Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices 6393 

24 15 U.S.C. 78s(b)(3)(A)(iii). 

25 17 CFR 240.19b–4(f)(6). 

26 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

27 15 U.S.C. 78s(b)(2)(B). 

28 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

outcry trading and this portion of their 

business is inoperable if open outcry is 

unavailable. 

The Exchange’s proposal seeks to 

provide greater accessibility to Floor 

Brokers for the portion of their business 

which does not require the 

infrastructure afforded by the Trading 

Floor while not amending the manner in 

which those orders are handled by 

either FBMS or the System. This 

proposal is competitive in that it allows 

Floor Brokers the ability to participate 

more continuously and efficiently on 

Phlx. All Floor Brokers have access to 

FBMS and therefore would be able to 

remotely submit limit orders to the 

electronic limit order book and Floor 

Qualified Contingent Cross Orders to 

the System as well as continue to 

submit these types of orders while on 

the Trading Floor. Further, the 

Exchange believes that this proposal, 

which would allow member 

organizations to utilize their Floor 

Brokers, who may be located in other 

locations, to more efficiently staff their 

operations and also to conduct their 

business, even in the event of a closure 

of the Trading Floor. 

Finally, this proposal does not amend 

the manner in which fees or other 

pricing incentives, such as caps, apply 

to Floor Brokers. 

Technical Amendment 

The Exchange’s proposal to amend 

Options 8, Section 1(a) to add the word 

‘‘System’’ to the end of ‘‘Options Floor 

Based Management’’ within the first 

sentence does not impose an undue 

burden on competition as this term 

conforms the manner in which the 

Exchange utilizes the term ‘‘Options 

Floor Based Management System’’ 

throughout Options 8. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 24 and Rule 

19b–4(f)(6) thereunder.25 Because the 

proposed rule change does not: (i) 

Significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

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

of the Act and Rule 19b–4(f)(6)(iii) 

thereunder.26

At any time within 60 days of the 

filing of such 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 

under Section 19(b)(2)(B) 27 of the Act 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– 

Phlx–2021–02 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–Phlx–2021–02. 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–Phlx–2021–02 and should 

be submitted on or before February 11, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01129 Filed 1–19–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90914; File No. SR– 

CboeEDGX–2021–003] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Fee Schedule To Expand the Existing 

Financial Product Distribution Program 

To Provide for a Derived Data Platform 

Service 

January 13, 2021. 

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 January 4, 

2021, Cboe EDGX Exchange, Inc. 

(‘‘Exchange’’ or ‘‘EDGX’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 


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3See Exchange Rule 13.8(b). 

4A swap is a derivative contract in which two 

parties agree to exchange financial instruments. 

5A swaption, or swap option, is an option to 

enter into a swap at a specified time. 

6A contract for difference is an agreement to 

exchange the difference between the current value 

of an asset and its future value. If the price 

increases, the seller pays the buyer the amount of 

the increase. If the price decreases, the buyer pays 

the seller the amount of the decrease. 

7Currently, EDGX Top data is the only Exchange 

data included in the Program; however, as 

discussed in further detail below, the Exchange is 

also proposing to include Cboe One Summary in 

the Program. 

8External distribution occurs when a Distributor 

that receives an Exchange Market Data product 

distributes that data to a third-party or one or more 

users outside the Distributor’s own entity. 

9A ‘‘Professional User’’ of an Exchange Market 

Data product is any User other than a NonProfessional User. A ‘‘Non-Professional User’’ of an 

Exchange Market Data product is a natural person 

or qualifying trust that uses Data only for personal 

purposes and not for any commercial purpose and, 

for a natural person who works in the United States, 

is not: (i) Registered or qualified in any capacity 

with the Securities and Exchange Commission, the 

Commodities Futures Trading Commission, any 

state securities agency, any securities exchange or 

association, or any commodities or futures contract 

market or association; (ii) engaged as an 

‘‘investment adviser’’ as that term is defined in 

Section 202(a)(11) of the Investment Advisors Act 

of 1940 (whether or not registered or qualified 

under that Act); or (iii) employed by a bank or other 

organization exempt from registration under federal 

or state securities laws to perform functions that 

would require registration or qualification if such 

functions were performed for an organization not so 

exempt; or, for a natural person who works outside 

of the United States, does not perform the same 

functions as would disqualify such person as a 

Non-Professional User if he or she worked in the 

United States. 

