68700 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 

21 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange initially filed the proposed fee 

changes on September 1, 2023 (SR–CBOE–2023– 

045). On September 25, 2023, the Exchange 

withdrew that filing and submitted this proposal. 

4See Cboe Global Markets U.S. Options Market 

Volume Summary (August 30, 2023), available at 

https://markets.cboe.com/us/options/market_

statistics/. 

5See e.g., NASDAQ Stock Market Rules, Options 

Rules, Options 7 Pricing Schedule, Sec. 2 Options 

Market—Fees and Rebates, Tiers 1–6; see also NYSE 

Arca Options, Fees and Charges, Customer Posting 

Credit Tiers in Non-Penny Issues. 

6See Cboe Options Fees Schedule, Footnote 36. 

7See Cboe Options Fees Schedule, Volume 

Incentive Program. 

8See Cboe Options Fees Schedule, Footnote 34. 

9See Cboe Options Fees Schedule, Footnote 47. 

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 such filings 

will also be available for inspection and 

copying at the principal office of ICE 

Clear Credit and on ICE Clear Credit’s 

website at https://www.ice.com/clearcredit/regulation. 

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–ICC–2023–011 and 

should be submitted on or before 

October 25, 2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–21944 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98601; File No. SR–CBOE– 

2023–056] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Fees 

Schedule 

September 28, 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 

September 25, 2023, Cboe Exchange, 

Inc. (the ‘‘Exchange’’ or ‘‘Cboe 

Options’’) 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe Exchange, Inc. (the ‘‘Exchange’’ 

or ‘‘Cboe Options’’) proposes to amend 

its Fees 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://www.cboe.com/ 

AboutCBOE/

CBOELegalRegulatoryHome.aspx), 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 

Fees Schedule.3 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 19% of 

the market share.4 Thus, in such a lowconcentrated and highly competitive 

market, no single options 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 or 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. In 

response to the competitive 

environment, the Exchange offers tiered 

pricing in its Fees Schedule, like that of 

other options exchanges fees 

schedules,5 which provides Trading 

Permit Holders (‘‘TPHs’’) opportunities 

to qualify for higher rebates or reduced 

fees where certain volume criteria and 

thresholds are met. Tiered pricing 

provides an incremental incentive for 

TPHs to strive for higher tier levels, 

which provides increasingly higher 

benefits or discounts for satisfying 

increasingly more stringent criteria. 

Customer Volume Incentive Program 

and Affiliated Volume Plan 

The Exchange proposes to amend the 

Customer Volume Incentive Program 

(‘‘VIP’’) and the Affiliated Volume Plan 

(‘‘AVP’’). Under the VIP, the Exchange 

credits each TPH the per contract 

amount set forth in the VIP table for 

Public Customer (origin code ‘‘C’’) 

orders transmitted by TPHs (with 

certain exceptions) 6 and executed 

electronically on the Exchange, 

provided the TPH meets certain volume 

thresholds in a month; volume for 

Professional Customers (origin code 

‘‘U’’), Broker-Dealers (origin code ‘‘B’’), 

and Joint Back-Offices (‘‘JBO’’) (origin 

code ‘‘J’’) orders are counted toward 

reaching such thresholds.7 Specifically, 

the percentage thresholds are calculated 

based on the percentage of national 

customer volume in all underlying 

symbols excluding Underlying Symbol 

List A,8 Sector Indexes,9 the Dow Jones 

Industrial Average Index (‘‘DJX’’), the 

Mini Russell 2000 Index (‘‘MRUT’’), the 

MSCI EAFE Index (‘‘MXEA’’), the MSCI 

Emerging Market Index (‘‘MXEF’’), the 

Mini S&P 500 Index (‘‘NANOS’’), MiniSPX Index (‘‘XSP’’) and FLEX Micros 

entered and executed over the course of 

the month. VIP offers rates for both 


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10As part of the proposed change, the Exchange 

also proposes to eliminate reference to Tier 5 in the 

Fee Schedule table. Under the proposed change, a 

TPH will only receive the Complex credit rates for 

Complex volume if at least 32% for Tiers 1, 2, and 

3 or 38% for Tier 4 of that TPH’s qualifying VIP 

volume in the previous month was comprised of 

Simple volume. 

