81966 Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 

11See supra note 4. 

12 15 U.S.C. 78s(b)(3)(A)(ii). 

13 17 CFR 240.19b–4(f)(2). 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

to away markets on behalf of Members 

and does so in the same manner to all 

Members that are subject to routing fees. 

The costs to the Exchange to route 

orders to away markets for execution 

primarily includes transaction fees and 

rebates assessed by the away markets to 

which the Exchange routes orders, in 

addition to the Exchange’s clearing 

costs, administrative, regulatory and 

technical costs. The Exchange believes 

that the proposed re-categorization of 

certain exchange groupings would 

enable the Exchange to recover the costs 

it incurs to route orders to Nasdaq MRX. 

The per-contract transaction fee amount 

associated with each grouping 

approximates the Exchange’s all-in cost 

(plus an additional, non-material 

amount) to execute the corresponding 

contract at the corresponding exchange. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes its proposed recategorization of certain exchange 

groupings is intended to enable the 

Exchange to recover the costs it incurs 

to route orders to away markets, 

particularly Nasdaq MRX. The Exchange 

does not believe that this proposal 

imposes any unnecessary burden on 

competition because it seeks to recoup 

costs incurred by the Exchange when 

routing orders to away markets on 

behalf of Members and other exchanges 

have similar routing fee structures.11

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

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)(ii) of the Act,12 and Rule 

19b–4(f)(2) 13 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule 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– 

EMERALD–2020–19 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–EMERALD–2020–19. 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–EMERALD–2020–19 and 

should be submitted on or before 

January 7, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27720 Filed 12–16–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90643; File No. SR– 

CboeEDGX–2020–061] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change Relating To 

Amend Its Fee Schedule With Respect 

to Qualified Contingent Cross (‘‘QCC’’) 

and Solicitation Auction Mechanism 

(‘‘SAM’’) Orders 

December 11, 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 

3, 2020, Cboe EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX’’) 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 EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX Options’’) 

proposes to amend its Fee Schedule 

with respect to Qualified Contingent 

Cross (‘‘QCC’’) and Solicitation Auction 

Mechanism (‘‘SAM’’) orders. 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/ 

options/regulation/rule_filings/edgx/), 

at the Exchange’s Office of the 

Secretary, and at the Commission’s 

Public Reference Room. 

Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 81967 

3SAM is the Exchange’s solicited order 

mechanism for larger-sized orders. 4The Exchange initially filed the proposed fee 

changes on December 1, 2020 (SR–CboeEDGX– 

2020–058). On December 3, 2020, the Exchange 

withdrew that filing and submitted this proposal. 5See Cboe Global Markets U.S. Options Market 

Monthly Volume Summary (November 25, 2020), 

available at https://markets.cboe.com/us/options/ 

market_statistics/. 

6See e.g., BOX Options Fee Schedule, Section 

1(D), Qualified Contingent Cross (‘‘QCC’’) 

Transactions, which provides that no fees are 

assessed for Customer and Professional Customer 

QCC transactions. See also NYSE American Options 

Fee Schedule, Section 1(F), QCC Fees and Credits, 

which also provides that no fees are assessed for 

Customer and Professional Customer QCC 

transactions. 

7See e.g., Nasdaq ISE LLC Pricing Schedule, 

Options 7 Pricing Schedule, Section 1, ‘‘Crossing 

Orders’’, which provides that non-customer, nonprofessional QCC orders are assessed $0.20 per 

contract. 

8Fee Code ‘‘BC’’ is appended to AIM Agency 

Customer orders. 

9Fee Code ‘‘NC’’ is appended to Customer NonPenny orders. 

10Fee Code ‘‘PC’’ is appended to Customer Penny 

orders. 

11Fee Code ‘‘SC’’ is appended to SAM Agency 

Customer orders. 

12Fee Code ‘‘QA’’ is appended to QCC Agency 

Customer orders. 

13Fee Code ‘‘QM’’ is appended to QCC Agency 

Non-Customer orders. 

14Fee Code ‘‘ZA’’ is appended to Complex 

Customer (contra Non-Customer), Penny orders. 

15Fee Code ‘‘ZB’’ is appended to Complex 

Customer (contra Non-Customer), Non-Penny 

orders. 

