[Federal Register Volume 83, Number 8 (Thursday, January 11, 2018)]
[Notices]
[Pages 1391-1396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-00309]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82450; File No. SR-CboeBZX-2017-019]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Related to 
Market Data Fees

January 5, 2018.
    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 28, 2017, Cboe BZX Exchange, Inc. (the

[[Page 1392]]

``Exchange'' or ``BZX'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the 
Exchange. The Exchange has designated the proposed rule change as one 
establishing or changing a member due, fee, or other charge imposed by 
the Exchange under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-
4(f)(2) thereunder,\4\ which renders the proposed rule change effective 
upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend the Market Data section of 
its fee schedule to lower the Internal Distribution \5\ fees and to 
adopt per User fees for two market data products, the Cboe One Summary 
Feed and the ETF Implied Liquidity Feed.
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    \5\ A ``Distributor'' is defined as ``any entity that receives 
the Exchange Market Data product directly from the Exchange or 
indirectly through another entity and then distributes it internally 
or externally to a third party.'' See the Exchange's fee schedule 
available at http://markets.cboe.com/us/equities/membership/fee_schedule/bzx/. An ``Internal Distributor'' is defined as ``a 
Distributor that receives the Exchange Market Data product and then 
distributes that data to one or more Users within the Distributor's 
own entity.'' Id.
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    The text of the proposed rule change is available at the Exchange's 
website at www.markets.cboe.com, at the principal office of the 
Exchange, 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 parts 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 the Market Data section of its fee 
schedule to lower the fee for Internal Distribution and to adopt 
separate fees for Professional \6\ and Non-Professional Users \7\ for 
the Cboe One Summary Feed and the ETF Implied Liquidity Feed.\8\
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    \6\ A ``Professional User'' is defined as ``any User other than 
a Non-Professional User.'' See the Exchange's fee schedule available 
at http://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
    \7\ A ``Non-Professional User'' is currently defined as ``a 
natural person who is not: (i) Registered or qualified in any 
capacity with the Commission, the Commodity Futures Trading 
Commission, any state securities agency, any securities exchange or 
association, or any commodities or futures contract market or 
association; (ii) engaged as an ``investment adviser'' as that term 
is defined in Section 202(a)(11) of the Investment Advisers Act of 
1940 (whether or not registered or qualified under that Act); or 
(iii) employed by a bank or other organization exempt from 
registration under federal or state securities laws to perform 
functions that would require registration or qualification if such 
functions were performed for an organization not so exempt.'' Id. 
See SR-CboeBZX-2017-016 (filed December 15, 2017) (amending the 
definition of Non-Professional User to harmonize it with that of its 
affiliate exchanges, Cboe Exchange, Inc. and C2 Exchange, Inc. as of 
January 2, 2018).
    \8\ This Exchange initially filed the proposed rule change on 
December 15, 2017 (SR-CboeBZX-2017-017). On December 18, 2018 the 
Exchange withdrew SR-CboeBZX-2017-017 and submitted this filing.
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Cboe One Feed
    The Cboe One Feed is an optional data feed that disseminates, on a 
real-time basis, the aggregate best bid and offer (``BBO'') of all 
displayed orders for securities traded on BZX and its affiliated 
exchanges \9\ and for which they report quotes under the Consolidated 
Tape Association (``CTA'') Plan or the Nasdaq/UTP Plan.\10\ The Cboe 
One Feed also contains the individual last sale information for the 
Cboe Equity Exchanges (collectively with the aggregate BBO, the ``Cboe 
One Summary Feed''). In addition, the Cboe One Feed contains optional 
functionality which enables recipients to receive aggregated two-sided 
quotations from the Cboe Equity Exchanges for up to five (5) price 
levels (``Cboe One Premium Feed'').
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    \9\ BZX's affiliated exchanges are Cboe EDGA Exchange, Inc. 
(``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX''), and Cboe BYX 
Exchange, Inc. (``BYX'', together with EDGX, EDGA, and BZX, the 
``Cboe Equity Exchanges'').
    \10\ See Exchange Rule 11.22(j). See also Securities Exchange 
Act Release No. 73918 (December 23, 2014), 79 FR 78920 (December 31, 
2014) (File Nos. SR-EDGX-2014-25; SR-EDGA-2014-25; SR-BATS-2014-055; 
SR-BYX-2014-030) (Notice of Amendment No. 2 and Order Granting 
Accelerated Approval to Proposed Rule Changes, as Modified by 
Amendments Nos. 1 and 2, to Establish a New Market Data Product 
called the Cboe One Feed) (``Cboe One Approval Order'').
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    The Exchange proposes to amend its fee schedule to lower the fee 
for Internal Distribution for the Cboe One Summary Feed and to adopt 
separate fees for Professional and Non-Professional Users.\11\ The 
Exchange does not propose to amend the fees for the Cboe One Premium 
Feed.
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    \11\ The Exchange also proposes a non-substantive, immaterial 
change to the fee table headings to conform to other heading within 
the Market Data Section of the fee schedule. In particular, the 
Exchange proposes to change the term ``Distributor'' to 
``Distribution'' in both the Internal Distributor and External 
Distributor headings under the Cboe One Feed.
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    Distribution Fees. Currently, each Internal Distributor that 
receives the Cboe One Summary Feed is charged a fee of $10,000 per 
month. The Exchange now proposes to lower the fee for Internal 
Distribution to $1,500 per month.
    User Fees. Like it does today for External Distributors, the 
Exchange proposes to adopt per User fees for Internal Distributors that 
receive the Cboe One Summary Feed. The Exchange currently charges 
External Distributors that redistribute the Cboe One Summary Feed 
different fees for their Professional Users and Non-Professional Users. 
Those fees are $10.00 per month for each Professional Users and $0.25 
per month for each Non-Professional Users. To date, the Exchange has 
not charged per User fees to Internal Distributors for the Cboe One 
Summary Feed. To offset the proposed reduction to the monthly Internal 
Distribution fee, the Exchange proposes to adopt per User fees for 
Internal Distribution, the amounts of each fee would be the same as the 
per User fees currently charged to External Distributors described 
above.
    The Exchange also proposes to extend the current $50,000 per month 
Enterprise Fee available to External Distributors of the Cboe One 
Summary Feed to Internal Distributors. In lieu of per User fees, the 
Enterprise fee will permit Internal Distributors who redistribute the 
Cboe One Summary Feed to an unlimited number of internal Professional 
and Non-Professional Users for a set fee of $50,000 per month. For 
example, if an Internal Distributor had 15,000 Professional Users who 
each receive the Cboe One Summary Feed at $10.00 per month, then that 
Internal Distributor will pay $150,000 per month in Professional Users 
fees. Under the proposed Enterprise Fee, the Internal Distributor will 
pay a flat fee of $50,000 for an unlimited number of internal