11For purposes of AVP, ‘‘Affiliate’’ is defined as 

having at least 75% common ownership between 

the two entities as reflected on each entity’s Form 

BD, Schedule A. 

12See Cboe Options Fees Schedule Footnote 23. 

Particularly, a Market-Maker may designate an 

Order Flow Provider (‘‘OFP’’) as its ‘‘Appointed 

OFP’’ and an OFP may designate a Market-Maker 

to be its ‘‘Appointed Market-Maker’’ for purposes of 

qualifying for credits under AVP. 

13The term ‘‘customer’’ means a Public Customer 

or a broker-dealer. The term ‘‘Public Customer’’ 

means a person that is not a broker-dealer. See Rule 

1.1. 

14See Rule 5.37 (AIM); Rule 5.39 (SAM); Rule 

5.38 (Complex AIM); Rule 5.40 (Complex SAM); 

Rule 5.73 (FLEX AIM); and Rule 5.74 (FLEX SAM). 

15For purposes of this filing and the proposed 

fee, the term ‘‘AIM Response’’ will include 

responses submitted to AIM and SAM Auctions. 

16Currently, such orders are appended fee code 

MA, and assessed a standard fee of $0.23 per 

contract, subject to the Liquidity Provider Sliding 

Scale and Liquidity Provider Sliding Scale 

Adjustment Table. 

17See Cboe Exchange Fees Schedule, Footnote 

20. 

18See Cboe Exchange Fees Schedule, Footnote 

47. 

Complex and Simple orders (both in 

AIM and Non-AIM orders). 

Currently, VIP offers 5 tiers. 

Particularly, a TPH may meet the 

criteria under Tier 1 if its qualifying 

volume in the qualifying classes is 

above 0% and up to 0.75% of national 

customer volume, under Tier 2 if its 

qualifying volume in qualifying classes 

is above 0.75% and up to 2.00% of 

national customer volume, under Tier 3 

if its qualifying volume in the qualifying 

classes is above 2.00% and up to 3.00% 

of national customer volume, under Tier 

4 if its qualifying volume in the 

qualifying classes is above 3.00% and 

up to 4.00% of national customer 

volume, and under Tier 5 if its 

qualifying volume in the qualifying 

classes is above 4.00% of national 

customer volume. 

The Exchange proposes to eliminate 

Tier 4 and to amend the volume 

threshold for Tier 3 to be above 2.00% 

and up to 4.00% of national customer 

volume. The Exchange also proposes a 

corresponding non-substantive 

amendment to update current Tier 5 to 

become Tier 4.10 The VIP credit rates for 

Simple and Complex orders remain 

unchanged under the proposed change. 

The proposed changes are designed to 

incentivize more volume to earn the 

same credits while also maintaining an 

incremental incentive for TPHs to strive 

for the highest tier level. The Exchange 

expects the impact of the change to be 

minimal, as currently, no TPHs qualify 

for Tier 4. Further, under current Tiers 

4 and 5, the VIP credit rates for Simple 

and Complex Non-AIM contracts are the 

same (i.e., $0.15 for Simple Non-AIM 

contracts and $0.25 for Complex NonAIM contracts), and the difference 

between VIP credit rates for Simple and 

Complex AIM contracts are $0.01 (i.e., 

$0.13 for Tier 4 Simple AIM contracts 

and $0.14 for Tier 5 Simple AIM 

contracts; $0.23 for Tier 4 Complex AIM 

contracts and $0.24 for Complex AIM 

contracts). The proposed changes are 

also designed to increase the amount of 

volume TPHs provide on the Exchange 

and further encourage them to 

contribute to a deeper, more liquid 

market, as well as to increase 

transactions and take such execution 

opportunities provided by such 

increased liquidity. The Exchange 

believes that this, in turn, benefits all 

market participants by contributing 

towards a robust and well-balanced 

market ecosystem. The Exchange notes 

the proposed tiers are competitively 

achievable for all TPHs that submit 

significant customer order flow, in that 

all firms that submit the requisite 

significant customer order flow could 

compete to meet the tiers. 

