Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices 6385 

9 15 U.S.C. 78s(b)(3)(A)(ii). 10 17 CFR 200.30–3(a)(12). 

NBBO in a large number of securities 

which the Exchange believes will 

improve market quality. By relaxing the 

qualification criteria, the modifications 

will make the Program more accessible 

to new member organizations and easier 

for existing QMMs to remain in the 

Program. 

Intermarket Competition 

Addressing whether the proposed fee 

could impose a burden on competition 

on other SROs that is not necessary or 

appropriate, the Exchange believes that 

its proposed modifications to its 

schedule of credits and charges will not 

impose a burden on competition 

because the Exchange’s execution 

services are completely voluntary and 

subject to extensive competition both 

from the other live exchanges and from 

off-exchange venues, which include 

alternative trading systems that trade 

national market system stock. The 

Exchange notes that it operates in a 

highly competitive market in which 

market participants can readily favor 

competing venues if they deem fee 

levels at a particular venue to be 

excessive, or rebate opportunities 

available at other venues to be more 

favorable. In such an environment, the 

Exchange must continually adjust its 

fees to remain competitive with other 

exchanges and with alternative trading 

systems that have been exempted from 

compliance with the statutory standards 

applicable to exchanges. Because 

competitors are free to modify their own 

fees in response, and because market 

participants may readily adjust their 

order routing practices, the Exchange 

believes that the degree to which fee 

changes in this market may impose any 

burden on competition is extremely 

limited. 

The proposed credit for adding 

liquidity and the proposed 

modifications to the QMM Program are 

reflective of this competition because, as 

a threshold issue, the Exchange is a 

relatively small market so its ability to 

burden intermarket competition is 

limited. In this regard, even the largest 

U.S. equities exchange by volume only 

has 17–18% market share, which in 

most markets could hardly be 

categorized as having enough market 

power to burden competition. Moreover, 

as noted above, price competition 

between exchanges is fierce, with 

liquidity and market share moving 

freely between exchanges in reaction to 

fee and credit changes. This is in 

addition to free flow of order flow to 

and among off-exchange venues which 

comprises more than 40% of industry 

volume in recent months. 

In sum, the Exchange intends for the 

modified QMM Program to increase 

member organizations incentives to 

quote more securities at the NBBO for 

at least 10 percent of the day, which 

stands to improve the quality of the 

Exchange’s market and its attractiveness 

to participants; however, if the 

proposals are unattractive to market 

participants, it is likely that the 

Exchange will either fail to increase its 

market share or even lose market share 

as a result. Accordingly, the Exchange 

does not believe that the proposed 

amended credits will impair the ability 

of members or competing order 

execution venues to maintain their 

competitive standing in the financial 

markets. 

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 foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.9

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: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) 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– 

Phlx–2021–01 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–2021–01. 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–2021–01 and should 

be submitted on or before February 9, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01136 Filed 1–19–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90910; File No. SR– 

CboeBZX–2021–005] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change Relating To 

Amend Its Fees Schedule 

January 13, 2021. 

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

Securities Exchange Act of 1934 (the 


jbell on DSKJLSW7X2PROD with NOTICES
6386 Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices 

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

2 17 CFR 240.19b–4. 

3See Cboe Global Markets U.S. Options Market 

Month-to-Date Volume Summary (December 31, 

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

options/market_statistics/. 

4Orders yielding fee code PM are Market Maker 

orders that add liquidity in Penny Program 

Securities and are offered a rebate of $0.29, and 

orders yielding fee code XM are Market Maker 

orders in XSP options that add liquidity and are 

offered a rebate of $0.29. 

5 ‘‘ADAV’’ means average daily added volume 

calculated as the number of contracts added, per 

day. 

6 ‘‘OCC Customer Volume’’ or ‘‘OCV’’ means the 

total equity and ETF options volume that clears in 

the Customer range at the Options Clearing 

Corporation (‘‘OCC’’) for the month for which the 

fees apply, excluding volume on any day that the 

Exchange experiences an Exchange System 

Disruption and on any day with a scheduled early 

market close. 

