79548 Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Notices 

39 Id. 

40 15.U.S.C. 78q–1(b)(3)(I). 

41 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b-4. 

Rules 17Ad–22(e)(4)(i) and Rule 17Ad– 

22(e)(6)(i) under the Act. 39

FICC also believes that the above 

described burden on competition that 

could be created by the proposed 

changes would be appropriate in 

furtherance of the Act because such 

changes have been appropriately 

designed to assure the safeguarding of 

securities and funds which are in the 

custody or control of FICC or for which 

it is responsible, as described in detail 

above. The proposed change to 

incorporate the Minimum Margin 

Amount would enable FICC to produce 

margin levels more commensurate with 

the risks and particular attributes of 

each Clearing Member’s portfolio. Any 

increase in Required Fund Deposit as a 

result of such proposed changes for a 

particular Clearing Member would be in 

direct relation to the specific risks 

presented by such Clearing Members’ 

portfolio, and each Clearing Member’s 

Required Fund Deposit would continue 

to be calculated with the same 

parameters and at the same confidence 

level. Therefore, Clearing Members with 

portfolios that present similar risks, 

regardless of the type of Clearing 

Member, would have similar impacts on 

their Required Fund Deposit amounts. 

In addition, the proposed changes 

would improve the risk-based margining 

methodology that FICC employs to set 

margin requirements and better limit 

FICC’s credit exposures to its Clearing 

Members. Impact studies indicate that 

the proposed methodology would result 

in backtesting coverage that more 

appropriately addresses the risks 

presented by each portfolio. Therefore, 

because the proposed changes are 

designed to provide FICC with a more 

appropriate and complete measure of 

the risks presented by Clearing 

Members’ portfolios, FICC believes the 

proposals are appropriately designed to 

meet its risk management goals and its 

regulatory obligations. 

Therefore, FICC does not believe that 

the proposed changes would impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the Act.40

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule Change 

Received From Members, Participants, 

or Others 

Written comments relating to the 

proposed rule changes have not been 

solicited or received. FICC will notify 

the Commission of any written 

comments received by FICC. 

III. Date of Effectiveness of the 

Proposed Rule Change, and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

such proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

The proposal shall not take effect 

until all regulatory actions required 

with respect to the proposal are 

completed. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

FICC–2020–017 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–FICC–2020–017. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of FICC and on DTCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). 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–FICC– 

2020–017 and should be submitted on 

or before December 31, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.41

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27087 Filed 12–9–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90569; File No. SRCboeBZX–2020–088] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend Its 

Fee Schedule To Update the Add 

Volume Tiers, To Eliminate the 

Remove Volume Tier, and To Eliminate 

Unused Fee Codes 

December 4, 2020. 

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 

2, 2020, Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) is filing with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

to amend the fee schedule. The text of 


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Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Notices 79549 

3The Exchange initially filed the proposed fee 

changes on December 1, 2020 (SR-CboeBZX–2020– 

087). On December 2, 2020, the Exchange withdrew 

that filing and submitted this proposal. 

4See Cboe Global Markets, U.S. Equities Market 

Volume Summary, Month-to-Date (November 27, 

2020), available at https://markets.cboe.com/us/ 

equities/market_statistics/. 

5Appended to displayed orders that adds 

liquidity to BZX (Tape B) and is assessed a standard 

rebate of $0.0025. 

6Appended to displayed orders that adds 

liquidity to BZX (Tape A) and is assessed a 

standard rebate of $0.0025. 

7Appended to displayed orders that adds 

liquidity to BZX (Tape C) and is assessed a standard 

rebate of $0.0025. 

8 ‘‘ADAV’’ means average daily added volume 

calculated as the number of shares added per day. 

