83_FR_42901 83 FR 42737 - Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Options Regulatory Fee

83 FR 42737 - Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Options Regulatory Fee

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 164 (August 23, 2018)

Page Range42737-42739
FR Document2018-18166

Federal Register, Volume 83 Issue 164 (Thursday, August 23, 2018)
[Federal Register Volume 83, Number 164 (Thursday, August 23, 2018)]
[Notices]
[Pages 42737-42739]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-18166]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83881; File No. SR-CboeEDGX-2018-034]


Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend the Options Regulatory Fee

August 17, 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 August 9, 2018, Cboe EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') 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 its fee schedule related to 
the Options Regulatory Fee.
    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 modify the fee schedule applicable to the 
Exchange's options platform (``EDGX Options'') to amend the rate of its 
Options Regulatory Fee (``ORF'').\5\ Currently, the Exchange charges an 
ORF in the amount of $0.0004 per contract side. The Exchange proposes 
to decrease the amount of ORF from $0.0004 per contract side to $0.0001 
per contract side. The proposed change to ORF should continue to 
balance the Exchange's regulatory expenses against the anticipated 
revenue.
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    \5\ The Exchange initially filed the proposed fee change on 
August 1, 2018 (SR-CboeEDGX-2018-028) for August 1, 2018 
effectiveness. On business date August 9, 2018, the Exchange 
withdrew that filing and submitted this filing.
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    The ORF is assessed by the Exchange on each Member for options 
transactions cleared by the Member that are cleared by the Options 
Clearing Corporation (OCC) in the customer range, regardless of the 
exchange on which the transaction occurs. In other words, the Exchange 
imposes the ORF on all customer-range transactions cleared by a Member, 
even if the transactions do not take place on the Exchange. The ORF is 
collected by OCC on behalf of the Exchange from the Clearing Member or 
non-Clearing Member that ultimately clears the transaction. With 
respect to linkage transactions, the Exchange reimburses its routing 
broker providing Routing Services for options regulatory fees it incurs 
in connection with the Routing Services it provides.
    Revenue generated from ORF, when combined with all of the 
Exchange's other regulatory fees and fines, is designed to recover a 
material portion of the regulatory costs to the Exchange of the 
supervision and regulation of Member customer options business. 
Regulatory costs include direct regulatory expenses and certain 
indirect expenses for work allocated in support of the regulatory 
function. The direct expenses include in-house and third party service 
provider costs to support

[[Page 42738]]

the day to day regulatory work such as surveillances, investigations 
and examinations. The indirect expenses include support from such areas 
as human resources, legal, information technology and accounting. These 
indirect expenses are estimated to be approximately 12% of EDGX 
Options' total regulatory costs for 2018. Thus, direct expenses are 
estimated to be approximately 88% of total regulatory costs for 2018. 
In addition, it is EDGX Options' practice that revenue generated from 
ORF not exceed more than 75% of total annual regulatory costs. These 
expectations are estimated, preliminary and may change. There can be no 
assurance that our final costs for 2018 will not differ materially from 
these expectations and prior practice; however, the Exchange believes 
that revenue generated from the ORF, when combined with all of the 
Exchange's other regulatory fees and fines, will cover a material 
portion, but not all, of the Exchange's regulatory costs.\6\
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    \6\ The Exchange notes that its regulatory responsibilities with 
respect to compliance with options sales practice rules has been 
allocated to the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') under a 17d-2 Agreement. The ORF is not designed to 
cover the cost of options sales practice regulation.
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    The Exchange will continue to monitor the amount of revenue 
collected from the ORF to ensure that it, in combination with its other 
regulatory fees and fines, does not exceed the Exchange's total 
regulatory costs. The Exchange monitors its regulatory costs and 
revenues at a minimum on a semi-annual basis. If the Exchange 
determines regulatory revenues exceed or are insufficient to cover a 
material portion of its regulatory costs, the Exchange will adjust the 
ORF by submitting a fee change filing to the Commission. The Exchange 
notifies Members of adjustments to the ORF via regulatory circular. The 
Exchange provides Members with such notice at least 30 calendar days 
prior to the effective date of the change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6 of the Act.\7\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\8\ in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among members and other persons using its facilities. The Exchange 
notes that it operates in a highly competitive market in which market 
participants can readily direct order flow to competing venues or 
providers of routing services if they deem fee levels to be excessive.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the decreased ORF is equitable and not 
unfairly discriminatory because it would be objectively allocated to 
Members in that it would be charged to all Members on all their 
transactions that clear as customer transactions at the OCC. The 
Exchange believes that decreasing the ORF is reasonable because the 
Exchange's collection of ORF needs to be balanced against the amount of 
regulatory revenue collected by the Exchange. The Exchange believes 
that the proposed adjustment noted herein will serve to continue to 
balance the Exchange's regulatory revenue against its anticipated 
regulatory costs.
    The Exchange has designed the ORF to generate revenues that, when 
combined with all of the Exchange's other regulatory fees, will be less 
than or equal to the Exchange's regulatory costs, which is consistent 
with the Commission's view that regulatory fees be used for regulatory 
purposes and not to support the Exchange's business side. In this 
regard, the Exchange believes that the decreased level of the fee is 
reasonable and appropriate.