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 modify the 

Fee Schedule relating to Qualified 

Contingent Cross (‘‘QCC’’) and 

Solicitation Auction Mechanism 

(‘‘SAM’’) 3 orders.4

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 options venues to which market 

participants may direct their order flow. 

Based on publicly available information, 

no single options exchange has more 

than 15% of the market share.5 Thus, in 

such a low-concentrated and highly 

competitive market, no single options 

exchange possesses significant pricing 

power in the execution of option order 

flow. 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 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. In response to the competitive 

environment, the Exchange offers 

specific rates and credits in its fees 

schedule, like that of other options 

exchanges’ fees schedules, which the 

Exchange believes provide incentive to 

Members to increase order flow of 

certain qualifying orders. 

QCC Transaction Fees 

By way of background, a QCC order 

is comprised of an ‘initiating order’ to 

buy (sell) at least 1,000 contracts, 

coupled with a contra-side order to sell 

(buy) an equal number of contracts and 

that for complex QCC transactions, the 

1,000 contracts minimum is applied per 

leg. Currently, the Exchange assesses a 

fee of $0.08 per contract for NonCustomer Agency and Contra QCC 

orders and $0.00 for Customer QCC 

Agency and Contra orders. The 

Exchange proposes to amend its fees for 

orders executed in QCC transactions. 

First, the Exchange proposes to 

eliminate transaction fees for 

Professional Agency and Contra QCC 

orders. The purpose of the proposed 

change to waive fees for Professional 

QCC orders is to incentivize the sending 

of QCC orders to the Exchange by these 

market participants and compete with 

other Exchanges that similarly do not 

assess fees on Professional QCC orders.6

In connection with this proposed 

change, the Exchange proposes to adopt 

new fee codes QO and QP to apply 

specifically to QCC Agency and Contra 

Professional orders, respectively, and 

amend the description of current fee 

codes QM and QN to provide it applies 

to Non-Customer, Non-Professionals. 

The Exchange next proposes to increase 

the fees for QCC Agency and Contra 

Non-Customer, Non-Professional orders 

from $0.08 per contract to $0.20 per 

contract. The proposed Non-Customer, 

Non-Professional QCC fee change is also 

in line with amounts assessed by other 

exchanges for similar transactions.7

Agency Orders and Designated Give Up 

Footnote 5 of the Fee Schedule 

currently specifies that when an order is 

submitted with a Designated Give Up, as 

defined in Rule 21.12(b)(1), the 

applicable rebates for such orders when 

executed on the Exchange (orders 

yielding fee code BC, NC, PC, SC, QA, 

QM, ZA and ZB) are provided to the 

Member who routed the order to the 

Exchange. Pursuant to Rule 21.12, 

which specifies the process to submit an 

order with a Designated Give Up, a 

Member acting as an options routing 

firm on behalf of one or more other 

Exchange Members (a ‘‘Routing Firm’’) 

is able to route orders to the Exchange 

and to immediately give up the party (a 

party other than the Routing Firm itself 

or the Routing Firm’s own clearing firm) 

who accepts and clears any resulting 

transaction. Because the Routing Firm is 

responsible for the decision to route the 

order to the Exchange, the Exchange 

currently provides such Member with 

the rebate when orders that yield fee 

code BC,8 NC,9 PC,10 SC,11 QA,12 QM,13

ZA 14 and ZB15 are executed. In 

connection with the adoption of a new 

fee code for QCC Professional orders, 

the Exchange proposes to add new fee 

code QO (QCC Professional Agency 

Order) to the lead-in sentence of 

footnote 5 and to append footnote 5 to 

fee code QO in the Fee Codes and 

Associated Fees table of the Fee 

Schedule. The Exchange notes that 

Professional QCC Agency orders are 

currently included under Footnote 5, 

albeit represented by fee code QM, 

which will no longer be appended to 

Professional QCC Agency orders. 

QCC Initiator/Solicitation Rebate Tiers 

As noted above, the Exchange 

operates in a highly-competitive market 

by which 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. In response to the competitive 

environment, the Exchange offers, 

among other things, 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 

81968 Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 

16Fee Code ‘‘SA’’ is appended to SAM Agency 

Non-Customer orders. 