The Exchange proposes to make 

corresponding amendments to the 

Affiliated Volume Plan (‘‘AVP’’). Under 

AVP, if a Market-Maker Affiliate 11

(‘‘Affiliate OFP’’) or Appointed OFP 12

receives a credit under the VIP, the 

Market-Maker will receive an access 

credit on its BOE Bulk Ports 

corresponding to the VIP tier reached as 

well as a transaction fee credit on its 

sliding scale Market-Maker transaction 

fees (not including any additional 

surcharges or fees assessed as part of the 

Liquidity Provider Sliding Scale 

Adjustment Table). In connection with 

the proposed changes to the VIP, the 

Exchange proposes to make a 

corresponding change to the AVP and 

eliminate VIP Tier 4 (and corresponding 

MM Affiliate Access Credits and 

Liquidity Provider Sliding Scale 

Credits). The Exchange proposes to 

rename current VIP Tier 5 as VIP Tier 

4, with the same corresponding MarketMarker Affiliate Access Credit of 25% 

and Liquidity Provider Sliding Scale 

Credit of 35%. All other Tiers and 

corresponding Market-Maker Affiliate 

Access Credits and Liquidity Provider 

Sliding Scale Credits remain unchanged 

under the proposed rule change. 

New AIM Responder Fee Code 

The Exchange proposes to amend its 

Fees Schedule in connection with the 

fees related to orders and auction 

responses executed in the Automated 

Improvement Mechanism (‘‘AIM’’) and 

Solicitation Auction Mechanism 

(‘‘SAM’’) Auctions. 

AIM and SAM include functionality 

in which a TPH (an ‘‘Initiating TPH’’) 

may electronically submit for execution 

an order it represents as agent on behalf 

of a customer,13 broker dealer, or any 

other person or entity (‘‘Agency Order’’) 

against any other order it represents as 

agent, as well as against principal 

interest in AIM only, (an ‘‘Initiating 

Order’’) provided it submits the Agency 

Order for electronic execution into the 

AIM or SAM Auctions.14 The Exchange 

may designate any class of options 

traded on Cboe Options as eligible for 

AIM or SAM. The Exchange notes that 

all Users, other than the Initiating TPH, 

may submit responses to an Auction 

(‘‘AIM Responses’’).15 AIM and SAM 

Auctions take into account AIM 

Responses to the applicable Auction as 

well as contra interest resting on the 

Cboe Options Book at the conclusion of 

the Auction (‘‘unrelated orders’’), 

regardless of whether such unrelated 

orders were already present on the Book 

when the Agency Order was received by 

the Exchange or were received after the 

Exchange commenced the applicable 

Auction. If contracts remain from one or 

more unrelated orders at the time the 

Auction ends, they are considered for 

participation in the AIM or SAM order 

allocation process. 

The Exchange assesses fees for certain 

AIM Responses (the ‘‘AIM Response’’ 

fees set forth in the fees schedule). For 

example, the Exchange assesses a fee of 

$0.50 per contract for non-Customer, 

non-Market-Maker AIM Responses in 

penny classes, yielding fee code NB, 

and a fee of $1.05 per contract for NonCustomer, Non-Market-Maker AIM 

Responses in non-penny classes, 

yielding fee code NC. 

The Exchange now proposes to add 

fee code ‘‘MD’’, which would be 

appended to Market-Maker AIM 

Responses 16 and assessed a fee of $0.25 

per contract. 

The Exchange notes that the same 

FLEX AIM and FLEX SAM responses 

will be assessed the same fee, which is 

consistent with the structure of the 

Exchange’s current fees for AIM 

Responses, which apply uniformly to 

qualifying orders in AIM, SAM, FLEX 

AIM, and FLEX SAM. 17 The Exchange 

also notes that the Market-Maker AIM 

Responder fee applies to AIM Responses 

in Equity, ETF and ETN Options, 

Sectors Indexes,18 and all other index 


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19Excluding products in Underlying Symbol List 

A (see Footnote 34), MRUT, NANOS, XSP and 

FLEX Micros. 

20See Cboe Exchange Fees Schedule, Footnote 

34. 