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. This proposal does not create 
an unnecessary or inappropriate intra-market burden on competition 
because the ORF applies to all customer activity, thereby raising 
regulatory revenue to offset regulatory expenses. It also supplements 
the regulatory revenue derived from non-customer activity. This 
proposal does not create an unnecessary or inappropriate inter-market 
burden on competition because it is a regulatory fee that supports 
regulation in furtherance of the purposes of the Act. The Exchange is 
obligated to ensure that the amount of regulatory revenue collected 
from the ORF, in combination with its other regulatory fees and fines, 
does not exceed regulatory costs.

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 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 \9\ and paragraph (f) of Rule 19b-4 
thereunder.\10\ 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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 No. SR-CboeEDGX-2018-034 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 No. SR-CboeEDGX-2018-034. 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

[[Page 42739]]

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 No. SR-CboeEDGX-2018-034, and should 
be submitted on or before September 13, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18166 Filed 8-22-18; 8:45 am]
 BILLING CODE 8011-01-P



                                                                           Federal Register / Vol. 83, No. 164 / Thursday, August 23, 2018 / Notices                                                    42737

                                               If the Commission takes such action, the                  For the Commission, by the Division of               the proposed rule change and discussed
                                               Commission shall institute proceedings                  Trading and Markets, pursuant to delegated             any comments it received on the
                                               to determine whether the proposed rule                  authority.11                                           proposed rule change. The text of these
                                               should be approved or disapproved.                      Eduardo A. Aleman,                                     statements may be examined at the
                                                                                                       Assistant Secretary.                                   places specified in Item IV below. The
                                               IV. Solicitation of Comments                                                                                   Exchange has prepared summaries, set
                                                                                                       [FR Doc. 2018–18157 Filed 8–22–18; 8:45 am]
                                                 Interested persons are invited to                     BILLING CODE 8011–01–P                                 forth in Sections A, B, and C below, of
                                               submit written data, views, and                                                                                the most significant parts of such
                                               arguments concerning the foregoing,                                                                            statements.
                                               including whether the proposed rule                     SECURITIES AND EXCHANGE
                                                                                                                                                              A. Self-Regulatory Organization’s
                                               change is consistent with the Act.                      COMMISSION
                                                                                                                                                              Statement of the Purpose of, and the
                                               Comments may be submitted by any of
                                                                                                       [Release No. 34–83881; File No. SR–                    Statutory Basis for, the Proposed Rule
                                               the following methods:                                  CboeEDGX–2018–034]                                     Change
                                               Electronic Comments
                                                                                                       Self-Regulatory Organizations; Cboe                    1. Purpose
                                                 • Use the Commission’s internet                       EDGX Exchange, Inc.; Notice of Filing                     The Exchange proposes to modify the
                                               comment form (http://www.sec.gov/                       and Immediate Effectiveness of a                       fee schedule applicable to the
                                               rules/sro.shtml); or                                    Proposed Rule Change To Amend the                      Exchange’s options platform (‘‘EDGX
                                                 • Send an email to rule-comments@                     Options Regulatory Fee                                 Options’’) to amend the rate of its
                                               sec.gov. Please include File Number SR–                                                                        Options Regulatory Fee (‘‘ORF’’).5
                                               BX–2018–038 on the subject line.                        August 17, 2018.
                                                                                                                                                              Currently, the Exchange charges an ORF
                                                                                                          Pursuant to Section 19(b)(1) of the                 in the amount of $0.0004 per contract
                                               Paper Comments
                                                                                                       Securities Exchange Act of 1934 (the                   side. The Exchange proposes to decrease
                                                  • Send paper comments in triplicate                  ‘‘Act’’),1 and Rule 19b–4 thereunder,2                 the amount of ORF from $0.0004 per
                                               to Secretary, Securities and Exchange                   notice is hereby given that on August 9,               contract side to $0.0001 per contract
                                               Commission, 100 F Street NE,                            2018, Cboe EDGX Exchange, Inc. (the                    side. The proposed change to ORF
                                               Washington, DC 20549–1090.                              ‘‘Exchange’’ or ‘‘EDGX’’) filed with the               should continue to balance the
                                               All submissions should refer to File                    Securities and Exchange Commission                     Exchange’s regulatory expenses against
                                               Number SR–BX–2018–038. This file                        (‘‘Commission’’) the proposed rule                     the anticipated revenue.
                                               number should be included on the                        change as described in Items I, II and III                The ORF is assessed by the Exchange
                                               subject line if email is used. To help the              below, which Items have been prepared                  on each Member for options