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Professional and Non-Professional Users of the Cboe One Summary Feed. 
An Internal Distributor that pays the Enterprise Fee will not have to 
report its number of such Users (as set forth below) on a monthly 
basis. However, every six months, an Internal Distributor must provide 
the Exchange with a count of the total number of natural person users 
of each product, including both Professional and Non-Professional 
Users. Like for External Distributors, the Enterprise Fee for Internal 
Distributors would be in addition to the applicable Distribution Fee.
ETF Implied Liquidity Feed
    The ETF Implied Liquidity feed is an optional data feed that 
provides the Exchange's proprietary calculation of the implied 
liquidity and the aggregate best bid and offer (``BBO'') of all 
displayed orders on the Cboe Equity Exchange for all standard, non-
leveraged U.S. equity Exchange Traded Funds (``ETFs'') \12\ traded on 
the System.\13\ An ETF's implied liquidity disseminated via the 
proposed feed would consist of the ETF's implied BBO (including the 
implied size) calculated via a proprietary methodology based on the 
national best bid and offer (``NBBO''), the number of shares of 
securities underlying one creation unit of the ETF, and the estimated 
cash included in one creation unit of the ETF.
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    \12\ The securities underlying each of the U.S. equity ETFs 
included in the feed must be considered NMS Securities as defined 
under Rule 600(b)(46) of Regulation NMS. 17 CFR 242.600(b)(46).
    \13\ See Exchange Rule 11.22(n). See also Securities Exchange 
Act Release No. 80580 (May 3, 2017) (SR-BatsBZX-2017-25) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Amend Rule 11.22, Data Products, to Adopt a New Market Data Product 
Known as the ETF Implied Liquidity Feed).
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    Similar to as proposed above for the Cboe One Summary Feed, the 
Exchange proposes to amend its fee schedule to lower the fee for 
Internal Distribution and to adopt separate fees for Professional and 
Non-Professional Users.
    Distribution Fees. Currently, each Internal Distributor that 
receives the ETF Implied Liquidity Feed is charged a fee of $5,000 per 
month. The Exchange now proposes to lower the fee for Internal 
Distribution to $1,500 per month. Like it does for External 
Distributors today, the Exchange proposes to waive the Distribution fee 
for Internal Distributors of the ETF Implied Liquidity Feed that also 
receive the Cboe One Feed. The ETF Implied Liquidity Feed and the Cboe 
One Feed are similar in that both include the aggregate BBO for all 
displayed orders on the Cboe Equity Exchanges. The key difference here 
is that the ETF Implied Liquidity Feed also contains the Exchange's 
proprietary calculation of the ETF's implied liquidity. As such, the 
Exchange believes it is reasonable to waive the Distributor fee for 
Internal Distributors of the ETF Implied Liquidity Feed where that 
Internal Distributor also receives and is charged the Internal 
Distributor fee for the Cboe One Feed. The Exchange notes that the 
proposed lower Internal Distribution fee for the ETF Implied Liquidity 
Feed of $1,500 per month would equal the proposed Internal Distribution 
fee for Cboe One Summary and less than the existing $15,000 per month 
Internal Distribution fee for Cboe One Premium.
    User Fees. Like it does today for External Distributors, the 
Exchange proposes to charge per User fees to Internal Distributors that 
receive the ETF Implied Liquidity Feed. The Exchange currently charges 
External Distributors that redistribute the ETF Implied Liquidity Feed 
different fees for their Professional Users and Non-Professional Users. 
Those fees are $25.00 per month for each Professional Users and $1.00 
per month for each Non-Professional Users. To date, the Exchange has 
not charged per User fees to Internal Distributors. To offset the 
proposed reduction to the monthly Internal Distribution fee, the 
Exchange proposes to adopt per User fees for Internal Distribution, the 
amounts of each would be the same as the per User fees currently 
charged to External Distributors.
User Count Policy
    Like External Distributors of the Cboe One Summary Feed and the ETF 
Implied Liquidity Feed, Internal Distributors that receive the Cboe One 
Summary Feed and/or ETF Implied Liquidity Feed will be required to 
count every Professional User and Non-Professional User to which they 
provide the Cboe One Summary Feed and/or ETF Implied Liquidity Feed, 
the requirements for which are identical to that currently in place for 
External Distributors of the Cboe One Summary Feed and ETF Implied 
Liquidity Feed, as well as other market data products offered by the 
Exchange.\14\ Thus, the Internal Distributor's count will include every 
person and device that accesses the data regardless of the purpose for 
which the individual or device uses the data. Internal Distributors 
must report all Professional and Non-Professional Users in accordance 
with the following:
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    \14\ See Securities Exchange Act Release Nos. 74285 (February 
18, 2015); 80 FR 9828 (February 24, 2015) (SR-BATS-2015-11) 
(proposing fees for the Cboe One Feed); 75406 (July 9, 2015), 80 FR 
41522 (July 15, 2015) (SR-BATS-2015-48) (proposing user fees for the 
BZX Top and Last Sale data feeds); 75785 (August 28, 2015), 80 FR 
53360 (September 3, 2015) (SR-BATS-2015-64) (proposing fees for BZX 
Book Viewer); and 79636 (December 21, 2016), 81 FR 95693 (December 
28, 2016) (SR-BatsBZX-2016-87) (proposing fees for BZX Summary 
Depth).
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    <bullet> In connection with an Internal Distributor's distribution 
of the Cboe One Summary Feed and/or ETF Implied Liquidity Feed, the 
Internal Distributor must count as one User each unique User that the 
Internal Distributor has entitled to have access to the Cboe One 
Summary Feed and/or ETF Implied Liquidity Feed. However, where a device 
is dedicated specifically to a single individual, the Internal 
Distributor must count only the individual and need not count the 
device.
    <bullet> The Internal Distributor must identify and report each 
unique User. If a User uses the same unique method to gain access to 
the Cboe One Summary Feed and/or ETF Implied Liquidity Feed, the 
Internal Distributor must count that as one User. However, if a unique 
User uses multiple methods to gain access to the Cboe One Summary Feed 
and/or the ETF Implied Liquidity Feed (e.g., a single User has multiple 
passwords and user identifications), the Internal Distributor must 
report each of those methods as an individual User.
    <bullet> Internal Distributors must report each unique individual 
person who receives access through multiple devices as one User so long 
as each device is dedicated specifically to that individual.
    <bullet> If an Internal Distributor entitles one or more 
individuals to use the same device, the Distributor must include only 
the individuals, and not the device, in the count.
Implementation Date
    The Exchange intends to implement the proposed fees on January 2, 
2018.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\15\ in general, and 
furthers the objectives of Section 6(b)(4),\16\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its members and other recipients of 
Exchange data. The Exchange believes that the proposed rates are 
equitable and non-discriminatory in that they apply

