83 FR 34621 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on Cboe BZX Exchange, Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 140 (July 20, 2018)

[Federal Register Volume 83, Number 140 (Friday, July 20, 2018)]
[Notices]
[Pages 34621-34622]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-15506]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83640; File No. SR-CboeBZX-2018-050]


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

July 16, 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 July 5, 2018, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II and III below, which 
Items have been prepared by the Exchange. The Exchange has designated 
the proposed rule change as one establishing or changing a member due, 
fee, or other charge imposed by the Exchange under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposed rule change effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

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

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

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

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

1. Purpose
    The Exchange proposes to amend its fee schedule applicable to its 
equities trading platform (``BZX Equities''). Particularly, the 
Exchange proposes to amend the Tape B Volume and Quoting Tiers 
effective July 2, 2018.
    The Exchange currently offers one Tape B Volume and Quoting Tier 
under footnote 13, which provides an additional rebate of $0.0001 per 
share for orders that add liquidity in Tape B securities where a Member 
is enrolled in at least 50 LMP Securities \6\ for which it meets the 
following criteria for at least 50% of the trading days in the 
applicable month: (1) Member has a NBBO Time \7\ greater than or equal 
to 15% or NBBO Size Time \8\ is equal to or greater than 25%; and (2) 
Member has a Displayed Size Time \9\ equal to or greater than 90%. Such 
rebates are applicable to orders that add liquidity which are appended 
with fee code B. The Exchange proposes to make two changes to the Tape 
B Volume and Quoting Tier.
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    \6\ ``LMP Securities'' means a list of securities included in 
the Liquidity Management Program, the universe of which will be 
determined by the Exchange and published in a circular distributed 
to Members and on the Exchange's website. Such LMP Securities will 
include all Cboe-listed ETPs and certain non-Cboe-listed ETPs for 
which the Exchange wants to incentivize Members to provide enhanced 
market quality. All Cboe-listed securities will be LMP Securities 
immediately upon listing on the Exchange. The Exchange will not 
remove a security from the list of LMP Securities without 30 days 
prior notice. See Cboe BZX U.S. Equities Exchange Fee Schedule.
    \7\ ``NBBO Time'' means the average of the percentage of time 
during regular trading hours during which the Member maintains at 
least 100 shares at each of the NBB and NBO. See Cboe BZX U.S. 
Equities Exchange Fee Schedule.
    \8\ ``NBBO Size Time'' means the percentage of time during 
regular trading hours during which there are size-setting quotes at 
the NBBO on the Exchange. See Cboe BZX U.S. Equities Exchange Fee 
Schedule.
    \9\ ``Displayed Size Time'' means the percentage of time during 
regular trading hours during which the Member maintains at least 
2,500 displayed shares on the bid and separately maintains at least 
2,500 displayed shares on the offer that are priced no more than 2% 
away from the NBB and NBO, respectively. See Cboe BZX U.S. Equities 
Exchange Fee Schedule.
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    First, the Exchange proposes to require that a Member is enrolled 
in and meets the requirements for at least 100 LMP Securities, an 
increase from the current requirement of 50. Second, the Exchange is 
proposing to require that at least 10 of the LMP Securities that a 
Member is enrolled in and meets the requirements for are BZX-listed 
securities.\10\
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    \10\ The Exchange notes that all BZX-listed securities are by 
definition LMP Securities.
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2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with the objectives of Section 6 of the Act,\11\ in general, and 
furthers the objectives of Section 6(b)(4),\12\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and other 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 or incentives to be insufficient. The proposal 
reflects a change to a competitive pricing structure designed to incent 
market participants to direct their order flow to the Exchange and 
enhance market quality in LMP Securities, including BZX-listed 
securities, and in Tape B securities.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that increasing the threshold for Members to 
be enrolled in and meet the requirements for at least 50 LMP Securities 
to 100 LMP Securities is a reasonable means to incentivize Members to 
meet certain quoting standards in additional LMP Securities that the 
Exchange believes will narrow spreads, increase size at the inside, and 
increase liquidity depth on

[[Page 34622]]

the Exchange in such LMP Securities, which will increase market quality 
in LMP Securities, to the benefit of all market participants. 
Similarly, the Exchange believes that requiring that at least 10 of the 
LMP Securities that a Member is enrolled in and meets the requirements 
for are BZX-listed securities in order to receive the Tape B Volume and 
Quoting Tier rebate is a reasonable means to incentive enhanced quoting 
in BZX-listed securities in order to narrow spreads, increase size at 
the inside, and increase liquidity depth on the Exchange BZX-listed 
securities, to the benefit of all market participants and enhance the 
Exchange's standing as a listing venue.
    The Exchange further believes that the proposed changes represent 
an equitable allocation of reasonable dues, fees, and other charges 
because the thresholds necessary to achieve the Tape B Volume and 
Quoting Tier would continue to encourage Members to add additional 
liquidity to the Exchange in LMP Securities, including BZX-listed 
securities. The proposed changes also are not unreasonably 
discriminatory as they apply equally to all Members.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the changes burden competition, but instead, enhance competition, 
as these changes are intended to increase the competitiveness of the 
Exchange as it is designed to enhance the market quality of LMP 
Securities, including BZX-listed securities, on the Exchange. The 
Exchange 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 structures to be unreasonable or excessive. The 
proposed changes are generally intended to enhance market quality in 
LMP Securities, including BZX-listed securities, and Tape B securities. 
As such, the proposal is a competitive proposal that is intended to add 
additional liquidity to the Exchange, which will, in turn, benefit the 
Exchange and all Exchange participants and enhance the Exchange's 
standing as a listing venue.

(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 \13\ and paragraph (f) of Rule 19b-4 
thereunder.\14\ 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.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CboeBZX-2018-050 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-2018-050. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-CboeBZX-2018-050 and should be submitted 
on or before August 10, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-15506 Filed 7-19-18; 8:45 am]
 BILLING CODE 8011-01-P