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[Federal Register Volume 89, Number 225 (Thursday, November 21, 2024)]
[Notices]
[Pages 92235-92238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27215]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101634; File No. SR-CBOE-2024-050]

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

November 15, 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 November 1, 2024, Cboe Exchange, Inc. (the

[[Page 92236]]

``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 Fees 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 amend its Fees Schedule, effective 
November 1, 2024.
    The Exchange first proposes to amend a fee related to transactions 
in Mini-SPX Index (``XSP'') options, as set forth in the Rate Table for 
All Products Excluding Underlying Symbol List A. Specifically, the 
proposed rule change amends fee code MY, appended to all Market-Maker 
(capacity ``M'') in XSP contra to non-customers that remove liquidity 
and that are executed electronically and assesses a fee of $0.30 per 
contract, to assess a fee of $0.50 per contract.
    Next, the Exchange proposes clarifying changes to fees related to 
certain orders and auction responses executed in S&P 500 Index 
(``SPX''), SPX Weekly (``SPXW''), S&P 500 ESG Index (``SPESG'') and 
Cboe Volatility Index (``VIX'') options in the Automated Improvement 
Mechanism (``AIM'') Auction.
    By way of background, AIM includes functionality in which a Trading 
Permit Holder (``TPH'') (an ``Initiating TPH'') may electronically 
submit for execution an order it represents as agent on behalf of a 
customer,\3\ broker dealer, or any other person or entity (``Agency 
Order'') against any other order it represents as agent, as well as 
against principal interest in AIM (an ``Initiating Order''), provided 
it submits the Agency Order for electronic execution into an AIM 
Auction.\4\ The Exchange may designate any class of options traded on 
Cboe Options as eligible for AIM. The Exchange notes that all Users, 
other than the Initiating TPH, may submit responses to an Auction 
(``AIM Responses''). AIM Auctions take into account AIM Responses to 
the applicable Auction as well as contra interest resting on the Cboe 
Options Book at the conclusion of the Auction (``unrelated orders''), 
regardless of whether such unrelated orders were already present on the 
Book when the Agency Order was received by the Exchange or were 
received after the Exchange commenced the applicable Auction. If 
contracts remain from one or more unrelated orders at the time the 
Auction ends, they are considered for participation in the AIM order 
allocation process.
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    \3\ The term ``customer'' means a Public Customer or a broker-
dealer. The term ``Public Customer'' means a person that is not a 
broker-dealer. See Rule 1.1.
    \4\ See Rule 5.37 (AIM); Rule 5.38 (Complex AIM); and Rule 5.73 
(FLEX AIM).
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    Certain AIM-related surcharges under the Rate Table for Underlying 
Symbol List A apply when the Exchange is operating in a hybrid 
environment (i.e., the trading floor is operable). Specifically, the 
SPX AIM Hybrid Surcharge of $0.50 per contract applies to all Joint 