21For this program, an ‘‘Originating Clearing 

Firm’’ is defined as either (a) the executing clearing 

Options Clearing Corporation (‘‘OCC’’) number on 

any transaction which does not also include a 

Clearing Member Trading Agreement (‘‘CMTA’’) 

OCC clearing number or (b) the CMTA in the case 

of any transaction which does include a CMTA 

OCC clearing number. 

22 15 U.S.C. 78f(b). 

23 15 U.S.C. 78f(b)(5). 

24 Id. 

25See supra note 5. 

26 Id. 

products, executed in AIM, SAM, FLEX 

AIM, and FLEX SAM Auctions. 

The Exchange also proposes to 

remove Market-Maker volume via AIM 

Market-Maker Responses (yielding fee 

code MD) from eligibility for credits 

pursuant to the Liquidity Provider 

Sliding Scale, similar to how MarketMaker orders transacted in open outcry 

(i.e., manual) in Equity, ETF, and ETN 

Options, Sector Indexes and All Other 

Index Products, which yield fee code 

MB, are handled today. Currently, the 

Liquidity Provider Sliding Scale offers 

credits on Market-Maker orders where a 

Market-Maker achieves certain volume 

thresholds based on total national 

Market-Maker volume in all underlying 

symbols 19 during the calendar month. 

Footnote 10 (appended to the Liquidity 

Provider Sliding Scale) states that the 

Liquidity Provider Sliding Scale applies 

to Liquidity Provider (Cboe Options 

Market-Maker, DPM and LMM) 

transaction fees in all products except 

(1) Underlying Symbol List A 20 (34), 

MRUT, NANOS, XSP and FLEX Micros, 

and (2) volume executed in open outcry. 

The proposed rule change amends 

Footnote 10 to add volume executed via 

AIM Responses to the list of Liquidity 

Provider Sliding Scale exclusions. The 

proposed rule change also adds 

language to Footnote 10 to make it clear 

that the volume thresholds under the 

Liquidity Provider Sliding Scale will 

continue to include volume executed 

via AIM Responses. The Exchange notes 

that it continues to include volume 

executed via AIM Responses in a 

Market-Maker’s volume eligible to meet 

the tier thresholds in order to continue 

to incentivize Market-Maker order flow 

to the trading floor. The Exchange offers 

a hybrid market system and aims to 

continue to balance incentives for 

Market-Makers to contribute to deep 

liquid markets for investors on both its 

electronic and open outcry platforms. 

Score Program Changes 

The Exchange proposes to amend the 

Select Customer Options Reduction 

program (‘‘SCORe’’). By way of 

background, SCORe is a discount 

program for Retail, Non-FLEX Customer 

(‘‘C’’ origin code) volume in the 

following options classes: SPX 

(including SPXW), VIX, RUT, MXEA, 

MXEF & XSP (‘‘Qualifying Classes’’). 

The SCORe program is available to any 

TPH Originating Clearing Firm or nonTPH Originating Clearing Firm that sign 

up for the program.21 SCORe utilizes 

Discount Tiers to determine the 

Originating Firm’s applicable 

corresponding discounts. To determine 

the Discount Tier, an Originating Firm’s 

Retail volume in the Qualifying Classes 

will be divided by total Retail volume 

in the Qualifying Classes executed on 

the Exchange. The program then 

provides a discount per retail contract, 

based on the determined Discount Tier 

thereunder. Currently, the program sets 

forth four Discount Tiers, with 

applicable discounts ranging from $0 to 

$0.14 per retail contract. 

The Exchange proposes to amend 

Footnote 48 to exclude from the SCORe 

program certain orders that are revised 

post-trade, using the Clearing Editor 

tool. Specifically, the Exchange 

proposes to exclude orders where the 

capacity is changed from another 

capacity to Customer using the Clearing 

Editor, and single leg orders created by 

hard-edits to complex orders using the 

Clearing Editor. 

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.22 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 23 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) 24 requirement that 

the rules of an exchange not be designed 

to permit unfair discrimination between 

customers, issuers, brokers, or dealers. 

As stated 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 TPHs. 

