6710 Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Notices 

25See Characteristics of Emerging Growth 

Companies and their Audit Firms as of November 

15, 2019 (November 9, 2020), available at https:// 

archive.pcaobus.org/EconomicAndRiskAnalysis/ 

ProjectsOther/Documents/White-PaperCharacteristics-Emerging-Growth-CompaniesNovember-15-2019.pdf. 

26See EGC White Paper at 13. 

27See PCAOB Adopting Release at 27. 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 90536 

(November 30, 2020), 85 FR 78381. 

4 15 U.S.C. 78s(b)(2). 

5 Id. 

6 17 CFR 200.30–3(a)(31). 

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

2 17 CFR 240.19b–4. 

published a white paper that provides 

general information about 

characteristics of EGCs (‘‘EGC White 

Paper’’).25 In the EGC White Paper, the 

PCAOB staff stated that 

‘‘[a]pproximately 96% of EGC filers 

were audited by accounting firms that 

also audit issuers that are not EGC 

filers.’’ 26 Additionally, the PCAOB 

Adopting Release discussed the 

Commission’s intent to improve the 

practical application of Rule 2–01 of 

Regulation S–X and reduce compliance 

burdens, which may lead to increased 

competition among auditors and 

facilitate capital formation. The Board 

noted that if the Proposed Rules were 

determined not to apply to the audits of 

EGCs, auditors would be required to 

address the differing independence 

requirements in their independence 

policies and procedures and in their 

quality control systems as a result of the 

differences between the Board and 

Commission requirements, which 

would create the potential for 

confusion.27

We agree with the Board’s analysis. 

We believe the Proposed Rules will 

benefit EGCs at least as much as nonEGCs, in part, because the Commission’s 

amendments to Rule 2–01 were meant 

to more effectively focus the 

independence analysis on those 

relationships or services that are more 

likely to pose threats to an auditor’s 

objectivity and impartiality. 

As such, after considering the 

protection of investors and whether the 

action will promote efficiency, 

competition, and capital formation, we 

believe there is a sufficient basis to 

determine that applying the Proposed 

Rules to the audits of EGCs is necessary 

or appropriate in the public interest. 

V. Conclusion 

The Commission has carefully 

reviewed and considered the Proposed 

Rules, the information submitted 

therewith by the PCAOB and the 

comment letters received. In connection 

with the PCAOB’s filing and the 

Commission’s review, 

A. The Commission finds that the 

Proposed Rules are consistent with the 

requirements of the Sarbanes-Oxley Act 

and the securities laws and are 

necessary or appropriate in the public 

interest or for the protection of 

investors; and 

B. Separately, the Commission finds 

that the application of the Proposed 

Rules to the audits of EGCs is necessary 

or appropriate in the public interest, 

after considering the protection of 

investors and whether the action will 

promote efficiency, competition, and 

capital formation. 

It is therefore ordered, pursuant to 

Section 107 of the Sarbanes-Oxley Act 

and Section 19(b)(2) of the Exchange 

Act, that the Proposed Rules (File 

No.PCAOB–2020–01) be and hereby are 

approved. 

By the Commission. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2021–01311 Filed 1–21–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90926; File No. SR–CBOE– 

2020–106] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Designation 

of a Longer Period for Commission 

Action on a Proposed Rule Change, as 

Modified by Amendment No. 1, To 

Amend Its Rules Regarding the 

Minimum Increments for Electronic 

Bids and Offers and Exercise Prices of 

Certain FLEX Options and Clarify in 

the Rules How the System Ranks FLEX 

Option Bids and Offers for Allocation 

Purposes 

January 14, 2021. 

On November 16, 2020, Cboe 

Exchange, Inc. 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 

amend its rules regarding the minimum 

increments for electronic bids and offers 

and exercise prices of certain FLEX 

options and clarify how the system 

ranks FLEX option bids and offers for 

allocation purposes. On November 30, 

2020, the Exchange filed Amendment 

No. 1 to the proposed rule change, 

which amended and replaced the 

proposed rule change in its entirety. The 

Commission published notice of the 

proposed rule change, as modified by 

Amendment No. 1, in the Federal 

Register on December 4, 2020.3 The 

Commission has received no comments 

on the proposal. 