10The Non-Professional User Fee for external 

distribution of EDGX Top is $0.10/month. 

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. (‘‘EDGX’’ 

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

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

to amend the Fee Schedule to expand 

the existing Financial Product 

Distribution Program (the ‘‘Program’’) to 

provide for a Derived Data Platform 

Service. Additionally, the proposal 

seeks to enhance the Program to provide 

for the distribution of data derived from 

the Cboe Aggregated Market (‘‘Cboe 

One’’) 3 Summary Feed. 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. 

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 purpose of the proposed rule 

change is to implement a pricing 

structure that would reduce fees 

charged to Distributors of ‘‘Derived 

Data’’, as defined below, through an 

Exchange approved Derived Data 

Platform Service. Additionally, the 

proposal seeks to enhance the Program 

to permit the distribution of data 

derived from Cboe One Summary 

through the existing White Label 

Service, Application Programming 

Interface (‘‘API’’) Service, and the 

proposed Platform Service. 

Derived Data Platform Service 

‘‘Derived Data’’ is pricing data or 

other data that (i) is created in whole or 

in part from Exchange Data, (ii) is not 

an index or financial product, and (iii) 

cannot be readily reverse-engineered to 

recreate Exchange Data or used to create 

other data that is a reasonable facsimile 

or substitute for Exchange Data. Derived 

Data may be created by Distributors for 

a number of different purposes, as 

determined by the Distributor. Possible 

uses include the display of information 

or data, or the creation of derivative 

instruments, such as swaps,4

swaptions,5 or contracts for difference.6

The specific use of the data is 

determined by the Distributor, as 

applicable fees do not depend on the 

purpose for placing the Derived Data 

under the Program. 

The Exchange currently offers a White 

Label Service and an API Service that 

allow Distributors to benefit from 

discounted fees when distributing 

Derived Data taken from Exchange 

data.7 Instead of the regular fee for 

external distribution 8 of Exchange data, 

Distributors of Derived Data under both 

the White Label Service and API Service 

are charged a tiered External Subscriber 

Fee based on the number of External 

Subscribers that receive Derived Data 

from the Distributor. Additionally, 

Distributors are charged a Professional 

User 9 Fee based on the number of 

Professional Users of the Derived Data. 

Non-Professional Users of Derived Data 

are not subject to a fee under either the 

White Label Service or the API Service. 

The White Label Service is a type of 

hosted display solution in which a 

Distributor hosts, maintains, and 

controls a website or platform on behalf 

of a third-party entity. The service 

allows Distributors to make Derived 

Data available on a platform that is 

branded with a third-party brand, or cobranded with a third-party and a 

Distributor, while the Distributor 

maintains control of the applications 

data, entitlements and display. 

Alternatively, the API Service is a type 

of data feed distribution in which a 

Distributor delivers an API or similar 

distribution mechanism to a third-party 

entity for use within one or more 

platforms. The API Service allows 

Distributors to provide Derived Data to 

a third-party entity for use within one 

or more downstream platforms that are 

operated and maintained by the thirdparty entity. The Distributor maintains 

control of the entitlements, but does not 

maintain technical control of the usage 

or the display. 

Now the Exchange is proposing to 

implement a third service under the 

Program, the Platform Service. The 

Platform Service would allow a 

Distributor to provide derivative 

products directly to users that are 

hosted within their infrastructure. The 

Platform Service would be strictly 

limited to derivative products based in 

whole or in part on Exchange data 

where only user remote access is 

permitted. Normally, distributors of 

Exchange market data may be subject to 

Distribution and User Fees including an: 

External Distribution Fee, Professional 

User Fee, and Non-Professional User 

Fee. Distributors would be liable for the 

fees normally applicable for external 

distribution except for the NonProfessional User fee,10 which would be 

eliminated when participating in the 

Platform Service, further reducing costs 

for Distributors that provide access to 

such data to retail investors. In contrast 

to the existing White Label Service and 

API Service, the Platform Service 

provides a targeted discount to 

Distributors rather than to External 

Subscribers. 


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11See Exchange Rule 13.8(b). 

12Supra note 3. 