17See Box Options Fee Schedule, Section 1(D), 

which provides a $0.14 per contract rebate to the 

Agency Order where at least one party to the QCC 

transaction is a Broker-Dealer or Market-Maker (i.e., 

a non-customer, non-professional) and a $0.22 per 

contract rebate where both parties to the QCC 

transaction are a Broker-Dealer or Market-Maker. 

18 15 U.S.C. 78f. 

19 15 U.S.C. 78f(b)(4). 

benefits or discounts for satisfying 

increasingly more stringent criteria. One 

such example is that the Exchange 

currently offers QCC Initiator/ 

Solicitation Rebate Tiers under footnote 

7, which provide enhanced rebates for 

qualifying QCC and SAM Agency orders 

where a Member meets incrementally 

increasing volume thresholds. 

Particularly, the Exchange will apply 

the QCC Initiator/Solicitation Rebate to 

the Member that submits QCC Agency 

Orders or Solicitation Agency Orders, 

including a Member who routed orders 

to the Exchange with a Designated Give 

Up, when at least one side of the 

transaction is of Non-Customer capacity. 

Currently fee codes QA, QM, SA 16 and 

SC qualify for these rebates. Currently, 

Tier 1 provides no rebates for Members 

that submit qualifying orders (i.e., QA, 

QM, SA and SC) totaling 0 to 99,999 

contracts per month; Tier 2, provides a 

rebate of $0.05 per contract for Members 

that submit qualifying orders totaling 

100,000 to 199,999 contracts per month; 

Tier 3, provides a rebate of $0.07 per 

contract for Members that submit 

qualifying orders totaling 200,000 to 

499,999 contracts per month; Tier 4, 

provides a rebate of $0.09 per contract 

for Members that submit qualifying 

orders totaling 500,000 to 749,999 

contracts per month; Tier 5 provides a 

rebate of $0.10 per contract for Members 

that submit qualifying orders totaling 

750,000 to 999,999 contracts per month; 

and Tier 6, provides a rebate of $0.11 

per contract for Members that submit 

qualifying orders totaling 1,000,000 or 

more contracts per month. 

The Exchange proposes to amend the 

QCC Initiator/Solicitation Rebate Tier 

program by (1) amending the volume 

thresholds, (2) eliminating Tiers 5 and 

6, (3) amending the current rebates and 

(4) clarifying that the program will 

apply to new fee code QO which will be 

appended to QCC Agency Professional 

orders. The Exchange first proposes to 

amend the volume thresholds as 

follows: 

• To receive the rebate in Tier 1, a 

member must submit qualifying orders 

totaling 0–999,999 contracts per month. 

• To receive the rebate in Tier 2, a 

member must submit qualifying orders 

totaling 1,000,000–1,999,999 contracts 

per month. 

• To receive the rebate in Tier 3, a 

member must submit qualifying orders 

totaling 2,000,000–2,999,999 contracts 

per month. 

• To receive the rebate in Tier 4, a 

member must submit qualifying orders 

totaling 3,000,000 or more contracts per 

month. 

The Exchange also proposes to 

eliminate Tiers 5 and 6 and notes that 

no Members have historically hit such 

tiers. The Exchange also proposes to 

adopt a new rebate structure for Tiers 1 

through 4. Particularly, the Exchange 

proposes to adopt two separate rebates 

that are available under each tier, 

depending on the market participants 

involved in a particular transaction. A 

qualifying order will receive the rebate 

under ‘‘Rebate 1’’ if one side of the 

transaction is of Non-Customer, NonProfessional capacity. A qualifying 

order will receive the rebate under 

‘‘Rebate 2’’, if both sides of the 

transaction are of Non-Customer, NonProfessional capacity. Transactions 

where both sides of the transaction are 

Customers or Professionals will not 

receive a rebate. The proposed rebates 

and corresponding tiers are as follows: 

Tier Volume threshold 

(per month) Rebate 1 Rebate 2 

1 ............. 0 to 999,999 contracts ......................................................................................................................... ($0.14) ($0.22) 

2 ............. 1,000,000 to 1,999,999 contracts ........................................................................................................ ($0.15) ($0.23) 

3 ............. 2,000,000 to 2,999,999 contracts ........................................................................................................ ($0.16) ($0.24) 

4 ............. 3,000,000+ contracts ........................................................................................................................... ($0.16) ($0.26) 

