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[Federal Register Volume 89, Number 228 (Tuesday, November 26, 2024)]
[Notices]
[Pages 93374-93376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27616]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101669; File No. SR-CboeEDGX-2024-076]

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

November 20, 2024.
    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 November 12, 2024, Cboe EDGX Exchange, Inc. (``Exchange'' or 
``EDGX'') 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 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
    Effective November 1, 2024, the Exchange proposes to amend its EDGX 
Fee Schedule applicable to its equities trading platform. By 
implementing a remove fee (as opposed to a rebate) for fee code, AA, 
and removing fee codes, I and RR.\3\
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    \3\ The Exchange initially filed the proposed fee change on 
November 1, 2024 (SR-CboeEDGX-2024-073). On November 12, 2024, the 
Exchange withdrew that filing and submitted this filing.
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Fee Codes
    The Exchange proposes to implement a remove fee for fee code, AA. 
The proposed changes are as follows:
     For securities priced above $1.00,\4\ fee code AA is 
appended to orders that are routed to EDGA using the ALLB \5\ routing 
strategy. Currently, orders appended with fee code AA receive a rebate 
of $0.0016.
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    \4\ The Exchange notes for securities priced below $1.00, there 
is no fee or rebate for removing liquidity from EDGA using the ALLB 
routing strategy.
    \5\ ALLB is a routing option under which an order checks the 
System for available shares and is then sent to Cboe BZX Exchange, 
Inc., Cboe BYX Exchange, Inc., and/or Cboe EDGA Exchange, Inc., in 
accordance with the System routing table. If shares remain 
unexecuted after routing, they are posted on the EDGX Book, unless 
otherwise instructed by the User. See Rule 11.11(g)(7).
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    The Exchange now proposes to amend fee code, AA, as follows:
     For securities priced above $1.00, fee code AA will 
continue to be appended to orders that are routed to EDGA using the 
ALLB routing strategy. However, orders appended with fee code AA will 
now pay a fee of $0.0030. The Exchange does not propose to add a fee or 
rebate for removing liquidity for securities priced below $1.00.
    The Exchange also proposes to remove fee codes, I and RR. For 
orders in securities priced at $1.00 or above,

[[Page 93375]]