Like the existing White Label Service 

and API Service, the proposed Platform 

Service would be entirely optional, in 

that it would only apply to Distributors 

that opt to use Derived Data to create a 

Platform Service, as described herein. It 

would not impact or raise the cost of 

any other Exchange product, nor would 

it affect the cost of Exchange data, 

except in instances where Derived Data 

is made available on a Platform Service. 

A Distributor that provides a Platform 

Service for Exchange data that is not 

Derived Data or distributes Derived Data 

through a platform other than an 

approved White Label Service, API 

Service, or Platform Service would be 

liable for the fees normally applicable 

for the distribution of Exchange data. 

Cboe One Summary 

In addition to the above, the Exchange 

is proposing to adopt fees for the 

distribution of data derived from Cboe 

One Summary under the existing White 

Label Service and API Service, as well 

as the proposed Platform Service. Under 

the existing Fee Schedule, Distributors 

that participate in the Program may only 

create Derived Data from EDGX Top,11

a proprietary data product that provides 

top of book quotations and execution 

information for all equity securities 

traded on the Exchange. The Exchange 

is now proposing a fee amendment to 

allow Distributors that participate in the 

Program to create Derived Data from 

Cboe One Summary in addition to 

EDGX Top. Cboe One Summary is a 

proprietary data product that provides 

the top of book quotations and 

execution information for all listed 

equity securities traded across the 

Exchange and its affiliated U.S. equities 

exchanges (the ‘‘Cboe equity 

exchanges’’).12 Therefore, Distributors of 

Derived Data created from Cboe One 

Summary could display information or 

data or create derivative instruments 

based on top of book information across 

the four Cboe equity exchanges rather 

than just EDGX. The Exchange believes 

that the proposal will enhance the 

Program as the inclusion of Cboe One 

Summary will allow Distributors to 

create Derived Data that is based on a 

more comprehensive view of the U.S. 

equities market. 

As discussed above, Distributors of 

Exchange data, including Cboe One 

Summary, may be subject to 

Distribution and User Fees including an: 

External Distribution Fee, Professional 

User Fee, and Non-Professional User 

Fee. As proposed, a Distributor that 

provides Derived Data from Cboe One 

Summary would be liable for the 

proposed fees discussed below instead 

of the fees normally applicable for the 

distribution of Cboe One Summary. 

Existing fees for EDGX Top Derived 

Data within a White Label Service or 

API Service are comprised of a tiered fee 

based on the number of External 

Subscribers, a monthly fee for each 

Professional User, and include no fee for 

Non-Professional Users. Similarly, the 

proposed fees for the Platform Service 

are comprised of the normal External 

Distribution and Professional User fees 

applicable for the distribution of EDGX 

Top except that they would not be 

subject to the Non-Professional Users 

fees normally applicable. The Exchange 

proposes to adopt a similar fee structure 

for Cboe One Summary Derived Data. 

As proposed, Distributors would be 

charged the following fees for a White 

Label Service for Cboe One Summary 

Derived Data: (1) $1,000 Per month for 

each External Subscriber if the 

Distributor makes Derived Data 

available to 1–5 External Subscribers; 

(2) $750 per month for each External 

Subscriber if the Distributor makes 

Derived Data available to 6–10 External 

Subscribers; and (3) $500 per month for 

each External Subscriber if the 

Distributor makes Derived Data 

available to 11 or more External 

Subscribers. For example, a Distributor 

providing White Label Derived Data 

based on Cboe One Summary to six 

External Subscribers would be charged 

a monthly fee of $4,500 (i.e., 6 External 

Subscribers x $750 each). Additionally, 

the Exchange would continue to charge 

a monthly Professional User fee of $10 

per month for each Professional User. 

The Exchange proposes no NonProfessional User fee for the distribution 

of Cboe One Summary Derived Data 

under the White Label Service, which is 

consistent with the fee structure for the 

distribution of EDGX Top Derived Data 

under the White Label Service. 

