65412 Federal Register / Vol. 88, No. 183 / Friday, September 22, 2023 / Notices 

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

2 17 CFR 240.19b–4. 

3The Exchange initially filed the proposed fee 

change on September 1, 2023 (SR–CboeBZX–2023– 

066). On September 12, 2023, the Exchange 

withdrew that filing and submitted this filing. 

extension of the previously approved 

collection of information provided for in 

Rule 17f–2(e) (17 CFR 240.17f–2(e)), 

under the Securities Exchange Act of 

1934 (15 U.S.C. 78a et seq.). 

Rule 17f–2(e) requires every member 

of a national securities exchange, 

broker, dealer, registered transfer agent, 

and registered clearing agency (‘‘covered 

entities’’) claiming an exemption from 

the fingerprinting requirements of Rule 

17f–2 to make and keep current a 

statement entitled ‘‘Notice Pursuant to 

Rule 17f–2’’ (‘‘Notice’’) containing the 

information specified in paragraph (e)(1) 

to support their claim of exemption. 

Rule 17f–2(e) contains no filing 

requirement. Instead, paragraph (e)(2) 

requires covered entities to keep a copy 

of the Notice in an easily accessible 

place at the organization’s principal 

office and at the office employing the 

persons for whom exemptions are 

claimed and to make the Notice 

available upon request for inspection by 

the Commission, appropriate regulatory 

agency (if not the Commission), or other 

designated examining authority. Notices 

prepared pursuant to Rule 17f–2(e) must 

be maintained for different lengths of 

time depending on the type of entity 

maintaining the Notice. Under Rule 

240.17a–1, every registered clearing 

agency must keep and preserve at least 

one copy of all documents made or 

received by it in the course of its 

business for a period of not less than 

five years. Under Rule 240.17a–4 certain 

members of national securities 

exchanges, brokers, and dealers must 

maintain the Notice during the life of 

their enterprise. Under Rule 240.17Ad– 

7, registered transfer agents must 

maintain the Notice in an easily 

accessible place. The recordkeeping 

requirement under Rule 17f–2(e) assists 

the Commission and other regulatory 

agencies with ensuring compliance with 

Rule 17f–2. This rule does not involve 

the collection of confidential 

information. 

We estimate that approximately 75 

respondents will incur an average 

burden of 30 minutes per year to 

comply with this rule, which represents 

the time it takes for a staff person at a 

covered entity to properly document a 

claimed exemption from the 

fingerprinting requirements of Rule 17f– 

2 in the required Notice and to properly 

retain the Notice according to the 

entity’s record retention policies and 

procedures. The total annual burden for 

all covered entities is approximately 38 

hours (75 entities × .5 hours, rounded 

up). 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

under the PRA 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 by 

October 23, 2023 to (i) www.reginfo.gov/ 

public/do/PRAMain and (ii) David 

Bottom, Director/Chief Information 

Officer, Securities and Exchange 

Commission, c/o John Pezzullo, 100 F 

Street NE, Washington, DC 20549, or by 

sending an email to: PRA_Mailbox@

sec.gov. 

Dated: September 18, 2023. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–20528 Filed 9–21–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98420; File No. SR– 

CboeBZX–2023–071] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fee Schedule Related to the Options 

Regulatory Fee 

September 18, 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 12, 2023, Cboe BZX 

Exchange, Inc. (the ‘‘Exchange’’ or 

‘‘BZX’’) filed with the Securities and 

Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I and II, 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) proposes to 

amend its Fee Schedule related to the 

Options Regulatory Fee. 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 increase 

the Options Regulatory Fee (‘‘ORF’’) 

from $0.0001 per contract to $0.0003 per 

contract.3

The ORF is assessed by BZX Options 

to each Member for options transactions 

cleared by the Member that are cleared 

by the Options Clearing Corporation 

(‘‘OCC’’) in the customer range, 

regardless of the exchange on which the 

transaction occurs. In other words, the 

Exchange imposes the ORF on all 

customer-range transactions cleared by a 

Member, even if the transactions do not 

take place on the Exchange. The ORF is 

collected by OCC on behalf of the 

Exchange from the Clearing Member or 

non-Member that ultimately clears the 

transaction. With respect to linkage 

transactions, BZX Options reimburses 

its routing broker providing Routing 

Services (pursuant to BZX Options Rule 

21.9) for options regulatory fees it incurs 

in connection with the Routing Services 

it provides. 

