[Federal Register Volume 88, Number 164 (Friday, August 25, 2023)]
[Notices]
[Pages 58334-58336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-18305]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98183; File No. SR-CboeBZX-2023-060]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fee Schedule To Eliminate Reference to the ETF Implied Liquidity 
Feed and Corresponding Fees

August 21, 2023.
    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 August 8, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'' or ``BZX 
Equities'') proposes to amend its Fee Schedule. The text of the 
proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule applicable to its 
equities trading platform (``BZX Equities'') to eliminate reference to 
the ETF Implied Liquidity Feed and corresponding fees, effective August 
8, 2023.
    The Exchange proposes to amend the Market Data section of its fee 
schedule to eliminate reference to, and corresponding fees for, a 
market data product called the ETF Implied Liquidity Feed.\3\ The ETF 
Implied Liquidity feed is an optional data feed that provides the 
Exchange's proprietary calculation of the implied liquidity and the 
aggregate best bid and offer (``BBO'') of all displayed orders on the 
Exchange and its affiliated exchanges \4\ for all standard, non-
leveraged U.S. equity Exchange Traded Funds (``ETFs'') traded on the 
System.\5\ An ETF's implied liquidity disseminated via the feed 
consists of the ETF's implied BBO (including the implied size) 
calculated via a proprietary methodology based on the national best bid 
and offer (``NBBO''), the number of shares of securities underlying one 
creation unit of the ETF, and the estimated cash included in one 
creation unit of the ETF. The Exchange disseminates the aggregate BBO 
through the ETF Implied Liquidity feed no earlier than it provides its 
BBO to the processors under the CTA Plan or the Nasdaq/UTP Plan. The 
Exchange currently assesses (i) Distribution Fees for both Internal and 
External, Distributors \6\ (ii) Usage Fees for both Professional \7\ 
and Non-Professional \8\ Users; and a (iii) Data Consolidation fee. 
Specifically, the Exchange assesses (i) Internal Distributors a monthly 
fee of $1,500 and External Distributors a monthly fee of $5,000; (ii) 
Professional Users a monthly fee of $0.25 (if receiving internally) or 
$25 (if receiving externally); (iii) Non-Professional Users a monthly 
fee of $1.00 (whether receiving internally or externally); and a 
monthly Data Consolidation Fee of $500. The Fee Schedule currently 
provides that Distributors of the Cboe One Feed (as described in Rule 
11.22(j)) may also receive upon request access to the ETF Implied 
Liquidity Feed without incurring an additional Logical Port fee for the 
ETF Implied Liquidity Feed. It also provides that External Distributors 
of the Cboe One Feed will also receive

[[Page 58335]]