Section 19(b)(2) of the Act 4 provides 

that, within 45 days of the publication 

of notice of the filing of a proposed rule 

change, or within such longer period up 

to 90 days as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or as to which the 

self-regulatory organization consents, 

the Commission shall either approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether the 

proposed rule change should be 

disapproved. The 45th day after 

publication of the notice for this 

proposed rule change is January 18, 

2021. The Commission is extending this 

45-day time period. 

The Commission finds that it is 

appropriate to designate a longer period 

within which to take action on the 

proposed rule change so that it has 

sufficient time to consider the proposed 

rule change. Accordingly, the 

Commission, pursuant to Section 

19(b)(2) of the Act,5 designates March 4, 

2021, as the date by which the 

Commission shall either approve or 

disapprove or institute proceedings to 

determine whether to disapprove the 

proposed rule change, as modified by 

Amendment No. 1 (File Number SR– 

CBOE–2020–106). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.6

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01282 Filed 1–21–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90919; File No. SR– 

CboeBZX–2021–002] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend the 

Fees Applicable to the BZX Top Feed 

January 14, 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. (the 

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


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Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Notices 6711 

3See BZX Rule 11.22(d). 

4See e.g., BZX Schedule of Fees, Financial 

Product Distribution Program. The Financial 

Product Distribution Program lowers the cost of 

distributing Derived Data based upon the 

Exchange’s top-of-book offerings, including Derived 

Data that is often used by retail investors. 

5See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37495, 37499 (June 29, 2005) 

(S7–10–04) (Final Rule) (‘‘Regulation NMS 

Adopting Release’’). 

6See Securities Exchange Act Release No. 51808, 

84 FR 5202, 5253 (February 20, 2019) (File No. S7– 

05–18) (Transaction Fee Pilot for NMS Stocks Final 

Rule) (‘‘Transaction Fee Pilot’’). 

7See FINRA ATS Transparency Data, available at 

https://otctransparency.finra.org/otctransparency/ 

AtsData. A list of alternative trading systems 

registered with the Commission is available at 

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

8See Cboe Global Markets, U.S. Equities Market 

Volume Summary, available at http://

markets.cboe.com/us/equities/market_share/. 

9See Rule 602 of Regulation NMS. 

10By contrast, Rule 603(c) of Regulation NMS (the 

‘‘Vendor Display Rule’’) effectively requires that SIP 

data or some other consolidated display be utilized 

in any context in which a trading or order-routing 

decision can be implemented. 

11Competing top of book products include, 

Nasdaq Basic, BX Basic, PSX Basic, NYSE BQT, 

NYSE BBO/Trades, NYSE BQT, NYSE Arca BBO/ 

Trades, NYSE American BBO/Trades, NYSE 

Chicago BBO/Trades, IEX TOPS, MIAX PEARL 

Equities Top of Market Feed, and MEMX MEMOIR 

Top. 

12See BZX Schedule of Fees, BZX Top, Internal 

Distribution. 

13The Exchange’s fee schedule defines an 

Internal Distributor of an Exchange Market Data 

product as a Distributor that receives the Exchange 

Market Data product and then distributes that data 

to one or more Users within the Distributor’s own 

entity. See BZX Schedule of Fees, Market Data Fees, 

Definitions. 

14See Securities Exchange Act Release No. 69936 

(July 3, 2013), 78 FR 41483 (July 10, 2013) (SR– 

BATS–2013–39). 

15See https://markets.cboe.com/services/listings/. 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe BZX Exchange, Inc. (‘‘BZX’’ or 

the ‘‘Exchange’’) is filing with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) a proposed rule 

change to amend the fees applicable to 

the BZX Top 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 amend the fees applicable 

to the BZX Top Feed, which is an 

uncompressed data feed that offers both 

top-of-book quotations and execution 

information based on equity orders 

entered into the System.3 Specifically, 

the Exchange proposes to: (1) Increase 

the fee for internal distribution of the 

BZX Top Feed; and (2) introduce 

Professional User fees for internal 

Professional Users of the BZX Top Feed. 