                                               Commission process and review your                      by the Exchange. The Exchange has                      transactions cleared by the Member that
                                               comments more efficiently, please use                   designated the proposed rule change as                 are cleared by the Options Clearing
                                               only one method. The Commission will                    one establishing or changing a member                  Corporation (OCC) in the customer
                                               post all comments on the Commission’s                   due, fee, or other charge imposed by the               range, regardless of the exchange on
                                               internet website (http://www.sec.gov/                   Exchange under Section 19(b)(3)(A)(ii)                 which the transaction occurs. In other
                                               rules/sro.shtml). Copies of the                         of the Act 3 and Rule 19b–4(f)(2)                      words, the Exchange imposes the ORF
                                               submission, all subsequent                              thereunder,4 which renders the                         on all customer-range transactions
                                               amendments, all written statements                      proposed rule change effective upon                    cleared by a Member, even if the
                                               with respect to the proposed rule                       filing with the Commission. The                        transactions do not take place on the
                                               change that are filed with the                          Commission is publishing this notice to                Exchange. The ORF is collected by OCC
                                               Commission, and all written                             solicit comments on the proposed rule                  on behalf of the Exchange from the
                                               communications relating to the                          change from interested persons.                        Clearing Member or non-Clearing
                                               proposed rule change between the                        I. Self-Regulatory Organization’s                      Member that ultimately clears the
                                               Commission and any person, other than                   Statement of the Terms of Substance of                 transaction. With respect to linkage
                                               those that may be withheld from the                     the Proposed Rule Change                               transactions, the Exchange reimburses
                                               public in accordance with the                                                                                  its routing broker providing Routing
                                               provisions of 5 U.S.C. 552, will be                        The Exchange filed a proposal to                    Services for options regulatory fees it
                                               available for website viewing and                       amend its fee schedule related to the                  incurs in connection with the Routing
                                               printing in the Commission’s Public                     Options Regulatory Fee.                                Services it provides.
                                               Reference Room, 100 F Street NE,                           The text of the proposed rule change                   Revenue generated from ORF, when
                                               Washington, DC 20549, on official                       is available at the Exchange’s website at              combined with all of the Exchange’s
                                               business days between the hours of                      www.markets.cboe.com, at the principal                 other regulatory fees and fines, is
                                               10:00 a.m. and 3:00 p.m. Copies of the                  office of the Exchange, and at the                     designed to recover a material portion of
                                               filing also will be available for                       Commission’s Public Reference Room.                    the regulatory costs to the Exchange of
                                               inspection and copying at the principal                 II. Self-Regulatory Organization’s                     the supervision and regulation of
                                               office of the Exchange. All comments                    Statement of the Purpose of, and                       Member customer options business.
                                               received will be posted without change.                 Statutory Basis for, the Proposed Rule                 Regulatory costs include direct
                                               Persons submitting comments are                         Change                                                 regulatory expenses and certain indirect
                                               cautioned that we do not redact or edit                                                                        expenses for work allocated in support
                                               personal identifying information from                     In its filing with the Commission, the               of the regulatory function. The direct
                                                                                                       Exchange included statements
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                                               comment submissions. You should                                                                                expenses include in-house and third
                                               submit only information that you wish                   concerning the purpose of and basis for                party service provider costs to support
                                               to make available publicly. All                           11 17 CFR 200.30–3(a)(12).
                                               submissions should refer to File                          1 15
                                                                                                                                                                 5 The Exchange initially filed the proposed fee
                                                                                                              U.S.C. 78s(b)(1).                               change on August 1, 2018 (SR–CboeEDGX–2018–
                                               Number SR–BX–2018–038 and should                          2 17 CFR 240.19b–4.
                                                                                                                                                              028) for August 1, 2018 effectiveness. On business
                                               be submitted on or before September 13,                   3 15 U.S.C. 78s(b)(3)(A)(ii).
                                                                                                                                                              date August 9, 2018, the Exchange withdrew that
                                               2018.                                                     4 17 CFR 240.19b–4(f)(2).                            filing and submitted this filing.



