28892 Federal Register / Vol. 83, No. 120 / Thursday, June 21, 2018 / Notices 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5The Exchange initially filed the proposed 

changes on June 1, 2018 (SR–C2–2018–013). On 

June 4, 2018, the Exchange withdrew that filing and 

submitted this filing. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83455; File No. SR–C2– 

2018–014] 

Self-Regulatory Organizations; Cboe 

C2 Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Related to Physical Port 

Fees for C2 

June 15, 2018. 

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 June 4, 

2018, Cboe C2 Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘C2’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated the proposed rule change as 

one establishing or changing a member 

due, fee, or other charge imposed by the 

Exchange under Section 19(b)(3)(A)(ii) 

of the Act 3 and Rule 19b–4(f)(2) 

thereunder,4 which renders the 

proposed rule change effective upon 

filing with the Commission. 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 proposes to amend its 

Fees Schedule. The text of the proposed 

rule change is available at the 

Exchange’s website at 

www.markets.cboe.com, at the principal 

office of the Exchange, 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 parts 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.5

Physical Connectivity 

A physical port is utilized by a 

Trading Permit Holder (‘‘TPH’’) or nonTPH to connect to the Exchange at the 

data centers where the Exchange’s 

servers are located. The Exchange 

currently assesses fees for Network 

Access Ports for legacy physical 

connections to the Exchange. 

Specifically, TPHs and non-TPHs can 

currently elect to connect to C2’s trading 

system via either a 1 gigabit per second 

(‘‘Gbps’’) Network Access Port or a 10 

Gbps Network Access Port. The 

Exchange currently assesses a monthly 

fee of $500 per port for 1 Gbps Network 

Access Ports and a monthly fee of 

$1,000 per port for 10 Gbps Network 

Access Ports. Through June 30, 2018, C2 

market participants will continue to 

have the ability to connect to C2’s 

trading system via legacy Network 

Access Ports. The Exchange however, 

does not wish to assess fees for the 

legacy ports for the month of June. As 

such, the Exchange proposes to 

eliminate the $500 and $1,000 per port 

per month fees, effective June 1, 2018. 

On May 14, 2018, the Exchange 

migrated its technology onto the same 

trading platform as its affiliates Cboe 

BZX Exchange, Inc., Cboe BYX 

Exchange, Inc., Cboe EDGA Exchange, 

Inc., and Cboe BZX Exchange, Inc. 

(‘‘Affiliated Exchanges’’) (the 

‘‘migration’’). In connection with the 

migration, effective May 14, 2018, TPHs 

and non-TPHs could alternatively elect 

to connect to C2 via new Physical Ports. 

The new Physical Ports allow TPHs and 

non-TPHs the ability to connect to the 

Exchange at the data centers where the 

Exchange’s servers are located and TPHs 

and non-TPHs have the option to 

connect via 1 Gbps or 10 Gbps Physical 

Ports. The Exchange currently maintains 

a presence in two third-party data 

centers: (i) The primary data center 

where the Exchange’s business is 

primarily conducted on a daily basis, 

and (ii) a secondary data center, which 

is predominantly maintained for 

business continuity purposes. The 

Exchange currently assesses a monthly 

fee of $2,000 per port for 1 Gbps 

Physical Ports, and a monthly fee of 

$7,000 per port for 10 Gbps Physical 

Ports, for Physical Ports that connect to 

the primary data center. The Exchange 

proposes to increase the monthly 

Physical Port fees to $2,500 per port for 

1 Gbps Physical Ports and to $7,500 per 

port for 10 Gbps Physical Ports. The 

Exchange notes the proposed fees 

enable it to continue to maintain and 

improve its market technology and 

services and also notes that the 

proposed fee changes are in line with 

the amounts assessed by other 

exchanges for similar connections. The 

Exchange also notes that the proposed 

changes to the Physical Port fees are 

also being proposed by its Affiliated 

Exchanges for June 1, 2018 

effectiveness. 