The current fees for external 

distribution of the BZX Top Feed will 

continue to apply, without change, 

including various incentive programs 

that the Exchange has adopted to 

facilitate the provision of lower-cost 

market data to retail and other 

investors.4

Market Background 

The Commission has repeatedly 

expressed its preference for competition 

over regulatory intervention in 

determining prices, products, and 

services in the securities markets. 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.’’ 5 As 

the Commission itself recognized, the 

market for trading services in NMS 

stocks has become ‘‘more fragmented 

and competitive.’’ 6

Equity trading is currently dispersed 

across sixteen exchanges, including 

three new U.S. equities exchanges that 

launched trading in 2020, 32 alternative 

trading systems,7 and numerous brokerdealer internalizers and wholesalers, all 

competing fiercely for order flow. Based 

on publicly-available information, no 

single U.S. equities exchange has more 

than 20% market share.8 In turn, the 

market for top-of-book data is highly 

competitive as national securities 

exchanges compete both with each other 

and with the securities information 

processors (‘‘SIPs’’) to provide efficient, 

reliable, and low-cost data to a wide 

range of investors and market 

participants. In fact, Regulation NMS 

requires all U.S. equities exchanges to 

provide their best bids and offers, and 

executed transactions, to the two 

registered SIPs for dissemination to the 

public.9 Top-of-book data is therefore 

widely available to investors today at a 

relatively modest cost. National 

securities exchanges may also 

disseminate their own top-of-book data, 

but no rule or regulation of the 

Commission requires market 

participants to purchase top-of-book 

data from an exchange.10 The BZX Top 

Feed therefore competes with the SIP 

and with similar products offered by 

other national securities exchanges that 

offer their own competing market data 

products. In fact, there are twelve 

competing products offered by other 

national securities exchanges today,11

not counting products offered by the 

Exchange’s affiliates, and each of the 

Exchange’s affiliated U.S. equities 

exchanges also offers similar top-ofbook data. 

Fees for Internal Distribution of the BZX 

Top Feed 

Currently, the Exchange charges a 

modest fee of $500 per month for 

internal distribution of BZX Top Feed 

data,12 i.e., distribution within the 

distributor’s own firm,13 and does not 

charge any additional fees for internal 

distribution based on the number of 

Professional or Non-Professional Users 

that receive access to this information. 

These internal distribution fees have 

been in place, without change, since 

July 2013 when the Exchange first began 

charging for access to the BZX Top 

Feed, which had previously been 

available free of charge.14 In the time 

since, the Exchange has made a number 

of significant enhancements to its 

platform, including, among other things, 

a significant expansion of its listing 

program for exchange-traded 

products,15 that have resulted in 

improved trading opportunities for 

investors and, consequently, more 

valuable market data. 

As discussed, the Exchange now 

proposes to increase certain fees 

applicable to firms that consume this 


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6712 Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Notices 

16 15 U.S.C. 78f. 

17 15 U.S.C. 78f(b)(4). 

18 15 U.S.C. 78k–1. 

19See 17 CFR 242.603. 

20NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. 

Cir. 2010) (‘‘NetCoalition I’’) (quoting H.R. Rep. No. 

94–229 at 92 (1975), as reprinted in 1975 

U.S.C.C.A.N. 323). 

21 Id. at 535. 

22The Exchange notes that broker-dealers are not 

required to purchase proprietary market data to 

comply with their best execution obligations. See In 

the Matter of the Application of Securities Industry 

and Financial Markets Association for Review of 

Actions Taken by Self-Regulatory Organizations, 

Release Nos. 34–72182; AP–3–15350; AP–3–15351 

(May 16, 2014). Similarly, there is no requirement 

in Regulation NMS or any other rule that 

proprietary data be utilized for order routing 

decisions, and some broker-dealers and ATSs have 

chosen not to do so. 

23See CTA Quarterly Population Metrics (Q3 

2020), available at https://www.ctaplan.com/ 

publicdocs/ctaplan/CTAPLAN_Population_

Metrics_3Q2020.pdf; UTP Quarterly Population 

data as internal distributors, i.e., firms 

that use BZX Top Feed data for internal 

purposes as opposed to firms that 

distribute such data externally to its 

customers. As proposed, the Exchange 

would increase the monthly charge for 

internal distribution of BZX Top Feed 

data to $750 per month, which would 

continue to be significantly cheaper 

than similar products offered by the 

Exchange’s main competitors, including 

both other national securities exchanges 

that offer top-of-book data products to 

their customers as well as the SIPs that 

provide similar ‘‘core data’’ to vendors 

and subscribers pursuant to Regulation 

NMS. In addition, the Exchange would 

introduce Professional User fees for 

internal Professional Users of the BZX 

Top Feed. Those Professional User fees 

will be the same as the modest fee 

currently charged for external 

distribution of the BZX Top Feed, i.e., 

$4 per month for each Professional User. 

