Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Notices 80369 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Cboe Global Markets U.S. Options Market 

Monthly Volume Summary (October 30, 2023), 

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

market_statistics/. 

4The term ‘‘AIM’’ refers to Automated 

Improvement Mechanism. 

5The term ‘‘AIM Contra Order’’ refers to an order 

submitted by a Member entering a AIM Agency 

Order for execution within AIM that will 

potentially execute against the AIM Agency Order 

pursuant to Rules 21.19 and 21.22. 

6The term ‘‘AIM Agency Order’’ refers to an order 

represented as agent by a Member on behalf of 

another party and submitted to AIM for potential 

price improvement pursuant to Rules 21.19 and 

21.22. 

7As part of the proposed rule change, the 

Exchange proposes to delete duplicative 

information in the chart in Footnote 6 related to 

Customer AIM and SAM Auction fees. Further, the 

Exchange proposes to delete headers in the table 

referring to issues and consolidate all fee code and 

rate information on an order type basis. The 

Exchange also proposes to amend Footnote 6 to 

remove an inadvertent reference to XB, as such fee 

code was previously removed from the Exchange 

Fee Schedule. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–25380 Filed 11–16–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98910; File No. SRCboeEDGX–2023–068] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fee Schedule 

November 13, 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 November 

1, 2023, Cboe EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX’’) 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 EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX’’) proposes to 

amend its Fee Schedule. The text of the 

proposed rule change is provided in 

Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (https://markets.cboe.com/us/ 

options/regulation/rule_filings/edgx/), 

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 

Fee Schedule, effective November 1, 

2023. The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

17 options venues to which market 

participants may direct their order flow. 

Based on publicly available information, 

no single options exchange has more 

than 17% of the market share.3 Thus, in 

such a low-concentrated and highly 

competitive market, no single options 

exchange, including the Exchange, 

possesses significant pricing power in 

the execution of option order flow. The 

Exchange believes that the ever-shifting 

market share among the exchanges from 

month to month demonstrates that 

market participants can shift order flow 

or discontinue to reduce use of certain 

categories of products, in response to fee 

changes. Accordingly, competitive 

forces constrain the Exchange’s 

transaction fees, and market participants 

can readily trade on competing venues 

if they deem pricing levels at those 

other venues to be more favorable. 

The Exchange’s Fees Schedule sets 

forth standard rebates and rates applied 

per contract. For example, the Exchange 

provides standard rebates ranging from 

$0.01 up to $0.21 per contract for 

Customer orders in both Penny and 

Non-Penny Securities. The Fee Codes 

and Associated Fees section of the Fees 

Schedule also provides for certain fee 

codes associated with certain order 

types and market participants that 

provide for various other fees or rebates. 

For example, the Exchange assesses a 

fee of $0.05 per contract for AIM 4

Contra orders, yielding fee code BB; 

assesses a fee of $1.05 per contract for 

AIM Responder orders in Non-Penny 

Securities, yielding fee code BE; and 

provides a rebate of $0.06 for AIM 

Agency Customer orders, yielding fee 

code BC. 

The Exchange proposes to amend the 

Fee Codes and Associated Fees table of 

the Fee Schedule to adopt new fee codes 

for AIM Contra and AIM Agency 

Customer orders in Non-Penny 

Securities. Specifically, the Exchange 

proposes to adopt new fee codes, BF 

and BG, to apply to AIM Contra 5 orders 

in Non-Penny Securities and AIM 

Agency 6 Customer orders in Non-Penny 

Securities, respectively. The Exchange 

proposes to assess a fee of $0.02 per 

contract for AIM Contra orders in NonPenny Securities yielding fee code BF 

and to assess no fee per contract for AIM 

Agency Customer orders in Non-Penny 

Securities yielding fee code BG. 

The Exchange also proposes to amend 

the description of current fee code BB 

to provide it applies to AIM Contra 

orders in Penny Securities, and to 

amend the current description of 

current fee code BC to provide it applies 

to AIM Agency Customer orders in 

Penny Securities. The Exchange also 

proposes to increase the standard fee for 

AIM Responder orders in Non-Penny 

Securities (i.e., yield fee code BE) from 

$1.05 per contract to $1.15 per contract. 