Customer Volume Incentive Program 

and Affiliated Volume Plan 

The Exchange believes the proposed 

amendments to the VIP (and 

corresponding amendments to AVP) to 

eliminate Tier 4 and to amend the 

volume threshold for Tier 3 to be above 

2.00%–4.00%, is reasonable because it 

continues to encourage TPHs to take the 

opportunity to receive credits on 

Customer orders by reaching the 

proposed volume thresholds. The 

Exchange notes that relative volumebased incentives and discounts have 

been widely adopted by exchanges 25

and are reasonable, equitable and nondiscriminatory because they are open to 

all TPHs on an equal basis and provide 

additional benefits or discounts that are 

reasonably related to (i) the value to an 

exchange’s market quality and (ii) 

associated higher levels of market 

activity, such as higher levels of 

liquidity provision and/or growth 

patterns. Additionally, as noted above, 

the Exchange operates in a highly 

competitive market. The Exchange is 

only one of several options venues to 

which market participants may direct 

their order flow. Competing options 

exchanges offer similar tiered pricing 

structures to that of the Exchange, 

including schedules of rebates/credits 

and fees that apply based upon 

members achieving certain volume and/ 

or growth thresholds. These competing 

pricing schedules, moreover, are 

presently comparable to those that the 

Exchange provides, including the 

pricing of comparable tiers.26

The Exchange believes adjusting the 

VIP volume thresholds by eliminating 

Tier 4 (and making corresponding 

changes to the AVP) and amending the 

volume threshold for Tier 3 is 

reasonable because it will continue to 

encourage TPHs to increase their overall 

order flow to the Exchange based on 

increasing their Customer, Professional 

Customer, Broker-Dealer, and JBO 

executed orders as a percentage of 

national customer volume. Particularly, 

the Exchange believes the proposed 


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27See MIAX Options Fee Schedule, Section 

1(a)(v), ‘‘MIAX Price Improvement Mechanism 

(‘‘PRIME’’) Fees, which assesses a fee of $0.50 

(Penny Classes) and $1.10 (non-Penny Classes) for 

Market-Maker PRIME responses; see also NYSE 

American Options Fee Schedule, Section I(G), 

‘‘CUBE Auction Fees and Credits’’, which assesses 

a fee of $0.50 (Penny Classes) and $1.05 (non-Penny 

Classes) for Non-Customer CUBE (its Customer Best 

Execution Auction) responses. 

28See EDGX Options Exchange Fee Schedule, 

‘‘Fee Codes and Associated Fees’’, fee code BD is 

appended to AIM Responder Penny orders and is 

assessed a fee of $0.50 per share, and fee code BE 

is appended to AIM Responder Non-Penny orders 

and is assessed a fee of $1.05 per share. 

29See Cboe Exchange Fees Schedule, Footnote 

47. 

30See Cboe Options Fees Schedule, ‘‘SPX 

Liquidity Provider Sliding Scale’’ table; ‘‘Liquidity 

Provider Sliding Scale’’ table; and ‘‘Liquidity 

Provider Sliding Scale Adjustment Table’’. 

31That is, Market-Maker orders that execute 

against customer orders. 

32This is also true for SAM Auctions. See Rule 

5.39. 

threshold change is reasonable because 

it will encourage increased volume, thus 

a deeper, more liquid market, and an 

increase in transaction opportunities 

provided by the increased liquidity. In 

turn, these increases benefit all TPHs by 

contributing towards a robust and wellbalanced market ecosystem. Increased 

overall order flow benefits all investors 

by deepening the Exchange’s liquidity 

pool, providing greater execution 

incentives and opportunities, offering 

additional flexibility for all investors to 

enjoy cost savings, supporting the 

quality of price discovery, promoting 

market transparency, and improving 

investor protection. 

The proposed volume thresholds also 

do not represent a significant departure 

from the current required criteria under 

the Exchange’s existing tiers and is 

therefore still reasonable based on the 

difficulty of satisfying the tiers’ criteria 

and ensures the existing credit and 

proposed thresholds appropriately 

reflect the incremental difficulty to 

achieve the existing VIP tiers. Further, 

the Exchange believes that the 

amendments are reasonable because it 

will still allow TPHs transmitting 

qualifying orders that reach a threshold 

of above 3.00—4.00% to receive either 

the same credit for doing so, in the case 

of Simple and Complex Non-AIM 

Contracts, or a $0.01 lesser credit for 

Simple and Complex AIM Contracts. 