The Exchange is proposing to increase 

the volume thresholds under the tiers in 

light of the proposed new (and much 

higher) enhanced rebates. Particularly, 

the Exchange believes the proposed 

thresholds are more appropriate and 

commensurate with the new proposed 

rebates. The Exchange notes that it also 

wishes to provide a lower enhanced 

rebate where only one side of a 

transaction is a Non-Customer, NonProfessional, as it receives less revenue 

as compared to when both sides of a 

transaction are Non-Customer, NonProfessionals. The Exchange believes 

the proposed rebates and rebate 

structure are competitive with rebates 

offered at another exchange for similar 

transactions.17 Additionally, the 

proposed changes to the QCC Initiator/ 

Solicitation Rebate Tiers are designed to 

incentivize Members to grow their QCC 

Initiator and/or Solicitation order flow 

to receive the enhanced rebates. The 

Exchange believes that incentivizing 

greater QCC Initiator and/or Solicitation 

order flow would provide more 

opportunities for participation in QCC 

trades or in the SAM Auction which 

icreases [sic] opportunities for price 

improvement. 

Lastly, in connection with the 

adoption of a new fee code for QCC 

Professional orders, the Exchange 

proposes to add new fee code QO (QCC 

Agency Professional Order) to the leadin sentence of footnote 7 and to append 

footnote 7 to fee code QO in the Fee 

Codes and Associated Fees table of the 

Fee Schedule. The Exchange notes that 

Professional QCC Agency orders already 

are included under Footnote 7, albeit 

represented by fee code QM, which will 

no longer be appended to Professional 

QCC Agency orders. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6 of the Act,18 in general, and 

furthers the requirements of Section 

6(b)(4),19 in particular, as it is designed 

to provide for the equitable allocation of 

reasonable dues, fees and other charges 

among its facilities and does not 

unfairly discriminate between 

customers, issuers, brokers or dealers. 

As stated above, 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 

Exchange is only one of several options 

venues to which market participants 

may direct their order flow, and it 

represents a small percentage of the 

overall market. The proposed fee 

Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 81969 

20See e.g., BOX Options Fee Schedule, Section 

1(D), Qualified Contingent Cross (‘‘QCC’’) 

Transactions. See also NYSE American Options Fee 

Schedule, Section 1(F), QCC Fees and Credits and 

Nasdaq ISE LLC Pricing Schedule, Options 7 

Pricing Schedule, Section 1, ‘‘Crossing Orders’’. 

21See e.g., BOX Options Fee Schedule, Section 

1(D), Qualified Contingent Cross (‘‘QCC’’) 

Transactions, which provides that no fees are 

assessed for Customer and Professional Customer 

QCC transactions. See also NYSE American Options 

Fee Schedule, Section 1(F), QCC Fees and Credits, 

which also provides that no fees are assessed for 

Customer and Professional Customer QCC 

transactions. 

22See e.g., Nasdaq ISE LLC Pricing Schedule, 

Options 7 Pricing Schedule, Section 1, ‘‘Crossing 

Orders’’, which provides that non-customer, nonprofessional QCC orders are assessed $0.20 per 

contract. 

23See Box Options Fee Schedule, Section 1(D), 

which provides a $0.14 per contract rebate to the 

Agency Order where at least one party to the QCC 

transaction is a Broker-Dealer or Market-Maker (i.e., 

a non-customer, non-professional) and a $0.22 per 

contract rebate where both parties to the QCC 

transaction are a Broker-Dealer or Market-Maker. 

changes reflect a competitive pricing 

structure designed to incentivize market 

participants, including Professionals, to 

direct their QCC order flow, which the 

Exchange believes would enhance 

market quality to the benefit of all 

Members. 

Overall, the Exchange believes that its 

volume-based tiers for QCC and SAM 

Agency Orders is consistent with 

Section 6(b)(4) of the Act in that the 

proposed fees are reasonable, equitable 

and not unfairly discriminatory. The 

Exchange believes that the proposed 

fees and rebates are reasonable, 

equitable, and not unfairly 

discriminatory in that competing 

options exchanges offer substantially 

the same fees and credits in connection 

with QCC transactions as the Exchange 

now proposes.20

QCC Transaction Fees 

In particular, the Exchange believes 

the proposal to not assess a fee for 

Professional QCC orders is reasonable 

because such market participants would 

not be subject to any fees for such 

transactions. The Exchange notes other 

Exchanges also waive fees for 

Professional QCC transactions.21 The 

Exchange believes the proposed change 

to increase the fee for Non-Customer, 

Non-Professional QCC orders is 

reasonable because it is in line with the 

amounts assessed for similar orders at 

other exchanges.22 Additionally, the 

proposed rate changes apply uniformly 

to similarly situated market 

participants. 

