83_FR_556 83 FR 553 - Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Market Data Fees

83 FR 553 - Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Market Data Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 3 (January 4, 2018)

Page Range553-557
FR Document2017-28495

Federal Register, Volume 83 Issue 3 (Thursday, January 4, 2018)
[Federal Register Volume 83, Number 3 (Thursday, January 4, 2018)]
[Notices]
[Pages 553-557]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-28495]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82424; File No. SR-CboeEDGX-2017-008]


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

December 29, 2017.
    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 December 15, 2017, 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 a mend [sic] the Market Data 
section of its fee schedule to lower the Internal Distribution \5\ fees 
and to adopt per User fees for the Cboe One Summary Feed.
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    \5\ A ``Distributor'' is defined as ``any entity that receives 
the Exchange Market Data product directly from the Exchange or 
indirectly through another entity and then distributes it internally 
or externally to a third party.'' See the Exchange's fee schedule 
available at http://markets.cboe.com/us/equities/membership/fee_schedule/edgx/. An ``Internal Distributor'' is defined as ``a 
Distributor that receives the Exchange Market Data product and then 
distributes that data to one or more Users within the Distributor's 
own entity.'' Id.
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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

[[Page 554]]

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 the Market Data section of its fee 
schedule to lower the fee for Internal Distribution and to adopt 
separate fees for Professional \6\ and Non-Professional Users \7\ for 
the Cboe One Summary Feed.
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    \6\ A ``Professional User'' is defined as ``any User other than 
a Non-Professional User.'' See the Exchange's fee schedule available 
at http://markets.cboe.com/us/equities/membership/fee_schedule/edgx/.
    \7\ A ``Non-Professional User'' is currently defined as ``a 
natural person who is not: (i) Registered or qualified in any 
capacity with the Commission, the Commodity Futures Trading 
Commission, any state securities agency, any securities exchange or 
association, or any commodities or futures contract market or 
association; (ii) engaged as an ``investment adviser'' as that term 
is defined in Section 202(a)(11) of the Investment Advisers Act of 
1940 (whether or not registered or qualified under that Act); or 
(iii) employed by a bank or other organization exempt from 
registration under federal or state securities laws to perform 
functions that would require registration or qualification if such 
functions were performed for an organization not so exempt.'' Id. 
See SR-CboeEDGX-2017-006 (filed December 15, 2017) (amending the 
definition of Non-Professional User to harmonize it with that of its 
affiliate exchanges, Cboe Exchange, Inc. and C2 Exchange, Inc. as of 
January 2, 2018).
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    The Cboe One Feed is an optional data feed that disseminates, on a 
real-time basis, the aggregate best bid and offer (``BBO'') of all 
displayed orders for securities traded on EDGX and its affiliated 
exchanges \8\ and for which they report quotes under the Consolidated 
Tape Association (``CTA'') Plan or the Nasdaq/UTP Plan.\9\ The Cboe One 
Feed also contains the individual last sale information for the Cboe 
Equity Exchanges (collectively with the aggregate BBO, the ``Cboe One 
Summary Feed''). In addition, the Cboe One Feed contains optional 
functionality which enables recipients to receive aggregated two-sided 
quotations from the Cboe Equity Exchanges for up to five (5) price 
levels (``Cboe One Premium Feed'').
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    \8\ EDGX's affiliated exchanges are Cboe BYX Exchange, Inc. 
(``BYX''), Cboe EDGA Exchange, Inc. (``EDGA''), and Cboe BZX 
Exchange, Inc. (``BZX'', together with EDGX, EDGA, and BYX, the 
``Cboe Equity Exchanges'').
    \9\ See Exchange Rule 11.22(j). See also Securities Exchange Act 
Release No. 73918 (December 23, 2014), 79 FR 78920 (December 31, 
2014) (File Nos. SR-EDGX-2014-25; SR-EDGA-2014-25; SR-BATS-2014-055; 
SR-BYX-2014-030) (Notice of Amendment No. 2 and Order Granting 
Accelerated Approval to Proposed Rule Changes, as Modified by 
Amendments Nos. 1 and 2, to Establish a New Market Data Product 
called the Cboe One Feed) (``Cboe One Approval Order'').
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    The Exchange proposes to amend its fee schedule to lower the fee 
for Internal Distribution for the Cboe One Summary Feed and to adopt 
separate fees for Professional and Non-Professional Users.\10\ The 
Exchange does not propose to amend the fees for the Cboe One Premium 
Feed.
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    \10\ The Exchange also proposes a non-substantive, immaterial 
change to the fee table headings to conform to other heading within 
the Market Data Section of the fee schedule. In particular, the 
Exchange proposes to change the term ``Distributor'' to 
``Distribution'' in both the Internal Distributor and External 
Distributor headings under the Cboe One Feed.
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    Distribution Fees. Currently, each Internal Distributor that 
receives the Cboe One Summary Feed is charged a fee of $10,000 per 
month. The Exchange now proposes to lower the fee for Internal 
Distribution to $1,500 per month.
    User Fees. Like it does today for External Distributors, the 
Exchange proposes to adopt per User fees for Internal Distributors that 
receive the Cboe One Summary Feed. The Exchange currently charges 
External Distributors that redistribute the Cboe One Summary Feed 
different fees for their Professional Users and Non-Professional Users. 
Those fees are $10.00 per month for each Professional Users and $0.25 
per month for each Non-Professional Users. To date, the Exchange has 
not charged per User fees to Internal Distributors for the Cboe One 
Summary Feed. To offset the proposed reduction to the monthly Internal 
Distribution fee, the Exchange proposes to adopt per User fees for 
Internal Distribution, the amounts of each fee would be the same as the 
per User fees currently charged to External Distributors described 
above.
    The Exchange also proposes to extend the current $50,000 per month 
Enterprise Fee available to External Distributors of the Cboe One 
Summary Feed to Internal Distributors. In lieu of per User fees, the 
Enterprise fee will permit Internal Distributors who redistribute the 
Cboe One Summary Feed to an unlimited number of internal Professional 
and Non-Professional Users for a set fee of $50,000 per month. For 
example, if an Internal Distributor had 15,000 Professional Users who 
each receive the Cboe One Summary Feed at $10.00 per month, then that 
Internal Distributor will pay $150,000 per month in Professional Users 
fees. Under the proposed Enterprise Fee, the Internal Distributor will 
pay a flat fee of $50,000 for an unlimited number of internal 
Professional and Non-Professional Users of the Cboe One Summary Feed. 
An Internal Distributor that pays the Enterprise Fee will not have to 
report its number of such Users (as set forth below) on a monthly 
basis. However, every six months, an Internal Distributor must provide 
the Exchange with a count of the total number of natural person users 
of each product, including both Professional and Non-Professional 
Users. Like for External Distributors, the Enterprise Fee for Internal 
Distributors would be in addition to the applicable Distribution Fee.
    Like External Distributors of the Cboe One Summary Feed, Internal 
Distributors that receive the Cboe One Summary Feed will be required to 
count every Professional User and Non-Professional User to which they 
provide the Cboe One Summary Feed, the requirements for which are 
identical to that currently in place for External Distributors of the 
Cboe One Summary Feed and other market data products offered by the 
Exchange.\11\ Thus, the Internal Distributor's count will include every 
person and device that accesses the data regardless of the purpose for 
which the individual or device uses the data. Internal Distributors 
must report all Professional and Non-Professional Users in accordance 
with the following:
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    \11\ See Securities Exchange Act Release Nos. 74282 (February 
18, 2015); 80 FR 9487 (February 23, 2015) (SR-EDGX-2015-09) 
(proposing fees for the Bats One Feed); 75397 (July 8, 2015), 80 FR 
41104 (July 14, 2015) (SR-EDGX-2015-28) (proposing user fees for the 
EDGX Top and Last Sale data feeds); and 75788 (August 28, 2015), 80 
FR 53364 (September 3, 2015) (SR-EDGX-2015-38) (proposing fees for 
EDGX Book Viewer).
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     In connection with an Internal Distributor's distribution 
of the Cboe One Summary Feed, the Internal Distributor must count as 
one User each unique User that the Internal Distributor has entitled to 
have access to the Cboe One Summary Feed. However, where a device is 
dedicated specifically to a single individual, the Internal Distributor 
must count only the individual and need not count the device.
     The Internal Distributor must identify and report each 
unique User. If a User uses the same unique method to gain access to 
the Cboe One Summary Feed, the Internal Distributor must count that as 
one User. However, if a unique User uses multiple methods to gain 
access to the Cboe One Summary Feed (e.g., a single User has multiple 
passwords and user identifications), the