Additionally, as noted above, currently, 

no TPHs qualify for Tier 4. Finally, the 

changes to the AVP are reasonable 

because the AVP utilizes the VIP tier 

structure, and thus, any changes to the 

VIP tiers must be incorporated into the 

AVP. 

The Exchange believes Tiers 3 and 4, 

as amended, remain in line with 

existing tiers, both in required criteria 

and credits. For example, the volume 

threshold amount under existing Tier 1 

is currently set as a range within a 0.75 

percentage point (0%–0.75%) and Tier 

2 is currently set as a range within a 

1.25 percentage point (between 0.75% 

up to 2.00%). It is reasonable to 

incrementally increase this range for 

Tier 3 to be within 2 percentage points 

(between 2.00% and 4.00%), and then 

over 4.00% for Tier 4, as proposed, 

since higher credits are available for 

higher tiers. The Exchange also believes 

that the tiers, as amended, are in a 

reasonable increment to encourage 

overall order flow to the Exchange 

without so significantly increasing the 

difficulty in reaching the tiers’ criteria. 

The Exchange believes that the 

proposal represents an equitable 

allocation of rebates and is not unfairly 

discriminatory because all TPHs have 

the opportunity to meet the tier 

thresholds. The Exchange also notes 

that the proposed changes will not 

adversely impact any TPH’s pricing or 

ability to qualify for other credit tiers. 

Rather, should a TPH not meet the 

proposed criteria, the TPH will merely 

not receive the proffered credit, for both 

the VIP and AVP. 

New AIM Responder Fee Code 

The Exchange believes that the 

proposed rule change to adopt a fee 

code and assess a standard rate for 

Market-Maker AIM Responses is 

reasonable, equitable and not unfairly 

discriminatory. As noted above, the 

Exchange operates in a highly 

competitive market. 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. 

The Exchange believes that the 

proposed fees are reasonable, equitable, 

and not unfairly discriminatory in that 

competing options exchanges,27

including the Exchange’s affiliated 

options exchanges,28 offer substantially 

the same fees and credits in connection 

with similar price improvement 

auctions, as the Exchange now 

proposes. 

Additionally, the Exchange believes 

that the proposed rule change is 

equitable and not unfairly 

discriminatory because the proposed fee 

will apply automatically and uniformly 

to all Market-Maker AIM Response 

orders. The Exchange also believes that 

the proposed fees in connection with 

Market-Maker AIM Response orders do 

not represent a significant departure 

from the fees and credits rebates 

currently offered under the fees 

schedule for these market participants. 

For example, under the existing fees 

schedule electronic orders in Equity, 

ETF and ETN Options, Sectors 

Indexes,29 and all other index products 

with M Capacity Codes are assessed a 

fee of $0.23 per contract in Penny and 

non-Penny Classes. 

The Exchange also believes that 

assessing a fee applicable to MarketMaker responses that is lower than nonCustomer, non-Market-Maker responses 

is equitable and not unfairly 

discriminatory because Market-Makers 

are already subject to certain other 

transaction fees not otherwise 

applicable to other market participants. 

In particular, in addition to MarketMaker-specific standard transaction 

fees,30 Market-Makers are also currently 

assessed a marketing fee of $0.25 in 

Penny Program classes and $0.70 in all 

other classes on certain transactions 

resulting from customer orders,31

including qualifying orders submitted as 

AIM Responses. Further, MarketMakers, unlike other market 

participants, take on a number of 

obligations, including quoting 

obligations that other market 

participants do not have, as well as 

added market making and regulatory 

requirements, which normally do not 

apply to other market participants. For 

example, Market-Makers have 

obligations to maintain continuous 

markets, engage in a course of dealings 

reasonably calculated to contribute to 

the maintenance of a fair and orderly 

market, and to not make bids or offers 

or enter into transactions that are 

inconsistent with a course of dealing. 

