7146 Federal Register / Vol. 86, No. 15 / Tuesday, January 26, 2021 / Notices 

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

2 17 CFR 240.19b–4. 

3The Exchange initially filed the proposed fee 

changes January 4, 2021 (SR–CboeBYX–2021–002). 

On January 13, 2021, the Exchange withdrew that 

filing and submitted this proposal. 

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

Volume Summary, Month-to-Date (December 18, 

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

equities/market_statistics/. 

5A Sponsored Participant is a person which has 

entered into a sponsorship arrangement with a 

Sponsoring Member pursuant to Rule 11.3, which 

permits a Sponsored Participant to obtain 

authorized access to the System only if such access 

is authorized in advance by one or more Sponsoring 

Members. See Rules 1.5(x) and 11.3. 

6A Sponsoring Member is a Member that is a 

registered broker-dealer and that has been 

designated by a Sponsored Participant to execute, 

clear and settle transactions resulting from the 

System. The Sponsoring Member shall be either (i) 

a clearing firm with membership in a clearing 

agency registered with the Commission that 

maintains facilities through which transactions may 

be cleared or (ii) a correspondent firm with a 

clearing arrangement with any such clearing firm. 

See Rule 1.5(y) 

Dated: January 21, 2021. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01664 Filed 1–25–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90943; File No. SR– 

CboeBYX–2021–004] 

Self-Regulatory Organizations; Cboe 

BYX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Establish a 

Monthly Fee Assessed on Members’ 

MPIDs 

January 19, 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 

13, 2021, Cboe BYX Exchange, Inc. (the 

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

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I 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 

Cboe BYX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BYX Equities’’) 

proposes to amend its fee schedule to 

establish a fee in connection with a 

Member’s Market Participant 

Identifier(s) (‘‘MPID’’). The text of the 

proposed rule change is provided in 

Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

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

equities/regulation/rule_filings/byx/), at 

the Exchange’s Office of the Secretary, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

Fee Schedule to adopt a monthly fee 

assessed on Members’ MPIDs.3

The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

16 registered equities exchanges, as well 

as a number of alternative trading 

systems and other off-exchange venues 

that do not have similar self-regulatory 

responsibilities under the Exchange Act, 

to which market participants may direct 

their order flow. Based on publicly 

available information,4 no single 

registered equities exchange has more 

than 16% of consolidated equity market 

share and currently the Exchange 

represents approximately 1.5% of the 

U.S. equities market. Thus, in such a 

low-concentrated and highly 

competitive market, no single equities 

exchange possesses significant pricing 

power in the execution of order flow. 

The Exchange further notes that brokerdealers are not compelled to be 

Members of the Exchange, and a 

significant proportion of broker-dealers 

that trade U.S. equity securities have, in 

fact, chosen not to apply for 

membership on the Exchange. 

By way of background, an MPID is a 

four-character unique identifier that is 

approved by the Exchange and assigned 

to a Member for use on the Exchange to 

identify the Member firm on the orders 

sent to the Exchange and resulting 

executions. Members may choose to 

request more than one MPID as a unique 

identifier(s) for their transactions on the 

Exchange. The Exchange notes that a 

Member may have multiple MPIDs for 

use by separate business units and 

trading desks or to support Sponsored 

Participant 5 access. Certain members 

currently leverage multiple MPIDs to 

obtain benefits from and added value in 

their participation on the Exchange. 

Multiple MPIDs provide unique benefits 

to and efficiencies for Members by 

allowing: (1) Members to manage their 

trading activity more efficiently by 

assigning different MPIDs to different 

trading desks and/or strategies within 

the firm; and (2) Sponsoring Members 6

to segregate Sponsored Participants by 

MPID to allow for detailed client-level 

reporting, billing, and administration, 

and to market the ability to use separate 

MPIDs to Sponsored Participants, 

which, in turn, may serve as a potential 

incentive for increased order flow 

traded through the Sponsoring Member. 

The Exchange proposes to adopt a fee 

applicable to Members that use multiple 

MPIDs to facilitate their trading on the 

Exchange. Specifically, as proposed, the 

Exchange would assess a monthly MPID 

Fee of $150 per MPID per Member, with 

a Member’s first MPID provided free of 

charge. The Exchange believes the 

proposed assessment of an MPID Fee 

aligns with the additional value and 

benefits provided to Members that 

choose to utilize more than one MPID to 

facilitate their trading on the Exchange. 

The Exchange also believes that 

assessing a fee on additional MPIDs will 

be beneficial because such fee will 

promote efficiency in MPID use. 

