64480 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Cboe Global Markets U.S. Options Market 

Monthly Volume Summary (August 28, 2023), 

available at https://markets.cboe.com/us/options/ 

market_statistics/. 

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

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

6 Id. 

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–BX–2023–023 and should be 

submitted on or before October 10, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–20170 Filed 9–18–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98376; File No. CboeBZX– 

2023–065] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fee Schedule 

September 13, 2023. 

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 

September 1, 2023, Cboe BZX Exchange, 

Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. 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. (the 

‘‘Exchange’’ or ‘‘BZX’’) 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

Fee Schedule, effective September 1, 

2023. 

The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

16 options venues to which market 

participants may direct their order flow. 

Based on publicly available information, 

no single options exchange has more 

than 17% of the market share and 

currently the Exchange represents only 

approximately 5% of the market share.3

Thus, in such a low-concentrated and 

highly competitive market, no single 

options exchange, including the 

Exchange, possesses significant pricing 

power in the execution of option order 

flow. The Exchange believes that the 

ever-shifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow or discontinue to 

reduce use of certain categories of 

products, in response to fee changes. 

Accordingly, competitive forces 

constrain the Exchange’s transaction 

fees, and market participants can readily 

trade on competing venues if they deem 

pricing levels at those other venues to 

be more favorable. 

The Exchange’s Fee Schedule sets 

forth standard rebates and rates applied 

per contract. For example, the Exchange 

provides a rebate of $0.25 per contract 

for Customer orders that add liquidity in 

Penny Securities, yielding fee code PY. 

The Fee Codes and Associated Fees 

section of the Fees Schedule also 

provides for certain fee codes associated 

with certain order types and market 

participants that provide for various 

other fees or rebates. 

Currently, Customer orders in Penny 

Securities, excluding SPY, that remove 

liquidity are assessed a standard 

transaction fee of $0.48 per contract and 

yield fee code ‘‘PC’’. Customer SPY 

orders that remove liquidity are 

assessed a standard transaction fee of 

$0.45 per contract and yield fee code 

‘‘PR’’. 

Currently, IWM Customer orders that 

remove liquidity yield fee code PC and 

are assessed $0.48 per contract. The 

Exchange proposes to reduce the fee 

assessed for IWM orders that remove 

liquidity to $0.45 per contract. The 

Exchange therefore proposes to amend 

current fee code PR to include Customer 

IWM orders that remove liquidity. The 

standard transaction fee assessed for 

orders that yield fee code PR remains 

the same under the proposed rule 

change (i.e., $0.45 per contract). 

The Exchange also proposes to amend 

the definition of fee code PC to clarify 

that such fee code (and corresponding 

transaction fee) applies to all customer 

orders in Penny securities that remove 

liquidity, except Customer orders in 

SPY and IWM. 

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.4 Specifically, the 

Exchange believes the proposed rule 

change is consistent with the section 

6(b)(5) 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. 

Additionally, the Exchange believes the 

proposed rule change is consistent with 

the section 6(b)(5) 6 requirement that the 

rules of an exchange not be designed to 

permit unfair discrimination between 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 64481 

7 15 U.S.C. 78f(b)(4). 

8See e.g., MIAX Pearl Fee Schedule, Section 1 

Transaction Rebates/Fees, which provides for fees 

ranging between $0.45 and $0.48 per contract for 

priority customer IWM orders that remove liquidity. 

9 Id. 

10See BZX Options Fee Schedule, Fee Codes and 

Associated Fees; see also Cboe C2 Options 

Exchange Fees Schedule, Transaction Fees. 

customers, issuers, brokers, or dealers. 

The Exchange also believes the 

proposed rule change is consistent with 

section 6(b)(4) of the Act,7 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. 

As described above, the Exchange 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. The 

proposed rule change reflects a 

competitive pricing structure designed 

to incentivize market participants to 

direct their order flow to the Exchange, 

which the Exchange believes would 

enhance market quality to the benefit of 

all market participants. The Exchange is 

only one of several options venues to 

which market participants may direct 

their order flow, and it represents a 

small percentage of the overall market. 

Additionally, the Exchange believes 

that the proposed amendment to reduce 

the transaction fee for Customer IWM 

orders that remove liquidity (and 

therefore apply fee code PR to include 

such orders) is consistent with section 

6(b)(4) of the Act in that the proposed 

fee is reasonable, equitable, and not 

unfairly discriminatory. The Exchange 

believes the proposed change is 

reasonable as Members will pay lower 

fees for liquidity removing IWM 

Customer orders. The Exchange believes 

its proposed change is also reasonable 

as the proposed rate continues to be 

competitive and in line with IWMspecific pricing at other exchanges.8 The 

Exchange believes the proposed 

amendment will also encourage market 

participants to increase retail IWM order 

flow to the Exchange, which benefits all 

market participants by providing 

additional trading opportunities. This, 

in turn, attracts increased large-order 

flow from liquidity providers which 

facilitates tighter spreads and 

potentially triggers a corresponding 

increase in order flow originating from 

other market participants. The Exchange 

believes that the proposed rule change 

is equitable and not unfairly 

discriminatory as the proposed change 

will apply uniformly to all Customer 

IWM orders that remove liquidity. 

The Exchange also believes it is 

reasonable, equitable and not unfairly 

discriminatory to adopt IWM-specific 

pricing as the Exchange already 

maintains product-specific pricing for 

other products, such as SPY. 