[[Page 555]]

Internal Distributor must report each of those methods as an individual 
User.
     Internal Distributors must report each unique individual 
person who receives access through multiple devices as one User so long 
as each device is dedicated specifically to that individual.
     If an Internal Distributor entitles one or more 
individuals to use the same device, the Distributor must include only 
the individuals, and not the device, in the count.
Implementation Date
    The Exchange intends to implement the proposed fees on January 2, 
2018.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\12\ in general, and 
furthers the objectives of Section 6(b)(4),\13\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its members and other recipients of 
Exchange data. The Exchange believes that the proposed rates are 
equitable and non-discriminatory in that they apply uniformly to all 
recipients of Exchange data. The Exchange believes the proposed fees 
are competitive with those charged by other venues and, therefore, 
reasonable and equitably allocated to recipients.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed rule change is consistent 
with Section 11(A) of the Act \14\ in that it supports (i) fair 
competition among brokers and dealers, among exchange markets, and 
between exchange markets and markets other than exchange markets and 
(ii) the availability to brokers, dealers, and investors of information 
with respect to quotations for and transactions in securities. 
Furthermore, the proposed rule change is consistent with Rule 603 of 
Regulation NMS,\15\ which provides that any national securities 
exchange that distributes information with respect to quotations for or 
transactions in an NMS stock do so on terms that are not unreasonably 
discriminatory. In adopting Regulation NMS, the Commission granted 
self-regulatory organizations and broker-dealers increased authority 
and flexibility to offer new and unique market data to the public. It 
was believed that this authority would expand the amount of data 
available to consumers, and also spur innovation and competition for 
the provision of market data.
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    \14\ 15 U.S.C. 78k-1.
    \15\ 17 CFR 242.603.
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    In addition, the proposed fees would not permit unfair 
discrimination because all of the Exchange's customers and market data 
vendors who subscribe to the Cboe One Summary Feed will be subject to 
the proposed fees. The Cboe One Summary Feed is distributed and 
purchased on a voluntary basis, in that neither the Exchange nor market 
data distributors are required by any rule or regulation purchase this 
data or to make this data available. Accordingly, Distributors and 
Users can discontinue use at any time and for any reason, including due 
to an assessment of the reasonableness of fees charged. Firms have a 
wide variety of alternative market data products from which to choose, 
such as similar proprietary data products offered by other exchanges 
and consolidated data. Moreover, the Exchange is not required to make 
any proprietary data products available or to offer any specific 
pricing alternatives to any customers.
    In addition, the fees that are the subject of this rule filing are 
constrained by competition. As explained below in the Exchange's 
Statement on Burden on Competition, the existence of alternatives to 
the Cboe One Summary Feed further ensure that the Exchange cannot set 
unreasonable fees, or fees that are unreasonably discriminatory, when 
vendors and subscribers can elect such alternatives. That is, the 
Exchange competes with other exchanges (and their affiliates) that 
provide similar market data products. For example, the Cboe One Summary 
Feed provides investors with alternative market data and competes with 
similar market data product currently offered by other exchanges. If 
another exchange (or its affiliate) were to charge less to distribute 
its similar product than the Exchange charges to create the Cboe One 
Summary Feed, prospective Users likely would not subscribe to, or would 
cease subscribing to either market data product.
    The Exchange notes that the Commission is not required to undertake 
a cost-of-service or rate-making approach. The Exchange believes that, 
even if it were possible as a matter of economic theory, cost-based 
pricing for non-core market data would be so complicated that it could 
not be done practically.\16\
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    \16\ The Exchange believes that cost-based pricing would be 
impractical because it would create enormous administrative burdens 
for all parties, including the Commission, to cost-regulate a large 
number of participants and standardize and analyze extraordinary 
amounts of information, accounts, and reports. In addition, it is 
impossible to regulate market data prices in isolation from prices 
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort 
incentives, including those to minimize costs and to innovate, 
leading to further waste. Under cost-based pricing, the Commission 
would be burdened with determining a fair rate of return, and the 
industry could experience frequent rate increases based on 
escalating expense levels. Even in industries historically subject 
to utility regulation, cost-based ratemaking has been discredited. 
As such, the Exchange believes that cost-based ratemaking would be 
inappropriate for proprietary market data and inconsistent with 
Congress's direction that the Commission use its authority to foster 
the development of the national market system, and that market 
forces will continue to provide appropriate pricing discipline. See 
Appendix C to NYSE's comments to the Commission's 2000 Concept 
Release on the Regulation of Market Information Fees and Revenues, 
which can be found on the Commission's website at http://www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities 
Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200 
(December 17, 2014) (SR-NYSE-2014-64) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change to Establish an 
Access Fee for the NYSE Best Quote and Trades Data Feed, Operative 
December 1, 2014).
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    The Exchange believes that lowering the Internal Distribution fee 
for the Cboe One Summary Feed is equitable and reasonable because the 
lower fee coupled with the adoption of per User fees is designed to 
provide a price structure for Internal Distributors that is competitive 
and attracts additional subscribers to each market data feed. The 
Exchange also believes that it is reasonable to charge a lower fee to 
Internal Distributors than External Distributors because External 
Distributors redistribute the data to their subscribers for a fee while 
Internal Distributors do not.
    The Exchange believes that implementing the Professional and Non-
Professional User fees for the Cboe One Summary Feed are equitable and 
reasonable because they will result in greater availability to 
Professional and Non-Professional Users. The addition of per User fees 
also enables the fee for Internal Distribution, thereby lowering their 
overall costs where the number of Users they account for is low. 
Moreover, introducing a modest Non-Professional User fee is reasonable 
because it provides an additional method for Non-Professional investors 
to access the data by providing the same data that is available to 
Professional Users. The Exchange believes that the proposed fees are 
equitable and not unfairly discriminatory because they will be charged 
uniformly to Internal Distributors and Users. The Exchange notes that 
the amount of the per User fees for Internal Distribution equal those 
charged for External Distribution for the Cboe One Summary Feed.

