Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices 88159 

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

2 17 CFR 240.19b–4. 

3The Exchange initially filed the proposed fee 

changes on December 1, 2023 (SR–CboeEDGX– 

2023–073). On December 1, 2023, the Exchange 

withdrew that filing and submitted SR–CboeEDGX– 

2023–075. 

4See Cboe Global Markets U.S. Options Market 

Monthly Volume Summary (November 29, 2023), 

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

market_statistics/. 

5The Exchange proposes to amend Footnote 5 

(Orders Submitted with a Designated Give Up) to 

include orders yielding fee code CA. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99177; File No. SR– 

CboeEDGX–2023–075] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fee Schedule 

December 14, 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 December 

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 (http://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.3 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 16% of the market share.4 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 Fee 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 $0.24 per contract for Market 

Maker orders that remove liquidity in 

Non-Penny Securities, yielding fee code 

NT; provides a rebate of $0.01 per 

contract for Customer-to-Non-Customer 

(i.e., ‘‘Customer (contra NonCustomer)’’) orders (that both add and 

remove liquidity) and Customer-toCustomer (i.e., ‘‘Customer (contra 

Customer)’’) orders that remove 

liquidity, in Non-Penny Securities, 

yielding fee code NC; and provides a 

rebate of $0.01 per contract for 

Customer (contra Non-Customer) orders 

and Customer (contra Customer) orders 

that remove liquidity, in Penny 

Securities, yielding fee code PC. 

Customer (contra Customer) orders that 

add liquidity receive no rebate. 

Fee Codes 

The Exchange proposes to amend its 

Fee Schedule to adopt new fee code CA, 

which will apply to Customer (contra 

Non-Customer) orders that add 

liquidity; the proposed fee code 

provides a rebate of $0.01 per contract.5

This is the same rebate these orders 

currently receive pursuant to fee codes 

NC and PC. 

The Exchange also proposes to amend 

the definition of current fee code NC to 

provide that such fee code (and 

corresponding standard rebate of $0.01 

per contract) applies to all Simple 

Customer (i.e., Customer (contra NonCustomer) and Customer (contra 

Customer)) orders that remove liquidity 

in Non-Penny Securities. Similarly, the 

Exchange proposes to amend the 

definition of current fee code PC to 

provide that such fee code (and 

corresponding standard rebate of $0.01 

per contract) applies to all Simple 

Customer (i.e., Customer (contra NonCustomer) and Customer (contra 

Customer)) orders that remove liquidity 

in Penny Securities. These rebates 

currently apply to these orders today; 

the proposed amendments to these 

definitions merely reflect the removal of 

Customer (contra Non-Customer) orders 

that add liquidity from fee codes NC 

and PC (and moving such orders to 

proposed fee code CA). The Exchange 

also proposes to increase the standard 

fee for Market Maker orders that remove 

liquidity in Non-Penny Securities (i.e., 

yield fee code NT) from $0.24 to $0.70. 

Customer Volume Tiers 

The Exchange proposes to amend 

Footnote 1 (Customer Volume Tiers), 

applicable to orders yielding fee codes 

PC and NC. Pursuant to Footnote 1 of 

the Fee Schedule, the Exchange 

currently offers four Customer Volume 

Tiers that provide rebates between $0.10 

and $0.21 per contract for qualifying 

customer orders yielding fee codes PC 

and NC where a Member meets required 

criteria. The Exchange proposes to 

amend this Customer Volume Tier 

program to add orders yielding fee code 

CA to the list of qualifying customer 


ddrumheller on DSK120RN23PROD with NOTICES1
88160 Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices 

6 ‘‘ADV’’ means average daily volume calculated 

as the number of contracts added or removed, 

combined, per day. 

7 ‘‘OCV’’ means the total equity and ETF options 

volume that clears in the Customer range at the 

Options Clearing Corporation (‘‘OCC’’) for the 

month for which the fees apply, excluding volume 

on any day that the Exchange experiences an 

Exchange System Disruption and on any day with 

a scheduled early market close. 

8 ‘‘ADAV’’ means average daily added volume 

calculated as the number of contracts added, per 

day. 