The MPID Fee will be assessed on a 

pro-rated basis for new MPIDs by 

charging a Member based on the trading 

day in the month during which an 

additional MPID becomes effective for 

use. If a Member cancels an additional 

MPID on or after the first business day 

of the month, the Member will be 

required to pay the entire MPID Fee for 

that month. The Exchange believes that 

this practice is appropriate to balance 

the administrative costs associated with 

disabling MPIDs. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

Federal Register / Vol. 86, No. 15 / Tuesday, January 26, 2021 / Notices 7147 

7 15 U.S.C. 78f(b). 

8 15 U.S.C. 78f(b)(4). 

9See Securities and Exchange Release Nos. 65189 

(August 24, 2011), 76 FR 53990 (August 30, 2011) 

(SR–EDGX–2011–26); and 65188 (August 24, 2011), 

76 FR 53988 (August 30, 2011) (SR–EDGA–2011– 

27). The Exchange notes that its affiliated 

exchanges’ prior MPID Fees expired as a result of 

the integration with BATS technology, acquired by 

Cboe Global Markets, Inc. in 2017. 

10The reduction in MPIDs may also demonstrate 

that Members are free to cancel MPIDs on the 

Exchange and choose, instead, to utilize unique 

identifiers associated with participation on other 

exchanges. 

11See Nasdaq Price List, MPID Fees, available at 

http://nasdaqtrader.com/Trader.aspx?id=PriceList

Trading2. 

12See id. 

and, in particular, the requirements of 

Section 6(b) of the Act.7 Specifically, 

the Exchange believes the proposed rule 

change is consistent with Section 6(b)(4) 

of the Act,8 which requires that 

Exchange rules provide for the equitable 

allocation of reasonable dues, fees, and 

other charges among its Members 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) 

requirements that the rules of an 

exchange be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities, to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest, and, 

particularly, is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes that the 

proposed MPID Fee is consistent with 

the Act in that it is reasonable, 

equitable, and not unfairly 

discriminatory. In particular, the 

Exchange believes that the proposed fee 

is reasonable because it is reasonably 

aligned with the benefits provided to 

Members that choose to utilize multiple 

MPIDs to facilitate their trading on the 

Exchange. While each Member must 

have an MPID to participate on the 

Exchange, additional MPIDs are 

optional and will be assessed the 

proposed fee. Additional MPIDs 

currently allow for Members to realize 

certain benefits from and added value to 

their participation on the Exchange but 

also require the Exchange to allocate 

additional administrative resources to 

manage each MPID that a Member 

chooses to use for its trading activity. 

Therefore, the Exchange believes that it 

is reasonable to assess a modest fee on 

any additional MPIDs that Members 

choose to use to facilitate their trading. 

The Exchange again notes that it is 

optional for a Member to request and 

employ additional MPIDs, and a large 

portion (approximately 39%) of the 

Exchange’s Members currently utilize 

just the one MPID necessary to 

participate on the Exchange. 

The Exchange also believes that 

assessing a modest fee on additional 

MPIDs is reasonably designed to 

promote efficiency in MPID use. The 

Exchange notes that its affiliated 

equities exchanges, Cboe EDGX 

Exchange, Inc. (‘‘EDGX’’) and Cboe 

EDGA Exchange, Inc. (‘‘EDGA’’), had 

previously implemented an MPID Fee,9

and observed that, as a result of an 

MPID Fee, members were incentivized 

to more effectively administer their 

MPIDs and reduce the number of underused or superfluous MPIDs, or MPIDs 

that did not contribute additional value 

to a member’s participation on the 

exchange. Reduction of such MPIDs, in 

turn, reduces exchange resources 

allocated to administration and 

maintenance of those MPIDs. In 

particular, it was observed that within 

the first few months of introducing the 

previous MPID Fee on the Exchange’s 

affiliated exchanges, the number of 

MPIDs on EDGX and EDGA each 

decreased by approximately 17%, 

demonstrating that Members may 

choose to be more efficient in their use 

of MPIDs in response to an MPID Fee, 

such as that proposed in this fee 

change.10

The Exchange further believes the 

proposed MPID Fee is reasonable 

because the amount assessed is less than 

the analogous fees charged by at least 

one other market; namely, Nasdaq Stock 

Market LLC (‘‘Nasdaq’’).11 The 

Exchange’s proposed MPID Fee at $150 

a month per MPID, with no charge 

associated with a Members’ first MPID, 

is lower than Nasdaq’s MPID fee of $550 

per MPID, which is charged for all 

MPIDs used by a Nasdaq member, 

including a member’s first MPIDs. 