Alternatively, Distributors would be 

charged the following fees for an API 

Service for Cboe One Summary Derived 

Data: (1) $5,000 Per month for each 

External Subscriber if the Distributor 

makes Derived Data available to 1–5 

External Subscribers; (2) $4,000 per 

month for each External Subscriber if 

the Distributor makes Derived Data 

available to 6–20 External Subscribers; 

and (3) $3,000 per month for each 

External Subscriber if the Distributor 

makes Derived Data available to 11 or 

more External Subscribers. For example, 

a Distributor providing API Service 

Derived Data based on Cboe One 

Summary to six External Subscribers 

would be charged a monthly fee of 

$24,000 (i.e., 6 External Subscribers x 

$4,000 each). Additionally, the 

Exchange would continue to charge a 

monthly Professional User fee of $10 per 

month for each Professional User. The 

Exchange proposes no Non-Professional 

User fee for the distribution of Cboe One 

Summary Derived Data under the API 

Service, which is consistent with the fee 

structure for the distribution of EDGX 

Top Derived Data under the API 

Service. 

Lastly, the Exchange proposes to 

adopt fees for the proposed Platform 

Service for Cboe One Summary data in 

addition to the proposed fees for EDGX 

Top discussed above. Like the proposed 

fee for EDGX Top Derived Data, 

Distributors of Cboe One Summary 

Derived Data would be liable for the fees 

normally applicable for the external 

distribution of Cboe One Summary, 

except for the Non-Professional User fee 

(i.e., $0.25/month) which would be free 

under the Platform Service. 

Corresponding Amendments to Fee 

Schedule 

Based on the proposed amendments 

discussed above, the Exchange proposes 

several clarifying modifications to the 

Fee Schedule. First, the Exchange 

proposes to add a definition of 

‘‘Platform Service’’ to the Market Data 

Fees definitions section of the Fee 

Schedule. The definition would provide 

that ‘‘a Platform Service is a type of 

hosted display solution in which a 

Distributor provides derivative products 

to Platform Service Data Users within 

their infrastructure. The service allows 

Distributors to make Derived Data 

available as part of a platform, providing 

users remote access to derivative 

products based in whole or in part on 

Exchange Data.’’ 

The Exchange also proposes to amend 

explanatory asterisks provided under 

the Program in the Fee Schedule. 

Specifically, the Exchange proposes to 

amend the paragraph following the first 

asterisk to reference the proposed 

Platform Service in addition to the 

existing references to the White Label 

Service and API Service. Additionally, 

the Exchange proposes to add references 

to Cboe One Summary after all 

references to EDGX Top in the 

paragraph following the first asterisk. 

Lastly, the Exchange proposes to add 

additional examples to asterisks two 

and three so as to explain the 

application of fees for Derived Data from 

Cboe One Summary. These proposed 

non-substantive changes would provide 

clarity in the Fee Schedule based on the 

addition of the Platform Service and 

Cboe One Summary proposed herein. 


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13 15 U.S.C. 78f. 

14 15 U.S.C. 78f(b)(4). 

15 15 U.S.C. 78k–1. 

16See 17 CFR 242.603. 

17See Securities Exchange Act Release No. 51808 

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

(‘‘Regulation NMS Adopting Release’’). 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,13

in general, and furthers the objectives of 

Section 6(b)(4),14 in particular, as it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its members and 

other recipients of Exchange data. 

The Exchange also believes that the 

proposed rule change is consistent with 

Section 11(A) of the Act.15 Specifically, 

the proposed rule change supports (i) 

fair competition among brokers and 

dealers, among exchange markets, and 

between exchange markets and markets 

other than exchange markets, and (ii) 

the availability to brokers, dealers, and 

investors of information with respect to 

quotations for and transactions in 

securities. In addition, the proposed 

rule change is consistent with Rule 603 

of Regulation NMS,16 which provides 

that any national securities exchange 

that distributes information with respect 

to quotations for or transactions in an 

NMS stock do so on terms that are not 

unreasonably discriminatory. 

In adopting Regulation NMS, the 

Commission granted SROs and brokerdealers increased authority and 

flexibility to offer new and unique 

market data to the public. It was 

believed that this authority would 

expand the amount of data available to 

consumers, and also spur innovation 

and competition for the provision of 

market data. The Exchange believes that 

the proposed fee change would further 

broaden the availability of U.S. equity 

market data to investors, consistent with 

the principles of Regulation NMS. 

The Exchange operates in a highly 

competitive environment. Indeed, there 

are 16 registered national securities 

exchanges that trade U.S. equities and 

have the capability to offer associated 

top of book market data products to 

their customers. The national securities 

exchanges also compete with the 

Securities Information Processors 

(‘‘SIPs’’) for market data customers. 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.’’ 17 The 

proposed fee change is a result of the 

competitive environment, as the 

Exchange seeks to amend its fees to 

attract additional subscribers for its 

proprietary top of book data offerings 

through the introduction of a Derived 

Data Platform Service and the expansion 

of top of book data offerings to include 

Cboe One Summary under the Program. 