There would continue to be no charge 

associated with internal distribution to 

Non-Professional Users. Further, as 

discussed, the current fees for external 

distribution of the BZX Top Feed would 

continue to apply, without change, 

including various incentive programs 

that the Exchange has adopted to 

facilitate the provision of lower-cost 

market data to retail and other investors. 

As a result, the Exchange believes that 

the proposed fee changes would allow 

it to be appropriately compensated for 

the value of its market data, particularly 

from professional financial services 

firms that use that data for internal 

purposes, while simultaneously 

ensuring that its data would continue to 

be available to a wide range of market 

participants at a cost that facilitates 

widespread availability of such data. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,16

in general, and furthers the objectives of 

Section 6(b)(4),17 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. In 

addition, the Exchange believes that the 

proposed rule change is consistent with 

Section 11(A) of the Act as it 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.18 Finally, the proposed rule 

change is also consistent with Rule 603 

of Regulation NMS,19 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. 

The Exchange operates in a highly 

competitive environment. Indeed, with 

the launch of three new national 

securities exchanges that trade U.S. 

equity securities last September, there 

are now sixteen registered U.S equities 

exchanges, and with the exception of 

Long-Term Stock Exchange, Inc. 

(‘‘LTSE’’), which has determined to not 

offer any proprietary market data feeds, 

each of these exchanges offer associated 

market data products to their customers, 

either with or without a fee. The 

national securities exchanges also 

compete with the SIPs for market data 

customers, as much of the information 

offered to market participants and 

investors through the BZX Top Feed is 

similarly made available to market 

participants and investors through the 

SIPs, consolidated with data from each 

of the other fifteen exchanges. It is in 

this robust and competitive market in 

which the Exchange is proposing to 

modestly increase its fees. 

The Commission has repeatedly 

expressed its preference for competition 

over regulatory intervention in 

determining prices, products, and 

services in the securities markets. 

Further, with respect to market data, the 

decision of the United States Court of 

Appeals for the District of Columbia 

Circuit in NetCoalition v. SEC upheld 

the Commission’s reliance on the 

existence of competitive market 

mechanisms to evaluate the 

reasonableness and fairness of fees for 

proprietary market data: ‘‘In fact, the 

legislative history indicates that the 

Congress intended that the market 

system ‘evolve through the interplay of 

competitive forces as unnecessary 

regulatory restrictions are removed’ and 

that the SEC wield its regulatory power 

‘in those situations where competition 

may not be sufficient,’ such as in the 

creation of a ‘consolidated transactional 

reporting system.’ ’’ 20 The court agreed 

with the Commission’s conclusion that 

‘‘Congress intended that ‘competitive 

forces should dictate the services and 

practices that constitute the U.S. 

national market system for trading 

equity securities.’ ’’ 21 As discussed in 

this filing, significant competitive forces 

constrain the ability of the Exchange to 

charge supra-competitive fees. 

i. The BZX Top Feed Is an Optional 

Market Data Product, and the Exchange 

is Constrained in Its Pricing by 

Significant Competitive Forces 

Subscribing to the BZX Top Feed is 

entirely optional. The Exchange is not 

required to make the BZX Top Feed 

available to any customers, nor is any 

customer required to purchase the BZX 

Top Feed. Unlike certain other data 

products that firms may be required to 

purchase in order to fulfill regulatory 

obligations,22 e.g., the consolidated 

quotation and last-sale information 

feeds offered by the SIPs, a customer’s 

decision as to whether to purchase the 

BZX Top Feed is entirely discretionary, 

and is based on that firms individual 

business needs. Generally, firms that 

choose to subscribe to the BZX Top 

Feed do so because they believe that it 

is a cost-effective alternative to core data 

offered by the SIPs that provides 

valuable information about the market 

for securities traded on the Exchange, 

particularly in cases where a 

consolidated display is not required 

pursuant to the Vendor Display Rule. 

Such firms are able to determine for 

themselves whether the BZX Top Feed 

helps them to achieve their business 

goals, and if so, whether or not it is 

attractively priced compared to other 

similar products. 

Indeed, if the BZX Top Feed does not 

provide sufficient value to firms based 

on the uses those firms may have for it, 

such firms may simply choose to 

conduct their business operations in 

ways that do not use the BZX Top Feed. 