7Pursuant to BZX Equities Rules, the term 

‘‘LMM’’ means a Market Maker registered with the 

Exchange for a particular LMM Security that has 

committed to maintain Minimum Performance 

Standards in the LMM Security, and the term 

‘‘LMM Security’’ means a Listed Security that has 

an LMM. See Cboe BZX Exchange, Inc. Rule 

11.8(e)(1)(B) [sic] and (C) [sic]. 

8 ‘‘ADV’’ means average daily volume calculated 

as the number of contracts added or removed, 

combined, per day. 

9 ‘‘TCV’’ means total consolidated volume 

calculated as the volume reported by all exchanges 

to the consolidated transaction reporting plan for 

the month for which the fees apply, excluding 

volume on any day that the Exchange experiences 

an Exchange System Disruption and on any day 

with a scheduled early market close. 

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

notice is hereby given that on January 4, 

2021, Cboe BZX Exchange, Inc. (the 

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

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

Cboe BZX Exchange, Inc. (the 

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

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

to amend its 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/bzx/), at 

the Exchange’s Office of the Secretary, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

fee schedule for its equity options 

platform (‘‘BZX Options’’) in connection 

with its Market Maker Penny Add 

Volume Tiers, effective January 4, 2021. 

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 17% of the market share and 

currently the Exchange represents only 

approximately 8% of the market share.3

Thus, in such a low-concentrated and 

highly competitive market, no single 

options exchange, including the 

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 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’s fee 

schedule sets forth standard rebates and 

rates applied per contract, which varies 

depending on the Member’s Capacity 

(Customer, Firm, Market Maker, etc.), 

whether the order adds or removes 

liquidity, and whether the order is in 

Penny or Non-Penny Pilot Securities. 

Additionally, in response to the 

competitive environment, the Exchange 

also offers tiered pricing which provides 

Members opportunities to qualify for 

higher rebates or reduced fees where 

certain volume criteria and thresholds 

are met. Tiered pricing provides an 

incremental incentive for Members to 

strive for higher tier levels, which 

provides increasingly higher benefits or 

discounts for satisfying increasingly 

more stringent criteria. 

For example, the Exchange currently 

offers 12 Market Maker Penny Add 

Volume Tiers under footnote 6 of the 

Fee Schedule which provide additional 

rebates between $0.33 and $0.46 per 

contract for qualifying Market Maker 

orders (i.e., that yield fee code PM or 

XM) 4 where a Member meets certain 

liquidity thresholds. For example, 

current Tier 12 offers an enhanced 

rebate of $0.46 per contract for 

qualifying orders where a Member has 

an ADAV 5 in Market Maker orders 

greater or equal to 0.75% of OCV.6 The 

Exchange now proposes to amend the 

Market Maker Penny Add Volume Tiers 

by adding a new Tier 12 (and 

subsequently updating current Tier 12 

to Tier 13). As proposed, new Tier 12 

will provide an opportunity for a 

Member to receive an enhanced rebate 

of $0.44 per contract for qualifying 

orders where the Member (1) has a StepUp ADAV in Market Maker orders from 

December 2020 ≥ 0.05% of overage [sic] 

OCV; and (2) is a Lead Market Maker 

(‘‘LMM’’) in at least 85 LMM Securities 

on BZX Equities.7 The Exchange 

believes the proposed tier, along with 

the existing tiers, will continue to 

provide an incremental incentive for 

Members to strive for the highest tier 

levels, which provide increasingly 

higher rebates for such transactions. 

Additionally, the Exchange notes that 

the two prongs of the proposed criteria 

are similar to the criteria set forth in 

other Market Maker Penny Add Volume 

tiers. Many of the existing tiers provide 

criteria in which a Member must ‘‘step 

up’’ a percentage of ADAV or ADV 8

from a certain point in time over OCV 

or TCV,9 and criteria which measures a 

Member’s participation on the 

Exchange’s equities platform (‘‘BZX 

Equities’’). Overall, the proposed 

enhanced rebate and corresponding 

criteria is designed to encourage Market 

Makers (including LMMs) to increase 

their order flow on BZX Options and 

Equities, which facilitates tighter 

spreads, signaling increased activity 

from other market participants, and thus 

ultimately contributes to deeper and 

more liquid markets and provides 

greater execution opportunities on the 

Exchange to the benefit of all market 

participants. The proposed change 

encourages Members to enroll as LMMs 


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Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices 6387 

10 15 U.S.C. 78f. 