ADAV is calculated on a monthly basis. 

the proposed rule change is provided in 

Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

equities/regulation/rule_filings/bzx/), at 

the Exchange’s Office of the Secretary, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

fee schedule applicable to its equities 

trading platform (‘‘BZX Equities’’) to: (1) 

Update the Add Volume Tiers, (2) 

eliminate the Remove Volume Tier, and 

(3) eliminate unused fee codes.3

The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

16 registered equities exchanges, as well 

as a number of alternative trading 

systems and other off-exchange venues 

that do not have similar self-regulatory 

responsibilities under the Exchange Act, 

to which market participants may direct 

their order flow. Based on publicly 

available information,4 no single 

registered equities exchange has more 

than 16% of the market share. Thus, in 

such a low-concentrated and highly 

competitive market, no single equities 

exchange possesses significant pricing 

power in the execution of order flow. 

The Exchange in particular operates a 

‘‘Maker-Taker’’ model whereby it pays 

credits to members that provide 

liquidity and assesses fees to those that 

remove liquidity. The Exchange’s fee 

schedule sets forth the standard rebates 

and rates applied per share for orders 

that provide and remove liquidity, 

respectively. Currently, for orders 

priced at or above $1.00, the Exchange 

provides a standard rebate of $0.0020 

per share for orders that add liquidity 

and assesses a fee of $0.0030 per share 

for orders that remove liquidity and 

orders that are routed. For orders priced 

below $1.00, the Exchange provides a 

standard rebate of $0.0009 per share for 

orders that add liquidity and assesses a 

fee of 0.30% of total dollar value for 

orders that remove liquidity and for 

orders that are routed. Additionally, in 

response to the competitive 

environment, the Exchange also offers 

tiered pricing which provides Members 

opportunities to qualify for higher 

rebates or reduced fees where certain 

volume criteria and thresholds are met. 

Tiered pricing provides an incremental 

incentive for Members to strive for 

higher tier levels, which provides 

increasingly higher benefits or discounts 

for satisfying increasingly more 

stringent criteria. 

Proposed Updates to the Add Volume 

Tiers 

The Exchange currently offers six Add 

Volume Tiers under footnote 1 of the 

Fee Schedule. The Add Volume Tiers 

provide Members with opportunities to 

receive incrementally increasing 

enhanced rebates for their liquidity 

adding orders that yield fee codes ‘‘B’’ 5, 

‘‘V’’ 6, and ‘‘Y’’ 7, upon reaching 

incrementally more difficult criteria 

under each tier. The Exchange proposes 

to amend Tier 1 and remove Tier 3 (and 

renumber the remaining tiers 

accordingly). 

Particularly Tier 1 offers an enhanced 

rebate of $0.0025 for qualifying orders 

(i.e., yielding fee codes B, V or Y) where 

a Member has an ADAV 8 greater or 

equal to 1,000,000. The Exchange 

proposes to increase the ADAV 

requirement to 3,000,000. The Exchange 

notes Tier 1, as modified, continues to 

be available to all Members and provide 

Members an opportunity to receive an 

enhanced rebate, albeit using a more 

stringent criteria. Moreover, the 

proposed change is designed to 

encourage Members to increase order 

flow on the Exchange in order to receive 

the corresponding rebate, which further 

contributes to a deeper, more liquid 

market and provides even more 

execution opportunities for active 

market participants at improved prices. 

Tier 3 offers an enhanced rebate of 

$0.0028 for qualifying orders where a 

Member has an ADAV as a percentage 

of TCV greater than or equal to 0.20%. 

The Exchange proposes to eliminate the 

3 Tier as it no longer wishes to, nor is 

it required to, maintain such tier. More 

specifically, the proposed rule change 

removes this tier as the Exchange would 

rather redirect resources and funding 

into other programs and tiers intended 

to incentivize increased order flow. 

Remove Volume Tier 

The Exchange also proposes to 

eliminate Remove Volume Tier, which 

offers a reduced fee of $0.0029 for 

orders in securities at or above $1.00 

and 0.28% of total dollar value for 

orders in securities below $1.00 yielding 

fee code ‘‘N’’, ‘‘W’’ and ‘‘BB’’ where a 

Member has an ADAV greater than or 

equal to 0.20% TCV with displayed 

orders that yield fee codes B, V or Y. 