Back-Office (capacity ``J''), Market-Maker (capacity ``M''), Broker-
Dealer (capacity ``B''), Non-TPH Market-Maker (capacity ``N'') and 
Professional (capacity ``U'') (collectively, ``Non-Customers) orders in 
SPX/SPXW options executed in AIM, while the SPX AIM Hybrid Surcharge of 
$0.39 per contract applies to all Clearing TPHs (capacity ``F'') and 
for Non-Clearing TPH Affiliates (capacity ``L'') (collectively, 
``Firms'') orders in SPX/SPXW options executed in AIM. The SPX AIM 
Hybrid Originator Surcharge of $0.10 per contract applies to all SPX/
SPXW Agency/Primary orders. Footnote 26 is appended to the 
aforementioned surcharges and provides that the SPX AIM Hybrid 
Surcharges, including the Originator Surcharge, apply only to SPX/SPXW 
orders executed in AIM and C-AIM during Regular Trading Hours (``RTH'') 
when the Exchange is operating in a hybrid environment (i.e., the 
trading floor is operable). Footnote 26 further provides the SPX AIM 
Hybrid Surcharge will apply to all SPX/SPXW AIM Agency/Primary, Contra 
and Response orders; and the SPX AIM Hybrid Originator Surcharge will 
apply to all SPX/SPXW Agency/Primary orders and such fee will be 
invoiced to the executing TPH.\5\
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    \5\ See Securities Exchange Act Release No. 91252 (March 3, 
2021), 86 FR 13598 (March 9, 2021) (SR-CBOE-2021-021[sic]), wherein 
the Exchange adopted these surcharges.
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    In contrast, the Exchange notes that the Rate Table for Underlying 
Symbol List A includes the following fees, which apply when the 
Exchange trading floor is inoperable: AIM Response Surcharge Fee (for 
SPX/SPXW and SPESG) of $0.05 per contract, AIM Contra Surcharge Fee 
(for SPX/SPXW and SPESG) of $0.10 per contract, and AIM Agency/Primary 
Surcharge Fee (for SPX/SPXW) of $0.10 per contract and (for VIX) of 
$0.04 per contract.\6\
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    \6\ See Securities Exchange Act Release No. 88883 (May 15, 
2020), 85 FR 31012 (May 21, 2020) (SR-CBOE-2020-045), wherein the 
Exchange adopted the AIM Contra Surcharge and the AIM Response 
Surcharge. See also Securities Exchange Act Release No. 88426 (March 
19, 2020), 85 FR 16978 (March 25, 2020) (SR-CBOE-2020-021), wherein 
the Exchange adopted the AIM Execution Surcharge for SPX/SPXW/VIX 
AIM Agency/Primary Orders (later re-named the AIM Agency/Primary 
Surcharge Fee).
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    Each of the aforementioned fees has appended to it Footnote 12, 
which governs pricing changes in the event the Exchange trading floor 
becomes inoperable. Particularly, in the event the trading floor 
becomes inoperable, the Exchange will continue to operate in a screen-
based only environment using a floorless configuration of the System 
that is operational while the trading floor facility is inoperable. The 
Exchange will operate using that configuration only until the 
Exchange's trading floor facility becomes operational. Open outcry 
trading will not be available in the event the trading floor becomes 
inoperable.
    The Exchange proposes to amend the titles of the AIM Response 
Surcharge Fee, the AIM Contra Surcharge Fee, and the AIM Agency/Primary 
Surcharge Fee to include ``(Trading Floor Inoperable)'', to further 
distinguish between when the

