and services. Similarly, the
                                                Exchange believes the proposed fees for                   Interested persons are invited to                        Eduardo A. Aleman,
                                                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. 2018–13160 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.
                                                                                                        Comments may be submitted by any of
                                                  Lastly, the Exchange believes the fees                the following methods:                                     SECURITIES AND EXCHANGE
                                                remain competitive with those charged
                                                                                                        Electronic Comments                                        COMMISSION
                                                by other venues and therefore continue
                                                to be reasonable and equitably allocated                   • Use the Commission’s internet                         [Investment Company Act Release No.
                                                to Members.10                                           comment form (http://www.sec.gov/                          33123; 812–14872]

                                                (B) Self-Regulatory Organization’s                      rules/sro.shtml); or                                       Sprott ETF Trust and Sprott Asset
                                                Statement on Burden on Competition                         • Send an email to rule-comments@
                                                                                                                                                                   Management USA Inc.
                                                                                                        sec.gov. Please include File Number SR–
                                                   The Exchange does not believe that                   CboeEDGX–2018–017 on the subject                           June 15, 2018.
                                                the proposed rule change will impose                    line.                                                      AGENCY: Securities and Exchange
                                                any burden on competition not                           Paper Comments                                             Commission (‘‘Commission’’).
                                                necessary or appropriate in furtherance                                                                            ACTION: Notice.
                                                of the purposes of the Act. As discussed                   • Send paper comments in triplicate
                                                above, the Exchange believes that fees                  to Secretary, Securities and Exchange                         Notice of an application for an order
                                                for connectivity are constrained by the                 Commission, 100 F Street NE,                               under section 6(c) of the Investment
                                                robust competition for order flow among                 Washington, DC 20549–1090.                                 Company Act of 1940 (the ‘‘Act’’) for an
                                                exchanges and non-exchange markets.                     All submissions should refer to File                       exemption from sections 2(a)(32),
                                                The Exchange does not believe that the                  Number SR–CboeEDGX–2018–017. This                          5(a)(1), 22(d), and 22(e) of the Act and
                                                proposed changes represent a significant                file number should be included on the                      rule 22c–1 under the Act, under
                                                departure from previous pricing offered                 subject line if email is used. To help the                 sections 6(c) and 17(b) of the Act for an
                                                by the Exchange or pricing offered by                   Commission process and review your                         exemption from sections 17(a)(1) and
                                                the Exchange’s competitors.                             comments more efficiently, please use                      17(a)(2) of the Act, and under section
                                                Additionally, Members may opt to                        only one method. The Commission will                       12(d)(1)(J) for an exemption from
                                                disfavor the Exchange’s pricing if they                 post all comments on the Commission’s                      sections 12(d)(1)(A) and 12(d)(1)(B) of
                                                believe that alternatives offer them                    internet website (http://www.sec.gov/                      the Act. The requested order would
                                                better value. Further, excessive fees for               rules/sro.shtml). Copies of the                            permit (a) index-based series of certain
                                                connectivity would serve to impair an                   submission, all subsequent                                 open-end management investment
                                                exchange’s ability to compete for order                 amendments, all written statements                         companies (‘‘Funds’’) to issue shares
                                                flow rather than burdening competition.                 with respect to the proposed rule                          redeemable in large aggregations
                                                                                                        change that are filed with the                             (‘‘Creation Units’’); (b) secondary market
                                                (C) Self-Regulatory Organization’s                      Commission, and all written                                transactions in Fund shares to occur at
                                                Statement on Comments on the                            communications relating to the                             negotiated market prices rather than at
                                                Proposed Rule Change Received From                      proposed rule change between the                           net asset value (‘‘NAV’’); (c) certain
                                                Members, Participants or Others                         Commission and any person, other than                      Funds to pay redemption proceeds,
                                                                                                        those that may be withheld from the                        under certain circumstances, more than
                                                  The Exchange has not solicited, and                   public in accordance with the                              seven days after the tender of shares for
                                                does not intend to solicit, comments on                 provisions of 5 U.S.C. 552, will be                        redemption; (d) certain affiliated
                                                this proposed rule change. The                          available for website viewing and                          persons of a Fund to deposit securities
                                                Exchange has not received any
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                        printing in the Commission’s Public                        into, and receive securities from, the
                                                unsolicited written comments from                       Reference Room, 100 F Street NE,                           Fund in connection with the purchase
                                                Members or other interested parties.                    Washington, DC 20549, on official                          and redemption of Creation Units; (e)
                                                                                                        business days between the hours of                         certain registered management
                                                  10 See e.g., NYSE Arca Equities Fees and Charges,
                                                                                                        10:00 a.m. and 3:00 p.m. Copies of the                     investment companies and unit
                                                NYSE Arca Marketplace: Other Fees and Charges,
                                                Connectivity Fees. See also, Nasdaq Phlx LLC                                                                       investment trusts outside of the same
                                                                                                          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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Document Created: 2018-06-20 00:20:07
Document Modified: 2018-06-20 00:20:07
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 28695 

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