[[Page 556]]

    The fee structure of differentiated Professional and Non-
Professional fees is utilized by the Exchange for the Cboe One Feed and 
has long been used by other exchanges for their proprietary data 
products, and by the Nasdaq UTP and the CTA and CQ Plans in order to 
reduce the price of data to retail investors and make it more broadly 
available.\17\ Offering the Cboe One Summary Feed to Non-Professional 
Users with the same data available to Professional Users results in 
greater equity among data recipients.
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    \17\ See Securities Exchange Act Release Nos. 74285 (February 
18, 2015), 80 FR 9828 (February 24, 2015) (SR-BATS-2015-11); 74283 
(February 18, 2015), 80 FR 9809 (February 24, 2015) (SR-EDGA-2015-
09); 74282 (February 17, 2015), 80 FR 9487 (February 23, 2015) (SR-
EDGX-2015-09); and 74284 (February 18, 2015), 80 FR 9792 (February 
24, 2015) (SR-BYX-2015-09) (``Initial Cboe One Feed Fee Filings''). 
See also, e.g., Securities Exchange Act Release No. 20002, File No. 
S7-433 (July 22, 1983) (establishing nonprofessional fees for CTA 
data); and Nasdaq Rules 7023(b) and 7047.
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    The proposed expansion of the Enterprise Fee to Internal 
Distributors of the Cboe One Summary Feed is reasonable because it 
could result in a fee reduction for Internal Distributors with a large 
number of Professional and Non-Professional Users. If an Internal 
Distributor has a smaller number of Professional Users of the Cboe One 
Summary Feed, then it may continue using the per User structure. By 
reducing prices for Internal Distributors with a large number of 
Professional and Non-Professional Users, the Exchange believes that 
more Internal Distributors may choose to receive and to distribute the 
Cboe One Summary Feed, thereby expanding the distribution of this 
market data for the benefit of investors.
    The Exchange further believes that the proposed Enterprise Fee is 
reasonable because it will simplify reporting for certain Internal 
Distributors that have large numbers of Professional and Non-
Professional Users. Internal Distributors that pay the proposed 
Enterprise Fee will not have to report the number of Users on a monthly 
basis as they currently do, but rather will only have to count natural 
person users every six months, which is a significant reduction in 
administrative burden. Finally, the Exchange believes that it is 
equitable and not unfairly discriminatory to establish an Enterprise 
Fee because it reduces the Exchange's costs and the Distributor's 
administrative burdens in tracking and auditing large numbers of Users.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
Exchange's ability to price the Cboe One Summary Feed is constrained 
by: (i) Competition among exchanges, other trading platforms, and Trade 
Reporting Facilities (``TRF'') that compete with each other in a 
variety of dimensions; (ii) the existence of inexpensive real-time 
consolidated data and market-specific data and free delayed data; and 
(iii) the inherent contestability of the market for proprietary data.
    The Exchange and its market data products are subject to 
significant competitive forces and the proposed fees represent 
responses to that competition. To start, the Exchange competes 
intensely for order flow. It competes with the other national 
securities exchanges that currently trade equities, with electronic 
communication networks, with quotes posted in FINRA's Alternative 
Display Facility, with alternative trading systems, and with securities 
firms that primarily trade as principal with their customer order flow. 
The Cboe One Summary Feed will enhance competition because it not only 
provides content that is competitive with the similar products offered 
by other exchanges, but will provide pricing that is competitive as 
well. The Cboe One Summary Feed provides investors with an alternative 
option for receiving market data and competes directly with similar 
market data products currently offered by the NYSE and Nasdaq.\18\
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    \18\ See Nasdaq Basic, http://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic (data feed offering the BBO and Last Sale 
information for all U.S. exchange-listed securities based on 
liquidity within the Nasdaq market center, as well as trades 
reported to the FINRA/Nasdaq Trade Reporting Facility (``TRF'')); 
Nasdaq NLS Plus, http://www.nasdaqtrader.com/Trader.aspx?id=NLSplus 
(data feed providing last sale data as well as consolidated volume 
from the following Nasdaq OMX markets for U.S. exchange-listed 
securities: Nasdaq, FINRA/Nasdaq TRF, Nasdaq OMX BX, and Nasdaq OMX 
PSX); Securities Exchange Act Release No. 73553 (November 6, 2014), 
79 FR 67491 (November 13, 2014) (SR-NYSE-2014-40) (Notice of 
Amendment No. 1 and Order Granting Accelerated Approval to a 
Proposed Rule Change, as Modified by Amendment No.1, To Establish 
the NYSE Best Quote & Trades (``BQT'') Data Feed); https://www.nyse.com/market-data/real-time/nyse-bqt (data feed providing 
unified view of BBO and last sale information for the NYSE, NYSE 
Arca, and NYSE MKT).
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    In addition, when establishing the proposed fees, the Exchange 
considered the competitiveness of the market for proprietary data and 
all of the implications of that competition. The Exchange believes that 
it has considered all relevant factors and has not considered 
irrelevant factors in order to establish fair, reasonable, and not 
unreasonably discriminatory fees and an equitable allocation of fees 
among all Users. The existence of alternatives to the Cboe One Summary 
Feed ensures that the Exchange cannot set unreasonable fees, or fees 
that are unreasonably discriminatory, when vendors and subscribers can 
elect these alternatives or choose not to purchase a specific 
proprietary data product if its cost to purchase is not justified by 
the returns any particular vendor or subscriber would achieve through 
the purchase.
    Lastly, the Exchange represents that the proposed pricing of the 
Cboe One Summary Feed provides investors with alternative market data 
and competes with similar market data product currently offered by 
other exchanges.\19\ In addition, the Exchange notes the concerns 
regarding whether a competing vendor could create a similar product on 
the same price basis as the Exchange are not present here. The proposed 
changes are limited to fees for Internal Distributers who use the data 
for internal use only and not for the redistribution and sale to 
external parties.
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    \19\ Id.
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(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written 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 \20\ and paragraph (f) of Rule 19b-4 
thereunder.\21\ 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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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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:

[[Page 557]]

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CboeEDGX-2017-008 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CboeEDGX-2017-008. 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-2017-008 and should be 
submitted on or before January 25, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-28495 Filed 1-3-18; 8:45 am]
 BILLING CODE 8011-01-P



                                                                                Federal Register / Vol. 83, No. 3 / Thursday, January 4, 2018 / Notices                                                           553