Additionally, the Exchange notes that 

Market-Makers (with an appointment in 

the applicable class) may not submit 

solicited orders into an AIM Auction; 32

this restriction does not apply to Firm 

orders. As stated, the Exchange also 

recognizes that Market-Makers are the 

primary liquidity providers in the 

options markets, and particularly, 

during AIM auctions. Thus, the 

Exchange believes Market-Makers 

provide the most accurate prices 

reflective of the true state of the market 

and are primarily responsible for 

encouraging more aggressive quoting 

and superior price improvement during 

an AIM Auction. As a result, the 

Exchange believes it is important to 

continue to incentivize Market-Makers 

to actively participate in such auctions 

by means of assessing a lower 

transaction fee for Market-Maker AIM 

Response orders. Increased MarketMaker liquidity also increases trading 

opportunities and signals to other 


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68704 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 

33See e.g., Cboe Options Fees Schedule, Volume 

Incentive Program (VIP) table (which counts 

volume for capacity B, J and U towards tier 

qualification but not as eligible for the VIP credit), 

and Cboe Options Clearing Trading Permit Holder 

Proprietary Products Sliding Scale table (which 

counts volume in products not included in 

Underlying Symbol List A towards reaching the 

tiers, but provides reduced rates to volume in 

products included in Underlying Symbol List A). 

34See Securities Exchange Act Release No. 51808, 

70 FR 37495, 37498–99 (June 29, 2005) (S7–10–04) 

(Final Rule). 35See supra note 4. 

participants to increase their order flow, 

which benefits all market participants. 

The proposed rule change to remove 

Market-Maker volume transacted via 

AIM Responses from eligibility for 

credits pursuant to the Liquidity 

Provider Sliding Scale is reasonable 

because it is also reasonably designed to 

balance incentivizing Market-Maker’s 

participation in AIM Auctions with 

establishing a fee in-line with other AIM 

Response fees. The Exchange also 

believes that it is reasonable to continue 

to include Market-Maker AIM Response 

volume in the volume thresholds for 

meeting the Liquidity Provider Sliding 

Scale tiers because, as stated above, it is 

designed to continue to incentivize 

Market-Maker participation in AIM 

Auctions and would assist the Exchange 

in continuing to provide a robust hybrid 

market. The Exchange notes that the 

AIM and C–AIM Auctions generally 

deliver meaningful opportunities for 

price improvement to orders and 

provide an efficient manner of access to 

liquidity for members. Increased overall 

auction-related order flow benefits all 

investors by deepening the Exchange’s 

liquidity pool, potentially providing 

even greater execution incentives and 

opportunities, offering additional 

flexibility for all investors to enjoy cost 

savings, supporting the quality of price 

discovery, promoting market 

transparency and improving investor 

protection. The Exchange notes, too, 

that other programs in the Fees 

Schedule include certain volume in 

meeting volume thresholds while not 

including the same volume as eligible 

for credits or reduced rates under such 

programs.33 The proposed rule change 

is equitable and not unfairly 

discriminatory because the proposed 

rule change will apply equally to all 

Market-Maker AIM Response volume, in 

that, no such volume will be allotted 

credits under the Liquidity Provider 

Sliding Scale Program. 

SCORe Program Changes 

The Exchange believes the proposal to 

exclude certain orders that are revised 

post-trade, using the Clearing Editor tool 

is reasonable because it no longer 

wishes to include these orders as part of 

the program, and it is not required to do 

so. The Exchange notes that orders 

where the capacity is changed from 

another capacity to Customer using the 

Clearing Editor and single leg orders 

created by hard-edits to complex orders 

using the Clearing Editor were not 

intended to be a part of the program and 

believes the intention of the program 

will continue to be achieved as a result 

of the proposed changes. The Exchange 

believes the proposed changes are 

reasonable because they provide further 

clarity regarding what orders are (and 

are not) eligible for the program. 

Further, the Exchange believes the 

changes remain equitable and 

reasonable by not materially changing 

the program. The Exchange believes 

SCORe, currently and as amended, 

continues to provide an incremental 

incentive for Originating Firms to strive 

for the highest tier level, which provides 

increasingly higher discounts. As such, 

the changes are designed to encourage 

increased Retail volume in the 

Qualifying Classes, which provides 

increased volume and greater trading 

opportunities for all market 

participants. The Exchange believes the 

proposed change is equitable and not 

unfairly discriminatory because the 

exclusions of certain orders that are 

revised post-trade, using the Clearing 

Editor tool apply to all registered 

Originating Firms uniformly. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule changes will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Specifically, 