Professional QCC Agency Orders and 

Designated Give Up 

The Exchange believes that the 

proposal to add new fee code QO to the 

lead-in sentence of footnote 5 and to 

append footnote 5 to fee code QO is a 

reasonable and equitable allocation of 

fees and dues and is not unreasonably 

discriminatory because, as is currently 

the case pursuant to footnote 5 and Rule 

21.12(b)(1), the proposal simply makes 

clear that a firm acting as a Routing 

Firm that routes Professional QCC 

Agency Orders to the Exchange will be 

provided applicable rebates, based on 

the Routing Firm’s decision to route the 

order to the Exchange. Particularly, as 

noted above, Professional QCC Agency 

orders were already subject to footnote 

5 of the fee schedule, albeit represented 

by footnote QM. 

QCC Initiator/Solicitation Rebate Tiers 

The Exchange believes the proposed 

changes to the existing QCC Initiator/ 

Solicitation Rebate Tiers is reasonable 

because they continue to provide 

opportunities for Members to receive 

higher rebates by providing for 

incrementally increasing volume-based 

criteria they can reach for (albeit using 

more stringent criteria, but offering 

higher enhanced rebates). The Exchange 

believes the rebate tiers, as modified, 

continue to serve as a reasonable means 

to encourage Members to increase their 

liquidity on the Exchange, particularly 

in connection with additional QCC and/ 

or Solicitation Agency Order flow to the 

Exchange in order to benefit from the 

proposed enhanced rebates. The 

Exchange believes that incentivizing 

greater QCC Initiator and/or Solicitation 

order flow would provide more 

opportunities for participation in QCC 

trades or in the SAM Auction which 

increases opportunities for price 

improvement. The Exchange also notes 

that any overall increased liquidity that 

may result from the proposed tier 

incentives benefits all investors by 

offering additional flexibility for all 

investors to enjoy cost savings, 

supporting the quality of price 

discovery, promoting market 

transparency and improving investor 

protection. The Exchange again notes 

that volume-based incentives and 

discounts have been widely adopted by 

other exchanges, and believes that the 

proposed tiers are reasonable, equitable 

and non-discriminatory because they 

are open to all Members on an equal 

basis. 

The Exchange believes eliminating 

current Tiers 5 and 6 is reasonable 

because the Exchange is not required to 

maintain these tiers and Members still 

have the opportunity to receive 

enhanced rebates under the existing 

Tiers 1–4. Moreover, no Member has 

historically achieved these tiers. The 

Exchange believes the proposal to 

eliminate these tiers is also equitable 

and not unfairly discriminatory because 

it applies to all Members. 

The Exchange believes the proposed 

enhanced rebates are commensurate 

with the difficulty of the proposed 

criteria and that the tiers continue to 

provide an incremental incentive for 

Members to strive for higher tier levels, 

which provides increasingly higher 

rebates for satisfying increasingly more 

stringent criteria. As noted above, the 

Exchange also believes the proposal to 

adopt two alternative rebates depending 

on the capacity of the parties to the 

transaction is reasonable. As discussed, 

the Exchange wishes to provide a lower 

enhanced rebate where only one side of 

a transaction is a Non-Customer, NonProfessional, as these transactions 

generally generate less revenue as 

compared to when both sides of a 

transaction are Non-Customer, NonProfessionals. The Exchange also 

believes the proposed rebates and rebate 

structure are competitive with rebates 

offered at another exchange for similar 

transactions.23

The Exchange believes that the 

proposed changes to Tiers 1–4 represent 

an equitable allocation of fees and is not 

unfairly discriminatory because 

Members will be eligible for these tiers 

and the corresponding enhanced rebates 

will apply uniformly to all Members 

that reach the proposed tier criteria. The 

Exchange believes that a number of 

market participants have a reasonable 

opportunity to satisfy the tiers’ criteria, 

even as modified. The Exchange notes 

that currently no Members satisfy any of 

the Tiers’ current criteria. While the 

Exchange has no way of knowing 

whether this proposed rule change 

would definitively result in any 

particular Member qualifying for the 

proposed tiers, the Exchange anticipates 

at least one to three Members meeting, 

or being reasonably able to meet, the 

proposed criteria under the rebate tiers. 