                                               Procedures applicable to the exercise of                  All submissions should refer to File                    SECURITIES AND EXCHANGE
                                               options to align the Procedures with                      Number SR–ICEEU–2017–015. This file                     COMMISSION
                                               recent changes to the Exchange rules,                     number should be included on the
                                                                                                                                                                 [Release No. 34–82424; File No. SR–
                                               and to make certain other clarifications                  subject line if email is used. To help the              CboeEDGX–2017–008]
                                               and updates. ICE Clear Europe does not                    Commission process and review your
                                               believe the amendments would affect                       comments more efficiently, please use                   Self-Regulatory Organizations; Cboe
                                               competition among clearing members or                     only one method. The Commission will                    EDGX Exchange, Inc.; Notice of Filing
                                               adversely affect the cost of clearing, the                post all comments on the Commission’s                   and Immediate Effectiveness of a
                                               market for clearing services generally or                 internet website (http://www.sec.gov/                   Proposed Rule Change Related to
                                               access to clearing in these products by                   rules/sro.shtml). Copies of the                         Market Data Fees
                                               clearing members or other market                          submission, all subsequent
                                               participants.                                                                                                     December 29, 2017.
                                                                                                         amendments, all written statements                         Pursuant to Section 19(b)(1) of the
                                               (C) Clearing Agency’s Statement on                        with respect to the proposed rule                       Securities Exchange Act of 1934 (the
                                               Comments on the Proposed Rule                             change, security-based swap submission                  ‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                               Change Received From Members,                             or advance notice that are filed with the               notice is hereby given that on December
                                               Participants or Others                                    Commission, and all written                             15, 2017, Cboe EDGX Exchange, Inc.
                                                 Written comments relating to the                        communications relating to the                          (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with
                                               proposed amendments have not been                         proposed rule change, security-based                    the Securities and Exchange
                                               solicited or received by ICE Clear                        swap submission or advance notice                       Commission (‘‘Commission’’) the
                                               Europe. ICE Clear Europe will notify the                  between the Commission and any                          proposed rule change as described in
                                               Commission of any comments received                       person, other than those that may be                    Items I, II and III below, which Items
                                               with respect to the proposed                              withheld from the public in accordance                  have been prepared by the Exchange.
                                               amendments.                                               with the provisions of 5 U.S.C. 552, will               The Exchange has designated the
                                                                                                         be available for website viewing and                    proposed rule change as one
                                               III. Date of Effectiveness of the                         printing in the Commission’s Public                     establishing or changing a member due,
                                               Proposed Rule Change, Security-Based                                                                              fee, or other charge imposed by the
                                                                                                         Reference Section, 100 F Street NE,
                                               Swap Submission and Advance Notice                                                                                Exchange under Section 19(b)(3)(A)(ii)
                                                                                                         Washington, DC 20549, on official
                                               and Timing for Commission Action                                                                                  of the Act 3 and Rule 19b–4(f)(2)
                                                                                                         business days between the hours of
                                                                                                                                                                 thereunder,4 which renders the
                                                  The foregoing rule change has become                   10:00 a.m. and 3:00 p.m. Copies of such                 proposed rule change effective upon
                                               effective pursuant to Section 19(b)(3)(A)                 filings will also be available for                      filing with the Commission. The
                                               of the Act 11 and Rule 19b–4(f)(4)(ii) 12                 inspection and copying at the principal                 Commission is publishing this notice to
                                               thereunder. At any time within 60 days                    office of ICE Clear Europe and on ICE                   solicit comments on the proposed rule
                                               of the filing of the proposed rule change,                Clear Europe’s website at https://                      change from interested persons.
                                               the Commission summarily may                              www.theice.com/notices/
                                               temporarily suspend such rule change if                   Notices.shtml?regulatoryFilings.                        I. Self-Regulatory Organization’s
                                               it appears to the Commission that such                                                                            Statement of the Terms of Substance of
                                               action is necessary or appropriate in the                    All comments received will be posted                 the Proposed Rule Change
                                               public interest, for the protection of                    without change. Persons submitting
                                                                                                                                                                    The Exchange filed a proposal to a
                                               investors, or otherwise in furtherance of                 comments are cautioned that we do not
                                                                                                                                                                 mend [sic] the Market Data section of its
                                               the purposes of the Act.                                  redact or edit personal identifying
                                                                                                                                                                 fee schedule to lower the Internal
                                                                                                         information from comment submissions.                   Distribution 5 fees and to adopt per User
                                               IV. Solicitation of Comments                              You should submit only information                      fees for the Cboe One Summary Feed.
                                                 Interested persons are invited to                       that you wish to make available                            The text of the proposed rule change
                                               submit written data, views, and                           publicly. All submissions should refer                  is available at the Exchange’s website at
                                               arguments concerning the foregoing,                       to File Number SR–ICEEU–2017–015                        www.markets.cboe.com, at the principal
                                               including whether the proposed rule                       and should be submitted on or before                    office of the Exchange, and at the
                                               change, security-based swap submission                    January 25, 2018.                                       Commission’s Public Reference Room.
                                               or advance notice is consistent with the                    For the Commission, by the Division of
                                               Act. Comments may be submitted by                                                                                 II. Self-Regulatory Organization’s
                                                                                                         Trading and Markets, pursuant to delegated              Statement of the Purpose of, and
                                               any of the following methods:                             authority.13                                            Statutory Basis for, the Proposed Rule
                                               Electronic Comments                                       Robert W. Errett,                                       Change
                                                 • Use the Commission’s internet                         Deputy Secretary.                                          In its filing with the Commission, the
                                               comment form (http://www.sec.gov/                         [FR Doc. 2017–28437 Filed 1–3–18; 8:45 am]              Exchange included statements
                                               rules/sro.shtml) or                                       BILLING CODE 8011–01–P
                                                 • Send an email to rule-comments@
                                                                                                                                                                   1 15 U.S.C. 78s(b)(1).
                                                                                                                                                                   2 17 CFR 240.19b–4.
                                               sec.gov. Please include File Number SR–                                                                             3 15 U.S.C. 78s(b)(3)(A)(ii).
                                               ICEEU–2017–015 on the subject line.                                                                                 4 17 CFR 240.19b–4(f)(2).
                                                                                                                                                                   5 A ‘‘Distributor’’ is defined as ‘‘any entity that
                                               Paper Comments
                                                                                                                                                                 receives the Exchange Market Data product directly
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                                                 • Send paper comments in triplicate                                                                             from the Exchange or indirectly through another
                                                                                                                                                                 entity and then distributes it internally or externally
                                               to Secretary, Securities and Exchange                                                                             to a third party.’’ See the Exchange’s fee schedule
                                               Commission, 100 F Street NE,                                                                                      available at http://markets.cboe.com/us/equities/
                                               Washington, DC 20549–1090.                                                                                        membership/fee_schedule/edgx/. An ‘‘Internal
                                                                                                                                                                 Distributor’’ is defined as ‘‘a Distributor that
                                                                                                                                                                 receives the Exchange Market Data product and
                                                 11 15   U.S.C. 78s(b)(3)(A).                                                                                    then distributes that data to one or more Users
                                                 12 17   CFR 240.19b–4(f)(4)(ii).                          13 17   CFR 200.30–3(a)(12).                          within the Distributor’s own entity.’’ Id.



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                                               554                            Federal Register / Vol. 83, No. 3 / Thursday, January 4, 2018 / Notices