11 15 U.S.C. 78f(b)(4). 

12 15 U.S.C. 78f.(b)(5). 

13See e.g., NYSE Arca Options Fee Schedule, 

Market Maker Penny and SPY Posting Credit Tiers. 

NYSE Arca also provides various discounts for its 

LMMs throughout its fee schedule. 

14See e.g., BZX Options Fee Schedule, Footnote 

6, Market Maker Penny Add Volume Tiers, and 

Footnote 7, Market Maker Non-Penny Add Volume 

Tiers. 

in LMM Securities on the Exchange’s 

equities platform, which enhances 

market quality in securities listed on the 

Exchange’s equity platform. The 

Exchange notes that LMMs serve a 

crucial role in providing quotes and 

trading opportunities for all market 

participants, which can lead to 

increased volume, enhanced price 

discovery and transparency, and more 

robust markets overall. As such, the 

proposed tier is designed to benefits all 

Members by contributing towards a 

robust and well-balanced market 

ecosystem across the Exchange’s options 

and equities platforms, offering 

additional flexibility for all investors to 

enjoy cost savings, supporting the 

quality of price discovery, promoting 

market transparency and improving 

investor protection. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,10

in general, and furthers the objectives of 

Section 6(b)(4),11 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) 12 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. 

As described 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 

proposed rule change reflects a 

competitive pricing structure designed 

to incentivize market participants to 

direct their order flow to the Exchange, 

which the Exchange believes would 

enhance market quality to the benefit of 

all Members. 

In particular, the Exchange believes 

the proposed tier is reasonable because 

it provides an additional opportunity for 

Members to receive an enhanced rebate 

on qualifying orders in a manner that 

incentivizes increased Market Maker 

order flow to the Exchange and LMM 

participation on the Exchange’s equities 

platform. The Exchange notes that 

volume-based incentives and discounts 

have been widely adopted by 

exchanges,13 including the Exchange,14

and are reasonable, equitable and nondiscriminatory because they are open to 

all Members on an equal basis and 

provide additional benefits or discounts 

that are reasonably related to (i) the 

value to an exchange’s market quality 

and (ii) associated higher levels of 

market activity, such as higher levels of 

liquidity provision and/or growth 

patterns. Additionally, as noted above, 

the Exchange operates in a highly 

competitive market. 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. 

Competing options exchanges offer 

similar tiered pricing structures to that 

of the Exchange, including schedules of 

rebates and fees that apply based upon 

Members achieving certain volume and/ 

or growth thresholds. 

Moreover, the Exchange believes the 

proposed additional Market Maker 

Penny Add Volume Tier is a reasonable 

means to encourage Market Makers to 

increase their order flow on the 

Exchange, as well as their participation 

in securities on the Exchange’s equities 

platform. More specifically, the 

Exchange believes that adopting a tier 

with alternative criteria to the existing 

Market Maker Penny Add Volume Tiers 

may encourage those Members who 

could not previously achieve the criteria 

under existing Market Maker Volume 

Tiers 10 and 11 (which offer the same 

enhanced rebate as proposed for new 

Tier 12) or 12 (proposed to be 

renumbered to Tier 13) to increase their 

order flow on BZX Options and 

Equities. For example, the proposed tier 

would provide an additional rebate 

opportunity for Market Makers who 

increase their ADAV in Market Makers 

orders over OCV by at least 0.05% from 

December 2020 and participate as an 

LMM in at least 85 LMM Securities on 

BZX Equities, but do not meet the more 

stringent criteria under Tier 13 (i.e., 

current Tier 12) of having an ADAV in 

Market Maker orders that is greater than 

or equal to 0.75% of average OCV (and 

thus, do not receive the slightly higher 

enhanced rebate of $0.46 per contract), 

or do not meet all three of the different, 

yet comparable, prongs of criteria under 

Tier 10 or Tier 11 (which provide the 

same enhanced rebate of $0.44 per 

contract). Overall, the proposed tier 

provides an alternative opportunity for 

Members to receive an enhanced rebate, 

as is thereby reasonably designed to 

incentivize Market Makers to grow their 

options volume and increase their 

participation on BZX Equities. The 

Exchange notes that increased Market 

Maker activity (including LMMs), 

particularly, facilitates tighter spreads 

and an increase in overall liquidity 

provider activity, both of which signal 

additional corresponding increase in 

order flow from other market 

participants, contributing towards a 

robust, well-balanced market ecosystem. 