Disaster Recovery Physical Ports 

The Exchange also proposes to adopt 

separate Physical Port fees for 

connection to its secondary data center, 

which is predominantly maintained for 

business continuity purposes (‘‘Disaster 

Recovery Systems’’). Particularly, the 

Disaster Recovery Systems can be 

accessed via Physical Ports in Chicago. 

TPHs and Non-TPHs may maintain 

Physical Ports in order to be able to 

connect to the Disaster Recovery 

Systems in case of a disaster. The 

Exchange proposes to establish separate 

pricing for Physical Ports that are used 

to connect to the Disaster Recovery 

Systems (‘‘Disaster Recovery Physical 

Ports’’). Specifically, the Exchange 

proposes to assess a monthly fee of 

$2,000 per 1 Gbps Disaster Recovery 

Physical Port and a monthly fee of 

$6,000 per 10 Gbps Disaster Recovery 

Physical Port. This amount will allow 

the Exchange to maintain the Disaster 

Recovery Physical Ports in case they 

become necessary. The Exchange notes 

that the Disaster Recovery Physical 

Ports may also be used to access the 

Disaster Recovery Systems for the 

following affiliate exchanges: Cboe BZX 

Exchange, Inc., Cboe EDGX Exchange, 

Inc., Cboe EDGA Exchange, Inc., Cboe 

BYX Exchange, Inc., Cboe Exchange 

Inc., and Cboe Futures Exchange, LLC. 

The Exchange proposes to provide that 

market participants will only be 

assessed a single fee for any Disaster 

Recovery Physical Port that also 

accesses the Disaster Recovery Systems 

for these exchanges. 

Logical Connectivity 

The Exchange currently assesses $650 

per port for BOE and FIX Logical Ports. 

Additionally, the Fees Schedule 

provides that each BOE or FIX Logical 

Port incur the standard logical port fee 

when used to enter up to 20,000 orders 

per trading day per logical port as 


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Federal Register / Vol. 83, No. 120 / Thursday, June 21, 2018 / Notices 28893 

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

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

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

9See e.g., NYSE Arca Equities Fees and Charges, 

NYSE Arca Marketplace: Other Fees and Charges, 

Connectivity Fees. See also, Nasdaq Phlx LLC 

Pricing Schedule, Section XI, Direct Connectivity to 

Phlx. 

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

NYSE Arca Marketplace: Other Fees and Charges, 

Connectivity Fees. See also, Nasdaq Phlx LLC 

Pricing Schedule, Section XI, Direct Connectivity to 

Phlx. 

measured on average in a single month 

and that each incremental usage of up 

to 20,000 per day per logical port will 

incur an additional logical port fee of 

$650 per month. The Exchange proposes 

to increase the number of average daily 

orders used to determine incremental 

usage from 20,000 orders per trading 

day per logical port to 70,000 orders per 

day per logical port. The Exchange 

believes that the pricing implications of 

going beyond 70,000 orders, instead of 

20,000 orders, per trading day per 

Logical Port still encourage users to 

mitigate message traffic as necessary. 

Cboe Data Services—Port Fees 

The Exchange lastly proposes to 

amend the ‘‘Port Fee’’ under the Cboe 

Data Services (‘‘CDS’’) fees section. 

Currently, the Port Fee is payable by any 

Customer that receives data through a 

direct connection to CDS (‘‘direct 

connection’’) or through a connection to 

CDS provided by an extranet service 

provider (‘‘extranet connection’’). The 

Port Fee applies to receipt of any C2 

Options data feed but is only assessed 

once per data port. The Exchange 

proposes to amend the monthly CDS 

Port Fee to provide that it is payable 

‘‘per source’’ used to receive data, 

instead of ‘‘per data port’’. The 

Exchange also proposes to increase the 

fee from $500 per data port/month to 

$1,000 per data source/month. 

