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[Federal Register Volume 89, Number 213 (Monday, November 4, 2024)]
[Notices]
[Pages 87706-87708]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25536]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101465; File No. SR-CBOE-2024-048]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fee Schedule

October 29, 2024.
    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 October 18, 2024, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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 
temporary 20% discount on fees assessed to Exchange Trading Permit 
Holders and non-Trading Permit Holders that purchase $20,000 or more of 
ad hoc purchases of CBOE Options Historical Depth Data (``Historical 
Depth Reports''), effective October 18, 2024 through December 31, 2024.
    By way of background, the Exchange currently makes available for 
purchase Depth Data, which is a daily archive of the Exchange's depth 
of book real-time feed, which provides depth-of-book quotations and 
execution information based on options orders entered into the System. 
The Exchange also offers Historical Depth Data, which offers such data 
on a historical basis, i.e., T+1 or later. The Historical Depth 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.
    Cboe LiveVol, LLC (``LiveVol''), a wholly owned subsidiary of the 
Exchange's parent company, Cboe Global Markets, Inc., makes the 
Historical Depth Report available for purchase to Users on the LiveVol 
DataShop website (datashop.cboe.com). The Historical Depth Data is 
available for purchase to Trading Permit Holders and non-Trading Permit 
Holders; the Exchange charges a fee per month of historical data of 
$1,500. The Historical Depth Report provided on a historical basis is 
only provided to data recipients for internal use only, and thus, no 
redistribution will be permitted. The Exchange notes that the 
Historical Depth Report is subject to direct competition from other 
exchanges, as other exchanges offer similar products for a fee.\3\
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    \3\ See, e.g., https://www.nasdaqtrader.com/Trader.aspx?id=DPPriceListOptions#nom; and https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf.
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    The Exchange and affiliated equities and options exchanges (i.e., 
Cboe C2 Exchange, Inc. (``C2 Options''), Cboe EDGX Exchange, Inc. 
(``EDGX''), Cboe BYX Exchange, Inc. (``BYX''), Cboe BZX Exchange, Inc. 
(``BZX''), and Cboe EDGA Exchange, Inc. (``EDGA'') (collectively, 
``Affiliates'') also offer similar data products.\4\ Particularly,

[[Page 87707]]

each of the Exchange's Affiliates offer a daily and historical archive 
of their depth of book real-time feed with execution information based 
on their trading activity that is substantially similar to the 
information provided by the Exchange through its Depth Data products.
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    \4\ See, for example, EDGX Fee Schedule, BZX Fee Schedule, BYX 
Fee Schedule.
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    The Exchange proposes to provide a temporary pricing incentive 
program in which Trading Permit Holders or non-Trading Permit Holders 
that purchase Historical Depth Reports will receive a percentage fee 
discount where specific purchase thresholds are met. Specifically, the 
Exchange proposes to provide a temporary 20% discount for ad-hoc 
purchases of Historical Depth Data of $20,000 or more.\5\ 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 October 18, 2024, with the program remaining in effect 
through December 31, 2024. The Exchange also notes that it previously 
adopted similar discount programs for other historical data products 
offered by the Exchange.\6\
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    \5\ 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).
    \6\ See Securities Exchange Act Release No. 99028 (November 28, 
2023), 88 FR 84002 (December 1, 2023) (SR-CBOE-2023-061) and 
Securities Exchange Act Release No. 100370 (June 18, 2024), 89 FR 
53148 (June 25, 2024) (SR-CBOE-2024-025).
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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.\7\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \8\ 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) \9\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Id.
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``SROs'') and broker-dealers increased authority and 
flexibility to offer new and unique market data to the public. It was 
believed that this authority would expand the amount of data available 
to consumers, and also spur innovation and competition for the 
provision of market data. The Exchange believes that the proposed fee 
changes will further broaden the availability of U.S. options market 
data to investors consistent with the principles of Regulation NMS. The 
Exchange believes the dissemination of historical depth of book data 
via Historical Depth Reports benefits investors through increased 
transparency and may promote better informed trading, as well as 
research and studies of the options 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 same type of data content through 
similar reports.\10\
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    \10\ See supra note 4.
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    The Exchange also operates in a highly competitive environment. 
Indeed, there are currently 17 registered options exchanges that trade 
options. Based on publicly available information, no single options 
exchange has more than 17% of the market share.\11\ 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.'' \12\ Making similar data products available to 
market participants fosters competition in the marketplace, and 
constrains the ability of exchanges to charge supracompetitive fees. In 
the event that a market participant views one exchange's data product 
as more or less attractive than the competition they can and do switch 
between similar products. The proposed fees are a result of the 
competitive environment, as the Exchange seeks to adopt fees to attract 
purchasers of Historical Depth Reports.
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    \11\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (October 1, 2024), available at https://markets.cboe.com/us/options/market_statistics/.
    \12\ 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 Depth Reports is 
reasonable because such purchasers would receive a 20% discount for 
purchasing $20,000 or more worth of Historical Depth Reports. The 
Exchange believes the proposed discount is reasonable as it will give 
purchasers the ability to use and test the Historical Depth Reports at 
a discounted rate, prior to purchasing additional months or a monthly 
subscription, and will therefore encourage and promote users to 
purchase the Historical Depth Reports. Further, the proposed discount 
is intended to promote increased use of the Exchange's Historical Depth 
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 Trading Permit Holders and non-
Trading Permit Holders who purchase Historical Depth Reports. Lastly, 
the purchase of this data product is discretionary and not compulsory. 
Indeed, no market participant is required to purchase the Historical 
Depth Reports, and the Exchange is not required to make Historical 
Depth 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. As noted above, the Exchange has 
previously adopted this discount program at other times.\13\
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    \13\ See Securities Exchange Act Release No. 99028 (November 28, 
2023), 88 FR 84002 (December 1, 2023) (SR-CBOE-2023-061) and 
Securities Exchange Act Release No. 100370 (June 18, 2024), 89 FR 
53148 (June 25, 2024) (SR-CBOE-2024-025).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange operates in a 
highly competitive environment in which the Exchange must continually 
adjust its fees to remain competitive. Because competitors are free to 
modify their own

[[Page 87708]]

fees in response, including the adoption of similar discounts to those 
fees, the Exchange believes that the degree to which fee changes 
(including discounts and rebates) in this market may impose any burden 
on competition is extremely limited. As discussed above, the Exchange's 
Historical Depth Reports offering is subject to direct competition from 
several other options exchanges that offer similar data products. 
Moreover, purchase of Historical Depth 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 Depth 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 \14\ and paragraph (f) of Rule 19b-4 \15\ 
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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CBOE-2024-048 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-CBOE-2024-048. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CBOE-2024-048 and should be 
submitted on or before November 25, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-25536 Filed 11-1-24; 8:45 am]
BILLING CODE 8011-01-P
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