[Federal Register Volume 88, Number 243 (Wednesday, December 20, 2023)]
[Notices]
[Pages 88173-88176]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27923]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99182; File No. SR-CboeBZX-2023-097]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fee Schedule To Provide a Discount on the Purchase of Historical 
Equity Short Volume and Trade Reports

December 14, 2023.
    Pursuant to 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 December 1, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') 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 (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 update its Fee Schedule to provide a 
discount on fees assessed to BZX Members (``Members'') \3\ and non-
Members that purchase $20,000 or more of U.S. Equity Short Volume and 
Trades Reports (``Short Volume Reports''), effective

[[Page 88174]]

December 1, 2023 through December 31, 2023.
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    \3\ See Rule 1.5(n) (``Member''). The term ``Member'' shall mean 
any registered broker or dealer that has been admitted to membership 
in the Exchange. A Member will have the status of a ``member'' of 
the Exchange as that term is defined in Section 3(a)(3) of the Act. 
Membership may be granted to a sole proprietor, partnership, 
corporation, limited liability company or other organization which 
is a registered broker or dealer pursuant to Section 15 of the Act, 
and which has been approved by the Exchange.
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    By way of background, the Short Volume Report is an end-of-day 
report that summarizes certain equity trading activity on the Exchange, 
including trade date,\4\ total volume,\5\ short volume,\6\ and sell 
short exempt volume,\7\ by symbol.\8\ The Short Volume Report also 
includes an end-of-month report that provides a record of all short 
sale transactions for the month, including trade date and time (in 
microseconds),\9\ trade size,\10\ trade price,\11\ and type of short 
sale execution,\12\ by symbol and exchange.\13\ The Short Volume Report 
is a completely voluntary product, in that the Exchange is not required 
by any rule or regulation to make this data available and that 
potential customers may purchase it on an ad-hoc basis only if they 
voluntarily choose to do so.
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    \4\ ``Trade date'' is the date of trading activity in yyyy-mm-dd 
format.
    \5\ ``Total volume'' is the total number of shares transacted.
    \6\ ``Short volume'' is the total number of shares sold short.
    \7\ ``Short exempt volume'' is the total number of shares sold 
short classified as exempt.
    \8\ ``Symbol'' refers to the Cboe formatted symbol in which the 
trading activity occurred. See https://cdn.cboe.com/resources/membership/US_Symbology_Reference.pdf.
    \9\ ``Trade date and time'' is the date and time of trading 
activity in yyyy-mm-dd hh:mm:ss.000000 ET format.
    \10\ ``Trade size'' is the number of shares transacted.
    \11\ ``Trade price'' is the price at which shares were 
transacted.
    \12\ ``Short type'' is a data field that will indicate whether 
the transaction was a short sale or short sale exempt transaction. A 
short sale transaction is a transaction in which a seller sells a 
security which the seller does not own, or the seller has borrowed 
for its own account (see 17 CFR 242.200). A short sale exempt 
transaction is a short sale transaction that is exempt from the 
short sale price test restrictions of Regulation SHO Rule 201 (see 
17 CFR 242.201(c)).
    \13\ ``Exchange'' is the market identifier (Z = BZX, Y = BYX, X 
= EDGX, A = EDGA).
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    Cboe LiveVol, LLC (``LiveVol''), a wholly owned subsidiary of the 
Exchange's parent company, Cboe Global Markets, Inc., makes the Short 
Volume Report available for purchase to Users on the LiveVol DataShop 
website (datashop.cboe.com). Both the end-of-day report and end-of-
month report are included in the cost of the Short Volume Report and 
are available for purchase by both Members as well as non-Members on an 
annual or monthly \14\ basis. The monthly fee is $750 per Internal 
Distributor \15\ and $1,250 per External Distributor.\16\ Additionally, 
the Exchange offers historical reports containing both the end-of-day 
volume and end-of-month trading activity. The fee per month of 
historical data is $500. The Short Volume Report provided on a 
historical basis is only for display use redistribution (e.g., the data 
may be provided on the User's platform). Therefore, Users of the 
historical data may not charge separately for data included in the 
Short Volume Report or incorporate such data into their product. The 
Exchange notes that the Short Volume Report is subject to direct 
competition from other exchanges, as other exchanges offer similar 
products for a fee.\17\
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    \14\ The monthly fees for the Report are assessed on a rolling 
period based on the original subscription date. For example, if a 
User subscribes to the Report on October 24, 2023, the monthly fee 
will cover the period of October 24, 2023, through November 23, 
2023. If the User cancels its subscription prior to November 23, 
2023, and no refund is issued, the User will continue to receive 
both the end-of-day and end-of-month components of the Report for 
the subscription period.
    \15\ An Internal Distributor of an Exchange Market Data product 
is a Distributor that receives the Exchange Market Data product and 
then distributes that data to one or more Users within the 
Distributor's own entity. See Cboe BZX U.S. Equities Exchange Fee 
Schedule.
    \16\ An External Distributor of an Exchange Market Data product 
is a Distributor that receives the Exchange Market Data product and 
then distributes that data to a third party or one or more Users 
outside the Distributor's own entity. See Cboe BZX U.S. Equities 
Exchange Fee Schedule.
    \17\ See the Nasdaq Fee Schedule, Equity 7, Section 152. See 
also, the TAQ Group Short Sales (Monthly File) and Short Volume 
product, offered by the New York Stock Exchange LLC (``NYSE'') and 
affiliated equity markets (the ``NYSE Group'') at NYSE Exchange 
Proprietary Market Data [verbar] TAQ NYSE Group Short Sales.
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    The Exchange proposes to provide a temporary pricing incentive 
program in which Members or Non-Members that purchase historical Short 
Volume Reports will receive a percentage fee discount where specific 
purchase thresholds are met. Specifically, the Exchange proposes to 
provide a 20% discount for ad-hoc purchases of historical Short Volume 
Reports of $20,000 or more.\18\ The proposed program will apply to all 
market participants irrespective of whether the market participant is a 
new or current purchaser; however, the discount cannot be combined with 
any other discounts offered by the Exchange. The Exchange intends to 
introduce the discount program beginning December 1, 2023, with the 
program remaining in effect through December 31, 2023.
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    \18\ The discount will apply on an order-by-order basis. The 
discount will apply to the total purchase price, once the $20,000 
minimum purchase is satisfied (for example, a qualifying order of 
$25,000 would be discounted to $20,000, i.e., receive a 20% discount 
of $5,000).
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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.\19\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \20\ 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) \21\ 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,\22\ 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.
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    \19\ 15 U.S.C. 78f(b).
    \20\ 15 U.S.C. 78f(b)(5).
    \21\ Id.
    \22\ 15 U.S.C. 78f(b)(4).
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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 that the proposed fee 
changes will further broaden the availability of U.S. equity market 
data to investors consistent with the principles of Regulation NMS. The 
Exchange believes the dissemination of historical short volume data via 
historical Short Volume Reports benefits investors through increased 
transparency and may promote better informed trading, as well as 
research and studies of the equities industry. Nevertheless, the 
Exchange notes that 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 the