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                                               42738                       Federal Register / Vol. 83, No. 164 / Thursday, August 23, 2018 / Notices

                                               the day to day regulatory work such as                  charges among members and other                       C. Self-Regulatory Organization’s
                                               surveillances, investigations and                       persons using its facilities. The                     Statement on Comments on the
                                               examinations. The indirect expenses                     Exchange notes that it operates in a                  Proposed Rule Change Received From
                                               include support from such areas as                      highly competitive market in which                    Members, Participants, or Others
                                               human resources, legal, information                     market participants can readily direct                  The Exchange has not solicited, and
                                               technology and accounting. These                        order flow to competing venues or                     does not intend to solicit, comments on
                                               indirect expenses are estimated to be                   providers of routing services if they                 this proposed rule change. The
                                               approximately 12% of EDGX Options’                      deem fee levels to be excessive.                      Exchange has not received any written
                                               total regulatory costs for 2018. Thus,                                                                        comments from members or other
                                               direct expenses are estimated to be                        The Exchange believes the decreased
                                                                                                       ORF is equitable and not unfairly                     interested parties.
                                               approximately 88% of total regulatory
                                               costs for 2018. In addition, it is EDGX                 discriminatory because it would be                    III. Date of Effectiveness of the
                                               Options’ practice that revenue generated                objectively allocated to Members in that              Proposed Rule Change and Timing for
                                               from ORF not exceed more than 75% of                    it would be charged to all Members on                 Commission Action
                                               total annual regulatory costs. These                    all their transactions that clear as                     The foregoing rule change has become
                                               expectations are estimated, preliminary                 customer transactions at the OCC. The                 effective pursuant to Section 19(b)(3)(A)
                                               and may change. There can be no                         Exchange believes that decreasing the                 of the Act 9 and paragraph (f) of Rule
                                               assurance that our final costs for 2018                 ORF is reasonable because the                         19b–4 thereunder.10 At any time within
                                               will not differ materially from these                   Exchange’s collection of ORF needs to                 60 days of the filing of the proposed rule
                                               expectations and prior practice;                        be balanced against the amount of                     change, the Commission summarily may
                                               however, the Exchange believes that                     regulatory revenue collected by the                   temporarily suspend such rule change if
                                               revenue generated from the ORF, when                    Exchange. The Exchange believes that                  it appears to the Commission that such
                                               combined with all of the Exchange’s                     the proposed adjustment noted herein                  action is necessary or appropriate in the
                                               other regulatory fees and fines, will                   will serve to continue to balance the                 public interest, for the protection of
                                               cover a material portion, but not all, of               Exchange’s regulatory revenue against                 investors, or otherwise in furtherance of
                                               the Exchange’s regulatory costs.6                       its anticipated regulatory costs.                     the purposes of the Act.
                                                  The Exchange will continue to
                                                                                                          The Exchange has designed the ORF                  IV. Solicitation of Comments
                                               monitor the amount of revenue
                                               collected from the ORF to ensure that it,               to generate revenues that, when                         Interested persons are invited to
                                               in combination with its other regulatory                combined with all of the Exchange’s                   submit written data, views, and
                                               fees and fines, does not exceed the                     other regulatory fees, will be less than              arguments concerning the foregoing,
                                               Exchange’s total regulatory costs. The                  or equal to the Exchange’s regulatory                 including whether the proposed rule
                                               Exchange monitors its regulatory costs                  costs, which is consistent with the                   change is consistent with the Act.
                                               and revenues at a minimum on a semi-                    Commission’s view that regulatory fees                Comments may be submitted by any of
                                               annual basis. If the Exchange                           be used for regulatory purposes and not               the following methods:
                                               determines regulatory revenues exceed                   to support the Exchange’s business side.              Electronic Comments
                                               or are insufficient to cover a material                 In this regard, the Exchange believes
                                               portion of its regulatory costs, the                                                                             • Use the Commission’s internet