9The Exchange proposes to amend this tier rebate 

as described in the table in Footnote 1 and amend 

the amounts of the rebates in the Standard Rates 

table. 

10The Exchange proposes to add this tier rebate 

as described in the table in Footnote 1 and add to 

the rebates in the Standard Rates table. 

11The term ‘‘AIM’’ refers to Automated 

Improvement Mechanism. 

12An Options Member may electronically submit 

for execution in AIM an order it represents as agent 

(‘‘Agency Order’’) against principal interest or a 

solicited order(s) (except for an order for the 

account of any Options Market Maker registered in 

the applicable series on the Exchange) (an 

‘‘Initiating Order’’). See EDGX Options Rule 21.19. 

13 15 U.S.C. 78f(b). 

14 15 U.S.C. 78f(b)(5). 

orders that may be eligible for the 

Customer Volume Tier program. 

The Exchange also proposes to amend 

the required criteria for Tiers 3 and 4. 

Currently, to qualify for Tier 3, a 

Member must have (1) an ADV 6 in 

Customer orders greater than or equal to 

1.00% of average OCV; 7 and (2) an ADV 

in Customer Non-Crossing orders of 

greater than or equal to 0.40% of 

average OCV. To qualify for Tier 4, a 

Member must have (1) an ADV in 

Customer orders greater than or equal to 

0.75% of average OCV; (2) an ADV in 

Customer or Market Maker orders 

greater than or equal to 1.50% of 

average OCV; (3) an ADV in Customer 

Non-Crossing orders greater than or 

equal to 0.50% of average OCV; and (4) 

an ADAV 8 in Customer Non-Crossing 

orders greater than or equal to 0.40% of 

average OCV. 

The Exchange proposes to amend Tier 

3 required criteria to state that a 

Member must have (1) an ADV in 

Customer orders greater than or equal to 

1.00% of average OCV; (2) an ADV in 

Customer Non-Crossing orders of greater 

than or equal to 0.75% of average OCV; 

and (3) an ADAV in Simple Customer 

Non-Crossing orders (i.e., yielding fee 

code CA) greater than or equal to 0.45% 

of average OCV. The Exchange proposes 

to amend Tier 4 required criteria to state 

that a Member must have (1) an ADV in 

Customer orders greater than or equal to 

1.50% of average OCV; and (2) an 

ADAV in Simple Customer NonCrossing orders (i.e., yielding fee code 

CA) greater than or equal to 0.65% of 

average OCV. 

Additionally, the Exchange proposes 

to change the rebate for Tier 4. 

Specifically, the Exchange proposes to 

amend the Tier 4 rebate from $0.21 per 

contract to $0.18 per contract.9 The 

rebates for Tiers 1, 2, and 4 remain 

unchanged. 

Finally, the Exchange proposes to add 

new Customer Volume Tier 5 to provide 

a rebate of $0.22 per contract if a 

Member has (1) an ADV in Customer 

orders of greater than or equal to 2.00% 

of average OCV; (2) an ADAV in Simple 

Customer Non-Crossing orders (i.e., 

yielding fee code CA) greater than or 

equal to 1.25% of average OCV; and (3) 

a QCC agency Volume of greater than or 

equal to 2,000,000 contracts per month, 

with both sides of each transaction 

being Non-Customer, NonProfessional.10

The Exchange believes that the 

proposed changes to the Customer 

Volume Tier program are designed 

overall to incentivize more Customer 

order flow and to direct an increase of 

order flow to the EDGX Options Order 

Book. The Exchange believes that an 

increase in Customer order flow and 

overall order flow to the Exchange’s 

Book creates more trading 

opportunities, which, in turn attracts 

Market Makers. A resulting increase in 

Market Maker activity may facilitate 

tighter spreads, which may lead to an 

additional increase of order flow from 

other market participants, further 

contributing to a deeper, more liquid 

market to the benefit of all market 

participants by creating a more robust 

and well-balanced market ecosystem. 

