Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 68801 

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

2 17 CFR 240.19b–4. 

3See 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. 

4See Securities Exchange Act Release No. 98420 

(September 18, 2023), 88 FR 65412 (September 22, 

2023) (SR–CboeBZX–2023–071). 

5The Exchange notes that in connection with 

September 1 ORF rate change, it provided 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. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98661; File No. SR– 

CboeBZX–2023–074] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fees Schedule To Adopt a Temporary 

Options Regulatory Fee 

September 29, 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 28, 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 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 Options’’) 

proposes to amend its Fees Schedule 

relating 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 amend the 

Fee Schedule to revise the ORF charged 

solely for the dates of September 28 and 

29, 2023. 

Background 

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, 

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.3 Based 

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

to increase the amount of ORF that is 

collected by the Exchange from $0.0001 

per contract side to $0.0003 per contract 

side, effective September 1, 2023.4 The 

increase was 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 then-current rate, would 

result in projected revenue that was 

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 thencurrent rate results was projected to 

result in combined revenue that is less 

than 100% of the Exchange’s estimated 

regulatory costs for the year. 

OIP and Current Proposal 

As noted above, on September 1, 2023 

the Exchange filed to increase ORF to 

$0.0003 (from $0.0001) per contract side 

(the ‘‘Original ORF Filing’’). However, 

on September 28, 2023, the Commission 

issued the Suspension of and Order 

Instituting Proceedings to Determine 

whether to Approve or Disapprove a 


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68802 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 

6See Securities Exchange Act Release No. 98597 

(September 28, 2023) (SR–CboeBZX–2023–071). 

7This proposal is not intended to be responsive 

to any issues that may be raised in the OIP, but to 

instead address the immediate issue of billing for 

September 28 and 29th. 

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

9 15 U.S.C. 78f(b)(4) and (5). 

Proposed Rule Change to Modify the 

Options Regulatory Fee (‘‘the ‘‘OIP’’).6

As a result of the OIP, on September 28, 

2023, the ORF reverted back to the rate 

in place prior to September 1, 2023 (i.e., 

$0.0001 per contract side). 

To ensure consistency of ORF 

assessments for the full month of 

September 2023, the Exchange proposes 

to modify the Fee Schedule to specify 

that the amount of ORF that will be 

collected by the Exchange through 

September 29, 2023 (i.e., the last trading 

day of the month of September), will be 

$0.0003 per contract side (the 

‘‘September ORF Rate’’) and that 

effective October 2, 2023, the ORF will 

be $0.0001 per contract side.7 The 

Exchange believes that revenue 

generated from the ORF, including 

based on the September ORF Rate, will 

continue to cover a material portion, but 

not all, of the Exchange’s regulatory 

costs. 

As noted above, the Exchange 

endeavors to notify Members of any 

change in the amount of the fee at least 

30 calendar days prior to the effective 

date of the change via Exchange Notice; 

however, the Exchange notes that as a 

result of the OIP, such notice in this 

instance could not be given 30 days in 

advance. 

For avoidance of doubt, the Exchange 

notes that the September ORF Rate 

applies only through September 29, 

2023 and that the ORF, effective October 

2, 2023, will be assessed at a rate of 

$0.0001 per contract (i.e., the rate in 

place prior to the Original ORF Filing). 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6(b) 8 of the 

Act, in general, and Section 6(b)(4) and 

(5) 9 of the Act, in particular, in that 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 and 

does not unfairly discriminate between 

customers, issuers, brokers, or dealers. 

The Proposal Is Reasonable 

The Exchange believes the proposed 

September ORF Rate is reasonable 

because it would help maintain fair and 

orderly markets and benefit investors 

and the public interest because it would 

ensure transparency and consistency of 

ORF for the entire month of September 

2023. Specifically, the proposal would 

ensure that the amount of ORF collected 

by the Exchange for the trading days of 

September 28 and 29, 2023 will be the 

same rate collected on every other 

trading day in September (i.e., $0.0003 

per contract side). The Exchange 

believes this will avoid disruption to its 

Members that are subject to the ORF. As 

noted above, the Exchange may only use 

regulatory funds such as ORF ‘‘to fund 

the legal, regulatory, and surveillance 

operations’’ of the Exchange. 

The Proposal Is an Equitable Allocation 

of Fees 

The Exchange believes its proposal is 

an equitable allocation of fees among its 

market participants. The Exchange 

believes that the proposed September 

ORF Rate would not place certain 

market participants at an unfair 

disadvantage because all options 

transactions must clear via a clearing 

firm. Such clearing firms can then 

choose to pass through all, a portion, or 

none of the cost of the ORF to its 

customers, i.e., the entering firms. 

