83 FR 3837 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Establish Fees for Customized Functionality and/or Connectivity on the Silexx Trading Platform

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 18 (January 26, 2018)

[Federal Register Volume 83, Number 18 (Friday, January 26, 2018)]
[Notices]
[Pages 3837-3838]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-01355]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82540; File No. SR-CBOE-2018-004]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Establish Fees for Customized Functionality and/or Connectivity on the 
Silexx Trading Platform

January 19, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on January 8, 2018, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to establish fees for customized 
functionality and/or connectivity on the Silexx trading platform 
(``Silexx'' or the ``platform''). The text of the proposed rule change 
is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of this filing is to adopt fees for customized 
functionality and/or connectivity on Silexx.\3\ Silexx is a front-end, 
broker-neutral, multi-asset class order entry and management trading 
platform owned by Cboe Silexx, LLC (``Cboe Silexx'' a wholly owned 
subsidiary of Cboe Options' parent company, Cboe Global Markets, Inc.).
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    \3\ The Exchange initially filed the proposed fee changes on 
January 2, 2018 (SR-CBOE-2018-002). On January 8, 2018, the Exchange 
withdrew that filing and submitted this filing.
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    Silexx is an order entry and management trading platform for listed 
stocks and options that support [sic] both simple and complex 
orders.\4\ The platform is a software application that is installed 
locally on a user's desktop. The platform provides users with the 
capability to send option orders to U.S. options exchanges and stock 
orders to U.S. stock exchanges (and other trading centers), and allows 
users to input parameters to control the size, timing and other 
variables of their trades. Silexx includes access to real-time options 
and stock market data, as well as access to certain historical data. 
The platform provides users with the ability to maintain an electronic 
audit trail and provide detailed trade reporting. In addition, Silexx 
offers other functionality such as access to crossing orders tickets, 
equity order reports and market data feeds (for specific fees).
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    \4\ The platform also permits users to submit orders for 
commodity futures, commodity options and other non-security products 
to be sent to designated contract markets, futures commission 
merchants, introducing brokers or other applicable destinations of 
the users' choice.
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    The Exchange is now proposing an addition to the Silexx fee 
schedule related to customized development of new functionality and/or 
connectivity. Pursuant to a Silexx user's request, Cboe Silexx will 
develop specifications and a statement of work relating to customized 
functionality and/or connectivity. The statement of work will show the 
time and materials costs associated with building Silexx to support the 
user's request. This addition to the Silexx fee schedule will allow 
Cboe Silexx to support users with user-specific functionality and 
connectivity. The same reasonable hourly and materials rates will apply 
to all users based on then-current rates in line with industry 
standards, which costs (and any reasonable, standard mark-up) will be 
passed through to users. As such, the Exchange believes the addition

[[Page 3838]]

represents an equitable allocation of reasonable fees.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\5\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \6\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with 
Section 6(b)(4) of the Act,\7\ which requires that Exchange rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its Trading Permit Holders and other persons using 
its facilities.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78f(b)(4).
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    Specifically, the Exchange believes the proposed change provides 
for the equitable allocation of reasonable fees because the same hourly 
and materials rates will apply to all users. The hourly and material 
rates will be based on then-current rates in line with industry 
standards, which costs (and any reasonable, standard mark-up) will be 
passed through to users. Any user may elect to customize their Silexx 
platform. Customization is completely optional and subject to an 
agreement on a statement of work between the user and Cboe Silexx.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Cboe Options does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Each version of Silexx and 
any additional customized functionality and/or connectivity will be 
available to all market participants. Users have discretion to 
determine whether to customize their version of the platform. Any 
market participants will continue to have the flexibility to use any 
order entry and management technology they choose. The Exchange will 
not distinguish orders coming from a customized Silexx platform versus 
any other order management platform.
    The proposed fees related to customized functionality and/or 
connectivity will not impose any burden on competition because the same 
rates will apply to all Silexx users. Those rates will be based on 
then-current rates in line with industry standards, which costs (and 
any reasonable, standard mark-up) will be passed through to Silexx 
users.

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and paragraph (f) of Rule 19b-4 \9\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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-CBOE-2018-004 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-CBOE-2018-004. 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-CBOE-2018-004 and should be submitted on 
or before February 16, 2018.
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    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-01355 Filed 1-25-18; 8:45 am]
 BILLING CODE 8011-01-P