Particularly, the Exchange anticipates at 

least one firm to satisfy the criteria 

under each of Tiers 1, 2 and 3; however, 

the proposed tiers are open to any 

Member that satisfies the tiers’ criteria. 

The Exchange also notes that the 

proposed changes will not adversely 

impact any Member’s pricing or their 

ability to qualify for other rebate tiers. 

Rather, should a Member not meet the 

proposed criteria, the Member will 

merely not receive the corresponding 

enhanced rebates. 

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 

81970 Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 

24See supra note 1 [sic]. 

25 15 U.S.C. 78s(b)(3)(A). 

26 17 CFR 240.19b–4(f). 

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 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.’’ 

The Exchange believes that 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. 

First, the Exchange notes that the 

proposed changes apply uniformly to 

similarly situated Members. The 

Exchange believes that the proposed 

changes related to QCC and SAM 

transactions would not impose any 

burden on intramarket competition, but 

rather, serves to increase intramarket 

competition by incentivizing members, 

including Professionals, to direct their 

QCC and SAM orders to the Exchange, 

in turn providing for more opportunities 

to compete at improved prices. 

Additionally, the proposed rule change 

benefits all market participants as any 

overall increased liquidity that may 

result from the proposed fee and tier 

incentives benefits all investors by 

offering additional flexibility for all 

investors to enjoy cost savings, 

supporting the quality of price 

discovery, promoting market 

transparency and improving investor 

protection. 

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 they may participate on and 

direct their order flow, including 15 

other options exchanges. Additionally, 

the Exchange represents a small 

percentage of the overall market. Based 

on publicly available information, no 

single options exchange has more than 

15% of the market share.24 Therefore, 

no exchange possesses significant 

pricing power in the execution of order 

flow. Indeed, participants can readily 

choose to send their orders to other 

exchanges and off-exchange venues if 

they deem fee levels at those other 

venues to be more favorable. As noted 

above, the Exchange believes that the 

proposed pricing rebates under the QCC 

Initiator/Solicitation Rebate Tiers is 

comparable to that of other exchanges 

offering similar QCC functionality. 

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.’’ 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’. . . .’’. 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 25 and paragraph (f) of Rule 

19b–4 26 thereunder. At any time within 

60 days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

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– 

CboeEDGX–2020–061 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–CboeEDGX–2020–061. 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 

Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / Notices 81971 

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Rule 1901. The Exchange notes 

that it submitted a separate filing with the 

Commission pursuant to Section 19(b)(3)(A) of the 

Act to establish the Fee Schedule and adopt 

transaction fees. See Securities Exchange Act 

Release No. 90102 (October 6, 2020), 85 FR 64559 

(October 13, 2020) (SR–PEARL–2020–17). 

4See Securities Exchange Act Release No. 89563 

(August 14, 2020), 85 FR 51510 (August 20, 2020) 

(SR–PEARL–2020–03) (Order Approving a 

Proposed Rule Change, as Modified by Amendment 

No. 1, To Establish Rules Governing the Trading of 

Equity Securities) (‘‘Approval Order’’). 

5The term ‘‘Equity Member’’ means a Member 

authorized by the Exchange to transact business on 

MIAX PEARL Equities. See Exchange Rule 1901. 

6The Exchange initially filed the proposed fee 

changes on September 24, 2020 (SR–PEARL–2020– 

18). See SR–PEARL–2020–18 (the ‘‘First Proposed 

Rule Change’’). 

7See Securities Exchange Act Release No. 90186 

(October 14, 2020), 85 FR 66656 (October 20, 2020) 

(SR–PEARL–2020–19) (the ‘‘Second Proposed Rule 

Change’’). 

8See id. 

9See letter from Chris Solgan, VP, Senior 

Counsel, the Exchange, dated November 20, 2020, 

notifying the Commission that the Exchange would 

withdraw SR–PEARL–2020–19. 

