[Federal Register Volume 88, Number 190 (Tuesday, October 3, 2023)]
[Notices]
[Pages 68237-68240]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21795]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98571; File No. SR-CBOE-2023-055]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fees Schedule Relating to the Sale of Open-Close Volume Data

September 27, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its Fees Schedule relating to the sale of Open-Close volume 
data. 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.

[[Page 68238]]

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 to offer a free 
trial for an ad-hoc request of up to six (6) historical months of 
Intraday Open-Close historical data to all Cboe Options Trading Permit 
Holders (``TPHs'') and non-TPHs who have never subscribed to the 
Intraday Open-Close historical files or previously received a free 
trial, effective September 25, 2023.
    By way of background, the Exchange currently offers End-of-Day 
(``EOD'') and Intraday Open-Close Data (collectively, ``Open-Close 
Data''). EOD Open-Close Data is an end-of-day volume summary of trading 
activity on the Exchange at the option level by origin (customer, 
professional customer, broker-dealer, and market maker), side of the 
market (buy or sell), price, and transaction type (opening or closing). 
The customer and professional customer volume is further broken down 
into trade size buckets (less than 100 contracts, 100-199 contracts, 
greater than 199 contracts). The Open-Close Data is proprietary Cboe 
Options trade data and does not include trade data from any other 
exchange. It is also a historical data product and not a real-time data 
feed. The Exchange also offers Intraday Open-Close Data, which provides 
similar information to that of Open-Close Data but is produced and 
updated every 10 minutes during the trading day. Data is captured in 
``snapshots'' taken every 10 minutes throughout the trading day and is 
available to subscribers within five minutes of the conclusion of each 
10-minute period.\3\ The Intraday Open-Close Data provides a volume 
summary of trading activity on the Exchange at the option level by 
origin (customer, professional customer, broker-dealer, and market 
maker), side of the market (buy or sell), and transaction type (opening 
or closing). The customer and professional customer volume are further 
broken down into trade size buckets (less than 100 contracts, 100-199 
contracts, greater than 199 contracts). The Intraday Open-Close Data is 
also proprietary Cboe Options trade data and does not include trade 
data from any other exchange.
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    \3\ For example, subscribers to the intraday product will 
receive the first calculation of intraday data by approximately 9:42 
a.m. ET, which represents data captured from 9:30 a.m. to 9:40 a.m. 
Subscribers will receive the next update at 9:52 a.m., representing 
the data previously provided together with data captured from 9:40 
a.m. through 9:50 a.m., and so forth. Each update will represent the 
aggregate data captured from the current ``snapshot'' and all 
previous ``snapshots.''
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    Cboe LiveVol, LLC (``LiveVol''), a wholly owned subsidiary of the 
Exchange's parent company, Cboe Global Markets, Inc., makes the Open-
Close Data available for purchase to TPHs and non-TPHs on the LiveVol 
DataShop website (datashop.cboe.com). Customers may currently purchase 
Intraday Open-Close Data on a subscription basis (monthly or annually) 
or by ad hoc request for a specified month (e.g., request for Intraday 
Open-Close Data for month of August 2023).
    Open-Close Data is subject to direct competition from similar end-
of-day and intraday options trading summaries offered by several other 
options exchanges.\4\ All of these exchanges offer essentially the same 
end-of-day and intraday options trading summary information.
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    \4\ These substitute products are: Nasdaq PHLX Options Trade 
Outline, Nasdaq Options Trade Outline, ISE Trade Profile, GEMX Trade 
Profile data; open-close data from C2 Options, BZX, and EDGX; and 
Open Close Reports from MIAX Options, Pearl, and Emerald.
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Free Trial
    The Exchange seeks to re-establish a free trial for historical ad 
hoc requests for Intraday Open-Close Data for new purchasers. 
Currently, ad hoc requests for historical Intraday Open-Close Data are 
available to all customers at the same price and in the same manner. 
The current charge for this historical Intraday Open-Close Data 
covering all of the Exchange's securities (Equities, Indexes & ETF's) 
is $1,000 per month. The Exchange previously offered a free trial 
during the months of September, October, November and December 2022 for 
an ad-hoc request of three (3) historical months of Intraday Open-Close 
historical data to all Cboe Options Trading Permit Holders (``TPHs'') 
and non-TPHs who have never before subscribed to the Intraday Open-
Close historical files.\5\
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    \5\ See Securities Exchange Act Release No. 34-95736 (September 
12, 2022), 87 FR 57005 (September 16, 2022) (SR-CBOE-2022-044).
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    The Exchange now proposes to reestablish a free trial and amend the 
Fees Schedule to provide a total up to six (6) historical months of 
Intraday Open-Close Data to any TPH or non-TPH that has not previously 
subscribed to this offering or previously received a free trial.\6\ As 
noted above, the Exchange previously offered a free trial period 
recently for the months of September through December 2022. The 
Exchange believes bringing back the proposed trial, on a general six-
month basis, will again serve as an incentive for new users who have 
never purchased Intraday Open-Close historical data (or received such 
data via a previous free trial offer) to start purchasing Intraday 
Open-Close historical data. Particularly, the Exchange believes it will 
give potential subscribers the ability to use and test the data 
offering before signing up for additional months. The Exchange also 
notes another exchange offers a free trial for new subscribers of a 
similar data product.\7\ Lastly, the purchase of Intraday Open-Close 
historical data is discretionary and not compulsory.
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    \6\ For example, if a TPH or non-TPH that has never made an ad-
hoc request for a specified month of Intraday Open-Close historical 
data wishes to purchase Intraday Open-Close Data for the months of 
January, February, March, April, May and June 2023 during the month 
of September 2023, the historical files for those months would be 
provided free of charge. If a new user wishes to purchase Intraday 
Open-Close historical data for the months of January, February, 
March, April, May, June, and July 2023 during the month of September 
2023, then the data for January, February, March, April, May, and 
June 2023 would be provided free of charge, and the new user would 
be charged $1,000 for the July 2023 historical file.
    \7\ See Nasdaq ISE, Options 7 Pricing Schedule, Section 10A., 
Nasdaq ISE Open/Close Trade Profile End of Day.
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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.\8\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \9\ 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,