                                                                                                       that the decreased level of the fee is
                                               Exchange will adjust the ORF by                                                                               comment form (http://www.sec.gov/
                                                                                                       reasonable and appropriate.
                                               submitting a fee change filing to the                                                                         rules/sro.shtml); or
                                               Commission. The Exchange notifies                       B. Self-Regulatory Organization’s                        • Send an email to rule-comments@
                                               Members of adjustments to the ORF via                   Statement on Burden on Competition                    sec.gov. Please include File No. SR–
                                               regulatory circular. The Exchange                                                                             CboeEDGX–2018–034 on the subject
                                                                                                          The Exchange does not believe that                 line.
                                               provides Members with such notice at
                                                                                                       the proposed rule change will impose
                                               least 30 calendar days prior to the                                                                           Paper Comments
                                               effective date of the change.                           any burden on competition not
                                                                                                       necessary or appropriate in furtherance                 • Send paper comments in triplicate
                                               2. Statutory Basis                                      of the purposes of the Act. This                      to Secretary, Securities and Exchange
                                                  The Exchange believes that the                       proposal does not create an unnecessary               Commission, 100 F Street NE,
                                               proposed rule change is consistent with                 or inappropriate intra-market burden on               Washington, DC 20549–1090.
                                               the requirements of the Act and the                     competition because the ORF applies to                All submissions should refer to File No.
                                               rules and regulations thereunder that                   all customer activity, thereby raising                SR–CboeEDGX–2018–034. This file
                                               are applicable to a national securities                 regulatory revenue to offset regulatory               number should be included on the
                                               exchange, and, in particular, with the                  expenses. It also supplements the                     subject line if email is used. To help the
                                               requirements of Section 6 of the Act.7                                                                        Commission process and review your
                                                                                                       regulatory revenue derived from non-
                                               Specifically, the Exchange believes that                                                                      comments more efficiently, please use
                                                                                                       customer activity. This proposal does
                                               the proposed rule change is consistent                                                                        only one method. The Commission will
                                                                                                       not create an unnecessary or
                                               with Section 6(b)(4) of the Act,8 in that                                                                     post all comments on the Commission’s
                                                                                                       inappropriate inter-market burden on                  internet website (http://www.sec.gov/
                                               it provides for the equitable allocation                competition because it is a regulatory
                                               of reasonable dues, fees and other                                                                            rules/sro.shtml). Copies of the
                                                                                                       fee that supports regulation in                       submission, all subsequent
                                                                                                       furtherance of the purposes of the Act.               amendments, all written statements
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                                                  6 The Exchange notes that its regulatory

                                               responsibilities with respect to compliance with        The Exchange is obligated to ensure that              with respect to the proposed rule
                                               options sales practice rules has been allocated to      the amount of regulatory revenue                      change that are filed with the
                                               the Financial Industry Regulatory Authority, Inc.       collected from the ORF, in combination
                                               (‘‘FINRA’’) under a 17d–2 Agreement. The ORF is
                                                                                                                                                             Commission, and all written
                                               not designed to cover the cost of options sales
                                                                                                       with its other regulatory fees and fines,             communications relating to the
                                               practice regulation.                                    does not exceed regulatory costs.
                                                  7 15 U.S.C. 78f.                                                                                             9   15 U.S.C. 78s(b)(3)(A).
                                                  8 15 U.S.C. 78f(b)(4).                                                                                       10   17 CFR 240.19b–4(f).



