Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Notices 79539 

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

2 17 CFR 240.19b–4. 

3See 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/. 

for Public Comments’’ or by using the 

search function. 

Brian Foster, 

Clearance Officer. 

[FR Doc. 2020–27099 Filed 12–9–20; 8:45 am] 

BILLING CODE 7905–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90567; File No. SRCboeBYX–2020–033] 

Self-Regulatory Organizations; Cboe 

BYX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend its 

Fee Schedule To Remove Unused 

Routing-related 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 

1, 2020, Cboe BYX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BYX’’) 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 the Substance 

of the Proposed Rule Change 

Cboe BYX 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 

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/byx/), 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 to remove unused routingrelated fee codes, effective December 1, 

2020. 

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,3 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 

‘‘Taker-Maker’’ model whereby it pays 

credits to members that remove 

liquidity and assesses fees to those that 

add liquidity. The Exchange’s Fees 

Schedule sets forth the standard rebates 

and rates applied per share for orders 

that provide and remove liquidity, 

respectively. Particularly, for securities 

at or above $1.00, the Exchange 

provides a standard rebate of $0.00050 

per share for orders that remove 

liquidity, assesses a fee of $0.00200 per 

share for orders that add liquidity and 

assesses a standard fee of $0.00300 for 

orders that are routed. For orders priced 

below $1.00, the Exchange does not 

assess a fee or provide a rebate for 

orders that add liquidity, assesses a fee 

of 0.10% of total dollar value for orders 

that remove liquidity, and assesses a fee 

of 0.29% of total dollar value for orders 

that are routed. The Exchange believes 

that the ever-shifting market share 

among the exchanges from month to 

month demonstrates that market 

participants can shift order flow or 

discontinue to reduce use of certain 

categories of products, in response to fee 

changes. Accordingly, competitive 

forces constrain the Exchange’s 

transaction fees, and market participants 

can readily trade on competing venues 

if they deem pricing levels at those 

other venues to be more favorable. 

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; 

• Fee Code R, which is appended to 

orders re-routed by NYSE using RDOT, 

RDOX or Post to Away routing strategy 

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 Nasdaq 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 


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79540 Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Notices 

4 15 U.S.C. 78f. 

5 15 U.S.C. 78f(b)(4). 

6 15 U.S.C. 78f.(b)(5). 

7Securities Exchange Act Release No. 51808, 70 

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

(Final Rule). 

8See Securities Exchange Act Release No. 51808 

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

9NetCoalition 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)). 

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,4

in general, and furthers the objectives of 

Section 6(b)(4),5 in particular, as it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its Members and 

issuers and other persons using its 

facilities. The Exchange also believes 

that the proposed rule change is 

consistent with the objectives of Section 

6(b)(5) 6 requirements that the rules of 

an exchange be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest, and, 

particularly, is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange operates in a highlycompetitive 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 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 intramarket or 

intermarket 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 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.’’ 7

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 change applies to all 

Members equally. 

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.’’ 8 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 

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’. . ..’’.9 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 has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 

Members or other interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

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


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Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Notices 79541 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3On November 27, 2020, FICC filed this proposed 

rule change as an advance notice (SR–FICC–2020– 

804) with the Commission pursuant to Section 

806(e)(1) of Title VIII of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act entitled the 

Payment, Clearing, and Settlement Supervision Act 

of 2010, 12 U.S.C. 5465(e)(1), and Rule 19b– 

4(n)(1)(i) under the Act, 17 CFR 240.19b–4(n)(1)(i). 

A copy of the advance notice is available at http:// 

www.dtcc.com/legal/sec-rule-filings.aspx. 

4Capitalized terms not defined herein are defined 

in the MBSD Rules, available at http://

www.dtcc.com/∼/media/Files/Downloads/legal/ 

rules/ficc_mbsd_rules.pdf. 

5Because FICC requested confidential treatment, 

the QRM Methodology was filed separately with the 

Secretary of the Commission as part of proposed 

rule change SR–FICC–2016–007 (the ‘‘VaR Filing’’). 

See Securities Exchange Act Release No. 79868 

(January 24, 2017), 82 FR 8780 (January 30, 2017) 

(SR–FICC–2016–007) (‘‘VaR Filing Approval 

Order’’). FICC also filed the VaR Filing proposal as 

an advance notice pursuant to Section 806(e)(1) of 

the Payment, Clearing, and Settlement Supervision 

Act of 2010 (12 U.S.C. 5465(e)(1)) and Rule 19b– 

4(n)(1)(i) under the Act (17 CFR 240.19b–4(n)(1)(i)), 

with respect to which the Commission issued a 

Notice of No Objection. See Securities Exchange 

Act Release No. 79843 (January 19, 2017), 82 FR 

8555 (January 26, 2017) (SR–FICC–2016–801). The 

QRM Methodology has been amended following the 

VaR Filing Approval Order. See Securities 

Exchange Act Release Nos. 85944 (May 24, 2019), 

84 FR 25315 (May 31, 2019) (SR–FICC–2019–001) 

and 90182 (October 14, 2020) 85 FR 66630 (October 

20, 2020) (SR–FICC–2020–009). 

6 17 CFR 240.24b–2. 

of the Act 10 and paragraph (f) of Rule 

19b–4 thereunder.11 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 SR– 

CboeBYX–2020–033 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-CboeBYX–2020–033. 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–CboeBYX–2020–033 and 

should be submitted on or before 

December 31, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27086 Filed 12–9–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90568; File No. SR–FICC– 

2020–017] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing of Proposed Rule Change To 

Modify the Calculation of the MBSD 

VaR Floor To Incorporate a Minimum 

Margin Amount 

December 4, 2020. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

20, 2020, Fixed Income Clearing 

Corporation (‘‘FICC’’) 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 clearing agency.3 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change of Fixed 

Income Clearing Corporation (‘‘FICC’’) is 

attached hereto as Exhibit 5 and consists 

of a proposal to modify the calculation 

of the VaR Floor (as defined below) and 

the corresponding description in the 

FICC Mortgage-Backed Securities 

Division (‘‘MBSD’’) Clearing Rules 

(‘‘MBSD Rules’’) 4 to incorporate a 

‘‘Minimum Margin Amount’’ as 

described in greater detail below. 

The proposed rule change would 

necessitate changes to the Methodology 

and Model Operations Document— 

MBSD Quantitative Risk Model (the 

‘‘QRM Methodology’’), which is 

attached hereto as Exhibit 5.5 FICC is 

requesting confidential treatment of this 

document and has filed it separately 

with the Secretary of the Commission.6

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, the 

clearing agency 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 

clearing agency has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

The purpose of the proposed rule 

change is to modify the calculation of 

the VaR Floor and the corresponding 

description in the MBSD Rules to 

incorporate a Minimum Margin 

Amount. 

The proposed changes would 

necessitate changes to the QRM 


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