Revenue generated from ORF, when 

combined with all of the Exchange’s 

other regulatory fees and fines, is 

designed to recover a material portion of 

the regulatory costs to the Exchange of 

the supervision and regulation of 

Member customer options business 

including performing routine 

surveillances, investigations, 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 183 / Friday, September 22, 2023 / Notices 65413 

4See Exchange Notice, C2023080104 ‘‘Cboe BZX 

Options Exchange Regulatory Fee Update Effective 

September 1, 2023.’’ The Exchange endeavors to 

provide at least 30 calendar days notice prior to any 

effective change to ORF. 

5The Exchange notes that in connection with 

proposed ORF rate changes, it provides the 

Commission confidential details regarding the 

Exchange’s projected regulatory revenue, including 

projected revenue from ORF, along with a breakout 

of its projected regulatory expenses, including both 

direct and indirect allocations. 

6 15 U.S.C. 78f(b). 

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

8 15 U.S.C. 78f(b)(5). 

9See Securities Exchange Act Release No. 89471 

(August 4, 2020), 85 FR 49405 (August 13, 2020) 

(SR–CboeBZX–2020–057) and Securities Exchange 

Act Release No. 83879 (August 17, 2018), 83 FR 

42739 (August 23, 2018) (SR–CboeBZX–2018–063). 

See also Securities Exchange Act Release No. 82660 

(February 8, 2018), 83 FR 6664 (February 14, 2018) 

(SR–CboeBZX–2018–008), Securities Exchange Act 

Release No. 80050 (February 16, 2017), 82 FR 11491 

(February 23, 2017) (SR–CboeBZX–2017–013) and 

Securities Exchange Act Release No. 74214 

(February 5, 2015), 80 FR 7665 (February 11, 2011) 

(SR–BATS–2015–08). 

10See e.g., NYSE Arca Options Fees and Charges, 

Options Regulatory Fee (‘‘ORF’’) and NYSE 

American Options Fees Schedule, Section VII(A), 

which provide that ORF is assessed at a rate of 

$0.0055 per contract for each respective exchange. 

See also Nasdaq PHLX, Options 7 Pricing Schedule, 

Section 6(D), which provides for an ORF rate of 

$0.0034 per contract. 

11See Securities Exchange Act Release No. 89471 

(August 4, 2020), 85 FR 49405 (August 13, 2020) 

(SR–CboeBZX–2020–005) and Securities Exchange 

Act Release No. 83879 (August 17, 2018), 83 FR 

42739 (August 23, 2018) (SR–CboeBZX–2018–063). 

See also Securities Exchange Act Release No. 82660 

(February 8, 2018), 83 FR 6664 (February 14, 2018) 

(SR–CboeBZX–2018–008), Securities Exchange Act 

Release No. 80050 (February 16, 2017), 82 FR 11491 

(February 23, 2017) (SR–CboeBZX–2017–013) and 

Securities Exchange Act Release No. 74214 

(February 5, 2015), 80 FR 7665 (February 11, 2011) 

(SR–BATS–2015–08). 

12Consistent with Rule 15.2 (Regulatory 

Revenue), the Exchange notes that should excess 

ORF revenue be collected prior to any reduction in 

an ORF rate, such excess revenue will not be used 

for nonregulatory purposes. 