The Exchange proposes to eliminate the 

Remove Volume Tier as it no longer 

wishes to, nor is it required to, maintain 

such tier. More specifically, the 

proposed rule change removes this tier 

as the Exchange would rather redirect 

resources and funding into other 

programs and tiers intended to 

incentivize increased order flow. 

Elimination of Certain Routing Fee 

Codes 

The Exchange assesses fees in 

connection with orders routed away to 

various exchanges. The Exchange 

proposes to eliminate several routingrelated fee codes that have been unused 

for several years. Particularly, the 

Exchange proposes to eliminate the 

following fee codes: 

• Fee Code 9, which is appended to 

orders routed to NYSE Arca and adds 

liquidity (Tapes A or C) and provides a 

rebate of $0.00210 per share for 

securities priced at or above $1.00 and 

are free for securities priced below 

$1.00; 

• Fee Code NB, which is appended to 

orders routed to any exchange not 

covered by Fee Code NA and adds nondisplayed liquidity and assesses a fee of 

$0.00300 per share for securities priced 

at or above $1.00 and a fee of 0.30% of 

dollar value for securities priced below 

$1.00; 


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79550 Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Notices 

9 15 U.S.C. 78f. 

10 15 U.S.C. 78f(b)(4). 

11See, e.g., Cboe EDGX Equities Fees Schedule, 

Footnote 1 which provides various Add Volume 

Tiers. 

• Fee Code R, which is appended to 

orders re-routed by NYSE and assesses 

a fee of 0.00300 per share; 

• Fee Code RA, which is appended to 

orders re-routed to EDGA and adds 

liquidity and assess a fee of 0.00300 per 

share for securities priced at or above 

$1.00 and are free for securities priced 

below $1.00; and 

• Fee Code RB, which is appended to 

orders routed to BX and adds liquidity 

and assess a fee of 0.00200 per share for 

securities priced at or above $1.00 and 

are free for securities priced below 

$1.00. 

As noted, above the Exchange has 

observed no volume in recent years in 

orders yielding fee codes 9, NB, R, RA 

and RB. The Exchange believes that 

because no Members elect to route their 

orders that yield these fee codes, the 

current demand (or lack thereof) does 

not warrant the infrastructure and 

ongoing Systems maintenance required 

to support separate fee codes 

specifically applicable to these types of 

transactions. Therefore, the Exchange 

now proposes to delete fee codes 9, NB, 

R, RA and RB in the Fee Schedule. The 

Exchange notes that Members will 

continue to be able to choose to route 

their orders to any exchange covered by 

these fee codes and such orders will be 

automatically and uniformly assessed 

the current fees (or rebates) in place for 

routed orders, as applicable (e.g., the 

standard fees applied to routed orders, 

which yields fee code X). 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,9

in general, and furthers the objectives of 

Section 6(b)(4),10 in particular, as it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its Members, 

issuers and other persons using its 

facilities. The Exchange operates in a 

highly competitive market in which 

market participants can readily direct 

order flow to competing venues if they 

deem fee levels at a particular venue to 

be excessive or incentives to be 

insufficient. The proposed rule changes 

reflect a competitive pricing structure 

designed to incentivize market 

participants to direct their order flow to 

the Exchange, which the Exchange 

believes would enhance market quality 

to the benefit of all Members. The 

Exchange notes that relative volumebased incentives and discounts have 

been widely adopted by exchanges, 

including the Exchange, and are 

reasonable, equitable and nondiscriminatory because they are open to 

all members on an equal basis and 

provide additional benefits or discounts 

that are reasonably related to (i) the 

value to an exchange’s market quality 

and (ii) associated higher levels of 

market activity, such as higher levels of 

liquidity provision and/or growth 

patterns. Additionally, as noted above, 

the Exchange operates in highly 

competitive market. The Exchange is 

only one of several equity venues to 

which market participants may direct 

their order flow, and it represents a 

small percentage of the overall market. 