the Exchange believes the proposed rule 

change to the VIP and AVP does not 

impose any burden on intramarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. The Exchange 

believes that the proposed changes to 

the VIP, and corresponding changes to 

the AVP, will encourage the submission 

of additional liquidity to a public 

exchange, thereby promoting market 

depth, price discovery and transparency 

and enhancing order execution 

opportunities for all TPHs. As a result, 

the Exchange believes that the proposed 

change furthers 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.’’ 34 Further, the 

proposed change applies to all TPHs 

submitting qualified orders equally, in 

that all TPHs submitting such orders are 

eligible for the tiers (as amended), have 

a reasonable opportunity to meet the 

tiers’ criteria (as amended) and will all 

receive the existing credit if such 

criteria is met. As described above, 

while only certain orders would count 

towards the qualifying thresholds, 

specifically, Customers, Professionals, 

Broker-Dealers and JBOs, these market 

participants’ orders are primarily 

executed as agency orders, whose order 

flow would bring greater volume and 

liquidity, which benefits all market 

participants by providing more trading 

opportunities and tighter spreads. 

Overall, the proposed change is 

designed to encourage additional order 

flow to the Exchange, which the 

Exchange believes benefits all market 

participants on the Exchange by 

providing more liquidity, thus trading 

opportunities, encouraging even more 

TPHs to send orders, thereby 

contributing towards a robust and wellbalanced market ecosystem to the 

benefit of all market participants. 

The Exchange does not believe that 

the proposed rule change to adopt a new 

fee code for Market-Maker AIM 

Responses will impose any burden on 

intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Particularly, 

the proposed changes will apply 

uniformly to all Market-Maker AIM 

Responses, in that all such orders will 

automatically and uniformly yield fee 

code MD and be assessed the standard 

fee for MD. Further, all such orders will 

uniformly not be eligible for credits 

under the Liquidity Provider Sliding 

Scale. 

Additionally, the Exchange does not 

believe that the proposed changes to the 

SCORe program will impose any burden 

on intramarket competition because the 

proposed changes apply to all registered 

Originating Firms uniformly, in that 

exclusions of certain orders that are 

revised post-trade, using the Clearing 

Editor tool apply to all registered 

Originating Firms uniformly. 

Finally, the Exchange believes the 

proposed rule changes do 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 that they may participate on and 

direct their order flow, including 15 

other options exchanges. Based on 

publicly available information, no single 

options exchange has more than 19% of 

the market share.35 Therefore, no 

exchange possesses significant pricing 


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Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 68705 

36See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 

37NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

83 (December 9, 2008) (SR–NYSEArca–2006–21)). 

38 15 U.S.C. 78s(b)(3)(A)(ii). 

39 17 CFR 240.19b–4(f)(2). 

40 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

power in the execution of option order 

flow. Indeed, participants can readily 

choose to send their orders to other 

exchange, and, additionally offexchange venues, 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.’’ 36 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’. . . .’’.37 Accordingly, the 

Exchange does not believe its proposed 

fee change imposes any burden on 

competition that is not necessary or 

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)(ii) of the Act,38 and Rule 

19b–4(f)(2) 39 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 shall 

institute proceedings to determine 

whether the proposed rule 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– 

CBOE–2023–056 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–CBOE–2023–056. 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–CBOE–2023–056 and should be 

submitted on or before October 25, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.40

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–21943 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98618; File No. SR– 

PEARL–2023–50] 

Self-Regulatory Organizations; MIAX 

PEARL, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change by MIAX PEARL, LLC To 

Amend the MIAX Pearl Equities Fee 

Schedule 

September 28, 2023. 

Pursuant to the provisions of 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 27, 2023, MIAX PEARL, 

LLC (‘‘MIAX Pearl’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’) a 

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 

The Exchange is filing a proposal to 

amend the fee schedule (the ‘‘Fee 

Schedule’’) applicable to MIAX Pearl 

Equities, an equities trading facility of 

the Exchange. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://www.miaxglobal.com/markets/ 

us-options/pearl-options/rule-filings, at 

MIAX Pearl’s principal office, and at the 

Commission’s Public Reference Room. 


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