                                               concerning the purpose of and basis for                 Summary Feed’’). In addition, the Cboe                 proposed Enterprise Fee, the Internal
                                               the proposed rule change and discussed                  One Feed contains optional                             Distributor will pay a flat fee of $50,000
                                               any comments it received on the                         functionality which enables recipients                 for an unlimited number of internal
                                               proposed rule change. The text of these                 to receive aggregated two-sided                        Professional and Non-Professional Users
                                               statements may be examined at the                       quotations from the Cboe Equity                        of the Cboe One Summary Feed. An
                                               places specified in Item IV below. The                  Exchanges for up to five (5) price levels              Internal Distributor that pays the
                                               Exchange has prepared summaries, set                    (‘‘Cboe One Premium Feed’’).                           Enterprise Fee will not have to report its
                                               forth in Sections A, B, and C below, of                    The Exchange proposes to amend its                  number of such Users (as set forth
                                               the most significant parts of such                      fee schedule to lower the fee for Internal             below) on a monthly basis. However,
                                               statements.                                             Distribution for the Cboe One Summary                  every six months, an Internal Distributor
                                                                                                       Feed and to adopt separate fees for                    must provide the Exchange with a count
                                               (A) Self-Regulatory Organization’s
                                                                                                       Professional and Non-Professional                      of the total number of natural person
                                               Statement of the Purpose of, and
                                                                                                       Users.10 The Exchange does not propose                 users of each product, including both
                                               Statutory Basis for, the Proposed Rule
                                                                                                       to amend the fees for the Cboe One                     Professional and Non-Professional
                                               Change
                                                                                                       Premium Feed.                                          Users. Like for External Distributors, the
                                               1. Purpose                                                 Distribution Fees. Currently, each                  Enterprise Fee for Internal Distributors
                                                  The Exchange proposes to amend the                   Internal Distributor that receives the                 would be in addition to the applicable
                                               Market Data section of its fee schedule                 Cboe One Summary Feed is charged a                     Distribution Fee.
                                               to lower the fee for Internal Distribution              fee of $10,000 per month. The Exchange                    Like External Distributors of the Cboe
                                               and to adopt separate fees for                          now proposes to lower the fee for                      One Summary Feed, Internal
                                               Professional 6 and Non-Professional                     Internal Distribution to $1,500 per                    Distributors that receive the Cboe One
                                               Users 7 for the Cboe One Summary Feed.                  month.                                                 Summary Feed will be required to count
                                                  The Cboe One Feed is an optional                        User Fees. Like it does today for
                                                                                                                                                              every Professional User and Non-
                                               data feed that disseminates, on a real-                 External Distributors, the Exchange
                                                                                                                                                              Professional User to which they provide
                                               time basis, the aggregate best bid and                  proposes to adopt per User fees for
                                                                                                                                                              the Cboe One Summary Feed, the
                                               offer (‘‘BBO’’) of all displayed orders for             Internal Distributors that receive the
                                                                                                                                                              requirements for which are identical to
                                               securities traded on EDGX and its                       Cboe One Summary Feed. The Exchange
                                                                                                                                                              that currently in place for External
                                               affiliated exchanges 8 and for which                    currently charges External Distributors
                                                                                                                                                              Distributors of the Cboe One Summary
                                               they report quotes under the                            that redistribute the Cboe One Summary
                                                                                                                                                              Feed and other market data products
                                               Consolidated Tape Association (‘‘CTA’’)                 Feed different fees for their Professional
                                                                                                                                                              offered by the Exchange.11 Thus, the
                                               Plan or the Nasdaq/UTP Plan.9 The                       Users and Non-Professional Users.
                                                                                                                                                              Internal Distributor’s count will include
                                               Cboe One Feed also contains the                         Those fees are $10.00 per month for
                                                                                                                                                              every person and device that accesses
                                               individual last sale information for the                each Professional Users and $0.25 per
                                                                                                                                                              the data regardless of the purpose for
                                               Cboe Equity Exchanges (collectively                     month for each Non-Professional Users.
                                                                                                                                                              which the individual or device uses the
                                               with the aggregate BBO, the ‘‘Cboe One                  To date, the Exchange has not charged
                                                                                                                                                              data. Internal Distributors must report
                                                                                                       per User fees to Internal Distributors for
                                                                                                                                                              all Professional and Non-Professional
                                                  6 A ‘‘Professional User’’ is defined as ‘‘any User   the Cboe One Summary Feed. To offset
                                                                                                                                                              Users in accordance with the following:
                                               other than a Non-Professional User.’’ See the           the proposed reduction to the monthly
                                               Exchange’s fee schedule available at http://            Internal Distribution fee, the Exchange                   • In connection with an Internal
                                               markets.cboe.com/us/equities/membership/fee_                                                                   Distributor’s distribution of the Cboe
                                               schedule/edgx/.                                         proposes to adopt per User fees for
                                                  7 A ‘‘Non-Professional User’’ is currently defined   Internal Distribution, the amounts of                  One Summary Feed, the Internal
                                               as ‘‘a natural person who is not: (i) Registered or     each fee would be the same as the per                  Distributor must count as one User each
                                               qualified in any capacity with the Commission, the      User fees currently charged to External                unique User that the Internal Distributor
                                               Commodity Futures Trading Commission, any state                                                                has entitled to have access to the Cboe
                                               securities agency, any securities exchange or           Distributors described above.
                                               association, or any commodities or futures contract        The Exchange also proposes to extend                One Summary Feed. However, where a
                                               market or association; (ii) engaged as an               the current $50,000 per month                          device is dedicated specifically to a
                                               ‘‘investment adviser’’ as that term is defined in       Enterprise Fee available to External                   single individual, the Internal
                                               Section 202(a)(11) of the Investment Advisers Act                                                              Distributor must count only the
                                               of 1940 (whether or not registered or qualified
                                                                                                       Distributors of the Cboe One Summary
                                               under that Act); or (iii) employed by a bank or other   Feed to Internal Distributors. In lieu of              individual and need not count the
                                               organization exempt from registration under federal     per User fees, the Enterprise fee will                 device.
                                               or state securities laws to perform functions that      permit Internal Distributors who                          • The Internal Distributor must
                                               would require registration or qualification if such
                                               functions were performed for an organization not so     redistribute the Cboe One Summary                      identify and report each unique User. If
                                               exempt.’’ Id. See SR–CboeEDGX–2017–006 (filed           Feed to an unlimited number of internal                a User uses the same unique method to
                                               December 15, 2017) (amending the definition of          Professional and Non-Professional Users                gain access to the Cboe One Summary
                                               Non-Professional User to harmonize it with that of      for a set fee of $50,000 per month. For                Feed, the Internal Distributor must
                                               its affiliate exchanges, Cboe Exchange, Inc. and C2
                                               Exchange, Inc. as of January 2, 2018).                  example, if an Internal Distributor had                count that as one User. However, if a
                                                  8 EDGX’s affiliated exchanges are Cboe BYX           15,000 Professional Users who each                     unique User uses multiple methods to
                                               Exchange, Inc. (‘‘BYX’’), Cboe EDGA Exchange, Inc.      receive the Cboe One Summary Feed at                   gain access to the Cboe One Summary
                                               (‘‘EDGA’’), and Cboe BZX Exchange, Inc. (‘‘BZX’’,       $10.00 per month, then that Internal                   Feed (e.g., a single User has multiple
                                               together with EDGX, EDGA, and BYX, the ‘‘Cboe
                                               Equity Exchanges’’).
                                                                                                       Distributor will pay $150,000 per month                passwords and user identifications), the
                                                  9 See Exchange Rule 11.22(j). See also Securities    in Professional Users fees. Under the
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                                               Exchange Act Release No. 73918 (December 23,                                                                     11 See Securities Exchange Act Release Nos.

                                               2014), 79 FR 78920 (December 31, 2014) (File Nos.         10 The  Exchange also proposes a non-substantive,    74282 (February 18, 2015); 80 FR 9487 (February
                                               SR–EDGX–2014–25; SR–EDGA–2014–25; SR–                   immaterial change to the fee table headings to         23, 2015) (SR–EDGX–2015–09) (proposing fees for
                                               BATS–2014–055; SR–BYX–2014–030) (Notice of              conform to other heading within the Market Data        the Bats One Feed); 75397 (July 8, 2015), 80 FR
                                               Amendment No. 2 and Order Granting Accelerated          Section of the fee schedule. In particular, the        41104 (July 14, 2015) (SR–EDGX–2015–28)
                                               Approval to Proposed Rule Changes, as Modified by       Exchange proposes to change the term ‘‘Distributor’’   (proposing user fees for the EDGX Top and Last
                                               Amendments Nos. 1 and 2, to Establish a New             to ‘‘Distribution’’ in both the Internal Distributor   Sale data feeds); and 75788 (August 28, 2015), 80
                                               Market Data Product called the Cboe One Feed)           and External Distributor headings under the Cboe       FR 53364 (September 3, 2015) (SR–EDGX–2015–38)
                                               (‘‘Cboe One Approval Order’’).                          One Feed.                                              (proposing fees for EDGX Book Viewer).



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                                                                              Federal Register / Vol. 83, No. 3 / Thursday, January 4, 2018 / Notices                                                            555