It is also only one of several maker-taker 

exchanges. Competing equity exchanges 

offer similar tiered pricing structures, 

including schedules of rebates and fees 

that apply based upon members 

achieving certain volume and/or growth 

thresholds, as well as assess similar fees 

or rebates for similar types of orders, to 

that of the Exchange. These competing 

pricing schedules, moreover, are 

presently comparable to those that the 

Exchange provides, including the 

pricing of comparable criteria and/or 

fees and rebates. 

In particular, the Exchange believes 

the proposed changes to Tier 1 is 

reasonable because Tier 1 as modified 

continues to be available to all Members 

and provides Members an opportunity 

to receive an enhanced rebate, albeit 

using more stringent criteria. The 

Exchange next notes that relative 

volume-based incentives and discounts 

have been widely adopted by 

exchanges, including the Exchange, and 

are reasonable, equitable and nondiscriminatory because they are open to 

all Members on an equal basis and 

provide additional benefits or discounts 

that are reasonably related to (i) the 

value to an exchange’s market quality 

and (ii) associated higher levels of 

market activity, such as higher levels of 

liquidity provision and/or growth 

patterns. The Exchange is only one of 

several equity venues to which market 

participants may direct their order flow, 

and it represents a small percentage of 

the overall market. It is also only one of 

several maker-taker exchanges. 

Competing equity exchanges offer 

similar tiered pricing structures to that 

of the Exchange, including schedules of 

rebates and fees that apply based upon 

members achieving certain volume 

thresholds.11 These competing pricing 

schedules, moreover, are presently 

comparable to those that the Exchange 

provides, including the pricing of 

comparable tiers. 

The Exchange also notes that the 

enhanced rebate available under Tier 1 

is not changing and further believes that 

the current enhanced rebate continues 

to be commensurate with the required 

criteria, even as amended. Furthermore, 

the Exchange believes the enhanced 

rebates under each Add Volume Tier 

continue to reasonably reflect the 

difficulty in achieving the 

corresponding criteria, even as 

amended. 

The Exchange believes the proposed 

change is also a reasonable means to 

incentivize Members to continue to 

provide liquidity adding, displayed 

volume, which will benefit all market 

participants by incentivizing continuous 

liquidity and thus, deeper more liquid 

markets as well as increased execution 

opportunities. This overall increase in 

activity deepens the Exchange’s 

liquidity pool, offers additional cost 

savings, supports the quality of price 

discovery, promotes market 

transparency and improves market 

quality, for all investors. 

Without having a view of activity on 

other markets and off-exchange venues, 

the Exchange has no way of knowing 

whether this proposed rule change 

would definitely result in any Members 

qualifying for the proposed amended 

tier. The Exchange notes that most 

recently, eleven Members satisfied Tier 

1. While the Exchange has no way of 

predicting with certainty how the 

proposed tier will impact Member 

activity, the Exchange anticipates that 

approximately three Members will be 

able to satisfy Tier 1 as amended. The 

Exchange also notes that the proposed 

amended tier will not adversely impact 

any Member’s ability to qualify for other 

rebate tiers. Rather, should a Member 

not meet the criteria for Tier 1, as 

amended, the Member will merely not 

receive the corresponding proposed 

enhanced rebate. Furthermore, the 

proposed rebate would uniformly apply 

to all Members that meet the required 

criteria. 

The Exchange also believes the 

proposal to remove Add Volume Tier 3 

is reasonable because the Exchange is 

not required to maintain this tier and 

Members still have a number of other 

opportunities and a variety of ways to 

receive enhanced rebates for displayed 

adding liquidity orders, including via 

the existing add volume tiers. The 

Exchange believes the proposal to 

eliminate this tier is also equitable and 

not unfairly discriminatory because it 

applies to all Members (i.e., the tier 

won’t be available for any Member). The 

Exchange notes that recently two 


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12See, e.g., Cboe BZX Equities Fee Schedule, 

Footnote 1, which provides various Add/Remove 

Volume Tiers applicable to fee codes B, V, and Y. 

13Securities Exchange Act Release No. 51808, 70 

FR 37495, 37498–99 (June 29, 2005) (S7–10–04) 

(Final Rule). 