Because the ORF is collected from 

Member clearing firms by the OCC on 

behalf of the Exchange, the Exchange 

believes that using options transactions 

in the Customer range serves as a proxy 

for how to apportion regulatory costs 

among such Members. In addition, the 

Exchange notes that the regulatory costs 

relating to monitoring Members with 

respect to Customer trading activity are 

generally higher than the regulatory 

costs associated with Members that do 

not engage in Customer trading activity, 

which tends to be more automated and 

less labor-intensive. By contrast, 

regulating Members that engage in 

Customer trading activity is generally 

more labor intensive and requires a 

greater expenditure of human and 

technical resources as the Exchange 

needs to review not only the trading 

activity on behalf of Customers, but also 

the Member’s relationship with its 

Customers via more labor-intensive 

exam-based programs. 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 noncustomer component (e.g., Member 

proprietary transactions) of its 

regulatory program. Thus, the Exchange 

believes the September ORF Rate (like 

the rate assessed for every other trading 

day in September 2023) would be 

equitably allocated in that it is charged 

to all Members on all their transactions 

that clear in the Customer range at the 

OCC. 

The Proposed Fee Is Not Unfairly 

Discriminatory 

The Exchange believes that the 

proposal is not unfairly discriminatory. 

The Exchange believes that the 

proposed September ORF Rate would 

not place certain market participants at 

an unfair disadvantage because all 

options transactions must clear via a 

clearing firm. Such clearing firms can 

then choose to pass through all, a 

portion, or none of the cost of the ORF 

to its customers, i.e., the entering firms. 

Because the ORF is collected from 

Member clearing firms by the OCC on 

behalf of the Exchange, the Exchange 

believes that using options transactions 

in the Customer range serves as a proxy 

for how to apportion regulatory costs 

among such Members. In addition, the 

Exchange notes that the regulatory costs 

relating to monitoring Member with 

respect to Customer trading activity are 

generally higher than the regulatory 

costs associated with Members that do 

not engage in Customer trading activity, 

which tends to be more automated and 

less labor-intensive. By contrast, 

regulating Members that engage in 

Customer trading activity is generally 

more labor intensive and requires a 

greater expenditure of human and 

technical resources as the Exchange 

needs to review not only the trading 

activity on behalf of Customers, but also 

the Member’s relationship with its 

Customers via more labor-intensive 

exam-based programs. 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 noncustomer component (e.g., Member 

proprietary transactions) of its 

regulatory program. Thus, the Exchange 

believes the September ORF Rate (like 

the rate assessed for every other trading 

day in September 2023), is not unfairly 

discriminatory because it is charged to 

all Members on all their transactions 

that clear in the Customer range at the 

OCC. 

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 

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. 

Intramarket Competition. The 

Exchange believes the proposed fee 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 68803 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(2). 

12 15 U.S.C. 78s(b)(2)(B). 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 98304 

(September 6, 2023), 88 FR 62612. 

4 17 CFR 200.30–3(a)(12). 

change would not impose an undue 

burden on competition as it is charged 

to all Members on all their transactions 

that clear in the Customer range at the 

OCC; thus, the amount of ORF imposed 

is based on the amount of Customer 

volume transacted. The Exchange 

believes that the proposed ORF would 

not place certain market participants at 

an unfair disadvantage because all 

options transactions must clear via a 

clearing firm. Such clearing firms can 

then choose to pass through all, a 

portion, or none of the cost of the ORF 

to its customers, i.e., the entering firms. 

In addition, because the ORF is 

collected from Member clearing firms by 

the OCC on behalf of the Exchange, the 

Exchange believes that using options 

transactions in the Customer range 

serves as a proxy for how to apportion 

regulatory costs among such Members. 

Intermarket Competition. The 

proposed fee change is not designed to 

address any competitive issues. Rather, 

the proposed change is designed to help 

the Exchange adequately fund its 

regulatory activities while seeking to 

ensure that total regulatory revenues do 

not exceed total 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) 10 of the Act and 

subparagraph (f)(2) of Rule 19b–4 11

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) 12 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–2023–074 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–2023–074. 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–2023–074 and should be 

submitted on or before October 25, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–22037 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98664; File No. SR–CBOE– 

2023–044] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Withdrawal 

of a Proposed Rule Change To Adopt 

a Quote Protection Timer 

September 29, 2023. 

On August 30, 2023, Cboe Exchange, 

Inc. (‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 1 and Rule 19b–4 thereunder,2 a 

proposed rule change to amend 

Exchange Rule 5.32 to adopt a passive 

quote protection mechanism. The 

proposed rule change was published for 

comment in the Federal Register on 

September 12, 2023.3 No comments 

were received on the proposed rule 

change. On September 20, 2023, the 

Exchange withdrew the proposed rule 

change (CBOE–2023–044). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.4

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–22040 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98592; File No. SR–FICC– 

2023–014] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing of Proposed Rule Change 

Relating to the GSD and MBSD 

Schedules of Haircuts for Eligible 

Clearing Fund Securities 

September 28, 2023 

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

Securities Exchange Act of 1934 


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