The Exchange believes that it is 

reasonable to introduce reduced fees for 

the use of Derived Data on Platform 

Services as the proposed fee reduction 

would facilitate cost effective access to 

market information that is used 

primarily to create and display certain 

derivative instruments rather than to 

display the underlying U.S. equity 

securities. The proposed Platform 

Service fees are constrained by 

competition, and it is this competition 

that is driving the proposed fee change. 

Indeed, the Program is designed to 

allow the Exchange to compete more 

effectively for market data distributors 

that purchase market information to 

offer Derived Data to investors. 

Similarly, the Exchange believes that 

it is reasonable to enhance the Program 

by expanding Exchange data offered 

under the Program to include Cboe One 

Summary as doing so will allow 

Distributors to create Derived Data that 

is based on a more comprehensive view 

of the U.S. equities market. Because 

Exchange data in this context is 

primarily purchased for the creation of 

Derived Data encompassing certain 

derivative instruments, Distributors do 

not require a consolidated view of the 

market across multiple exchanges, and 

will generally purchase such data from 

a single or select few exchange(s) for 

their purposes. As noted above, Cboe 

One Summary includes top of book 

quotation and transaction data across all 

four Cboe equity exchanges, which 

would allow Distributors to create more 

meaningful Derived Data than that 

available from a single exchange’s 

market data at a potentially reduced 

price. 

The existence of alternatives to the 

Program ensures that the Exchange 

cannot set unreasonable or unfairly 

discriminatory fees, as subscribers are 

free to elect such alternatives. That is, 

the Exchange competes with other 

exchanges that provide similar market 

data products and pricing programs. 

Expanding the availability of diverse 

competitive products actually promotes 

additional competition as it ensures that 

alternative products from different 

sources are readily available to 

Distributors and the broader market. 

The Exchange therefore believes that the 

introduction of pricing programs and 

the expansion of Exchange data are not 

only constrained by competition but 

also ensure continued competition that 

acts as a constraint on the pricing of 

services provided by other national 

securities exchanges and the SIPs. If a 

competing exchange were to charge less 

for a similar product than the Exchange 

charges under the proposed fee 

structure, prospective subscribers may 

choose not subscribe to, or cease 

subscribing to, the Program. The 

Exchange believes that lowering the cost 

of accessing Derived Data may make the 

Exchange’s market information more 

attractive, and encourage additional 

Distributors to subscribe to Exchange 

market data instead of competitor 

products. The Exchange anticipates up 

to 10 Distributors to participate in the 

proposed Platform Service, and up to 

three Distributors to create Derived Data 

from Cboe One Summary. Distributors 

can discontinue use at any time and for 

any reason, including due to an 

assessment of the reasonableness of fees 

charged. Further, firms have a wide 

variety of alternative market data 

products from which to choose, such as 

similar proprietary data products 

offered by other national securities 

exchanges, including those that choose 

to offer discounted fees for the 

distribution of Derived Data in an effort 

to compete for this business. 

The proposed rule change would 

provide an optional fee structure for 

Distributors to use Exchange data to 

make Derived Data available to NonProfessional Users via an Exchange 

approved Platform Service at a reduced 

fee. As proposed, if a Distributor uses a 

Platform Service to distribute Derived 

Data, the Distributor would be charged 

the normal applicable External 

Distributor Fee excluding the NonProfessional User Fee. The Exchange 

believes that it is equitable and not 

unfairly discriminatory to charge a fee 

for Professional Users but no fee for 

Non-Professional Users. NonProfessional Users are already subject to 

a heavily discounted fee for EDGX Top 

market data relative to Professional 

Users. Differential fees for Professional 

and Non-Professional Users are widely 

used by the Exchange and other 

exchanges for their proprietary market 

data as this reduces costs for retail 

investors and makes market data more 

broadly available. The Exchange 

believes that eliminating fees for NonVerDate Sep<11>2014 20:44 Jan 19, 2021 Jkt 253001 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 E:\FR\FM\21JAN1.SGM 21JAN1

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18As discussed previously, the Exchange does not 

fees [sic] to Non-Professional Users pursuant to the 

White Label Service and API Service. See Securities 

Exchange Act No. 84002 (August 30, 2018) 83 FR 

45149 (September 5, 2018) (SR–CboeEDGX–2018– 

065) (Proposed fee amendment for White Label 

Service). See also Securities Exchange Act No. 