Supplemental AIM Tiers 

The Exchange proposes to amend the 

Supplemental AIM 11 Tiers set forth in 

Footnote 9 (Automated Improvement 

Mechanism (‘‘AIM’’) Penny Tiers). The 

Exchange currently offers two tiers 

related to Customer volume under 

Footnote 9 applicable to orders yielding 

fee code ‘‘BC’’, which fee code is 

appended to Customer Agency orders 

executed in AIM. The AIM Tiers 

currently provide enhanced rebates of 

$0.09 and $0.10 per contract for 

qualifying orders that yield fee code BC 

where a Member meets the respective 

tier’s volume threshold. 

The Exchange also offers two 

Supplemental AIM Tiers under 

Footnote 9 which provide additional 

rebates (i.e., in addition to the standard 

rebate or enhanced rebates Members 

may receive for Customer Agency orders 

executed in AIM). The tiers are 

applicable to fee code BC and applied 

on an order-by-order basis. 

Supplemental AIM Tier 1 provides an 

additional rebate of $0.02 per contract 

where (i) a Member has an ADV in 

Customer Orders greater than or equal to 

0.50% of average OCV and (ii) the order 

has an Interaction Rate greater than or 

equal to 51% and less than 80%. 

Supplemental AIM Tier 2 provides an 

additional rebate of $0.05 per contract 

where (i) a Member has an ADV in 

Customer Orders greater than or equal to 

0.50% of average OCV and (ii) the order 

has an Interaction Rate greater than or 

equal to 0% and less than 51%. The 

‘‘Interaction Rate’’ of an order refers to 

the percentage of the Agency Order that 

traded against the Initiating Order.12

The Exchange proposes to amend 

Supplemental AIM Tier 1 criteria to 

require that (1) Member has an ADV in 

Customer Orders greater than or equal to 

0.50% of average OCV; and (2) the order 

has an Interaction Rate greater than or 

equal to 51% and less than 70%. The 

Exchange also proposes to amend 

Supplemental AIM Tier 2 criteria to 

require that (1) Member has an ADV in 

Customer Orders greater than or equal to 

0.50% of average OCV; and (2) the order 

has an Interaction Rate greater than or 

equal to 30% and less than 51%. The 

Exchange also proposes to reduce the 

current rebate for Supplemental AIM 

Tier 2 from $0.05 per contract to $0.03 

per contract. 

Finally, the Exchange proposes to add 

new Supplemental AIM Tier 3, which 

would provide an additional rebate of 

$0.05 per contract where (i) Member has 

an ADV in Customer Orders greater than 

or equal to 0.50% of average OCV; and 

(ii) the order has an Interaction Rate 

greater than or equal to 0% and less 

than 30%. 

The proposed changes to the 

Supplemental AIM Tiers are designed to 

incentivize order flow providers to 

continue to route AIM orders to the 

Exchange, notwithstanding the potential 

for such orders to be broken up. 

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.13 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 14 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 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices 88161 

15 Id. 

16 15 U.S.C. 78f(b)(4). 

17Customer (contra Customer) trades that add 

liquidity in Penny and Non-Penny Securities will 

continue to not be subject to fees. See EDGX 

Options Fee Schedule, Fee Codes and Associated 

Fees, Fee Codes TP and TN. 

18See e.g., MEMX Options Exchange Fee 

Schedule, Transactions Fees, which assesses a 

charge of $1.10 for Market Maker orders that 

remove liquidity in Non-Penny Securities. 

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) 15 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,16 which 

requires that Exchange rules provide for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

Members 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. 