14See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 

Members had satisfied the criteria of 

Add Volume Tier 3. The Exchange also 

notes that the proposed change does not 

preclude any Member, including the 

Members that were receiving the rebates 

under this tier, from achieving the 

remaining add volume tiers to qualify 

for the remaining enhanced rebates or 

other available enhanced rebates under 

other incentive tiers.12 Additionally, 

those Members are still entitled to a 

rebate for its displayed orders adding 

liquidity (i.e., the standard rebate), 

albeit a rebate that is lower than the 

amount under Add Volume Tier 3. The 

Exchange also notes that the proposed 

rule change to remove Add Volume Tier 

3 merely results in Members not 

receiving the enhanced rebate, which as 

noted above, the Exchange is not 

required to offer or maintain. 

Similarly, the Exchange believes the 

proposal to eliminate the Remove 

Volume Tier is reasonable because the 

Exchange is not required to maintain 

this tier or provide Members an 

opportunity to receive reduced fees. The 

Exchange believes the proposal to 

eliminate this tier is also equitable and 

not unfairly discriminatory because it 

applies to all Members (i.e., the tier 

won’t be available for any Member). The 

Exchange notes that recently seven 

Members had satisfied the criteria of 

Remove Volume Tier. The Exchange 

also notes that the proposed rule change 

to remove the Remove Volume Tier 

merely results in Members not receiving 

a reduced fee, which as noted above, the 

Exchange is not required to offer or 

maintain. Furthermore, the proposed 

rule change to eliminate both the Add 

Volume Tier 3 and the Remove Volume 

Tier enables the Exchange to redirect 

resources and funding into other 

programs and tiers intended to 

incentivize increased order flow. 

The Exchange also believes the 

proposed rule change to remove fee 

codes 9, NB, R, RA and RB is reasonable 

as the Exchange has observed no 

volume in orders yielding these fee 

codes and, therefore, the Exchange 

believes the proposed change will have 

a de minimis impact. Additionally, the 

Exchange believes that infrastructure 

and ongoing Systems maintenance 

required to support separate fee codes 

specifically applicable to these types of 

routed orders is not warranted or 

necessary in light of the fact that it has 

not received any recent volume yielding 

these fee codes. As noted above, to the 

extent volume for transactions currently 

covered by these fee codes ever 

increases, such orders will be 

automatically and uniformly assessed 

the current fees (or rebates) in place for 

routed orders, as applicable (e.g., the 

standard fees applied to routed orders, 

which yield fee code X). Finally, the 

Exchange believes that the proposed 

elimination of the fee codes is equitable 

and not unfairly discriminatory as it 

applies equally to all members that use 

the Exchange to route orders. If 

members do not favor the Exchange’s 

pricing for routed orders, they can send 

their routable orders directly to away 

markets instead of using routing 

functionality provided by the Exchange. 

Routing through the Exchange is 

voluntary, and the Exchange operates in 

a competitive environment where 

market participants can readily direct 

order flow to competing venues or 

providers of routing services if they 

deem fee levels to be excessive. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Rather, as 

discussed above, the Exchange believes 

that the proposed change to Add 

Volume 1 would encourage the 

submission of additional order flow to 

a public exchange, thereby promoting 

market depth, execution incentives and 

enhanced execution opportunities, as 

well as price discovery and 

transparency for all Members. As a 

result, the Exchange believes that the 

proposed change furthers the 

Commission’s goal in adopting 

Regulation NMS of fostering 

competition among orders, which 

promotes ‘‘more efficient pricing of 

individual stocks for all types of orders, 

large and small.’’ 13

The Exchange believes the proposed 

rule change does not impose any burden 

on intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Particularly, 

the proposed changes apply to all 

Members equally in that all Members 

will continue to be eligible for Add 

Volume tier 1 and have a reasonable 

opportunity to meet the tier’s criteria 

and will all receive the corresponding 

additional rebate if such criteria is met. 