[[Page 92237]]

various surcharges would be applicable.\7\
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    \7\ As part of the proposed rule change, the Exchange proposes 
to move the AIM-related surcharges applicable when the Exchange 
trading floor is inoperable to be listed below the AIM-related 
surcharges applicable when the Exchange is operating in its normal 
hybrid environment.
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    The Exchange also proposes to amend Footnote 12, to provide clarity 
as to when such changes would apply. As noted above, in the event the 
trading floor becomes inoperable, the Exchange will continue to operate 
in a screen-based only environment using a floorless configuration of 
the System that is operational while the trading floor facility is 
inoperable. To avoid confusion, since the Exchange also operates a 
screen-based only environment during its Global Trading Hours (``GTH'') 
trading session, the Exchange propose to amended Footnote 12 to specify 
that the Exchange will apply the pricing changes in the event the Cboe 
Options trading floor becomes inoperable and the Exchange operates in a 
screen-based only environment during RTH, for the duration of the time 
the Exchange operates in a screen-based only environment during RTH (as 
well as for the Curb session immediately following a RTH trading 
session in which the Cboe Options trading floor is inoperable and the 
Exchange operates in a screen-based only environment). The Exchange 
also propose to add references throughout the footnote to note that 
such pricing changes apply when the Exchange operates in a screen-based 
only environment during RTH.
    The Exchange also proposes to amend Footnote 26 to specify that the 
SPX AIM Hybrid Surcharges, including the Originator Surcharge, apply 
only to SPX/SPXW Orders executed in AIM (and C-AIM) during RTH and Curb 
when the Exchange is operating in a hybrid environment (i.e., the 
trading floor is operable).
    Finally, the Exchange also proposes to rename certain fees under 
the Clearing Trading Permit Holder Fee Cap section of the Fees 
Schedule. Specifically, the Exchange proposes to rename ``AIM 
Facilitation Contra Order'' to ``AIM Contra Order'' and to rename ``AIM 
Solicitation Contra Order'' to ``SAM Contra Order'', to more accurately 
reflect terminology used by the Exchange throughout the Fees Schedule 
and within the Rulebook.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\8\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \9\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \10\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange also believes the proposed rule 
change is consistent with Section 6(b)(4) of the Act,\11\ which 
requires that Exchange rules provide for the equitable allocation of 
reasonable dues, fees, and other charges among its TPHs and other 
persons using its facilities.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
    \11\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed fee change for Market-Maker 
orders in XSP that are contra to non-customers that remove liquidity 
and that are executed electronically is reasonable, equitable and not 
unfairly discriminatory. Specifically, the Exchange believes the 
proposed change to the fee for Market-Maker orders in XSP contra to 
non-customers that remove liquidity and that are executed 
electronically is reasonable. The proposed fee, in general, aligns with 
current fees for other types of orders in XSP, namely Clearing Trading 
Permit Holder Proprietary XSP orders contra to non-customers that 
remove liquidity and are executed electronically (which yield fee code 
XB). The Exchange believes that the changes are reasonable and that the 
fee, even as amended, will continue to incentivize TPHs to send 
additional Market-Maker orders to the Exchange.
    The Exchange believes that the proposed fee change to the fee for 
Market-Maker orders in XSP contra to non-customers that remove 
liquidity and that are executed electronically is equitable and not 
unfairly discriminatory because the proposed fee will apply 
automatically and uniformly to all applicable Market-Maker orders in 
XSP which yield fee code MY.
    Additionally, the Exchange believes the clarifying changes to the 
Fees Schedule will remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, 
will protect investors and the public interest. Specifically, by 
amending the names of fees related to certain orders and auction 
responses executed in SPX/SPXW, SPESG and VIX via AIM to better 
describe when such fees are applicable, the proposed change is designed 
to add clarity within the Fees Schedule. Similarly, by renaming certain 
fees under the Clearing Trading Permit Holder Fee Cap section of the 
Fees Schedule to more accurately reflect terminology used by the 
Exchange throughout the Fees Schedule and within the Rulebook, the 
proposed change is designed to mitigate any potential confusion 
resulting from outdated terminology. Overall, the changes are intended 
to add clarity to the Fees Schedule, thereby mitigating any potential 
confusing, to the benefit of investors. The Exchange notes that the 
proposed clarifying changes do not change the fees (or applicability of 
such fees).

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 proposed rule change related to XSP fee code MY will 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed fees will apply automatically and uniformly to all applicable 
Market-Maker orders in XSP which yield fee code MY. The Exchange does 
not believe the proposed clarifying rule changes will impose any burden 
on intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as the changes will not result 
in any practical changes to the fees, but rather are being added to 
eliminate potential confusion.
    The Exchange does not believe that the proposed rule changes will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed rule change related to a XSP fee code applies to Exchange 
proprietary products, which are traded exclusively on the Exchange. To 
the extent that the proposed changes

[[Page 92238]]

make Cboe Options a more attractive marketplace for market participants 
at other exchanges, such market participants are welcome to become Cboe 
Options market participants. The clarifying rule changes are not 
intended to have any impact on competition, as they make no substantive 
change to the Fees Schedule and will have no impact on trading on the 
Exchange.

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 \12\ and paragraph (f) of Rule 19b-4 \13\ 
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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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-2024-050 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-2024-050. 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-2024-050 and should be 
submitted on or before December 12, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024-27215 Filed 11-20-24; 8:45 am]
BILLING CODE 8011-01-P
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