Fee Codes 

The Exchange believes its proposed 

adoption of new fee code CA, which 

applies to Customer (contra NonCustomer) orders that add liquidity and 

which provides a rebate of $0.01 per 

contract, and its proposal to amend the 

definition of current fee code NC and PC 

is consistent with Section 6(b)(4) of the 

Act in that the proposed changes are 

reasonable, equitable and not unfairly 

discriminatory. Previously, Customer 

(contra Non-Customer) orders that add 

liquidity were assigned fee code PC or 

NC, depending on whether the order 

was in Penny Securities or Non-Penny 

Securities, respectively, and received a 

rebate of $0.01 per contract. Under the 

proposed changes, Customers executing 

an order in Penny and Non-Penny 

Securities with a Non-Customer on the 

liquidity adding side of orders executed 

in Penny and Non-Penny Securities will 

still be eligible for a rebate of $0.01 per 

contract, merely using a different fee 

code. Thus, the Exchange believes that 

the proposed change will continue to 

incentivize Customer order flow in 

Penny and Non-Penny Securities, which 

may lead to an increase in liquidity on 

the Exchange. An overall increase in 

liquidity benefits all market participants 

by providing more trading 

opportunities, which attracts Market 

Makers. An increase in Market Maker 

activity in turn facilitates tighter 

spreads, which may cause an additional 

corresponding increase in order flow 

from other market participants. The 

Exchange believes the proposed changes 

are equitable and not unfairly 

discriminatory because they will apply 

equally to all liquidity adding sides of 

Customer-to-Non-Customer transactions 

in Penny and Non-Penny Securities, i.e. 

all Customers will continue to receive a 

$0.01 rebate for these transactions. 

Further, the changes to fee codes NC 

and PC are reasonable, as the Exchange 

will, under the proposed rule changes, 

still offer a rebate of $0.01 for Simple 

Customer orders (including both 

Customer (contra Non-Customer) and 

Customer (contra-Customer), as is 

currently the case) that remove liquidity 

in Non-Penny and Penny Securities, 

respectively.17

The Exchange also believes the 

proposed change to increase the 

standard fee for Market Maker orders 

that remove liquidity in Non-Penny 

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

$0.24 to $0.70 is reasonable, equitable, 

and not unfairly discriminatory. The 

Exchange believes the proposed rate 

change is reasonable because, as stated 

above, in order to operate in the highly 

competitive options markets, the 

Exchange and its competing exchanges 

seek to offer similar pricing structures, 

including assessing comparable rates for 

various types of orders. Thus, the 

Exchange believes the proposed rates 

are reasonable as they are generally 

aligned with and competitive with the 

amounts assessed for similar Market 

Maker orders on other options 

exchanges.18 The Exchange also 

believes that amending the standard fee 

amount associated with fee code NT 

represents an equitable allocation of fees 

and is not unfairly discriminatory 

because the fee will continue to 

automatically and uniformly apply to all 

Members’ respective qualifying Market 

Maker orders. 

Customer Volume Tiers 

The Exchange believes the proposed 

changes to the Customer Volume Tier 

program are reasonable because they 

continue to provide opportunities for 

Members to receive higher rebates by 

providing for incrementally increasing 

volume-based criteria they can reach 

for. The Exchange believes the tiers, as 

modified, continue to serve as a 

reasonable means to encourage 

Members to increase their liquidity on 

the Exchange, particularly in connection 

with additional Customer Order flow to 

the Exchange in order to benefit from 

the proposed enhanced rebates. The 

Exchange also notes that any overall 

increased liquidity that may result from 

the proposed tier incentives benefits all 

investors by offering additional 

flexibility for all investors to enjoy cost 

savings, supporting the quality of price 

discovery, promoting market 

transparency and improving investor 

protection. 

The Exchange believes that the 

proposed changes to the Customer 

Volume Tier program represent an 

equitable allocation of fees and is not 

unfairly discriminatory because 

Members will be eligible for these tiers 

and the corresponding enhanced rebates 

will apply uniformly to all Members 

that reach the proposed tier criteria. The 

Exchange believes that a number of 

market participants have a reasonable 

opportunity to satisfy the tiers’ criteria 

as modified. While the Exchange has no 

way of knowing whether this proposed 

rule change would definitively result in 

any particular Member qualifying for 

the tiers as amended, the Exchange 

anticipates at least one Member 

meeting, or being reasonably able to 

meet, the revised Tier 1 criteria; 

approximately three Members being 

reasonably able to meet the revised Tier 

2 criteria; approximately one Member 

being reasonably able to meet the 

revised Tier 3 criteria; approximately 

two Members being reasonably able to 

meet the revised Tier 4 criteria; and 

currently no Members meeting the 

revised Tier 5 criteria. However, the 

proposed tiers, as amended, are open to 

any Member that satisfies the tier’s 

criteria. The Exchange also notes that 

the proposed changes will not adversely 

impact any Member’s pricing or their 

ability to qualify for other rebate tiers. 