examinations, financial monitoring, and 

policy, rulemaking, interpretive, and 

enforcement activities. Regulatory costs 

include direct regulatory expenses and 

certain indirect expenses for work 

allocated in support of the regulatory 

function. The direct expenses include 

in-house and third-party service 

provider costs to support the day-to-day 

regulatory work such as surveillances, 

investigations and examinations. The 

indirect expenses include support from 

such areas as human resources, legal, 

compliance, information technology, 

facilities and accounting. These indirect 

expenses are estimated to be 

approximately 50.5% of BZX Options’ 

total regulatory costs for 2023. Thus, 

direct expenses are estimated to be 

approximately 49.5% of total regulatory 

costs for 2023. In addition, it is BZX 

Options’ practice that revenue generated 

from ORF not exceed more than 75% of 

total annual regulatory costs. These 

expectations are estimated, preliminary 

and may change. There can be no 

assurance that our final costs for 2023 

will not differ materially from these 

expectations and prior practice; 

however, the Exchange believes that 

revenue generated from the ORF, when 

combined with all of the Exchange’s 

other regulatory fees and fines, will 

cover a material portion, but not all, of 

the Exchange’s regulatory costs. 

The Exchange monitors its regulatory 

costs and revenues at a minimum on a 

semi-annual basis. If the Exchange 

determines regulatory revenues exceed 

or are insufficient to cover a material 

portion of its regulatory costs in a given 

year, the Exchange will adjust the ORF 

by submitting a fee change filing to the 

Commission. The Exchange also notifies 

Members of adjustments to the ORF via 

an Exchange Notice, including for the 

change being proposed herein.4 Based 

on the Exchange’s most recent semiannual review, the Exchange is 

proposing to increase the amount of 

ORF that will be collected by the 

Exchange from $0.0001 per contract side 

to $0.0003 per contract side. The 

proposed increase is based on the 

Exchange’s estimated projections for its 

regulatory costs, which have increased.5

Particularly, based on the Exchange’s 

estimated projections for its regulatory 

costs, the revenue being generated by 

ORF using the current rate, would result 

in projected revenue that is insufficient 

to cover a material portion of its 

regulatory costs (i.e., less than 75% of 

total annual regulatory costs). Further, 

when combined with the Exchange’s 

projected other non-ORF regulatory fees 

and fines, the revenue being generated 

by ORF using the current rate results is 

projected to result in combined revenue 

that is less than 100% of the Exchange’s 

estimated regulatory costs for the year. 

The Exchange will continue to 

monitor the amount of revenue 

collected from the ORF to ensure that it, 

in combination with its other regulatory 

fees and fines, does not exceed the 

Exchange’s total regulatory costs. 

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.6 Specifically, 

the Exchange believes the proposed rule 

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

of the Act,7 which provides that 

Exchange rules may provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its 

Members and other persons using its 

facilities. Additionally, the Exchange 

believes the proposed rule change is 

consistent with the Section 6(b)(5) 8

requirement that the rules of an 

exchange not be designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

The Exchange believes the proposed 

fee change is reasonable because it 

would help ensure that revenue 

collected from the ORF, in combination 

with other regulatory fees and fines, 

would help offset, but not exceed, the 

Exchange’s total regulatory costs. As 

discussed, the Exchange has designed 

the ORF to generate revenues that 

would be less than or equal to 75% of 

the Exchange’s regulatory costs, which 

is consistent with the practice across the 

options industry and the view of the 

Commission that regulatory fees be used 

for regulatory purposes and not to 

support the Exchange’s business side. 

The Exchange determined to increase 

ORF after its semi-annual review of its 

regulatory costs and regulatory 

revenues, which includes revenues from 

ORF and other regulatory fees and fines. 

The Exchange notes that although recent 

options volumes have increased, it has 

not increased its ORF rate since it was 

adopted in 2015. In fact, the Exchange 

has been steadily decreasing the rate 

over the last several years.9

Accordingly, the Exchange believes it’s 

reasonable to increase the ORF. 

Additionally, the proposed change is 

reasonable as it would offset the 

anticipated increased regulatory costs, 

while still not exceeding 75% of the 

Exchange’s total regulatory costs. 