orders routed to EDGA using the routing option, ROUC, and appended with 
fee code I, received a rebate \6\ of $0.00160 for removing liquidity 
from the EDGA Book.\7\ However, effective November 1, 2024,\8\ EDGA 
will be transitioning from an inverted fee model \9\ to a maker taker 
fee model.\10\ As such, orders routed to EDGA that remove liquidity 
will now be charged a remove fee for removing liquidity from the EDGA 
Book. Therefore, the Exchange has elected to discontinue this fee code 
as Members that utilize the ROUC \11\ strategy, and append their orders 
with fee code, I, will no longer receive a rebate for removing 
liquidity on EDGA, and EDGX does not desire to assess such orders a 
fee.
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    \6\ The Exchange notes that there is no fee or rebate for 
removing liquidity for securities priced below $1.00.
    \7\ The term ``EDGA Book'' shall mean the Systems' electronic 
file of order. See Rule 1.5(d).
    \8\ See SR-CboeEDGA-2024-042; see also, SR-CboeEDGA-2024-045.
    \9\ The inverted fee model is a pricing structure in which a 
market, such as an exchange, charges its participants a fee to 
provide liquidity in securities, and provides a rebate to 
participants that remove liquidity in securities. See SEC Market 
Structure Advisory Committee, Memorandum on ``Maker-Taker Fees on 
Equities Exchanges,'' October 20, 2015, available at: https://www.sec.gov/spotlight/emsac/memo-maker-taker-fees-on-equities-exchanges.pdf.
    \10\ The maker-taker fee model is a pricing structure in which a 
market, such as an exchange, generally pays its members a per share 
rebate to provide (i.e., ``make'') liquidity in securities and 
assesses on them a fee to remove (i.e., ``take'') liquidity. Id.
    \11\ ROUC is a routing option under which an order checks the 
System for available shares and then is sent to destinations on the 
System routing table, Nasdaq OMX BX, and NYSE. If shares remain 
unexecuted after routing, they are posted on the EDGX Book, unless 
otherwise instructed by the User. See Rule 11.11(g)(1).
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    Similarly, orders routed to EDGA using routing option, DIRC,\12\ 
received a rebate of $0.00160 for removing liquidity from the EDGA 
Book. Again, because EDGA will be transitioning to a maker-taker fee 
model, orders removing liquidity from the EDGA Book will no longer 
receive a rebate, but instead will be charged a remove fee. Therefore, 
the Exchange has chosen to discontinue this fee code, as users of the 
DIRC routing option that append their order with fee code, RR, and 
direct their orders to EDGA, will no longer receive a rebate for 
removing liquidity, and EDGX does not desire to assess such orders a 
fee.
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    \12\ DIRC is a routing option under which an order checks the 
System for available shares, and then utilizes the DRT routing 
option to access alternative trading systems, as well as directed 
immediate or cancel/directed intermarket sweep orders (ISO) to 
access venues specified by the Member.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
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 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 as well as Section 6(b)(4) \16\ 
as it is designed to provide for the equitable allocation of reasonable 
dues, fees and other charges among its Members and other persons using 
its facilities.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ Id.
    \16\ 15 U.S.C. 78f(b)(4).
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    Adjusting fee code AA from paying a rebate to assessing a removal 
fee, is necessary to reflect the economics of a maker-taker fee model. 
Prior to the November 1, 2024, orders entered onto EDGX, that were 
appended with fee code, AA, and were routed to EDGA using routing 
option ALLB, received a rebate \17\ of $0.0016 for removing liquidity 
from the EDGA Book. However, given EDGA's transition to a maker-taker 
fee model, orders that remove liquidity will now need to pay a 
liquidity removal fee, rather than receive a rebate. Accordingly, 
removal of the current $0.00160 rebate associated with fee code, AA, 
and implementation of a $0.0030 remove fee is appropriate and 
consistent with the economics of a maker-taker model, as well as the 
expectations of Members that remove liquidity from EDGA (i.e., Members 
would expect to pay a fee to remove liquidity). Moreover, the proposed 
fee is not unfairly discriminatory because it applies to all Members 
equally, in that all Members will pay the same fee for orders routed to 
EDGA using the ALLB routing strategy, and appended with fee code, AA.
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    \17\ The Exchange notes that prior to November 1, 2024, there is 
no fee or rebate for removing liquidity from EDGA using routing 
option, ALLB, for securities priced below $1.00. Moreover, the 
Exchange is not proposing to add a fee or rebate for removing 
liquidity from EDGA using routing strategy, ALLB, for securities 
priced below $1.00.
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    The Exchange further believes that its proposal to now charge a fee 
to orders appended with the fee code, AA, is reasonable, equitable, and 
consistent with the Act because such change is designed to decrease the 
Exchange's expenditures with respect to transaction pricing in order to 
offset some of the costs associated with the Exchange's current pricing 
structure, which provides various rebates for liquidity-adding orders, 
and the Exchange's operations generally, in a manner that is consistent 
with the Exchange's overall pricing philosophy of encouraging added 
liquidity. Moreover, the proposed fee ($0.0030 per share for securities 
priced above $1.00) is reasonable and appropriate because it is 
consistent with EDGA's passthrough fee of $0.0030,\18\ and the remove 
fee assessed to the Exchange by other trading venues.\19\
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    \18\ See Cboe U.S. Equities Fee Schedules, EDGA Equities, 
``Standard Rates--Removing Liquidity'' is $0.0030.
    \19\ NYSE Arca charges a removal fee of $0.0030. See Section 
III--Standard Rates--Transactions (applicable when Tier Rates do not 
apply), Removing Liquidity, pg. 3, available at: https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf; NYSE charges a removal fee of 
$0.0030 for orders that remove midpoint liquidity. See NYSE Stock 
Exchange Price List, ``Equity per Share Charge--per transaction--MPL 
orders that remove liquidity from the NYSE (Adding Tier Credits do 
not apply) and with no Retail Modifier, as defined in Rule 13 
(``Retail Modifier'')), pg. 5, available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf; Nasdaq charges a 
removal fee of $0.0030. See Fees to Remove Liquidity, Shares 
Executed at or above $1.00, available at: https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
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    The Exchange also believes that its proposal to remove fee codes I 
and RR, from the Fee Schedule, is reasonable, equitable, and not 
unfairly discriminatory as it does not change the fees or rebates 
assessed by the Exchange. Rather, these proposed changes merely remove 
fee codes that the Exchange no longer desires to support because EDGA's 
transition to a maker-taker fee model would result in Members that 
utilize these fee codes being assessed a fee for removing liquidity, 
and this is contrary to what Members would expect when utilizing ROUC 
and DIRC, which are routing strategies typically used to achieve low-
cost executions when removing liquidity. Moreover, the Exchange is not 
required to offer fee codes I and RR to its Members. Therefore, the 
proposed rule change is reasonably designed to update the Fee Schedule 
to accurately reflect the Exchange's current product

[[Page 93376]]

offerings and is designed to reduce any potential confusion regarding 
the routing of orders from EDGX to EDGA, using routing options ROUC or 
DIRC.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act because the proposed rule 
change merely updates the Fee Schedule to reflect that fee code, AA, is 
now attached to a passthrough fee rather than payment of a rebate, as 
well as remove fee codes that the Exchange no longer wishes to, nor is 
required to, maintain. In this regard, the proposed changes are 
necessary and appropriate because they are designed to make the Fee 
Schedule more accurate and to reduce any potential confusion without 
having any impact on competition.

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 \20\ and paragraph (f) of Rule 19b-4 \21\ 
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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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 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-CboeEDGX-2024-076 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-2024-076. 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-2024-076 and should 
be submitted on or before December 17, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-27616 Filed 11-25-24; 8:45 am]
BILLING CODE 8011-01-P
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