Indeed, increased overall order flow 

benefits investors across both the 

Exchange’s options and equities 

platforms by continuing to deepen the 

Exchange’s liquidity pool, potentially 

providing even greater execution 

incentives and opportunities, 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 also believes that 

proposed enhanced rebate is reasonably 

based on the difficulty of satisfying the 

proposed tier’s criteria and ensures the 

proposed rebate and thresholds 

appropriately reflect the incremental 

difficulty in achieving the existing 

Market Maker Penny Add Volume Tiers. 

As indicated above, the Exchange does 

not believe that the proposed enhanced 

rebate amount represents a significant 

departure from the enhanced rebates 

currently offered under the Exchange’s 

existing Market Maker Penny Add 

Volume Tiers. Indeed, the proposed 

enhanced rebate amount under new Tier 

12 ($0.44) is incrementally lower than 

Tier 13 (current Tier 12) ($0.46), which, 

as described above, offers slightly more 

stringent criteria than proposed Tier 12, 

but is the same amount as the enhanced 

rebate offered under existing Tier 11 

(i.e., new Tier 11) ($0.44), the criteria for 

which the Exchange believes is 

comparable to the proposed criteria 

under proposed Tier 12. 

The Exchange believes that the 

proposal represents an equitable 

allocation of fees and is not unfairly 


jbell on DSKJLSW7X2PROD with NOTICES
6388 Federal Register / Vol. 86, No. 12 / Thursday, January 21, 2021 / Notices 

15Securities Exchange Act Release No. 51808, 70 

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

(Final Rule). 

16See supra note 4. 

17See Securities Exchange Act Release No. 51808 

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

18NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

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

discriminatory because it applies 

uniformly to all Market Makers, in that 

all Market Makers have the opportunity 

to compete for and achieve the proposed 

tier and the proposed enhanced rebate 

will apply automatically and uniformly 

to all Market Makers that achieve the 

proposed tier’s criteria. While the 

Exchange has no way of knowing 

whether this proposed rule change 

would definitively result in any 

particular Market Maker qualifying for 

the proposed tiers, the Exchange 

believes that at least two Market Makers 

will reasonably be able to compete for 

and achieve the proposed criteria in 

proposed Tier 12; however, the 

proposed tiers are open to any MarketMaker that satisfies the tier’s criteria. 

The Exchange believes the proposed tier 

could provide an incentive for other 

Members to submit additional liquidity 

on BZX Options and Equities to qualify 

for the proposed additional enhanced 

rebate. To the extent a Member 

participates on the Exchange but not on 

BZX Equities, the Exchange believes 

that the proposal is still reasonable, 

equitably allocated and nondiscriminatory with respect to such 

Member based on the overall benefit to 

the Exchange resulting from the success 

of BZX Equities. Particularly, the 

Exchange believes such success allows 

the Exchange to continue to provide and 

potentially expand its existing incentive 

programs to the benefit of all 

participants on the Exchange, whether 

they participate on BZX Equities or not. 

The proposed pricing program is also 

fair and equitable in that membership in 

BZX Equities and enrollment as an 

LMM is available to all market 

participants, which would provide them 

with access to the benefits on BZX 

Equities provided by the proposed 

change, even where a member of BZX 

Equities is not necessarily eligible for 

the proposed enhanced rebates on the 

Exchange. 

The Exchange lastly notes that it does 

not believe the proposed tier will 

adversely impact any Member’s pricing 

or ability to qualify for other tiers. 

Rather, should a Member not meet the 

proposed criteria, the Member will 

merely not receive the proposed 

enhanced rebate, and has 11 alternative 

choices (including only one with 

criteria the Exchange believes is more 

stringent) to aim to achieve under the 

Market Maker Penny Add Volume Tiers. 