In fact, comparing the number of 

internal distributors that currently 

subscribe to the BZX Top Feed, based 

on data compiled by the Exchange as of 

November 2020, to the total number of 

internal distributors that subscribe to 

core data offered by the CTA and UTP 

SIPs, as published on plan websites for 

Q3 2020,23 less than 9.5% of internal 


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Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Notices 6713 

Metrics (Q3 2020), available at https://

www.utpplan.com/DOC/UTP_2020_Q3_Stats_with_

Processor_Stats.pdf. 

24Although the Exchange does not have access to 

the customer lists for other competing products, it 

understands based on conversations with 

subscribers to the BZX Top Feed that they typically 

view exchange top-of-book products as substitutes 

and do not generally look to purchase such data 

from more than one national securities exchange. 

25See supra note 4. The Exchange also notes that 

while this proposed fee change involves an increase 

in fees, it is simultaneously filing another proposed 

fee change to expand its Financial Products 

Distribution Program and further reduce certain 

fees. See SR–CboeBZX–2021–003 (pending 

publication). 

26See Cboe Global Markets, U.S. Equities Market 

Volume Summary, available at http://

markets.cboe.com/us/equities/market_share/. 

distributors that purchase U.S. equities 

data choose to subscribe to the BZX Top 

Feed. The BZX Top Feed therefore 

represents an insignificant proportion of 

the relevant market for such market 

data, and significantly more internal 

distributors choose not to purchase this 

product than those that do. Given the 

insignificant percentage of internal 

distributors that consume the BZX Top 

Feed, it is clear that such firms can and 

do exercise their right to choose to 

purchase, or not purchase, this 

particular market data product. 

Although the Exchange is not 

required to make any data, including 

top-of-book data, available through its 

proprietary market data platform, the 

Exchange believes that making such 

data available increases investor choice, 

and contributes to a fair and competitive 

market. Specifically, making such data 

publicly available through proprietary 

data feeds allows investors to choose 

alternative, potentially less costly, 

market data based on their business 

needs. While some market participants 

that desire a consolidated display often 

choose the SIP to satisfy their top-ofbook data needs, and in some cases are 

effectively required to do so under the 

Vendor Display Rule, others may prefer 

to purchase data directly from one or 

more national securities exchanges. For 

example, a buy-side investor or fintech 

firm may choose to purchase the BZX 

Top Feed, or a similar product from 

another exchange, in order to perform 

investment analysis, or to provide 

general information about the market for 

U.S. equity securities, respectively. In 

either case the choice to purchase the 

BZX Top Feed would be based on the 

firm’s determination of the value of the 

data offered by their chosen product 

compared to the cost of acquiring this 

data instead of receiving similar data 

from other sources. The BZX Top Feed 

serves as a valuable reference for 

investors that do not require a 

consolidated display that contains 

quotations for all sixteen U.S. equities 

exchanges. Making alternative products 

available to market participants 

ultimately ensures competition in the 

marketplace, and constrains the ability 

of exchanges to charge supracompetitive fees. 

Further, in the event that a market 

data customer views one exchange’s 

top-of-book data product and/or fees as 

more or less attractive than a 

competitor’s offerings they can and 

often do switch between competing 

products. As discussed, much of the 

top-of-book quotation information and 

last-sale information offered within the 

BZX Top Feed is also available on the 

SIP feeds, and for firms that do not 

require a consolidated display, as is 

typically the case for the subscribers to 

the BZX Top Feed, similar top-of-book 

information is available from a number 

of competing U.S. equities exchanges.24

This include a number of large 

established exchanges that charge for 

access to such top-of-book data, as well 

as certain smaller or new exchange 

entrants that provide similar data 

without charge, in many cases as a way 

of attracting customers to their exchange 

while they seek to grow market share. In 

this way, the BZX Top Feed, SIP data 

products, and other top-of-book 

products offered by a number of U.S. 

equities exchanges, are all substitutes. 

The availability of these substitute 

products constrains the Exchange’s 

ability to charge supra-competitive 

prices as market participants can easily 

obtain similar data from one of the 

Exchange’s many competitors. In fact, 

the impact of competition on the market 

in which the BZX Top Feed is offered 

to market participants and investors is 

showcased by the Exchange’s other 

recent fee changes related to this 

product, which involved the reduction 

of fees to facilitate the Exchange’s 

ability to compete for customers.25

Distributors can discontinue use of the 

BZX Top Feed at any time and for any 

reason, including due to an assessment 

of the reasonableness of fees charged. 