Clean-Up 

The Exchange lastly proposes to 

correct an inadvertent error with respect 

to a reference to a C2 Rule in the Fees 

Schedule. Particularly, the Exchange 

notes that under the Regulatory Options 

Fee section of the Fees Schedule, a 

reference to C2 Rule 6.36 is made. The 

Exchange notes that such rule was 

recently replaced with C2 Rule 6.15. 

The Exchange proposes to update that 

reference and notes that no substantive 

changes are being made by this clean-up 

update. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.6 Specifically, 

the Exchange believes the proposed rule 

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

of the Act,7 which provides that 

Exchange rules may provide for the 

equitable allocation of reasonable dues, 

fees, and other charges among its Permit 

Holders and other persons using its 

facilities. Additionally, the Exchange 

believes the proposed rule change is 

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

requirement that the rules of an 

exchange not be designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

Physical Connectivity 

The Exchange believes it’s reasonable, 

equitable and not unfairly 

discriminatory to not assess Network 

Access Port fees for the month of June 

as market participants will no longer 

pay fees for these ports. TPHs and nonTPHs will continue to pay the Physical 

Port fees for Physical Port connections. 

The Exchange believes the proposed 

change is equitable and not unfairly 

discriminatory because it applies 

uniformly to market participants. 

The Exchange believes increasing the 

fees for the Physical Ports is reasonable 

because the proposed fees enable the 

Exchange to continue to maintain and 

improve its market technology. The 

Exchange also notes that the proposal 

represents an equitable allocation of 

reasonable dues, fees and other charges 

as its fees for physical connectivity are 

reasonably constrained by competitive 

alternatives. If a particular exchange 

charges excessive fees for connectivity, 

affected TPHs and non-TPHs may opt to 

terminate their connectivity 

arrangements with that exchange, and 

adopt a possible range of alternative 

strategies, including routing to the 

applicable exchange through another 

participant or market center or taking 

that exchange’s data indirectly. 

Accordingly, if the Exchange charges 

excessive fees, it would stand to lose not 

only connectivity revenues but also 

revenues associated with the execution 

of orders routed to it, and, to the extent 

applicable, market data revenues. The 

Exchange believes that this competitive 

dynamic imposes powerful restraints on 

the ability of any exchange to charge 

unreasonable fees for connectivity. The 

Exchange also notes that the proposed 

amounts are in line with the costs of 

physical connectivity at other 

Exchanges.9 The Exchange believes the 

proposed Physical Port fees are 

equitable and not unfairly 

discriminatory because it applies to all 

market participants. 

Similarly, the Exchange believes the 

proposed fees for the Disaster Recovery 

Physical Ports are reasonable as it will 

allow the Exchange to maintain the 

Disaster Recovery Physical Ports in case 

they become necessary. The Exchange 

also believes the proposed fees are 

reasonable as they remain competitive 

with those charged by other venues.10

The Exchange believes the proposed 

rule change is equitable and nondiscriminatory because it applies to all 

market participants equally. 

Logical Connectivity 

The Exchange believes the proposed 

increase to the maximum average orders 

per day per logical port for BOE and FIX 

Logical Port usage provides market 

participants adequate capacity and 

ability to submit orders, while still 

encouraging users to mitigate message 

traffic as necessary, which removes 

impediments to and perfects the 

mechanism of a free open market and a 

national market system, and, in general, 

protects investors and the public 

interest. The proposed change is also 

equitable and not unfairly 

discriminatory because it applies 

uniformly to all market participants. 

Cboe Data Services—Port Fees 

The Exchange believes the proposed 

change is reasonable, equitable and not 

unfairly discriminatory because it 

applies uniformly to all market 

participants. The Exchange believes 

assessing the fee per data source, 

instead of per port, is reasonable 

because it may allow for market 

participants to maintain more ports at a 

lower cost and applies uniformly to all 

market participants. The Exchange 

believes the proposed increase is 

reasonable because, as noted above, 

market participants will likely still pay 

lower fees as a result of charging per 

data source and not per data port. 

