13412 Federal Register / Vol. 86, No. 43 / Monday, March 8, 2021 / Notices 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5See Securities Exchange Act Release No. 90897 

(January 11, 2021), 86 FR 4161 (January 15, 2021) 

(SR–CboeBZX–2020–094). 

6For example, if the Exchange becomes aware of 

a transaction fee billing error on February 4, 2021, 

the Exchange will resolve the error by crediting or 

debiting Members based on the fees or rebates that 

should have been applied to any impacted 

transactions during November, 2020, December 

2020 and January 2021. The Exchange notes that 

because it bills in arrears, the Exchange would be 

able to correct the error in advance of issuing the 

February 2021 invoice and therefore, transactions 

impacted through the date of discovery (in this 

example, February 4, 2021) and thereafter, would be 

billed correctly. 

7See e.g., Securities Exchange Act Release No. 

87650 (December 3, 2019), 84 FR 67304 (December 

9, 2019) (SR–NYSECHX–2019–024); Securities 

Exchange Act Release No. 84430 (October 16, 2018), 

83 FR 53347 (October 22, 2018) (SR–NYSENAT– 

2018–23); and Securities Exchange Act Release No. 

79060 (October 6, 2016), 81 FR 70716 (October 13, 

2016) (SR–ISEGemini–2016–11). 

information unless it displays a 

currently valid OMB control number. 

The public may view background 

documentation for this information 

collection at the following website: 

www.reginfo.gov. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. Written comments and 

recommendations for the proposed 

information collection should be sent 

within 30 days of publication of this 

notice to (i) www.reginfo.gov/public/do/ 

PRAMain and (ii) David Bottom, 

Director/Chief Information Officer, 

Securities and Exchange Commission, c/ 

o Cynthia Roscoe, 100 F Street, NE, 

Washington, DC 20549, or by sending an 

email to: PRA_Mailbox@sec.gov. 

Dated: March 2, 2021. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–04656 Filed 3–5–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91239; File No. SR– 

CboeBZX–2021–017] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposal To Permit the Exchange To 

Look Back Only to July 2020 To 

Correct Certain Billing Errors Which 

Were Discovered in October 2020 

March 2, 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 February 

18, 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 and II 

below, which Items have been prepared 

by the Exchange. The Exchange filed the 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

Section 19(b)(3)(A)(iii) of the Act 3 and 

Rule 19b–4(f)(6) thereunder.4 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 proposal to 

permit the Exchange to look back only 

to July 2020 to correct certain billing 

errors which were discovered in 

October 2020. This rule change does not 

provide for any modifications to the text 

of the Exchange’s rules or fees schedule. 

The text of the proposal 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 recently amended its 

equities and options fees schedules to 

adopt a provision relating to billing 

errors and fee disputes.5 Specifically, 

the Exchange adopted a provision that 

provides that all fees and rebates 

assessed prior to the three full calendar 

months before the month in which the 

Exchange becomes aware of a billing 

error shall be considered final. 

Particularly, the Exchange will resolve 

an error by crediting or debiting 

Members and Non-Members based on 

the fees or rebates that should have been 

applied in the three full calendar 

months preceding the month in which 

the Exchange became aware of the error, 

including to all impacted transactions 

that occurred during those months.6 The 

Exchange will apply the three month 

look back regardless of whether the 

error was discovered by the Exchange or 

by a Member or Non-Member that 

submitted a fee dispute to the Exchange. 

The Exchange’s fees schedules also 

provide that all disputes concerning fees 

and rebates assessed by the Exchange 

would have to be submitted to the 

Exchange in writing and accompanied 

by supporting documentation. The 

purpose of this policy is to provide both 

the Exchange and Members and NonMembers subject to the Exchange’s fee 

schedule finality and the ability to close 

their books after a known period of 

time. The Exchange further notes that 

several other exchanges have adopted 

similar provisions in their rules.7

The Exchange proposes to apply the 

recently adopted billing policy to 

transactions impacted by billing errors 

that were discovered in October 2020. 

Particularly, in October 2020, the 

Exchange identified a billing error 

relating to certain fee codes. As a result 

of the discovery, the Exchange 

conducted a review of additional fee 

code configurations, which review was 

only recently completed. The review 

resulted in the discovery of additional 

billing errors relating to Exchange fee 

codes. These errors, along with the 

original error discovered in October 

2020, resulted in various Members being 

over-rebated or under-billed, and to a 

lesser extent over-billed, over the course 

of several years. In the absence of 

applying the recently adopted billing 

policy to transactions impacted by the 

October 2020 billing errors, the 

Exchange would be required to credit or 

debit Members based on the fees or 

rebates that should have been applied to 

all impacted transactions, regardless of 

how far back the transactions occurred 

(which as noted above, is several years). 