87306 (October 15, 2019) 84 FR 56258 (October 21, 

2019) (SR–CboeEDGX–2019–087) (Proposed fee 

amendment for API Service). 

Professional Users that access Derived 

Data from Distributors pursuant to the 

Program is consistent with longstanding 

precedent indicating that it is consistent 

with the Act to provide reasonable 

incentives to retail investors that rely on 

the public markets for their investment 

needs.18 Further, the proposed fee 

would only apply to Distributors that 

elect to participate in the Program by 

distributing Derived Data through a 

Platform Service. Exchange market data 

is distributed and purchased on a 

voluntary basis, in that neither the 

Exchange nor market data distributors 

are required by any rule or regulation to 

make this data available. Distributors of 

Exchange data are not required to 

participate in the proposed Program, 

which is merely an alternative option 

being proposed by the Exchange to 

potentially lower costs for market data 

that is Derived Data. As previously 

explained, the Exchange currently offers 

discounted fees for Distributors that 

distribute Derived Data on a White 

Label Service or an API Service. 

Expanding the universe of customers 

that can benefit from discounted fees for 

distributing Derived Data would serve to 

further increase the accessibility of the 

Exchange’s market data products. 

Although the proposed pricing for the 

Platform Service differs from the pricing 

currently in place for the White Label 

and API Service Programs, it mirrors the 

normal External Distribution Fee for 

EDGX Top and Cboe One Summary 

except that there would be no fee for 

Non-Professional Users. The White 

Label Service provides an ‘‘off-theshelf’’ solution to display Derived Data 

as it is ultimately designed and 

controlled by the Distributor. 

Alternatively, the API Service offers end 

clients of Distributors to use Derived 

Data in one or more of their own 

customized applications. The Exchange 

believes that the proposed pricing 

reflects the relative benefits provided to 

Distributors that offer a Platform Service 

that allows Users remote access to 

derivative products via a hosted display 

solution within the Distributors fully 

managed infrastructure. 

The proposed rule change would also 

provide Distributors the option to create 

Derived Data from Cboe One Summary, 

and benefit from reduced fees for that 

product under the Financial Product 

Distribution Program, in addition to the 

currently available EDGX Top. The 

proposed fees would only apply to 

Distributors that elect to create Derived 

Data from Cboe One Summary. Similar 

to the fee structure for EDGX Top under 

the Program, no fee would be assessed 

for Non-Professional Users of Derived 

Data from Cboe One Summary. For the 

same reasons discussed above, the 

Exchange believes it is equitable and not 

unfairly discriminatory to charge a fee 

for Professional Users but no fee for 

Non-Professional Users. Further, the 

proposed fee would only apply to 

Distributors that elect to participate in 

the Program by distributing Derived 

Data from Cboe One Summary. 

Exchange market data is distributed and 

purchased on a voluntary basis, in that 

neither the Exchange nor market data 

distributors are required by any rule or 

regulation to make this data available. 

Although the proposed pricing for Cboe 

One Summary differs from the pricing 

currently in place for EDGX Top, the 

Exchange also believes that its pricing 

reflects the relative benefits provided to 

Distributors that provide Derived Data 

based on market information from all 

four Cboe equities exchanges. For 

example, the proposed fee for one to 

five External Subscribers of Derived 

Data based on Cboe One Summary using 

the API Service is equal to the aggregate 

standard External Distribution Fee 

across the Cboe equities exchange Top 

feeds, and is also equal to the standard 

External Distribution Fee for Cboe One 

Summary (i.e., $5,000 per External 

Subscriber) on the Exchange. The 

proposed fee under the White Label 

Service is less than the proposed fee for 

API Service as Derived Data is provided 

on an ‘‘off-the-shelf’’ basis, and thus 

reflects the relative benefits provided to 

Distributors. Further, the proposed fee 

for Cboe One Summary under the 

proposed Platform Service is identical 

to the standard External Distributor fee 

for Cboe One Summary with the 

exception that there would be no fee 

associated with Non-Professional Users. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would result 

in any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange operates in a highly 

competitive environment, and its ability 

to price these data products is 

constrained by: (i) Competition among 

exchanges that offer similar data 

products, and pricing options, to their 

customers; and (ii) the existence of 

inexpensive real-time consolidated data 

disseminated by the SIPs. Top of book 

data is disseminated by both the SIPs 

and all 16 equities exchanges have the 

capability to disseminate such data. 