Additionally, the proposed tier change 

is designed to attract additional order 

flow to the Exchange. The Exchange 

believes that the updated tier criteria 

would incentivize market participants 

to direct liquidity adding order flow to 

the Exchange, bringing with it 

additional execution opportunities for 

market participants and improved price 

transparency. Greater overall order flow, 

trading opportunities, and pricing 

transparency benefits all market 

participants on the Exchange by 

enhancing market quality and 

continuing to encourage Members to 

send orders, thereby contributing 

towards a robust and well-balanced 

market ecosystem. The Exchange does 

not believe the proposed rule change to 

eliminate Add Volume Tier 3, the 

Remove Volume Tier, and the unused 

routing fee codes will impose any 

burden on intramarket competition 

because it applies to all Members 

uniformly. 

Next, the Exchange believes the 

proposed rule change does not impose 

any burden on intermarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

As previously discussed, the Exchange 

operates in a highly competitive market. 

Members have numerous alternative 

venues that they may participate on and 

direct their order flow, including 15 

other equities exchanges and offexchange venues and alternative trading 

systems. Additionally, the Exchange 

represents a small percentage of the 

overall market. Based on publicly 

available information, no single equities 

exchange has more than 16% of the 

market share. Therefore, no exchange 

possesses significant pricing power in 

the execution of order flow. Indeed, 

participants can readily choose to send 

their orders to other exchange and offexchange venues if they deem fee levels 

at those other venues to be more 

favorable. Moreover, the Commission 

has repeatedly expressed its preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 14 The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 


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15NetCoalition v. SEC, 615 F.3d 525, 539 (DC Cir. 

2010) (quoting Securities Exchange Act Release No. 

59039 (December 2, 2008), 73 FR 74770, 74782–83 

(December 9, 2008) (SR–NYSEArca-2006–21)). 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b–4(f). 18 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 89725 

(September 1, 2020), 85 FR 55544 (‘‘Notice’’). 

Comment received on the Notice is available on the 

Commission’s website at: https://www.sec.gov/ 

comments/sr-phlx-2020-41/srphlx202041.htm. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 90226, 

85 FR 67781 (October 26, 2020). The Commission 

designated December 7, 2020 as the date by which 

the Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

disapprove, the proposed rule change. 

6 15 U.S.C. 78s(b)(2)(B). 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 

the execution of order flow from broker 

dealers’. . . .’’.15 Accordingly, the 

Exchange does not believe its proposed 

fee change imposes any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 16 and paragraph (f) of Rule 

19b–4 thereunder.17 At any time within 

60 days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SRCboeBZX–2020–088 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR-CboeBZX–2020–088. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR-CboeBZX–2020–088 and 

should be submitted on or before 

December 31, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27088 Filed 12–9–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90573; File No. SR-Phlx– 

2020–41] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove a Proposed 

Rule Change To List and Trade 

Options on a Nasdaq-100 Volatility 

Index 

December 4, 2020. 

I. Introduction 

On August 24, 2020, Nasdaq PHLX 

LLC (‘‘Exchange’’ or ‘‘Phlx’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to list and trade options on a 

Nasdaq-100 Volatility Index (‘‘VOLQ’’ 

or ‘‘Volatility Index’’). The proposed 

rule change was published for comment 

in the Federal Register on September 8, 

2020.3 On October 20, 2020, pursuant to 

Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.5 This order 

institutes proceedings under Section 

19(b)(2)(B) of the Act 6 to determine 

whether to approve or disapprove the 

proposed rule change. 

II. Description of and Comment on the 

Proposed Rule Change 

A. Description of the Proposal 

The Exchange proposes to list and 

trade options on VOLQ, a new index 

that measures changes in 30-day 

implied volatility of the Nasdaq-100 

Index (‘‘Nasdaq-100 Index’’ or ‘‘NDX’’). 

As proposed, options on the VOLQ will 

be cash-settled and will have Europeanstyle exercise provisions. The Exchange 

states that the Volatility Index will 

measure ‘‘at-the-money’’ volatility. The 

Volatility Index, calculated using 


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