In setting the proposed fees for the 

BZX Top Feed, the Exchange considered 

the competitiveness of the market for 

proprietary data and all of the 

implications of that competition. The 

Exchange believes that it has considered 

all relevant factors and has not 

considered irrelevant factors in order to 

establish reasonable fees. Indeed, the 

Exchange has no market power and is 

not in a position to charge unreasonable 

fees for its top-of-book data as there are 

a number of competing products in the 

market, including products that are 

currently offered free of charge by 

certain other exchanges that have 

determined not to charge for their 

market data. The existence of 

alternatives to the BZX Top Feed 

ensures that the Exchange cannot set 

unreasonable fees when vendors and 

subscribers can freely elect these 

alternatives or choose not to purchase a 

specific proprietary data product if the 

attendant fees are not justified by the 

returns that any particular vendor or 

data recipient would achieve through 

the purchase. 

ii. The Proposed Fees Are Reasonable 

Given the Value of the Data Provided to 

Customers, and When Compared to 

Competing Market Data Products 

The proposed fees are also reasonable 

as they represent a modest increase for 

top-of-book data that has proven 

valuable for investors, particularly as 

the Exchange grows market share due to 

its innovative market model that has 

been successful in attracting retail limit 

orders, increasing the Exchange’s 

market share to over 7% consolidated 

U.S. equities volume.26 Specifically, the 

BZX Top Feed offers competitivelypriced alternative to top-of-book data 

disseminated by SIPs, i.e., core data, for 

firms that do not need or desire a 

consolidated display covering all 

sixteen U.S. equities exchanges, or 

similar data disseminated by other 

national securities exchanges. It is 

purchased by a wide variety of market 

participants and vendors, including data 

platforms, websites, fintech firms, buyside investors, retail brokers, regional 

banks, and securities firms inside and 

outside of the U.S. that desire low cost, 

high quality, real-time U.S. equity 

market data. By providing lower cost 

access to U.S. equity market data, the 

BZX Top Feed benefits a wide range of 

investors that participate in the national 

market system. As discussed, the 

decision to purchase a particular market 

data product from a particular exchange 

is largely based on two factors: (1) The 

quality of the data, and (2) the price 

charged for access to that data. The 

Exchange believes that the BZX Top 

Feed is competitive on both of these 

factors. 

First, the BZX Top Feed would 

remain competitively priced compared 

to similar products offered by other 

comparable U.S. equities exchanges and 

core data offered by the SIPs. Although 

the BZX Top Feed is not offered free of 

charge like certain other competitor 

offerings, particularly those offered by 

newer U.S. equities exchanges that are 

seeking to grow market share, it is made 

available at a price that is significantly 


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6714 Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Notices 

27See NYSE PDP Market Data Pricing, Section 

1.3, NYSE BBO. 

28See NYSE PDP Market Data Pricing, Section 

1.4, NYSE Trades. 

29See supra note 3 and accompanying text. The 

Exchange also offers a separate market data product, 

i.e., BZX Last Sale, that exclusively provides last 

sale information. See BZX Rule 13.8(d). However, 

all of the information contained in the BZX Last 

Sale Feed is also made available in the BZX Top 

Feed at no additional charge. 

30See NYSE PDP Market Data Pricing, Section 

3.3, NYSE Arca BBO; NYSE PDP Market Data 

Pricing, Section 3.4, NYSE Arca Trades. 

31See Nasdaq Equity Rules, Equity 7, Pricing 

Schedule, Section 147(c)(1). In addition, Nasdaq 

also charges distributors a $100 monthly 

administrative fee. See Nasdaq Equity Rules, Equity 

7, Pricing Schedule, Section 135. 

32Nasdaq’s Professional User fee is divided into 

Nasdaq issues ($13), NYSE issues ($6.50), and other 

issues ($6.50) for a total of $26 per month for each 

Professional User. See Nasdaq Equity Rules, Equity 

7, Pricing Schedule, Section 147(b)(1). 

33NYSE and Arca’s fees are both broken down 

into $4 per month for BBO information and an 

additional $4 per month for Trades information. See 

supra notes 27, 28, and 30. 

34See CTA Schedule of Market Data Charges, 

available at https://www.ctaplan.com/pricing; UTP 

Fee Schedule, available at https://utpplan.com/ 

DOC/Datapolicies.pdf. 