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                                                                             Federal Register / Vol. 83, No. 164 / Thursday, August 23, 2018 / Notices                                                   42739

                                               proposed rule change between the                         proposed rule change effective upon                   words, the Exchange imposes the ORF
                                               Commission and any person, other than                    filing with the Commission. The                       on all customer-range transactions
                                               those that may be withheld from the                      Commission is publishing this notice to               cleared by a Member, even if the
                                               public in accordance with the                            solicit comments on the proposed rule                 transactions do not take place on the
                                               provisions of 5 U.S.C. 552, will be                      change from interested persons.                       Exchange. The ORF is collected by OCC
                                               available for website viewing and                                                                              on behalf of the Exchange from the
                                                                                                        Self-Regulatory Organization’s
                                               printing in the Commission’s Public                                                                            Clearing Member or non-Clearing
                                                                                                        Statement of the Terms of Substance of
                                               Reference Room, 100 F Street NE,                                                                               Member that ultimately clears the
                                                                                                        the Proposed Rule Change
                                               Washington, DC 20549, on official                                                                              transaction. With respect to linkage
                                               business days between the hours of                          The Exchange filed a proposal to                   transactions, the Exchange reimburses
                                               10:00 a.m. and 3:00 p.m. Copies of the                   amend its fee schedule related to the                 its routing broker providing Routing
                                               filing also will be available for                        Options Regulatory Fee.                               Services for options regulatory fees it
                                               inspection and copying at the principal                     The text of the proposed rule change               incurs in connection with the Routing
                                               office of the Exchange. All comments                     is available at the Exchange’s website at             Services it provides.
                                               received will be posted without change.                  www.markets.cboe.com, at the principal                   Revenue generated from ORF, when
                                               Persons submitting comments are                          office of the Exchange, and at the                    combined with all of the Exchange’s
                                               cautioned that we do not redact or edit                  Commission’s Public Reference Room.                   other regulatory fees and fines, is
                                               personal identifying information from                    II. Self-Regulatory Organization’s                    designed to recover a material portion of
                                               comment submissions. You should                          Statement of the Purpose of, and                      the regulatory costs to the Exchange of
                                               submit only information that you wish                    Statutory Basis for, the Proposed Rule                the supervision and regulation of
                                               to make available publicly. All                          Change                                                Member customer options business.
                                               submissions should refer to File No.                                                                           Regulatory costs include direct
                                               SR–CboeEDGX–2018–034, and should                            In its filing with the Commission, the             regulatory expenses and certain indirect
                                               be submitted on or before September 13,                  Exchange included statements                          expenses for work allocated in support
                                               2018.                                                    concerning the purpose of and basis for               of the regulatory function. The direct
                                                                                                        the proposed rule change and discussed                expenses include in-house and third
                                                 For the Commission, by the Division of
                                                                                                        any comments it received on the                       party service provider costs to support
                                               Trading and Markets, pursuant to delegated
                                               authority.11                                             proposed rule change. The text of these               the day to day regulatory work such as
                                               Eduardo A. Aleman,
                                                                                                        statements may be examined at the                     surveillances, investigations and
                                                                                                        places specified in Item IV below. The                examinations. The indirect expenses
                                               Assistant Secretary.
                                                                                                        Exchange has prepared summaries, set                  include support from such areas as
                                               [FR Doc. 2018–18166 Filed 8–22–18; 8:45 am]
                                                                                                        forth in Sections A, B, and C below, of               human resources, legal, information
                                               BILLING CODE 8011–01–P
                                                                                                        the most significant parts of such                    technology and accounting. These
                                                                                                        statements.                                           indirect expenses are estimated to be
                                               SECURITIES AND EXCHANGE                                  A. Self-Regulatory Organization’s                     approximately 10% of BZX Options’
                                               COMMISSION                                               Statement of the Purpose of, and the                  total regulatory costs for 2018. Thus,
                                                                                                        Statutory Basis for, the Proposed Rule                direct expenses are estimated to be
                                               [Release No. 34–83879; File No. SR–                                                                            approximately 90% of total regulatory
                                               CboeBZX–2018–063]                                        Change
                                                                                                                                                              costs for 2018. In addition, it is BZX
                                                                                                        1. Purpose                                            Options’ practice that revenue generated
                                               Self-Regulatory Organizations; Cboe
                                                                                                           The Exchange proposes to modify the                from ORF not exceed more than 75% of
                                               BZX Exchange, Inc.; Notice of Filing
                                                                                                        fee schedule applicable to the                        total annual regulatory costs. These
                                               and Immediate Effectiveness of a
                                                                                                        Exchange’s options platform (‘‘BZX                    expectations are estimated, preliminary
                                               Proposed Rule Change To Amend the
                                                                                                        Options’’) to amend the rate of its                   and may change. There can be no
                                               Options Regulatory Fee
                                                                                                        Options Regulatory Fee (‘‘ORF’’).5                    assurance that our final costs for 2018
                                               August 17, 2018.                                         Currently, the Exchange charges an ORF                will not differ materially from these
                                                  Pursuant to Section 19(b)(1) of the                   in the amount of $0.0005 per contract                 expectations and prior practice;
                                               Securities Exchange Act of 1934 (the                     side. The Exchange proposes to decrease               however, the Exchange believes that
                                               ‘‘Act’’),1 and Rule 19b–4 thereunder,2                   the amount of ORF from $0.0005 per                    revenue generated from the ORF, when
                                               notice is hereby given that on August                    contract side to $0.0002 per contract                 combined with all of the Exchange’s
                                               10, 2018, Cboe BZX Exchange, Inc. (the                   side. The proposed change to ORF                      other regulatory fees and fines, will
                                               ‘‘Exchange’’ or ‘‘BZX’’) filed with the                  should continue to balance the                        cover a material portion, but not all, of
                                               Securities and Exchange Commission                       Exchange’s regulatory expenses against                the Exchange’s regulatory costs.6
                                               (‘‘Commission’’) the proposed rule                       the anticipated revenue.                                 The Exchange will continue to
                                               change as described in Items I, II and III                  The ORF is assessed by the Exchange                monitor the amount of revenue
                                               below, which Items have been prepared                    on each Member for options                            collected from the ORF to ensure that it,
                                               by the Exchange. The Exchange has                        transactions cleared by the Member that               in combination with its other regulatory
                                               designated the proposed rule change as                   are cleared by the Options Clearing                   fees and fines, does not exceed the
                                               one establishing or changing a member                    Corporation (OCC) in the customer                     Exchange’s total regulatory costs. The
                                               due, fee, or other charge imposed by the                 range, regardless of the exchange on                  Exchange monitors its regulatory costs
                                               Exchange under Section 19(b)(3)(A)(ii)                   which the transaction occurs. In other                and revenues at a minimum on a semi-
                                               of the Act 3 and Rule 19b–4(f)(2)                                                                              annual basis. If the Exchange
daltland on DSKBBV9HB2PROD with NOTICES