upon request access to the ETF Implied Liquidity Feed for external 
distribution only without incurring an additional Distributor fee or, 
if an External Distributor, the Data Consolidation fee for the ETF 
Implied Liquidity Feed.
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    \3\ The ETF Implied Liquidity Feed was adopted in 2017. See 
Securities Exchange Act Release No. 80580 (May 3, 2017), 82 FR 21585 
(May 9, 2017) (SR-BatsBZX-2017-25) and Securities Exchange Act 
Release No. 80772 (May 25, 2017), 82 FR 25389 (June 1, 2017) (SR-
BatsBZX-2017-036).
    \4\ The Exchange's affiliates are Cboe EDGA Exchange, Inc., 
(``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX''), and Cboe BYX 
Exchange, Inc. (``BYX'') (``collectively, the ``Bats Exchanges'').
    \5\ The securities underlying each of the U.S. equity ETFs 
included in the proposed feed must be considered NMS Securities as 
defined under Rule 600(b)(46) of Regulation NMS. 17 CFR 
242.600(b)(46)
    \6\ A ``Distributor'' is defined as ``any entity that receives 
the Exchange Market Data product directly from the Exchange or 
indirectly through another entity and then distributes it internally 
or externally to a third party.'' An ``Internal Distributor'' is 
defined 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.'' An ``External Distributor'' is 
defined as ``a Distributor that receives the Exchange Market Data 
product and then distributes that data to a third party or one or 
more Users outside the Distributor's own entity.''
    \7\ A Professional User of an Exchange Market Data product is 
any User other than a Non-Professional User.
    \8\ A ``Non-Professional User'' of an Exchange Market Data 
product is a natural person or qualifying trust that uses Data only 
for personal purposes and not for any commercial purpose and, for a 
natural person who works in the United States, is not: (i) 
registered or qualified in any capacity with the Securities and 
Exchange Commission, the Commodities Futures Trading Commission, any 
state securities agency, any securities exchange or association, or 
any commodities or futures contract market or association; (ii) 
engaged as an ``investment adviser'' as that term is defined in 
section 202(a)(11) of the Investment Advisors Act of 1940 (whether 
or not registered or qualified under that Act); or (iii) employed by 
a bank or other organization exempt from registration under federal 
or state securities laws to perform functions that would require 
registration or qualification if such functions were performed for 
an organization not so exempt; or, for a natural person who works 
outside of the United States, does not perform the same functions as 
would disqualify such person as a Non-Professional User if he or she 
worked in the United States.
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    Currently there are no market participants that are taking the ETF 
Implied Liquidity feed. As such, the Exchange no longer wishes to 
maintain or offer this product and therefore proposes to decommission 
the ETF Implied Liquidity feed and delete the corresponding reference 
to the product from its Fee Schedule.\9\
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    \9\ The Exchange intends to also submit a corresponding rule 
filing to eliminate reference to this feed in the Exchange's 
Rulebook under Exchange Rule 11.22(n). See SR-CboeBZX-2023-059.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of section 6(b) of the 
Act.\10\ Specifically, the Exchange believes the proposed rule change 
is consistent with the section 6(b)(5) \11\ 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) \12\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers as well as section 6(b)(4) \13\ 
as it is designed to provide for the equitable allocation of reasonable 
dues, fees and other charges among its Members and other persons using 
its facilities.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ Id.
    \13\ 15 U.S.C. 78f(b)(4)
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    In particular, the Exchange believes that the proposal to 
decommission the ETF Implied Liquidity feed and remove reference to the 
feed and corresponding fees in the Fee Schedule is appropriate given 
the non-usage of the product among market participants. Further, the 
ETF Implied Liquidity feed is optional, and its use is not a 
prerequisite for trading on the Exchange. The Exchange also notes that 
is not required to maintain or offer any one proprietary market data 
product, including the ETF Implied Liquidity feed. The Exchange also 
believes that the proposed rule change is fair and equitable and is not 
designed to permit unfair discrimination as it applies uniformly to all 
Members (i.e., the product will no longer be available for any Member). 
Eliminating reference to this feed in the Exchange's Fee Schedule will 
promote clarity in the rules as to what data products may or may not be 
available. The Exchange has also provided notice of such 
termination.\14\
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    \14\ See Exchange Notice C2023073104, ``Cboe Equities Fee 
Schedule Updates Effective August 1, 2023'' issued on July 31, 2023 
available at https://cdn.cboe.com/resources/fee_schedule/2023/Cboe-Equities-Exchanges-Fee-Schedule-Updates-Effective-August-1-2023.pdf.
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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 competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The ETF Implied Liquidity 
feed is an optional data feed offered by the Exchange, it is not a 
prerequisite to trading on the Exchange, and the Exchange is not 
required to offer or maintain such feed.
    The Exchange believes that the proposed deletion does impose any 
intramarket competition as it applies to all Members (i.e. the product 
will no longer be available to any Member). The Exchange believes that 
the proposed rule change also does not impose any undue burden on 
intermarket competition. The ETF Implied Liquidity feed is an optional 
data product offered by the Exchange and market participants are not 
required to subscribe to it and the Exchange is not required to offer 
it. Moreover, the proposed change is not being submitted for 
competitive reasons, but rather to eliminate a data product that is not 
being actively used by market participants today.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \15\ and paragraph (f) of Rule 19b-4 \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 Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f).
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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

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#c5b7b0a9a0e8a6aaa8a8a0abb1b685b6a0a6eba2aab3"><span class="__cf_email__" data-cfemail="4b393e272e66282426262e253f380b382e28652c243d">[email protected]</span></a>. Please include 
file number SR-CboeBZX-2023-060 on the subject line.

Paper Comments

    <bullet> 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-2023-060. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and

[[Page 58336]]

copying at the principal office of the Exchange. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to file number SR-CboeBZX-2023-060 and should be submitted 
on or before September 15, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-18305 Filed 8-24-23; 8:45 am]
BILLING CODE 8011-01-P


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