35See https://markets.cboe.com/us/equities/ 

market_share/. 

36See e.g., Investors Exchange Fee Schedule, 

Market Data fees. 

37See e.g., Cboe EDGA Exchange, Inc., Fee 

Schedule, EDGA Top. 

38See Regulation NMS Adopting Release, supra 

note 5, at 37503. 

lower than the prices charged by the 

Exchange’s main competitors—i.e., 

those with comparable market shares 

and data quality. Notably, even with the 

proposed fee increase, the BZX Top 

Feed would remain significantly 

cheaper than similar products offered by 

New York Stock Exchange LLC 

(‘‘NYSE’’), NYSE Arca, Inc. (‘‘Arca’’), 

and The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’) both in terms of the fees 

charged for internal distribution and the 

fees charge for each Professional User 

that is provided access to the feed. For 

example, NYSE charges a total of $3,000 

per month for internal distribution of 

their equivalent products, i.e., $1,500 

per month for applicable top-of-book 

quotation information,27 and an 

additional $1,500 per month for 

transaction information,28 both of which 

are included in the BZX Top Feed for 

a single fee.29 Arca, which has a similar 

pricing model to NYSE, also charges a 

higher rate of $1,500 per month for 

internal distribution of its equivalent 

products, separated into a $750 per 

month charge for top-of-book quotation 

information and an additional $750 per 

month charge for transaction 

information.30 Finally, Nasdaq charges 

its internal distributors a fee of $1,500 

per month for Nasdaq Basic, which 

includes both top-of-book quotation 

information and transaction information 

for the same fee, similar to the 

Exchange’s pricing model, but again at 

a higher cost.31 In each case, the internal 

distribution charges associated with 

obtaining comparable U.S. equities 

market data from NYSE, Arca, and 

Nasdaq runs at least double and up to 

four times as much as the proposed fee 

to be charged by the Exchange, meaning 

that the Exchange would continue to be 

offering its data at a price that is 

attractive compared to the prices 

charged by its competitors. Similarly, 

each of these exchanges charges a fee for 

each Professional User that is higher 

than that proposed by the 

Exchange—i.e., $26 per month for 

Nasdaq,32 and $8 per month total for 

both NYSE and Arca.33 Finally, the BZX 

Top Feed also remains competitively 

priced compared to core data provided 

by the SIPs for firms, e.g., buy-side 

investors or fintech firms, that do not 

need or desire a consolidated display 

covering all sixteen U.S. equities 

exchanges.34

Second, the proposed fees are 

reasonable given the value of the data 

provided in the BZX Top Feed and used 

by data recipients in their profitgenerating activities. The BZX Top Feed 

provides top-of-book quotations and 

transactions executed on the Exchange, 

and provides a valuable window into 

the market for securities traded on a 

market that accounts for about 4.5% of 

U.S. equity market volume today.35 As 

discussed, the Exchange offers the BZX 

Top Feed in a competitive environment 

where firms may freely choose which 

market data products best suit their 

business needs. Invariably, firms that 

choose to purchase the BZX Top Feed 

instead of receiving one of the many free 

products offered by other exchanges,36

including free products offered by an 

affiliate of the Exchange,37 have decided 

that the value of the BZX Top Feed is 

greater than that offered by those other 

products. Indeed, by incentivizing 

market quality improvements through 

its Lead Market Maker (‘‘LMM’’) and 

other programs designed to enhance the 

quality of its market, the Exchange is 

able to offer higher quality market data 

products to customers. In turn, investors 

may choose to rely on those products 

instead of other competitor offerings 

based on the value they provide in 

relation to any additional cost 

associated with obtaining that market 

data from the Exchange. The Exchange 

therefore believes that its proposal is 

consistent with the principles enshrined 

in Regulation NMS to ‘‘promote the 

wide availability of market data and to 

allocate revenues to SROs that produce 

the most useful data for investors.’’ 38

iii. The Proposed Fees Are Equitable 

and Not Unfairly Discriminatory as 

Internal Distributors Will Be Subject to 

Uniform Pricing Based on Their Usage 

of the Data 

The Exchange believes the proposed 

fees for internal distribution of the BZX 

Top Feed will continue to be allocated 

fairly and equitably among subscribers, 

and are not unfairly discriminatory, as 

the proposed fees will apply equally to 

all data recipients that choose to 

subscribe to the BZX Top Feed and 

distribute that data to internal 

subscribers. As proposed, all internal 

distributors of the BZX Top Feed will be 

subject to the same internal distribution 

fee, regardless of the type of business 

that they operate, or the use they plan 

to make of the data feed. Thus, all 

internal distributors would have access 

to the BZX Top Feed on the same 

equitable and non-discriminatory terms. 