10 In this filing, the Exchange also corrects an 

error in the earlier filings by replacing references to 

the term ‘‘Priority Purge Ports’’ with simply ‘‘Purge 

Ports.’’ 

11See Cboe BZX Exchange, Inc. Fee Schedule, 

Definitions section; Cboe BYX Exchange, Inc., 

Definitions section; Cboe EDGA Exchange, Inc., 

Definitions section; Cboe EDGX Exchange, Inc., 

Definitions section. 

submissions should refer to File 

Number SR–CboeEDGX–2020–061 and 

should be submitted on or before 

January 7, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27724 Filed 12–16–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90651; File No. SR– 

PEARL–2020–33] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend the MIAX 

PEARL Equities Fee Schedule To 

Adopt Connectivity Fees, Port Fees, a 

Technical Support Request Fee, and 

Historical Market Data Fee 

December 11, 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 December 

3, 2020, MIAX PEARL, LLC (‘‘MIAX 

PEARL’’ or ‘‘Exchange’’), filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) a 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 

The Exchange is filing a proposal to 

amend the MIAX PEARL Equities Fee 

Schedule (the ‘‘Fee Schedule’’) by 

adopting fees applicable to participants 

trading equity securities on and/or using 

services provided by MIAX PEARL 

Equities.3

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/pearl at MIAX PEARL’s principal 

office, 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 

On August 14, 2020, the Commission 

approved the Exchange’s proposal to 

adopt rules governing the trading of 

equity securities, referred to as MIAX 

PEARL Equities.4 The Exchange 

launched MIAX PEARL Equities on 

September 25, 2020. The Exchange 

proposes to adopt a Definitions section 

in the Fee Schedule as well as the 

following fees: (1) Connectivity fees for 

Equity Members 5 and non-Members; (2) 

Port fees (together with the proposed 

connectivity fees, the ‘‘Proposed Access 

Fees’’); (3) a Technical Support Request 

fee; and (4) a fee for Historical Market 

Data (collectively, the ‘‘Proposed Fees’’). 

The Exchange initially filed the 

proposal on September 24, 2020.6 The 

Exchange withdrew the First Proposed 

Rule Change on October 5, 2020 and 

submitted SR–PEARL–2020–19.7 The 

Second Proposed Rule Change was 

published for comment in the Federal 

Register on October 20, 2020 8 and no 

comment letters were received. 

Nonetheless, the Exchange withdrew 

the Second Proposed Rule Change 9 and 

now replaces it with this filing to 

provide further clarification regarding 

the Exchange’s cost analysis for the 

Proposed Fees.10

MIAX PEARL Equities, as a new 

entrant into the equity securities 

marketplace, has only begun generating 

revenue and has a very low market 

share. The Exchange believes that 

exchanges, in setting fees of all types, 

should meet very high standards of 

transparency to demonstrate why each 

new fee or fee increase meets the 

requirements of the Act that fees be 

reasonable, equitably allocated, not 

unfairly discriminatory, and not create 

an undue burden on competition among 

members and markets. The Exchange 

believes this high standard is especially 

important when an exchange imposes 

various access fees for market 

participants to access an exchange’s 

marketplace. The Exchange believes that 

it is important to demonstrate that these 

fees are based on its costs and 

reasonable business needs. Accordingly, 

the Exchange believes the Proposed 

Fees in general, and the Proposed 

Access Fees in particular, will allow the 

Exchange to offset a portion of the 

expenses the Exchange has and will 

incur and that the Exchange has 

provided sufficient transparency (as 

described below) into how the Exchange 

determined to charge such fees. 

Definitions 

The Exchange proposes to include a 

Definitions section at the beginning of 

the Fee Schedule, before the General 

Notes section. The purpose of the 

Definitions section is to provide market 

participants greater clarity and 

transparency regarding the applicability 

of fees and rebates by defining terms 

used within the Fee Schedule in a single 

location. The Exchange notes that other 

equities exchanges include Definitions 

sections in their respective fee 

schedules,11 and the Exchange believes 

that including a Definitions section in 

the front of the Fee Schedule makes the 

Fee Schedule more user-friendly and 

makes the Fee Schedule more 

comprehensive. 

Unless included in the Definition 

section, capitalized terms used in the 

Fee Schedule are defined in the MIAX 

PEARL Equities Rules. Each of the 

definitions proposed to be included in