[[Page 68239]]

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) \10\ requirement that the rules 
of an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``SROs'') and broker-dealers increased authority and 
flexibility to offer new and unique market data to the public. It was 
believed that this authority would expand the amount of data available 
to consumers, and also spur innovation and competition for the 
provision of market data. The Exchange believes the proposed fee change 
will further broaden the availability of U.S. option market data to 
investors consistent with the principles of Regulation NMS. Open-Close 
Data is designed to help investors understand underlying market trends 
to improve the quality of investment decisions. Indeed, subscribers to 
the data may be able to enhance their ability to analyze option trade 
and volume data and create and test trading models and analytical 
strategies. The Exchange believes Open-Close Data provides a valuable 
tool that subscribers can use to gain comprehensive insight into the 
trading activity in a particular series, but also emphasizes such data 
is not necessary for trading and as noted above, is entirely optional. 
Moreover, several other exchanges offer a similar data product which 
offer same type of data content through end-of-day or intraday 
reports.\11\
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    \11\ See supra note 4.
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    The Exchange also operates in a highly competitive environment. 
Indeed, there are currently 16 registered options exchanges that trade 
options. Based on publicly available information, no single options 
exchange has more than 15% of the market share.\12\ The Commission has 
repeatedly expressed its preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. Particularly, 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.'' \13\ Making similar data products available to 
market participants fosters competition in the marketplace, and 
constrains the ability of exchanges to charge supracompetitive fees. In 
the event that a market participant views one exchange's data product 
as more or less attractive than the competition they can and do switch 
between similar products. The proposed fees are a result of the 
competitive environment, as the Exchange seeks to adopt a fee waiver to 
attract future purchasers of historical Intraday Open-Close Data.
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    \12\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (September 12, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
    \13\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    The Exchange believes that the proposed free trial for any TPH or 
non-TPH who has not previously purchased Intraday Open-Close historical 
data or received a free trial is reasonable because such users would 
not be subject to fees for up to 6 months' worth of Intraday Open-Close 
historical data. The Exchange believes the proposed free trial is also 
reasonable as it will give potential subscribers the ability to use and 
test the Intraday Open-Close historical data prior to purchasing 
additional months and will therefore encourage and promote new users to 
purchase the Intraday Open-Close historical data. The Exchange believes 
that the proposed discount is equitable and not unfairly discriminatory 
because it will apply equally to all TPHs and non-TPHs who have not 
previously purchased Intraday Open-Close historical data or previously 
received a free trial. Also as noted above, another exchange offers a 
free trial to new users for a similar data product \14\ and the 
Exchange itself recently offered a similar free trial.\15\ Lastly, the 
purchase of this data product is discretionary and not compulsory.
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    \14\ See supra note 7.
    \15\ See supra note 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange operates in a 
highly competitive environment in which the Exchange must continually 
adjust its fees to remain competitive. Because competitors are free to 
modify their own fees in response, the Exchange believes that the 
degree to which fee changes in this market may impose any burden on 
competition is extremely limited.
    As discussed above, Open-Close Data is subject to direct 
competition from several other options exchanges that offer substitutes 
to Open-Close. Moreover, purchase of Open-Close is optional. It is 
designed to help investors understand underlying market trends to 
improve the quality of investment decisions, but is not necessary to 
execute a trade.
    The proposed rule change is grounded in the Exchange's efforts to 
compete more effectively. The Exchange is proposing to provide a free 
trial for market participants to test investment strategies and trading 
models, and develop market sentiment indicators. This change will not 
cause any unnecessary or inappropriate burden on intermarket 
competition, but rather will promote competition by encouraging new 
market participants to investigate the product. Other exchanges are, of 
course, free to match this change or undertake other competitive 
responses, enhancing overall competition. Indeed, as discussed, another 
exchange currently offers a similar free-trial period for similar 
data.\16\
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    \16\ See supra note 7.
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    The proposed rule change will not cause any unnecessary or 
inappropriate burden on intramarket competition. Particularly, the 
proposed rule change will apply to all TPHs and non-TPHs who have never 
made an ad-hoc request to purchase Intraday Open-Close historical data. 
Moreover, purchase of Intraday Open-Close historical files is 
discretionary and not compulsory.

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 \17\ and paragraph (f) of Rule 19b-4 \18\ 
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

[[Page 68240]]

the purposes of the Act. If the Commission takes such action, the 
Commission will institute proceedings to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f684839a93db95999b9b93988285b6859395d8919980"><span class="__cf_email__" data-cfemail="2250574e470f414d4f4f474c5651625147410c454d54">[email protected]</span></a>. Please include 
file number SR-CBOE-2023-055 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-CBOE-2023-055. 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-2023-055 and should be 
submitted on or before October 24, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21795 Filed 10-2-23; 8:45 am]
BILLING CODE 8011-01-P


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