Rather, should a Member not meet the 

proposed criteria, the Member will 


ddrumheller on DSK120RN23PROD with NOTICES1
88162 Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices 

19See supra note 3. 

20See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 

21NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

83 (December 9, 2008) (SR–NYSEArca–2006–21)). 

merely not receive the corresponding 

enhanced rebates. 

Supplemental AIM Tiers 

The Exchange believes its proposed 

changes related to the Supplemental 

AIM Tiers are reasonable, equitable and 

not unfairly discriminatory. The 

Exchange believes the proposed changes 

to Supplemental AIM Tiers 1 and 2 for 

orders yielding fee code BC are 

reasonable because the tiers continue to 

provide an enhanced rebate opportunity 

(albeit at a lower amount in the case of 

Supplemental AIM Tier 2), which the 

Exchange believes is still commensurate 

with the amended criteria. The 

Exchange also believes the proposed 

rule change to adopt new Supplemental 

AIM Tier 3 is reasonable because it 

provides an additional opportunity for 

Members to receive enhanced rebates 

for meeting certain thresholds, based on 

the Interaction Rate of the AIM order. 

The Exchange also believes the 

proposed enhanced rebate is 

commensurate with the proposed 

criteria. The proposed rule change is 

equitable and unfairly discriminatory as 

the amended criteria for Supplemental 

AIM Tiers 1 and 2, the amended rebate 

amount for Supplemental AIM Tier 2, 

and new Supplemental AIM Tier 3 

apply uniformly to all Members 

submitting AIM Agency Orders to the 

Exchange. While the Exchange has no 

way of knowing whether this proposed 

rule change would definitively result in 

any particular Member qualifying for 

the tiers, as amended, the Exchange 

anticipates at least six Members 

meeting, or being reasonably able to 

meet, the revised Tier 1 criteria; at least 

six Members meeting, or being 

reasonably able to meet, the revised Tier 

2 criteria; and at least six Members 

meeting, or being reasonably able to 

meet, new Tier 3 criteria. However, the 

proposed tiers are open to any Member 

that satisfies the tiers’ criteria. 

Overall, the Exchange believes the 

proposal encourages the use of AIM. As 

noted, the Exchange believes that the 

proposed changes would incentivize 

Agency Order flow to AIM Auctions, 

notwithstanding the potential for such 

orders to be broken up. Additional 

auction order flow provides market 

participants with additional trading 

opportunities at improved prices. 

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. Particularly, 

the proposed fee code changes apply 

uniformly and automatically to all 

Members’ respective qualifying orders. 

As noted above, under the proposed 

changes, Customers executing an order 

in Penny and Non-Penny Securities 

with a Non-Customer on the liquidity 

adding side of orders executed in Penny 

and Non-Penny Securities will still be 

eligible for a rebate of $0.01 per 

contract, merely using a different fee 

code. Further, the Exchange will, under 

the proposed rule changes, still offer a 

rebate of $0.01 for Simple Customer 

orders (including both Customer (contra 

Non-Customer) and Customer (contraCustomer), as is currently the case) that 

remove liquidity in Non-Penny and 

Penny Securities, respectively. Thus, 

orders assigned to current fee code NC 

and PC will continue to receive the 

same rebate of $0.01, under fee codes 

CA, NC, and PC. Additionally, the 

proposed Customer Volume Tier and 

Supplement AIM Tier changes apply to 

all Members equally in that all Members 

are eligible to achieve the tiers’ 

proposed criteria, have a reasonable 

opportunity to meet the tiers’ proposed 

criteria and will all receive the 

corresponding enhanced rebates 

(existing and as amended) if such 

criteria is met. Overall, the proposed 

change is designed to attract additional 

Customer order flow to the Exchange 

and overall order flow directly to the 

Exchange’s Book. The Exchange 

believes that the modified and new tier 

criteria will incentivize market 

participants to strive to increase such 

order flow to the Exchange to receive 

the corresponding enhanced rebates 

and, as a result, increase trading 

opportunities, attract further Market 

Maker activity, further incentivize the 

provision of liquidity and continued 

order flow to the Book, and improve 

price transparency on the Exchange. 