The proposed rule change also 

amends Footnote 6 of the Fee Schedule 

to include new fee codes BF and BG, 

and to reflect the proposed change in 

fees for orders yielding fee code BE.7

Further, AIM Agency Customer order in 

Non-Penny Securities yielding fee code 

BG will not be eligible for rebates under 

the Automated Improvement ‘‘AIM’’ 

Tiers set forth in Footnote 9 of the Fee 

Schedule. As such, the Exchange 

proposes to rename Footnote 9 as 

Automated Improvement Mechanism 

(‘‘AIM’’) Penny Tiers, and revise the 

definition of Interaction Rate set forth in 

Footnote 9 to state that the Interaction 

Rate is the percentage of the Penny 

Agency Order that trades against the 

Initiating Order. 


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80370 Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Notices 

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

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

10 Id. 

11 15 U.S.C. 78f(b)(4). 

12See Box Options Fee Schedule, Section IV(B), 

‘‘PIP and COPIP Transactions’’, which, for certain 

fees, provides varying rates for orders in Penny 

Interval Classes and Non-Penny Interval Classes 

submitted into its PIP and COPIP auction 

mechanism. See also MIAX Options Fee Schedule, 

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

Mechanism (‘‘PRIME’’) Fees’’, which, for certain 

fees, provides for varying rates for orders in NonPenny Classes and Penny Classes submitted into its 

PRIME auctions. 

13See MIAX Options Fee Schedule, Section 

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

(‘‘PRIME’’) Fees’’, which provides for a fee of no 

charge to $0.30 per contract for PRIME Agency 

orders, depending on market participant; and 

provides for a fee of no charge to $0.05 per contract 

for PRIME Contra-side orders, depending on market 

participant. 

14See Box Options Fee Schedule, Section IV(B), 

‘‘PIP and COPIP Transactions’’, which provides for 

a fee of $1.15 for Professional Customer or Broker 

Dealer or Market Maker Improvement Orders in 

Non-Penny Interval Classes. Footnote 21 to the Fee 

Schedule states that an Improvement Order is a 

response to a PIP or COPIP auction. 

15See Box Options Fee Schedule, Section IV(B), 

‘‘PIP and COPIP Transactions’’, which provides for 

PIP and COPIP Break-Up Credits of $0.81 per 

contract for Non-Penny Interval Classes. See also 

‘‘MIAX Options Fee Schedule, Section 1(a)(v), 

‘‘MIAX Price Improvement Mechanism (‘‘PRIME’’) 

Fees’’, which provides for PRIME Break-Up Credits 

ranging from $0.60 to $0.73 per contract for NonPenny Classes. 

In addition, the Exchange also 

proposes to amend certain Break-Up 

Credits located under the AIM and SAM 

Pricing table in Footnote 6. The BreakUp Credits provision applies to agency 

orders submitted in either the AIM or 

SAM auction that trades with a response 

order in the respective auction. 

Specifically, the Exchange will apply a 

Break-Up Credit to the Member that 

submitted an Agency Order (i.e., either 

an AIM or SAM Agency Order), 

including a Member who routed an 

order to the Exchange with a Designated 

Give Up, when the Agency Order trades 

with a Response Order (i.e., an AIM or 

SAM Response Order, as applicable). 

The Exchange proposes to amend the 

Break-Up Credit for qualifying AIM 

Agency Orders in Non-Penny Securities, 

from $0.60 per contract to $1.06 per 

contract. 

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, 

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. 

The Exchange also believes the 

proposed rule change is consistent with 

Section 6(b)(4) of the Act,11 which 

requires that Exchange rules provide for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

Trading Permit Holders and other 

persons using its facilities. 

As described above, the Exchange 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. The 

proposed rule change reflects a 

competitive pricing structure designed 

to incentivize market participants to 

direct their order flow to the Exchange, 

which the Exchange believes would 

enhance market quality to the benefit of 

all market participants. The Exchange is 

only one of several options venues to 

which market participants may direct 

their order flow, and it represents a 

small percentage of the overall market. 

The proposed fee changes reflect a 

competitive pricing structure designed 

to incentivize market participants to 

direct their order flow, which the 

Exchange believes would enhance 

market quality to the benefit of all 

Members. 

Overall, the Exchange believes that its 

proposed adoption of new fee codes for 

AIM Contra and AIM Agency Customer 

orders in Non-Penny Securities (and 

related changes for AIM Contra and AIM 

Agency Customer orders in Penny 

Securities) is consistent with Section 

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

fees are reasonable, equitable and not 

unfairly discriminatory. The Exchange 

believes that the proposed fees are 

reasonable, equitable, and not unfairly 

discriminatory in that competing 

options exchanges offer a similar 

distinction between order types in 

connection with similar price 

improvement auctions,12 as the 

Exchange now proposes. Further, 

competing exchanges charge different 

rates for transactions in their price 

improvement mechanisms, for orders in 

Penny or Non-Penny Securities, in a 

manner similar to the proposal. The 

Exchange believes the fee and rebate 

schedule as proposed continues to 

reflect differentiation among different 

product classes typically found in 

options fee and rebate schedules. 