If the Exchange were permitted to apply 

the current rule language to the billing 

errors discovered in October 2020 

however, then the Exchange could limit 

its look back in correcting those errors 

to only those transactions that occurred 


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Federal Register / Vol. 86, No. 43 / Monday, March 8, 2021 / Notices 13413 

8The Exchange corrected errors in advance of 

issuing the October 2020 invoice and therefore, 

transactions impacted through the date of discovery 

and thereafter, were billed correctly. 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(5). 

11 Id. 

12See supra note 7. 

13Since the errors were discovered in October 

2020, the three preceding months that would be 

corrected are July, August, and September 2020. 

14See supra note 7. 

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

16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

in the three months preceding the 

discovery of the errors (i.e., July 2020 

through September 2020).8 Moreover, 

the benefit to the Exchange of limiting 

the impact of these particular errors to 

three months is much smaller as 

compared to the benefit that Members 

would receive. Specifically, the nature 

of these particular billing errors is such 

that in correcting the errors, more 

money would be owed to the Exchange 

by Members due to over-rebating or 

under-billing than is owed to Members 

by the Exchange due to overbilling. 

Accordingly, the Exchange believes it’s 

appropriate and equitable to apply the 

three-month look back for corrective 

billing to the errors that were discovered 

in October 2020. 

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 

and, in particular, the requirements of 

Section 6(b) of the Act.9 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 10 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. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the Section 6(b)(5) 11 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

In adopting its currently policy, the 

Exchange noted that it believed 

providing that all fees are final after 3 

months is reasonable as both the 

Exchange and Members have an interest 

in knowing when its fee assessments are 

final and when reliance can be placed 

on those assessments. Indeed, without 

some deadline on fee disputes and 

billing errors, the Exchange and market 

participants would never be able to 

close their books with any confidence. 

Furthermore, as noted above, a number 

of Exchanges similarly consider their 

fees final after a similar period of time.12

As discussed above, in October 2020, 

the Exchange became aware of certain 

billings errors which resulted in various 

Members being over-rebated or underbilled, and to a lesser extent over-billed 

over the course of several years. The 

Exchange believes it’s appropriate that 

Members that were impacted by these 

billing errors similarly be subject to the 

recently adopted billing policy to not 

resolve billing errors past three months 

from the time a billing error was 

discovered (in this case, not be invoiced 

for impacted transactions that occurred 

prior to July 2020).13 The Exchange does 

not think it is appropriate or equitable 

to have to correct billing errors for 

transactions that occurred prior to July 

2020. As discussed, the Exchange 

believes it’s reasonable and important 

for both Members and the Exchange to 

rely on the finality of fees and rebates 

assessed. Moreover, the proposed rule 

change would apply to all Members 

equally, in that the Exchange would be 

precluded from invoicing any Member 

for the correct amounts that should have 

been applied to trades that were 

otherwise billed incorrectly before July 

2020. The Exchange also believes the 

proposal would be consistent with the 

protection of investors and the public 

interest because it would allow 

impacted market participants to benefit 

from the same rule recently adopted by 

the Exchange. Additionally, as 

discussed, Members would receive a 

greater benefit from the application of 

the current billing errors policy as 

compared to the Exchange with respect 

to these particular billing errors. 

Furthermore, the Exchange believes the 

proposal to limit the time period it must 

correct billing errors does not raise any 

new or novel issues that have not been 

already been considered by the 

Commission. Particularly, the proposal 

to limit how far back an exchange must 

go to correct billing errors is comparable 

to other policies and practices that have 

long been established at other 

exchanges.14

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. First, the 

Exchange notes the proposal is not 

intended to address any competitive 

issue, but rather provide finality to 

Members with respect to billing errors 

that were just recently discovered and 

extend to them the applicability of a 

recently adopted billing practice that 

considers all fees final after three 

months. Further, the Exchange does not 

believe that the proposed rule change 

will impose any burden on intramarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act because the 

proposed changes apply equally to all 

Members. The Exchange does not 

believe that the proposed rule change 

will impose any burden on intermarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act because the 

proposed change only affects 

transactions that occurred on the 

Exchange. Additionally, other 

exchanges have long established 

policies in which fees shall be 

considered final after a specified period 

of time. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No comments were solicited or 

received on the proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not (i) significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and; (iii) 

become operative for 30 days from the 

date on which it was filed, or such 

shorter time as the Commission may 

designate, it has become effective 

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

Act 15 and Rule 19b–4(f)(6) 16

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 


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13414 Federal Register / Vol. 86, No. 43 / Monday, March 8, 2021 / Notices 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 89197 

(June 30, 2020), 85 FR 40720 (‘‘Notice’’). 