Greater overall order flow and pricing 

transparency benefits all market 

participants on the Exchange by 

generally providing a cycle of more 

trading opportunities, enhancing market 

quality, and continuing to encourage 

Members to submit order flow and 

continue to contribute towards a robust 

and well-balanced market ecosystem to 

the benefit of all market participants. 

Next, the Exchange 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 that they may participate on and 

direct their order flow, including 16 

other options exchanges and offexchange venues and alternative trading 

systems. Additionally, the Exchange 

represents a small percentage of the 

overall market. Based on publicly 

available information, no single options 

exchange has more than 16% of the 

market share.19 Therefore, no exchange 

possesses significant pricing power in 

the execution of order flow. Indeed, 

participants can readily choose to send 

their orders to other exchange and offexchange venues 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.’’ 20 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’. . . .’’.21 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. 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices 88163 

22 15 U.S.C. 78s(b)(3)(A). 

23 17 CFR 240.19b–4(f). 

24 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(1). 

5OCC’s By-Laws and Rules can be found on 

OCC’s public website: https://www.theocc.com/ 

Company-Information/Documents-and-Archives/ 

By-Laws-and-Rules. 

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 22 and paragraph (f) of Rule 

19b–4 23 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–2023–075 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–2023–075. 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–2023–075 and should be 

submitted on or before January 10, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–27919 Filed 12–19–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99169; File No. SR–OCC– 

2023–008] 

Self-Regulatory Organizations; the 

Options Clearing Corporation; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change Concerning 

Amendments to the Options Clearing 

Corporation’s Collateral Risk 

Management Policy and Margin Policy 

December 14, 2023. 

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

Securities Exchange Act of 1934 

(‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule 

19b–4 thereunder,2 notice is hereby 

given that on December 4, 2023, The 

Options Clearing Corporation (‘‘OCC’’ or 

‘‘Corporation’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared primarily by OCC. OCC filed 

the proposed rule change pursuant to 

Section 19(b)(3)(A)(i) 3 of the Act and 

Rule 19b–4(f)(1) 4 thereunder, such that 

the proposed rule change was 

immediately effective upon filing with 

the Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

This proposed rule change would 

amend OCC’s Collateral Risk 

Management Policy (‘‘CRM Policy’’) and 

Margin Policy (collectively, ‘‘OCC 

Policies’’). The proposed changes are 

designed to update the OCC Policies to 

better align the descriptions therein 

with OCC’s current practices, delete 

extraneous information, and make other 

non-substantive clarifying, conforming 

and administrative changes. 

The proposed changes to the OCC 

Policies are included in confidential 

Exhibits 5A and 5B to File No. SR– 

OCC–2023–008. Material proposed to be 

added to the OCC Policies as currently 

in effect is underlined and material 

proposed to be deleted is marked in 

strikethrough text. All capitalized terms 

not defined herein have the same 

meaning as set forth in the OCC ByLaws and Rules.5

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, 

OCC 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. OCC has prepared 

summaries, set forth in sections (A), (B), 

and (C) below, of the most significant 

aspects of these statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

As the sole clearing agency for 

standardized equity options listed on 

national securities exchanges registered 

with the Commission (‘‘listed options’’), 

OCC is exposed to certain risks, 

including credit risk arising from its 

relationships with the Clearing 

Members for which OCC becomes the 

buyer to every seller and the seller to 

ever buyer with respect to listed 

options. In order to manage 

counterparty credit risk and mitigate 

related systemic risks, OCC requires 

Clearing Members to collateralize 

financial obligations that result from 

maintaining options, futures and stock 

loan positions at OCC. 

OCC maintains policies filed with the 

Commission as OCC rules that are 

designed to address such credit risk, 


ddrumheller on DSK120RN23PROD with NOTICES1