There are therefore a number of 

alternative products available to market 

participants and investors. In this 

competitive environment potential 

subscribers are free to choose which 

competing product to purchase to 

satisfy their need for market 

information. Often, the choice comes 

down to price, as broker-dealers or 

vendors look to purchase the lowest 

priced top of book data product, or 

quality, as market participants seek to 

purchase data that represents significant 

market liquidity. In order to better 

compete for this segment of the market, 

the Exchange is proposing to reduce fees 

charged to Distributors that distribute 

Derived Data through an Exchange 

approved Platform and enhance the 

existing program to offer Distributors 

the option to create Derived Data based 

on Cboe One Summary. The Exchange 

believes that this would facilitate greater 

access to Exchange data, ultimately 

benefiting investors that are provided 

access to such data. The proposed 

Platform Service fees would apply to 

data derived from EDGX Top and Cboe 

One Summary, which are subject to 

competition from both the SIPs and 

exchanges that offer similar products, 

including but not limited to those that 

choose to provide similar pricing 

options for Derived Data. A number of 

national securities exchanges, including 

the Exchange, its affiliated Cboe U.S. 

equities exchanges, and the Nasdaq 

Stock Market, LLC (‘‘Nasdaq’’) offer 

pricing discounts for Derived Data 

today. These pricing programs reduce 

the cost of accessing top of book market 

information that is used, among other 

things, to create derivative instruments 

rather than to trade U.S. equity 

securities. In order to better compete for 

this segment of the market, the 

Exchange is proposing to expand the 

Program to include a Derived Data 

Platform Service, which would allow 

additional market data customers to 

benefit from discounted pricing. 

Additionally, the Exchange is proposing 

to enhance the Program by providing a 

fee structure for Cboe One Summary, 

which would allow Distributors to 

create Derived Data that is based on a 

more comprehensive view of the U.S. 

equities market. The Exchange does not 

believe that the proposal would cause 

any unnecessary or inappropriate 

burden on intermarket competition as 

other exchanges and data vendors are 

free to lower their prices to better 


jbell on DSKJLSW7X2PROD with NOTICES
6398 Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices 

19 15 U.S.C. 78s(b)(3)(A). 

20 17 CFR 240.19b–4(f). 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 3See Exchange Rule 11.22(j). 

compete with the Exchange’s offering. 

The Exchange believes that the 

proposed rule change is pro-competitive 

as it seeks to offer pricing incentives to 

customers to better position the 

Exchange as it competes to attract 

additional market data subscribers. 

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 19 and paragraph (f) of Rule 

19b–4 20 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–2021–003 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–2021–003. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeEDGX–2021–003 and 

should be submitted on or before 

February 11, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01133 Filed 1–19–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90912; File No. SR– 

CboeBZX–2021–003] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Fee Schedule To Expand the Existing 

Financial Product Distribution Program 

To Provide for a Derived Data Platform 

Service 

January 13, 2021. 

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 January 4, 

2021, Cboe BZX Exchange, Inc. 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

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. (‘‘BZX’’ or 

the ‘‘Exchange’’) is filing with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) a proposed rule 

change to amend the Fee Schedule to 

expand the existing Financial Product 

Distribution Program (the ‘‘Program’’) to 

provide for a Derived Data Platform 

Service. Additionally, the proposal 

seeks to enhance the Program to provide 

for the distribution of data derived from 

the Cboe Aggregated Market (‘‘Cboe 

One’’) 3 Summary Feed. 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/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 purpose of the proposed rule 

change is to implement a pricing 

structure that would reduce fees 

charged to Distributors of ‘‘Derived 

Data’’, as defined below, through an 

Exchange approved Derived Data 

Platform Service. Additionally, the 

proposal seeks to enhance the Program 

to permit the distribution of data 

derived from Cboe One Summary 


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