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

5See Securities Exchange Act Release No. 89584, 

85 FR 51817 (Aug. 21, 2020). 

6See Securities Exchange Act Release No. 90075, 

85 FR 63597 (Oct. 8, 2020) (‘‘OIP’’). 

7See Securities Exchange Act Release No. 90672, 

85 FR 83135 (Dec. 21, 2020). 

8The comment on the proposed rule change can 

be found on the Commission’s website at: https:// 

www.sec.gov/comments/sr-nysearca-2020-56/ 

srnysearca202056-8163217-226939.pdf. 

9 15 U.S.C. 78f(b)(5). 

10See NYSE Arca Rules 5.2–E(j)(3) and 5.5– 

E(g)(2) (Investment Company Units); 5.2–E(j)(8) 

(Exchange-Traded Fund Shares); 8.600–E (Managed 

Fund Shares); and 8.900–E (Managed Portfolio 

Shares). 

11See Commentary .01(d) to NYSE Arca Rule 5.2– 

E(j)(3) (requiring a minimum of 100,000 shares of 

a series of Investment Company Units to be 

outstanding at commencement of trading); NYSE 

Arca Rule 5.2–E(j)(8)(e)(1)(A) (requiring the 

Exchange to establish a minimum number of 

Exchange-Traded Fund Shares to be outstanding at 

the time of commencement of trading); NYSE Arca 

Rule 8.600–E(d)(1)(A) (requiring the Exchange to 

establish a minimum number of Managed Fund 

Shares to be outstanding at the time of 

commencement of trading); and NYSE Arca Rule 

8.900–E(d)(1)(A) (requiring the Exchange to 

establish a minimum number of Managed Portfolio 

Shares to be outstanding at the time of 

commencement of trading). 

12The Exchange represents that the term 

‘‘creation unit’’ would have the same meaning as 

defined in Rule 6c–11(a)(1) under the Investment 

Company Act of 1940 (‘‘1940 Act’’). 

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 SRCboeBZX–2021–017 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-2021–017. 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; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

CboeBZX–2021–017 and should be 

submitted on or before March 29, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–04677 Filed 3–5–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91236; File No. SR– 

NYSEArca–2020–56] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Disapproving a 

Proposed Rule Change To Amend 

NYSE Arca Rules 5.2–E(j)(3), 5.2– 

E(j)(8), 5.5–E(g)(2), 8.600–E, and 8.900– 

E 

March 2, 2021. 

I. Introduction 

On June 18, 2020, NYSE Arca, Inc. 

(‘‘Exchange’’ or ‘‘NYSE Arca’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Exchange 

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

proposed rule change to amend certain 

listing requirements relating to 

maintaining a minimum number of 

beneficial holders and minimum 

number of shares outstanding. The 

proposed rule change was published for 

comment in the Federal Register on July 

7, 2020.3

On August 17, 2020, pursuant to 

Section 19(b)(2) of the Exchange Act,4

the Commission designated a longer 

period within which to approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether to 

disapprove the proposed rule change.5

On October 2, 2020, the Commission 

instituted proceedings to determine 

whether to approve or disapprove the 

proposed rule change.6 On December 

15, 2020, the Commission designated a 

longer period for Commission action on 

the proposed rule change.7 The 

Commission received one comment 

letter on the proposed rule change.8

This order disapproves the proposed 

rule change because, as discussed 

below, NYSE Arca has not met its 

burden under the Exchange Act and the 

Commission’s Rules of Practice to 

demonstrate that its proposal is 

consistent with the requirements of 

Exchange Act Section 6(b)(5), and, in 

particular, the requirement that the 

rules of a national securities exchange 

be designed ‘‘to prevent fraudulent and 

manipulative acts and practices’’ and 

‘‘to protect investors and the public 

interest.’’ 9

II. Description of the Proposal 

As described in detail in the Notice 

and OIP, the Exchange proposes to 

amend the listing standards governing 

the listing and trading of Investment 

Company Units, Exchange-Traded Fund 

Shares, Managed Fund Shares, and 

Managed Portfolio Shares (collectively, 

‘‘Fund Shares’’).10 Specifically, NYSE 

Arca proposes to: (1) Remove the listing 

requirement that, following the initial 

twelve-month period after 

commencement of trading of a series of 

Fund Shares on the Exchange, such 

series have at least 50 beneficial holders 

(‘‘Beneficial Holders Rule’’); and (2) 

replace the existing minimum number 

of shares requirements (‘‘Minimum 

Shares Outstanding Rules’’) 11 with a 

requirement that a series of Fund Shares 

have at least one creation unit 

outstanding on an initial and continued 

listing basis.12

The Exchange states that Beneficial 

Holders Rule as it pertains to Fund 

Shares listed on NYSE Arca is no longer 

necessary. The Exchange contends that 

the requirements of Rule 6c–11 under 

the 1940 Act and, in particular, the 

website disclosure requirements of Rule 


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