The proposed fees in relation to AIM 

orders are designed to promote order 

flow through AIM and, in particular, to 

attract liquidity, which benefits all 

market participants by providing 

additional trading opportunities at 

improved prices. This, in turn, attracts 

increased large-order flow from 

liquidity providers which facilitates 

tighter spreads and potentially triggers a 

corresponding increase in order flow 

originating from other market 

participants. 

Also, the Exchange believes that the 

proposed fee for AIM Contra and AIM 

Agency Customer orders in Non-Penny 

Securities ($0.02 per contract and no 

charge, respectively) is reasonable 

because it encourages participation in 

AIM by offering a rate that is equivalent 

to or better than most other price 

improvement auctions offered by other 

options exchanges as well as the 

Exchange itself.13

Further, the Exchange believes the 

proposed change to the standard fee for 

AIM Responder orders in Non-Penny 

Securities (i.e., yield fee code BE) from 

$1.05 per contract to $1.15 per contract 

is reasonable as the rate is equivalent to 

fees at competing exchanges.14

Finally, the Exchange believes its 

proposal to amend the AIM-related 

Break-Up Credit for qualifying orders in 

Non-Penny Securities is reasonable 

because it encourages use of AIM. 

Specifically, the Exchange believes that 

the proposed Break-Up Credit for AIM 

Agency Orders in Non-Penny Securities 

will encourage increased Agency Order 

flow to AIM Auctions, thereby 

potentially increasing the initiation of 

and volume executed through AIM 

Auctions. Additional auction order flow 

provides market participants with 

additional trading opportunities at 

improved prices. The Exchange also 

believes that the proposed AIM BreakUp Credit of $1.06 for Non-Penny 

Securities is reasonable and equitable as 

this credit is in-line with, albeit slightly 

higher than, corresponding break-up fee 

for a price improvement auction offered 

by other options exchanges.15 Also, the 

proposed AIM Break-Up Credits, as 

amended, are not unreasonably 

discriminatory because such credits are 


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Federal Register / Vol. 88, No. 221 / Friday, November 17, 2023 / Notices 80371 

16 15 U.S.C. 78s(b)(3)(A). 

17 17 CFR 240.19b-4(f). 18 17 CFR 200.30–3(a)(12). 

equally available to all Members 

submitting AIM Agency Orders to the 

Exchange. 

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. First, the 

Exchange believes that the proposed 

rule change does not impose any burden 

on intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange notes that the proposed 

changes apply uniformly to similarly 

situated Members. The Exchange 

believes that the proposed changes 

related to AIM transactions would not 

impose any burden on intramarket 

competition, but rather, serves to 

increase intramarket competition by 

incentivizing members to direct their 

AIM orders to the Exchange, in turn 

providing for more opportunities to 

compete at improved prices. 

The Exchange also believes the 

proposed rule change does not impose 

any burden on intermarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

As previously discussed, the Exchange 

operates in a highly competitive market. 

Members have numerous alternative 

venues they may participate on and 

direct their order flow, including 17 

other options exchanges. Additionally, 

the Exchange represents a small 

percentage of the overall market. Based 

on publicly available information, no 

single options exchange has more than 

17% of the market share. Therefore, no 

exchange possesses significant pricing 

power in the execution of order flow. 

Indeed, participants can readily choose 

to send their orders to other exchanges 

if they deem fee levels at those other 

venues to be more favorable. Moreover, 

the Commission has repeatedly 

expressed its preference for competition 

over regulatory intervention in 

determining prices, products, and 

services in the securities markets. 

Specifically, in Regulation NMS, the 

Commission highlighted the importance 

of market forces in determining prices 

and SRO revenues and, also, recognized 

that current regulation of the market 

system ‘‘has been remarkably successful 

in promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 

the execution of order flow from broker 

dealers’. . . .’’. Accordingly, the 

Exchange does not believe its proposed 

fee change imposes any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

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

of the Act 16 and paragraph (f) of Rule 

19b–4 17 thereunder. At any time within 

60 days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number 

SR–CboeEDGX–2023–068 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–CboeEDGX–2023–068. 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–CboeEDGX–2023–068 and should be 

submitted on or before December 8, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–25381 Filed 11–16–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–267, OMB Control No. 

3235–0272] 

Proposed Collection; Comment 

Request; Extension: Rule 11a–2 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 


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