                                               Internal Distributor must report each of                 spur innovation and competition for the                     The Exchange believes that lowering
                                               those methods as an individual User.                     provision of market data.                                the Internal Distribution fee for the Cboe
                                                 • Internal Distributors must report                       In addition, the proposed fees would                  One Summary Feed is equitable and
                                               each unique individual person who                        not permit unfair discrimination                         reasonable because the lower fee
                                               receives access through multiple                         because all of the Exchange’s customers                  coupled with the adoption of per User
                                               devices as one User so long as each                      and market data vendors who subscribe                    fees is designed to provide a price
                                               device is dedicated specifically to that                 to the Cboe One Summary Feed will be                     structure for Internal Distributors that is
                                               individual.                                              subject to the proposed fees. The Cboe                   competitive and attracts additional
                                                 • If an Internal Distributor entitles                  One Summary Feed is distributed and                      subscribers to each market data feed.
                                               one or more individuals to use the same                  purchased on a voluntary basis, in that                  The Exchange also believes that it is
                                               device, the Distributor must include                     neither the Exchange nor market data                     reasonable to charge a lower fee to
                                               only the individuals, and not the device,                distributors are required by any rule or                 Internal Distributors than External
                                               in the count.                                            regulation purchase this data or to make                 Distributors because External
                                                                                                        this data available. Accordingly,                        Distributors redistribute the data to their
                                               Implementation Date                                      Distributors and Users can discontinue                   subscribers for a fee while Internal
                                                 The Exchange intends to implement                      use at any time and for any reason,                      Distributors do not.
                                               the proposed fees on January 2, 2018.                    including due to an assessment of the                       The Exchange believes that
                                                                                                        reasonableness of fees charged. Firms                    implementing the Professional and Non-
                                               2. Statutory Basis
                                                                                                        have a wide variety of alternative                       Professional User fees for the Cboe One
                                                  The Exchange believes that the                        market data products from which to                       Summary Feed are equitable and
                                               proposed rule change is consistent with                  choose, such as similar proprietary data                 reasonable because they will result in
                                               the objectives of Section 6 of the Act,12                products offered by other exchanges and                  greater availability to Professional and
                                               in general, and furthers the objectives of               consolidated data. Moreover, the                         Non-Professional Users. The addition of
                                               Section 6(b)(4),13 in particular, as it is               Exchange is not required to make any                     per User fees also enables the fee for
                                               designed to provide for the equitable                    proprietary data products available or to                Internal Distribution, thereby lowering
                                               allocation of reasonable dues, fees and                  offer any specific pricing alternatives to               their overall costs where the number of
                                               other charges among its members and                      any customers.                                           Users they account for is low. Moreover,
                                               other recipients of Exchange data. The                      In addition, the fees that are the
                                                                                                                                                                 introducing a modest Non-Professional
                                               Exchange believes that the proposed                      subject of this rule filing are constrained
                                                                                                                                                                 User fee is reasonable because it
                                               rates are equitable and non-                             by competition. As explained below in
                                                                                                                                                                 provides an additional method for Non-
                                               discriminatory in that they apply                        the Exchange’s Statement on Burden on
                                                                                                                                                                 Professional investors to access the data
                                               uniformly to all recipients of Exchange                  Competition, the existence of
                                                                                                                                                                 by providing the same data that is
                                               data. The Exchange believes the                          alternatives to the Cboe One Summary
                                                                                                                                                                 available to Professional Users. The
                                               proposed fees are competitive with                       Feed further ensure that the Exchange
                                                                                                                                                                 Exchange believes that the proposed
                                               those charged by other venues and,                       cannot set unreasonable fees, or fees
                                                                                                                                                                 fees are equitable and not unfairly
                                               therefore, reasonable and equitably                      that are unreasonably discriminatory,
                                                                                                                                                                 discriminatory because they will be
                                               allocated to recipients.                                 when vendors and subscribers can elect
                                                                                                                                                                 charged uniformly to Internal
                                                  The Exchange believes that the                        such alternatives. That is, the Exchange
                                                                                                                                                                 Distributors and Users. The Exchange
                                               proposed rule change is consistent with                  competes with other exchanges (and
                                                                                                                                                                 notes that the amount of the per User
                                               Section 11(A) of the Act 14 in that it                   their affiliates) that provide similar
                                                                                                                                                                 fees for Internal Distribution equal those
                                               supports (i) fair competition among                      market data products. For example, the
                                                                                                                                                                 charged for External Distribution for the
                                               brokers and dealers, among exchange                      Cboe One Summary Feed provides
                                                                                                                                                                 Cboe One Summary Feed.
                                               markets, and between exchange markets                    investors with alternative market data
                                               and markets other than exchange                          and competes with similar market data
                                                                                                                                                                 market data prices in isolation from prices charged
                                               markets and (ii) the availability to                     product currently offered by other                       by markets for other services that are joint products.
                                               brokers, dealers, and investors of                       exchanges. If another exchange (or its                   Cost-based rate regulation would also lead to
                                               information with respect to quotations                   affiliate) were to charge less to distribute             litigation and may distort incentives, including
                                               for and transactions in securities.                      its similar product than the Exchange                    those to minimize costs and to innovate, leading to
                                                                                                                                                                 further waste. Under cost-based pricing, the
                                               Furthermore, the proposed rule change                    charges to create the Cboe One                           Commission would be burdened with determining
                                               is consistent with Rule 603 of                           Summary Feed, prospective Users likely                   a fair rate of return, and the industry could
                                               Regulation NMS,15 which provides that                    would not subscribe to, or would cease                   experience frequent rate increases based on
                                               any national securities exchange that                    subscribing to either market data                        escalating expense levels. Even in industries
                                                                                                                                                                 historically subject to utility regulation, cost-based
                                               distributes information with respect to                  product.                                                 ratemaking has been discredited. As such, the
                                               quotations for or transactions in an NMS                    The Exchange notes that the                           Exchange believes that cost-based ratemaking
                                               stock do so on terms that are not                        Commission is not required to                            would be inappropriate for proprietary market data
                                               unreasonably discriminatory. In                          undertake a cost-of-service or rate-                     and inconsistent with Congress’s direction that the
                                                                                                        making approach. The Exchange                            Commission use its authority to foster the
                                               adopting Regulation NMS, the                                                                                      development of the national market system, and
                                               Commission granted self-regulatory                       believes that, even if it were possible as               that market forces will continue to provide
                                               organizations and broker-dealers                         a matter of economic theory, cost-based                  appropriate pricing discipline. See Appendix C to
                                               increased authority and flexibility to                   pricing for non-core market data would                   NYSE’s comments to the Commission’s 2000
                                                                                                        be so complicated that it could not be                   Concept Release on the Regulation of Market
                                               offer new and unique market data to the                                                                           Information Fees and Revenues, which can be
                                               public. It was believed that this                        done practically.16
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                                                                                                                                                                 found on the Commission’s website at http://
                                               authority would expand the amount of                                                                              www.sec.gov/rules/concept/s72899/buck1.htm. See
                                                                                                          16 The Exchange believes that cost-based pricing       also Securities Exchange Act Release No. 73816
                                               data available to consumers, and also
                                                                                                        would be impractical because it would create             (December 11, 2014), 79 FR 75200 (December 17,
                                                 12 15
                                                                                                        enormous administrative burdens for all parties,         2014) (SR–NYSE–2014–64) (Notice of Filing and
                                                       U.S.C. 78f.                                      including the Commission, to cost-regulate a large       Immediate Effectiveness of Proposed Rule Change
                                                 13 15 U.S.C. 78f(b)(4).                                number of participants and standardize and analyze       to Establish an Access Fee for the NYSE Best Quote
                                                 14 15 U.S.C. 78k–1.
                                                                                                        extraordinary amounts of information, accounts,          and Trades Data Feed, Operative December 1,
                                                 15 17 CFR 242.603.                                     and reports. In addition, it is impossible to regulate   2014).



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                                               556                           Federal Register / Vol. 83, No. 3 / Thursday, January 4, 2018 / Notices