Miscellaneous Changes 

The Exchange believes the proposed 

rule change to correct an inadvertent 

rule reference error alleviates potential 

confusion. The alleviation of confusion 

removes impediments to and perfects 

the mechanism of a free and open 

market and a national market system. 

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 


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28894 Federal Register / Vol. 83, No. 120 / Thursday, June 21, 2018 / Notices 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f). 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. 82350 

(Dec. 19, 2017), 82 FR 61100 (Dec. 26, 2017). 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 82602 

(Jan. 30, 2018), 83 FR 4941 (Feb. 2, 2018). 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 82939 

(Mar. 23, 2018), 83 FR 13537 (Mar. 29, 2018). 

Specifically, the Commission instituted proceedings 

to allow for additional analysis of the proposed rule 

change’s consistency with Section 6(b)(5) of the 

Act, which requires, among other things, that the 

rules of a national securities exchange be ‘‘designed 

to prevent fraudulent and manipulative acts and 

practices, to promote just and equitable principles 

of trade,’’ and ‘‘to protect investors and the public 

interest.’’ See id. at 13538 (citing 15 U.S.C. 

78f(b)(5)). 

8See Letters from Abe Kohen, AK Financial 

Engineering Consultants, LLC (Dec. 27, 2017); Anita 

Desai (Apr. 6, 2018); Ed Kaleda (Apr. 6, 2018); Scott 

Moberg (Apr. 6, 2018); Adam Malkin (Apr. 8, 2018); 

Gisan Mohammed (Apr. 11, 2018); Shravan Kumar 

(Apr. 11, 2018); Louise Fitzgerald (Apr. 19, 2018); 

proposed change represents a significant 

departure from pricing offered by the 

Exchange’s affiliates. Additionally, 

TPHs may opt to disfavor the 

Exchange’s pricing if they believe that 

alternatives offer them better value. 

Accordingly, the Exchange does not 

believe that the proposed change will 

impair the ability of TPHs or competing 

venues to maintain their competitive 

standing in the financial markets. The 

Exchange believes that fees for 

connectivity are constrained by the 

robust competition for order flow among 

exchanges and non-exchange markets. 

Further, excessive fees for connectivity, 

would serve to impair an exchange’s 

ability to compete for order flow rather 

than burdening competition. The 

Exchange also does not believe the 

proposed rule change would impact 

intramarket competition as it would 

apply to all TPHs and non-TPHs 

equally. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has neither solicited 

nor received written 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 11 and paragraph (f) of Rule 

19b–4 12 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

C2–2018–014 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–C2–2018–014. 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 (http://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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–C2–2018–014 and should 

be submitted on or before July 12, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–13304 Filed 6–20–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83452; File No. SR– 

NYSEArca&2017–139] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Designation of a 

Longer Period for Commission Action 

on Proceedings To Determine Whether 

To Approve or Disapprove a Proposed 

Rule Change To List and Trade the 

Shares of the ProShares Bitcoin ETF 

and the ProShares Short Bitcoin ETF 

Under NYSE Arca Rule 8.200–E, 

Commentary .02 

June 15, 2018. 

On December 4, 2017, NYSE Arca, 

Inc. (‘‘NYSE Arca’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

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

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

list and trade the shares of the 

ProShares Bitcoin ETF and the 

ProShares Short Bitcoin ETF under 

NYSE Arca Rule 8.200–E, Commentary 

.02. The proposed rule change was 

published for comment in the Federal 

Register on December 26, 2017.3 On 

January 30, 2018, pursuant to Section 

19(b)(2) of the Act,4 the Commission 

designated a longer period within which 

to approve the proposed rule change, 

disapprove the proposed rule change, or 

institute proceedings to determine 

whether to disapprove the proposed 

rule change.5 On March 23, 2018, the 

Commission instituted proceedings 

under Section 19(b)(2)(B) of the Act 6 to 

determine whether to approve or 

disapprove the proposed rule change.7

The Commission has received 11 

comments on the proposed rule 

change.8


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