Additionally, the Exchange believes that 

charging a full-month’s fee for an 

additional MPID cancelled on or after 

the first business day of the month is 

reasonable in that it reasonably accounts 

for the administrative costs associated 

with disabling such MPIDs, and is a 

practice consistent with Nasdaq’s 

similar cancellation policy in 

connection with its MPID fees.12

The Exchange believes that the 

proposed MPID Fee is equitable and not 

unfairly discriminatory because it will 

apply equally to all Members that 

choose to employ two or more MPIDs 

based on the number of additional 

MPIDs that they use to facilitate their 

trading on the Exchange. As stated, 

additional MPIDs beyond a Member’s 

first MPID are optional, and Members 

may choose to trade using such 

additional MPIDs to achieve additional 

benefits and added value to support 

their individual business needs. 

Moreover, the Exchange believes the 

proposed fee is equitable and not 

unfairly discriminatory because it is 

proportional to the potential value or 

benefit received by Members with a 

greater number of MPIDs. That is, those 

Members that choose to employ a 

greater number of additional MPIDs 

have the opportunity to more effectively 

manage firm-wide trading activity and 

client-level administration, as well as 

potentially appeal to customers through 

the use of separate MPIDs, which may 

result in increased order flow through a 

Sponsoring Member. A Member may 

request at any time that the Exchange 

terminate an MPID, including MPIDs 

that may be under-used or superfluous, 

or that do not contribute additional 

value to a Member’s participation on the 

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 intramarket competition 

that is not necessary in furtherance of 

the purposes of the Act because the 

proposed MPID Fee will apply equally 

to all Members that choose to employ 

additional MPIDs and equally to each 

additional MPID. As stated, additional 

MPIDs are optional and Members may 

choose to utilize additional MPIDs, or 

not, based on their view of the 

additional benefits and added value 

provided by utilizing the single MPID 

necessary to participate on the 

Exchange. The Exchange believes the 

proposed fee will be assessed 

proportionately to the potential value or 

benefit received by Members with a 

greater number of MPIDs and notes that 

a Member may request at any time that 

the Exchange terminate any MPID, 

including those that may be under-used 

or superfluous, or that do not contribute 

additional value to a Member’s 

participation on the Exchange. 

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, 

including competition for exchange 

memberships. Members have numerous 

7148 Federal Register / Vol. 86, No. 15 / Tuesday, January 26, 2021 / Notices 

13See U.S. Securities and Exchange Commission 

Alternative Trading Systems (‘‘ATS’’) List 

(December 4, 2020), available at https://

www.sec.gov/foia/docs/atslist.htm. 

14See supra note 4. 

15See e.g., supra note 10. 

16See supra note 11. 

17 15 U.S.C. 78s(b)(3)(A). 

18 17 CFR 240.19b–4(f)(2). 

19 15 U.S.C. 78s(b)(2)(B). 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

alternative venues that they may 

participate on, including 15 other 

equities exchanges, as well as offexchange venues, including over 50 

alternative trading systems.13 The 

Exchange represents a small percentage 

of the overall market. Based on publicly 

available information, no single equities 

exchange has more than 16% market 

share.14 Indeed, participants can readily 

choose to submit their order flow to 

other exchange and off-exchange venues 

if they deem fee levels at those other 

venues to be more favorable.15 In 

addition to this the Exchange notes that 

at least one other exchange currently 

has MPID fees in place,16 which have 

been previously filed with the 

Commission. 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 is effective 

upon filing pursuant to Section 

19(b)(3)(A) of the Act 17 and 

subparagraph (f)(2) of Rule 19b–4 

thereunder,18 because it establishes a 

due, fee, or other charge imposed by the 

Exchange. 

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) of the Act 19 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 No. SR– 

CboeBYX–2021–004 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 No. 

SR–CboeBYX–2021–004. 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 No. 

SR–CboeBYX–2021–004, and should be 

submitted on or before February 16, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01583 Filed 1–25–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90952; File No. SR– 

NASDAQ–2020–082] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Designation of a Longer Period for 

Commission Action on a Proposed 

Rule Change To Offer Certain Listed 

Companies Access to a 

Complimentary Board Recruiting 

Solution To Help Advance Diversity on 

Company Boards 

January 19, 2021. 

On December 1, 2020, The Nasdaq 

Stock Market LLC (‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

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

19b–4 thereunder,2 a proposed rule 

change to offer certain listed companies