                                                  The fee structure of differentiated                  any burden on competition that is not                  establish fair, reasonable, and not
                                               Professional and Non-Professional fees                  necessary or appropriate in furtherance                unreasonably discriminatory fees and an
                                               is utilized by the Exchange for the Cboe                of the purposes of the Act, as amended.                equitable allocation of fees among all
                                               One Feed and has long been used by                      The Exchange’s ability to price the Cboe               Users. The existence of alternatives to
                                               other exchanges for their proprietary                   One Summary Feed is constrained by:                    the Cboe One Summary Feed ensures
                                               data products, and by the Nasdaq UTP                    (i) Competition among exchanges, other                 that the Exchange cannot set
                                               and the CTA and CQ Plans in order to                    trading platforms, and Trade Reporting                 unreasonable fees, or fees that are
                                               reduce the price of data to retail                      Facilities (‘‘TRF’’) that compete with                 unreasonably discriminatory, when
                                               investors and make it more broadly                      each other in a variety of dimensions;                 vendors and subscribers can elect these
                                               available.17 Offering the Cboe One                      (ii) the existence of inexpensive real-                alternatives or choose not to purchase a
                                               Summary Feed to Non-Professional                        time consolidated data and market-                     specific proprietary data product if its
                                               Users with the same data available to                   specific data and free delayed data; and               cost to purchase is not justified by the
                                               Professional Users results in greater                   (iii) the inherent contestability of the               returns any particular vendor or
                                               equity among data recipients.                           market for proprietary data.                           subscriber would achieve through the
                                                  The proposed expansion of the                           The Exchange and its market data                    purchase.
                                               Enterprise Fee to Internal Distributors of              products are subject to significant                       Lastly, the Exchange represents that
                                               the Cboe One Summary Feed is                            competitive forces and the proposed                    the proposed pricing of the Cboe One
                                               reasonable because it could result in a                 fees represent responses to that                       Summary Feed provides investors with
                                               fee reduction for Internal Distributors                 competition. To start, the Exchange                    alternative market data and competes
                                               with a large number of Professional and                 competes intensely for order flow. It                  with similar market data product
                                               Non-Professional Users. If an Internal                  competes with the other national                       currently offered by other exchanges.19
                                               Distributor has a smaller number of                     securities exchanges that currently trade              In addition, the Exchange notes the
                                               Professional Users of the Cboe One                      equities, with electronic communication                concerns regarding whether a competing
                                               Summary Feed, then it may continue                      networks, with quotes posted in                        vendor could create a similar product
                                               using the per User structure. By                        FINRA’s Alternative Display Facility,                  on the same price basis as the Exchange
                                               reducing prices for Internal Distributors               with alternative trading systems, and                  are not present here. The proposed
                                               with a large number of Professional and                 with securities firms that primarily                   changes are limited to fees for Internal
                                               Non-Professional Users, the Exchange                    trade as principal with their customer                 Distributers who use the data for
                                               believes that more Internal Distributors                order flow. The Cboe One Summary                       internal use only and not for the
                                               may choose to receive and to distribute                 Feed will enhance competition because                  redistribution and sale to external
                                               the Cboe One Summary Feed, thereby                      it not only provides content that is                   parties.
                                               expanding the distribution of this                      competitive with the similar products
                                               market data for the benefit of investors.               offered by other exchanges, but will                   (C) Self-Regulatory Organization’s
                                                  The Exchange further believes that the               provide pricing that is competitive as                 Statement on Comments on the
                                               proposed Enterprise Fee is reasonable                   well. The Cboe One Summary Feed                        Proposed Rule Change Received From
                                               because it will simplify reporting for                  provides investors with an alternative                 Members, Participants or Others
                                               certain Internal Distributors that have                 option for receiving market data and
                                               large numbers of Professional and Non-                                                                           The Exchange has neither solicited
                                                                                                       competes directly with similar market                  nor received written comments on the
                                               Professional Users. Internal Distributors               data products currently offered by the
                                               that pay the proposed Enterprise Fee                                                                           proposed rule change.
                                                                                                       NYSE and Nasdaq.18
                                               will not have to report the number of                      In addition, when establishing the                  III. Date of Effectiveness of the
                                               Users on a monthly basis as they                        proposed fees, the Exchange considered                 Proposed Rule Change and Timing for
                                               currently do, but rather will only have                 the competitiveness of the market for                  Commission Action
                                               to count natural person users every six                 proprietary data and all of the
                                               months, which is a significant reduction                                                                          The foregoing rule change has become
                                                                                                       implications of that competition. The                  effective pursuant to Section 19(b)(3)(A)
                                               in administrative burden. Finally, the                  Exchange believes that it has considered
                                               Exchange believes that it is equitable                                                                         of the Act 20 and paragraph (f) of Rule
                                                                                                       all relevant factors and has not                       19b–4 thereunder.21 At any time within
                                               and not unfairly discriminatory to                      considered irrelevant factors in order to
                                               establish an Enterprise Fee because it                                                                         60 days of the filing of the proposed rule
                                               reduces the Exchange’s costs and the                       18 See Nasdaq Basic, http://
                                                                                                                                                              change, the Commission summarily may
                                               Distributor’s administrative burdens in                 www.nasdaqtrader.com/                                  temporarily suspend such rule change if
                                               tracking and auditing large numbers of                  Trader.aspx?id=nasdaqbasic (data feed offering the     it appears to the Commission that such
                                               Users.
                                                                                                       BBO and Last Sale information for all U.S.             action is necessary or appropriate in the
                                                                                                       exchange-listed securities based on liquidity within   public interest, for the protection of
                                               (B) Self-Regulatory Organization’s                      the Nasdaq market center, as well as trades reported
                                                                                                       to the FINRA/Nasdaq Trade Reporting Facility           investors, or otherwise in furtherance of
                                               Statement on Burden on Competition                      (‘‘TRF’’)); Nasdaq NLS Plus, http://                   the purposes of the Act.
                                                 The Exchange does not believe that                    www.nasdaqtrader.com/Trader.aspx?id=NLSplus
                                                                                                       (data feed providing last sale data as well as         IV. Solicitation of Comments
                                               the proposed rule change will result in                 consolidated volume from the following Nasdaq
                                                                                                       OMX markets for U.S. exchange-listed securities:         Interested persons are invited to
                                                 17 See Securities Exchange Act Release Nos.           Nasdaq, FINRA/Nasdaq TRF, Nasdaq OMX BX, and           submit written data, views, and
                                               74285 (February 18, 2015), 80 FR 9828 (February         Nasdaq OMX PSX); Securities Exchange Act               arguments concerning the foregoing,
                                               24, 2015) (SR–BATS–2015–11); 74283 (February 18,        Release No. 73553 (November 6, 2014), 79 FR 67491      including whether the proposed rule
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                                               2015), 80 FR 9809 (February 24, 2015) (SR–EDGA–         (November 13, 2014) (SR–NYSE–2014–40) (Notice
                                               2015–09); 74282 (February 17, 2015), 80 FR 9487         of Amendment No. 1 and Order Granting                  change is consistent with the Act.
                                               (February 23, 2015) (SR–EDGX–2015–09); and              Accelerated Approval to a Proposed Rule Change,        Comments may be submitted by any of
                                               74284 (February 18, 2015), 80 FR 9792 (February         as Modified by Amendment No.1, To Establish the        the following methods:
                                               24, 2015) (SR–BYX–2015–09) (‘‘Initial Cboe One          NYSE Best Quote & Trades (‘‘BQT’’) Data Feed);
                                               Feed Fee Filings’’). See also, e.g., Securities         https://www.nyse.com/market-data/real-time/nyse-
                                                                                                                                                                19 Id.
                                               Exchange Act Release No. 20002, File No. S7–433         bqt (data feed providing unified view of BBO and
                                                                                                                                                                20 15    U.S.C. 78s(b)(3)(A).
                                               (July 22, 1983) (establishing nonprofessional fees      last sale information for the NYSE, NYSE Arca, and
                                               for CTA data); and Nasdaq Rules 7023(b) and 7047.       NYSE MKT).                                               21 17    CFR 240.19b–4(f).