[[Page 88175]]

same type of data content through similar reports.\23\
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    \23\ See supra note 17.
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    The Exchange operates in a highly competitive environment. Indeed, 
there are currently 16 registered equities exchanges that trade 
equities. Based on publicly available information, no single equities 
exchange has more than 13% of the equity market share.\24\ 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.'' \25\ Making similar data products 
available to market participants fosters competition in the 
marketplace, and constrains the ability of exchanges to charge 
supercompetitive fees. In the event that a market participant views one 
exchange's data product as more attractive than the competition, that 
market participant can, and often does, switch between similar 
products. The proposed fees are a result of the competitive environment 
of the U.S. equities industry as the Exchange seeks to adopt fees to 
attract purchasers of historical Short Volume Reports.
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    \24\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (November 16, 2023), available at https://www.cboe.com/us/equities/market_statistics/.
    \25\ 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 incentive program for any 
Member or non-Member who purchases historical Short Volume Reports is 
reasonable because such purchasers would receive a 20% discount for 
purchasing $20,000 or more worth of historical Short Volume Reports. 
The Exchange believes the proposed discount is reasonable as it will 
give purchasers the ability to use and test the historical Short Volume 
Reports at a discounted rate, prior to purchasing additional months or 
a monthly subscription, and will therefore encourage users to purchase 
historical Short Volume Reports. Further, the proposed discount is 
intended to promote increased use of the Exchange's historical Short 
Volume Reports by defraying some of the costs a purchaser would 
ordinarily have to expend before using the data product. The Exchange 
believes that the proposed discount is equitable and not unfairly 
discriminatory because it will apply equally to all Members and non-
Members who purchase historical Short Volume Reports. Lastly, the 
purchase of this data product is discretionary and not compulsory. 
Indeed, no market participant is required to purchase the historical 
Short Volume Reports, and the Exchange is not required to make 
historical Short Volume Reports available to all investors. Potential 
purchasers may request the data at any time if they believe it to be 
valuable or may decline to purchase such data.

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, the Exchange's 
historical Short Volume Reports offering is subject to direct 
competition from several other options exchanges that offer similar 
data products. Moreover, purchase of historical Short Volume Reports 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 changes are grounded in the Exchange's efforts to 
compete more effectively. In this competitive environment, potential 
purchasers are free to choose which, if any, similar product to 
purchase to satisfy their need for market information. As a result, the 
Exchange believes this proposed rule change permits fair competition 
among national securities exchanges. Further, the Exchange believes 
that these changes will not cause any unnecessary or inappropriate 
burden on intermarket competition, as the proposed incentive program 
applies uniformly to any purchaser of historical Short Volume Reports.

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 \26\ and paragraph (f) of Rule 19b-4 \27\ 
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.
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    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 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#fc8e899099d19f9391919992888fbc8f999fd29b938a"><span class="__cf_email__" data-cfemail="9fedeaf3fab2fcf0f2f2faf1ebecdfecfafcb1f8f0e9">[email protected]</span></a>. Please include 
file number SR-CboeBZX-2023-097 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-CboeBZX-2023-097. 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

[[Page 88176]]

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-2023-097 and should be submitted on or before January 10, 
2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27923 Filed 12-19-23; 8:45 am]
BILLING CODE 8011-01-P


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