Similarly, with the introduction of 

Professional User fees, internal 

distributors of the BZX Top Feed will be 

subject to the same modest fees based 

solely on the number of Professional 

Users that each internal distributor has 

chosen to permission for access to this 

information. The Exchange does not 

believe that it is inequitable, or unfairly 

discriminatory, to charge a fee based on 

the number of Professional Users within 

a firm that have access to the BZX Top 

Feed as this ensures that firms with the 

highest usage pay their equitable share 

for the data. 

The Exchange also believes that it is 

fair and equitable, and not unfairly 

discriminatory, to continue not to 

charge a fee for internal distribution to 

Non-Professional Users. The Exchange’s 

fee structure is generally designed to 

facilitate lower cost access to its market 

data by retail investors, either through 

substantially lower User fees for NonProfessional Users, or other incentive 

programs, such as the Small Retail 

Broker Distribution Program, which was 

recently implemented to lower the cost 

of the Exchange’s market data to small 

broker-dealers that serve retail investors. 

The Exchange does not anticipate any 

significant number of Non-Professional 

Users to receive BZX Top Feed Data 

through internal, i.e., within the 

distributor’s firm, as opposed to external 

distribution, and in the event that 

certain firms may distribute data 

internally to Users that qualify as NonProfessional, providing such Users 

access without any User fees would 


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Federal Register / Vol. 86, No. 13 / Friday, January 22, 2021 / Notices 6715 

39 15 U.S.C. 78s(b)(3)(A). 

40 17 CFR 240.19b–4(f). 

41 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

facilitate the Exchange’s overall goals of 

facilitating access to its data by retail 

investors, which the Commission has 

continually found to be consistent with 

the Exchange Act. 

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 to their customers; and (ii) the 

existence of inexpensive real-time 

consolidated data disseminated by the 

SIPs. Top-of-book data is broadly 

disseminated by both the SIPs and the 

sixteen U.S. equities exchanges. There 

are therefore a number of alternative 

products available to market 

participants and investors, including 

products offered by certain competing 

U.S. equities exchanges without charge. 

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 market data customers 

look to purchase cheaper top-of-book 

data products, and quality, as market 

participants seek to purchase data that 

represents significant market liquidity. 

Intramarket Competition. The 

Exchange believes that the proposed 

fees do not put any market participants 

at a relative disadvantage compared to 

other market participants. As discussed, 

the proposed fees would apply to all 

internal distributors of the BZX Top 

Feed on an equal and nondiscriminatory basis. The Exchange 

therefore believes that the proposed fees 

neither favor nor penalize one or more 

categories of market participants in a 

manner that would impose an undue 

burden on competition. To the extent 

that particular fees would apply to only 

a subset of subscribers, e.g., Professional 

versus Non-Professional Users, those 

distinctions are not unfairly 

discriminatory and do not unfairly 

burden one set of customers over 

another. 

Intermarket Competition. The 

Exchange believes that the proposed 

fees do not impose a burden on 

competition or on other SROs that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. In setting the 

proposed fees, the Exchange is 

constrained by the availability of 

numerous substitute products offered by 

other national securities exchanges as 

well as core data offered by the SIPs. 

Because market data customers can find 

suitable substitute feeds, an exchange 

that overprices its market data products 

stands a high risk that users may 

substitute another product. These 

competitive pressures ensure that no 

one exchange’s market data fees can 

impose an undue burden on 

competition, and the Exchange’s 

proposed fees do not do so here. 

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) 

of the Act 39 and paragraph (f) of Rule 

19b–4 40 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–2021–002 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–2021–002. 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–2021–002 and 

should be submitted on or before 

February 12, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.41

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–01279 Filed 1–21–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90928; File No. SR–ICC– 

2021–001] 

Self-Regulatory Organizations; ICE 

Clear Credit LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Relating to the ICC 

Clearing Rules 

January 14, 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 7, 

2021, ICE Clear Credit LLC (‘‘ICC’’) filed 

with the Securities and Exchange 


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