                                               thereunder,4 which renders the                             5 The Exchange initially filed the proposed fee

                                                                                                        change on August 1, 2018 (SR–CboeEDGX–2018–              6 The Exchange notes that its regulatory

                                                                                                        028) for August 1, 2018 effectiveness. On business    responsibilities with respect to compliance with
                                                 11 17 CFR 200.30–3(a)(12).
                                                 1 15 U.S.C. 78s(b)(1).
                                                                                                        date August 9, 2018, the Exchange withdrew that       options sales practice rules has been allocated to
                                                                                                        SR–CboeBZX–2018–055 and submitted SR–                 the Financial Industry Regulatory Authority, Inc.
                                                 2 17 CFR 240.19b–4.
                                                                                                        CboeBZX–2018–062 in its place. On business date       (‘‘FINRA’’) under a 17d–2 Agreement. The ORF is
                                                 3 15 U.S.C. 78s(b)(3)(A)(ii).
                                                                                                        August 10, 2018 the Exchange withdrew SR–             not designed to cover the cost of options sales
                                                 4 17 CFR 240.19b–4(f)(2).                              CboeBZX–2018–062 and submitted this filing.           practice regulation.



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Document Created: 2018-08-23 00:33:54
Document Modified: 2018-08-23 00:33:54
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 42737 

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