Furthermore, the proposed enhanced 

rebate would apply to all Members that 

meet the required criteria under the 

proposed tier. 

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 

liquidity to a public exchange, thereby 

promoting market depth, price 

discovery and transparency and 

enhancing order 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.’’ 15

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 uniformly 

to all Market Makers (including LMMs 

on BZX Equities). As described above, 

the Exchange believes that Market 

Makers (including LMMs) provide key 

liquidity to the Exchange’s options and 

equities platforms, facilitating tighter 

spreads, signaling additional 

corresponding increase in order flow 

from other market participants, and 

ultimately contributing towards a 

robust, well-balanced market ecosystem. 

To the extent a Member participates on 

the Exchange but not on BZX Equities, 

the Exchange notes that the proposed 

change can provide an overall benefit to 

the Exchange resulting from the success 

of BZX Equities. Such success enables 

the Exchange to continue to provide and 

potentially expand its existing incentive 

programs to the benefit of all 

participants on the Exchange, whether 

they participate on BZX Equities or not. 

The proposed pricing program is also 

fair and equitable in that membership in 

BZX Equities is available to all market 

participants and registration as an LMM 

is available equally to all BZX Equities 

members. 

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 

director their order flow, including 15 

other options exchanges and offexchange venues. Additionally, the 

Exchange represents a small percentage 

of the overall market. Based on publicly 

available information, no single options 

exchange has more than 17% of the 

market share.16 Therefore, no exchange 

possesses significant pricing power in 

the execution of option order flow. 

Indeed, participants can readily choose 

to send their orders to other exchange 

and off-exchange 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.’’ 17 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’. . . .’’.18 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. 


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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. 

3The term ‘‘Floor Broker’’ means an individual 

who is registered with the Exchange for the 

purpose, while on the Options Floor, of accepting 

and handling options orders. See Options 8, Section 

2(2). 

4FBMS, an order management system, is the 

gateway for the electronic execution of equity, 

equity index and U.S. dollar-settled foreign 

currency option orders represented by Floor 

Brokers on the Exchange’s Options Floor. Floor 

Brokers contemporaneously upon receipt of an 

order and prior to the representation of such an 

order in the trading crowd, record all options orders 

represented by such Floor Broker to FBMS, which 

creates an electronic audit trail. The execution of 

orders to Phlx’s electronic trading system also 

occurs via FBMS. The FBMS application is 

available on hand-held tablets and stationary 

desktops. 

5Utilizing FBMS while not physically present on 

the Trading Floor would be considered remote 

access. 

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– 

CboeBZX–2021–005 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CboeBZX–2021–005. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeBZX–2021–005 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. 2021–01131 Filed 1–19–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90909; File No. SR–Phlx– 

2021–02] 

Self-Regulatory Organizations; Nasdaq 

Phlx LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Modify Phlx Options 8, 

Section 28, ‘‘Responsibilities of Floor 

Brokers’’ and Section 30, ‘‘Crossing, 

Facilitation and Solicited Orders’’ 

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, Nasdaq Phlx LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

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 proposes to modify 

Phlx Options 8, Section 28, 

‘‘Responsibilities of Floor Brokers’’ and 

Section 30, ‘‘Crossing, Facilitation and 

Solicited Orders.’’ 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Phlx proposes to amend its Trading 

Floor rules at Options 8, Section 28, 

‘‘Responsibilities of Floor Brokers’’ and 

Section 30, ‘‘Crossing, Facilitation and 

Solicited Orders’’ to permit Floor 

Brokers 3 to utilize the Options Floor 

Based Management System (‘‘FBMS’’),4

remotely,5 to enter certain orders that do 

not require exposure in open outcry. 

This proposal is intended to provide 

greater accessibility to Floor Brokers for 

the portion of their business which does 

not require the physical infrastructure 

afforded by the Trading Floor and allow 

member organizations to more 

efficiently staff their operations. 

Background 

Today, Phlx Rules provide a Business 

Continuity and Disaster Recovery Plan 

for its Trading Floor (‘‘BCP’’) which is 


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