Moreover, the proposed amount is still 

significantly lower than the amount of 

ORF assessed on other exchanges 10 and 

lower than the Exchange has assessed 

previously.11

As noted above, the Exchange will 

also continue to monitor on at least a 

semi-annual basis the amount of 

revenue collected from the ORF, even as 

amended, to ensure that it, in 

combination with its other regulatory 

fees and fines, does not exceed the 

Exchange’s total regulatory costs. If the 

Exchange determines regulatory 

revenues would exceed its regulatory 

costs in a given year, the Exchange will 

reduce the ORF by submitting a fee 

change filing to the Commission.12

The Exchange also believes the 

proposed fee change is equitable and 

not unfairly discriminatory in that it is 

charged to all Members on all their 

transactions that clear in the customer 

range at the OCC. The Exchange 

believes the ORF ensures fairness by 


lotter on DSK11XQN23PROD with NOTICES1
65414 Federal Register / Vol. 88, No. 183 / Friday, September 22, 2023 / Notices 

13 If the Exchange changes its method of funding 

regulation or if circumstances otherwise change in 

the future, the Exchange may decide to modify the 

ORF or assess a separate regulatory fee on Member 

proprietary transactions if the Exchange deems it 

advisable. 

14 ISG is an industry organization formed in 1983 

to coordinate intermarket surveillance among the 

SROs by cooperatively sharing regulatory 

information pursuant to a written agreement 

between the parties. The goal of the ISG’s 

information sharing is to coordinate regulatory 

efforts to address potential intermarket trading 

abuses and manipulations. 

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

16 17 CFR 240.19b–4(f)(2). 

17 15 U.S.C. 78s(b)(2)(B). 18 17 CFR 200.30–3(a)(12). 

assessing higher fees to those Members 

that require more Exchange regulatory 

services based on the amount of 

customer options business they 

conduct. Regulating customer trading 

activity is much more labor intensive 

and requires greater expenditure of 

human and technical resources than 

regulating non-customer trading 

activity, which tends to be more 

automated and less labor-intensive. As a 

result, the costs associated with 

administering the customer component 

of the Exchange’s overall regulatory 

program are materially higher than the 

costs associated with administering the 

non-customer component (e.g., Member 

proprietary transactions) of its 

regulatory program.13 Moreover, the 

Exchange notes that it has broad 

regulatory responsibilities with respect 

to its Members’ activities, irrespective of 

where their transactions take place. 

Many of the Exchange’s surveillance 

programs for customer trading activity 

may require the Exchange to look at 

activity across all markets, such as 

reviews related to position limit 

violations and manipulation. Indeed, 

the Exchange cannot effectively review 

for such conduct without looking at and 

evaluating activity regardless of where it 

transpires. In addition to its own 

surveillance programs, the Exchange 

also works with other SROs and 

exchanges on intermarket surveillance 

related issues. Through its participation 

in the Intermarket Surveillance Group 

(‘‘ISG’’) 14 the Exchange shares 

information and coordinates inquiries 

and investigations with other exchanges 

designed to address potential 

intermarket manipulation and trading 

abuses. Accordingly, there is a strong 

nexus between the ORF and the 

Exchange’s regulatory activities with 

respect to its Members’ customer trading 

activity. 

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 not 

necessary or appropriate in furtherance 

of the purposes of the Act. This 

proposal does not create an unnecessary 

or inappropriate intra-market burden on 

competition because the ORF applies to 

all customer activity, thereby raising 

regulatory revenue to offset regulatory 

expenses. It also supplements the 

regulatory revenue derived from noncustomer activity. The Exchange notes, 

however, the proposed change is not 

designed to address any competitive 

issues. Indeed, this proposal does not 

create an unnecessary or inappropriate 

inter-market burden on competition 

because it is a regulatory fee that 

supports regulation in furtherance of the 

purposes of the Act. The Exchange is 

obligated to ensure that the amount of 

regulatory revenue collected from the 

ORF, in combination with its other 

regulatory fees and fines, does not 

exceed regulatory costs. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 15 of the Act and 

subparagraph (f)(2) of Rule 19b–4 16

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 17 of the Act 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–2023–071 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–2023–071. 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–2023–071 and should be 

submitted on or before October 13, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–20519 Filed 9–21–23; 8:45 am] 

BILLING CODE 8011–01–P 


lotter on DSK11XQN23PROD with NOTICES1