Additionally, as noted above, other 

exchanges similarly provide for IWMspecific pricing.9 The Exchange also 

believes that it is equitable and not 

unfairly discriminatory to assess a lower 

fee for Customer IWM orders as 

compared to other market participants 

because customer order flow enhances 

liquidity on the Exchange for the benefit 

of all market participants. Specifically, 

customer liquidity benefits all market 

participants by providing more trading 

opportunities, which attracts MarketMakers. An increase in the activity of 

these market participants in turn 

facilitates tighter spreads, which may 

cause an additional corresponding 

increase in order flow from other market 

participants. Moreover, the options 

industry has a long history of providing 

preferential pricing to customers, and 

the Exchange’s current Fee Schedule 

currently does so in many places, as do 

the fees structures of multiple other 

exchanges.10

Finally, the Exchange believes the 

change to the description of fee code PC 

is reasonable as such fee code does not 

currently apply to SPY Customer orders 

that remove liquidity, and as proposed 

will no longer apply to IWM Customer 

orders that remove liquidity. The 

Exchange believes explicitly referencing 

that SPY and IWM are excluded from 

fee code PC in the fee code description 

will reduce potential confusion and 

maintain clarity in the Fees Schedule. 

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. In particular, 

the Exchange believes the proposed rule 

change does not impose any burden on 

intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed change to reduce the 

transaction fee for Customer IWM orders 

that remove liquidity will apply to all 

Members. As discussed above, the 

Exchange believes the proposed change 

to reduce the transaction fee would 

attract additional IWM Customer orders 

that remove liquidity, thereby 

promoting market depth, price 

discovery and transparency and 

enhancing order execution 

opportunities for all Members. As a 

result, the Exchange believes that the 

proposed change furthers the Securities 

and Exchange Commission’s (the 

‘‘Commission’s’’) goal in adopting 

Regulation NMS of fostering 

competition among orders, which 

promotes ‘‘more efficient pricing of 

individual stocks for all types of orders, 

large and small.’’ 

The Exchange also believes the 

proposed rule change does not impose 

any burden on intermarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

As previously discussed, the Exchange 

operates in a highly competitive market. 

Members have numerous alternative 

venues they may participate on and 

direct their order flow, including 15 

other options exchanges. Additionally, 

the Exchange represents a small 

percentage of the overall market. Based 

on publicly available information, no 

single options exchange has more than 

17% of the market share. Therefore, no 

exchange possesses significant pricing 

power in the execution of order flow. 

Indeed, participants can readily choose 

to send their orders to other exchanges 

if they deem fee levels at those other 

venues to be more favorable. Moreover, 

the Commission has repeatedly 

expressed its preference for competition 

over regulatory intervention in 

determining prices, products, and 

services in the securities markets. 

Specifically, in Regulation NMS, the 

Commission highlighted the importance 

of market forces in determining prices 

and SRO revenues and, also, recognized 

that current regulation of the market 

system ‘‘has been remarkably successful 

in promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 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 


ddrumheller on DSK120RN23PROD with NOTICES1
64482 Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f). 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Trading Floor’’ or ‘‘Options Floor’’ 

means the physical trading floor of the Exchange 

located in Chicago. The Trading Floor shall consist 

of one ‘‘Crowd Area’’ or ‘‘Pit’’ where all option 

classes will be located. The Crowd Area or Pit shall 

be marked with specific visible boundaries on the 

Trading Floor, as determined by the Exchange. A 

Floor Broker must open outcry an order in the 

Crowd Area. See BOX Rule 100(a)(68). 

4The term ‘‘Participant’’ means a firm, or 

organization that is registered with the Exchange 

pursuant to the Rule 2000 Series for purposes of 

participating in trading on a facility of the Exchange 

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 has become 

effective pursuant to section 19(b)(3)(A) 

of the Act 11 and paragraph (f) of Rule 

19b–4 12 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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

CboeBZX–2023–065 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–2023–065. 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 

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–2023–065 and should be 

submitted on or before October 10, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–20168 Filed 9–18–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98380; File No. SR–BOX– 

2023–20] 

Self-Regulatory Organizations; BOX 

Exchange LLC; Notice of Filing of 

Proposed Rule Change To Adopt Rules 

To Govern FLEX Equity Options and a 

New Order Type to Trade FLEX Equity 

Options on the BOX Trading Floor 

September 13, 2023. 

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 

September 1, 2023, BOX Exchange LLC 

(the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to (1) adopt 

Rules 5055 and 7605 which will govern 

the trading of flexible exchange options 

(‘‘FLEX Equity Options’’) on BOX; and 

(2) make related changes to Rules 100 

(Definitions), 7620 (Accommodation 

Transactions), and 12140 (Imposition of 

Fines for Minor Rule Violations). The 

text of the proposed rule change is 

available from the principal office of the 

Exchange, at the Commission’s Public 

Reference Room and also on the 

Exchange’s internet website at https://

rules.boxexchange.com/rulefilings. 

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 

self-regulatory organization 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 self-regulatory organization 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 adopt rules 

to govern FLEX Equity Options and a 

new order type to trade FLEX Equity 

Options on the BOX Trading Floor.3 The 

Exchange also proposes to amend Rules 

100 (Definitions), 7620 

(Accommodation Transactions), and 

12140 (Imposition of Fines for Minor 

Rule Violations) to reflect the 

introduction of FLEX Equity Option 

trading on the Exchange. FLEX Equity 

Options are options with flexible terms 

such that Participants 4 can customize 


ddrumheller on DSK120RN23PROD with NOTICES1