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                                                                                Federal Register / Vol. 83, No. 3 / Thursday, January 4, 2018 / Notices                                                        557

                                               Electronic Comments                                       SECURITIES AND EXCHANGE                                which the Commission understands
                                                                                                         COMMISSION                                             requires authorized CCPs to establish
                                                  • Use the Commission’s internet                                                                               effective systems, procedures and
                                               comment form (http://www.sec.gov/                         [Release No. 34–82421; File No. SR–LCH
                                                                                                         SA–2017–010]
                                                                                                                                                                arrangements to ensure that cleared
                                               rules/sro.shtml); or                                                                                             derivatives transactions are submitted
                                                  • Send an email to rule-comments@                      Self-Regulatory Organizations; LCH                     and accepted for clearing on a straight-
                                               sec.gov. Please include File Number SR–                   SA; Order Granting Accelerated                         through processing (‘‘STP’’) basis,7 and
                                               CboeEDGX–2017–008 on the subject                          Approval of a Proposed Rule Change                     Article 30 of MiFIR, which the
                                               line.                                                     Relating to the Implementation of the                  Commission understands requires
                                                                                                         Markets in Financial Instruments                       authorized CCPs to establish indirect
                                               Paper Comments                                            Regulation                                             clearing arrangements with respect to
                                                                                                                                                                exchange-traded derivatives (‘‘ETDs’’)
                                                 • Send paper comments in triplicate                     December 29, 2017.                                     that are of ‘‘equivalent effect’’ to the
                                               to Brent J. Fields, Secretary, Securities
                                                                                                         I. Introduction                                        corresponding requirements under
                                               and Exchange Commission, 100 F Street
                                                                                                                                                                EMIR.8
                                               NE, Washington, DC 20549–1090.                               On November 21, 2017, Banque
                                                                                                                                                                   In addition, the Commission
                                                                                                         Centrale de Compensation, which
                                               All submissions should refer to File                                                                             understands that the European
                                                                                                         conducts business under the name LCH
                                               Number SR–CboeEDGX–2017–008. This                                                                                Commission has adopted regulatory
                                                                                                         SA (‘‘LCH SA’’), filed with the
                                               file number should be included on the                                                                            technical standards to set more specific
                                                                                                         Securities and Exchange Commission
                                               subject line if email is used. To help the                                                                       requirements that authorized CCPs must
                                                                                                         (‘‘SEC’’ or ‘‘Commission’’), pursuant to
                                               Commission process and review your                                                                               meet in order to comply with MiFIR.
                                                                                                         Section 19(b)(1) of the Securities
                                               comments more efficiently, please use                                                                            The regulatory technical standards for
                                                                                                         Exchange Act of 1934 (‘‘Act’’),1 and
                                               only one method. The Commission will                                                                             straight-through processing (‘‘RTS 26’’)
                                                                                                         Rule 19b–4 thereunder,2 a proposed rule
                                               post all comments on the Commission’s                                                                            were adopted in 2016.9 More recently,
                                                                                                         change to make conforming and
                                               internet website (http://www.sec.gov/                                                                            the European Commission adopted
                                                                                                         clarifying changes necessary to
                                               rules/sro.shtml). Copies of the                                                                                  regulatory technical standards, which
                                                                                                         implement certain provisions of the
                                               submission, all subsequent                                                                                       align the indirect clearing requirements
                                                                                                         European Union’s Markets in Financial
                                               amendments, all written statements                                                                               under EMIR and MiFIR (‘‘Indirect
                                                                                                         Instruments Regulation (‘‘MiFIR’’).3 The
                                                                                                                                                                Clearing RTS’’).10 MiFIR takes effect
                                               with respect to the proposed rule                         proposed rule change was published for
                                                                                                                                                                January 3, 2018 and it is expected that
                                               change that are filed with the                            comment in the Federal Register on
                                                                                                                                                                the Indirect Clearing RTS will also take
                                               Commission, and all written                               December 7, 2017.4 The Commission
                                                                                                                                                                effect on the same date.
                                               communications relating to the                            received no comment letters regarding
                                               proposed rule change between the                          the proposed rule change. For the                      b. Straight-Through Processing
                                               Commission and any person, other than                     reasons discussed below, the                             The Commission understands that
                                               those that may be withheld from the                       Commission is approving the proposed                   RTS 26 establishes the specific
                                               public in accordance with the                             rule change on an accelerated basis.                   requirements with which authorized
                                               provisions of 5 U.S.C. 552, will be                       II. Description of the Proposed Rule                   CCPs, trading venues,11 and clearing
                                               available for website viewing and                         Change
                                               printing in the Commission’s Public                                                                                 7 In this context, the Commission understands

                                               Reference Room, 100 F Street NE,                          a. Overview                                            STP to mean that an authorized CCP must have
                                                                                                                                                                systems, procedures, and arrangements in place to
                                               Washington, DC 20549, on official                            The principal purpose of this                       ensure derivatives are cleared as quickly as
                                               business days between the hours of                        proposed rule change is to amend LCH                   technologically practicable using automated
                                               10:00 a.m. and 3:00 p.m. Copies of the                    SA’s CDS Clearing Rulebook (the                        systems. Notice, 82 FR at 57804. The Commission
                                               filing also will be available for                         ‘‘Rulebook’’) and CDS Clearing                         understands that RTS 26 provides detailed
                                                                                                                                                                additional requirements regarding the transfer of
                                               inspection and copying at the principal                   Procedures (the ‘‘Procedures’’) to                     information and related authorized CCP rulebook
                                               office of the Exchange. All comments                      implement provisions of MiFIR that are                 requirements, as well as timelines for the transfer
                                               received will be posted without change.                   applicable to central counterparties                   of information, among other things. See id. at 57803
                                               Persons submitting comments are                           (‘‘CCPs’’) authorized under the                        & n.5 (citing RTS 26).
                                                                                                                                                                   8 Notice, 82 FR at 57803.
                                               cautioned that we do not redact or edit                   European Markets Infrastructure
                                                                                                                                                                   9 Commission Delegated Regulation (EU) 2017/
                                               personal identifying information from                     Regulation (‘‘EMIR’’) 5 (each such CCP,                582 of 29.6.2016 supplementing Regulation (EU) No
                                               comment submissions. You should                           an ‘‘authorized CCP’’).6 In particular,                600/2014 of the European Parliament and of the
                                               submit only information that you wish                     the proposed rule changes are intended                 Council with regard to regulatory technical
                                                                                                         to implement Article 29 of MiFIR,                      standards specifying the obligation to clear
                                               to make available publicly. All                                                                                  derivatives traded on regulated markets and timing
                                               submissions should refer to File                                                                                 of acceptance for clearing.
                                                                                                           1 15 U.S.C. 78s(b)(1).
                                               Number SR–CboeEDGX–2017–008 and                             2 17
                                                                                                                                                                   10 Commission Delegated Regulation (EU) of
                                                                                                                CFR 240.19b–4.                                  22.9.2017 amending Commission Delegated
                                               should be submitted on or before                            3 Regulation (EU) No 600/2014 of the European
                                                                                                                                                                Regulation (EU) No 149/2013 with regard to
                                               January 25, 2018.                                         Parliament and of the Council of 15 May 2014 on        regulatory technical standards on indirect clearing
                                                                                                         markets in financial instruments and amending          arrangements. A separate, but identical, set of RTS
                                                 For the Commission, by the Division of                  Regulation (EU) No 648/2012.                           apply to indirect clearing of exchange-traded
                                               Trading and Markets, pursuant to delegated                  4 Securities Exchange Act Release No. 34–82194
                                                                                                                                                                derivatives. See, Commission Delegated Regulation
                                               authority.22
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                                                                                                         (December 1, 2017), 82 FR 57803 (December 7,           (EU) of 22.9.2017 supplementing Regulation (EU)
                                               Robert W. Errett,                                         2017) (SR–LCH–2017–010) (‘‘Notice’’).                  No 600/2014 with regard to regulatory technical
                                                                                                           5 Regulation (EU) No 648/2012 of the European        standards on indirect clearing arrangements.
                                               Deputy Secretary.                                         Parliament and of the Council of 4 July 2012 on           11 The Commission understands that the term

                                               [FR Doc. 2017–28495 Filed 1–3–18; 8:45 am]                OTC derivatives, central counterparties and trade      ‘‘trading venue,’’ as used in RTS 26, refers to EU-
                                                                                                         reporting.                                             based venues only (i.e., regulated markets,
                                               BILLING CODE 8011–01–P
                                                                                                           6 Capitalized terms not otherwise defined herein     multilateral trading facilities and organized trading
                                                                                                         have the meanings ascribed to them in the              facilities). LCH SA therefore represents that third-
                                                 22 17   CFR 200.30–3(a)(12).                            Rulebook.                                                                                          Continued




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Document Created: 2018-01-04 02:01:50
Document Modified: 2018-01-04 02:01:50
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 553 

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