[[Page 1394]]

uniformly to all recipients of Exchange data. The Exchange believes the 
proposed fees are competitive with those charged by other venues and, 
therefore, reasonable and equitably allocated to recipients.
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    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed rule change is consistent 
with Section 11(A) of the Act \17\ in that it supports (i) fair 
competition among brokers and dealers, among exchange markets, and 
between exchange markets and markets other than exchange markets and 
(ii) the availability to brokers, dealers, and investors of information 
with respect to quotations for and transactions in securities. 
Furthermore, the proposed rule change is consistent with Rule 603 of 
Regulation NMS,\18\ which provides that any national securities 
exchange that distributes information with respect to quotations for or 
transactions in an NMS stock do so on terms that are not unreasonably 
discriminatory. In adopting Regulation NMS, the Commission granted 
self-regulatory organizations 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.
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    \17\ 15 U.S.C. 78k-1.
    \18\ 17 CFR 242.603.
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    In addition, the proposed fees would not permit unfair 
discrimination because all of the Exchange's customers and market data 
vendors who subscribe to the Cboe One Summary Feed and ETF Implied 
Liquidity Feed will be subject to the proposed fees. The Cboe One 
Summary Feed and ETF Implied Liquidity Feed are distributed and 
purchased on a voluntary basis, in that neither the Exchange nor market 
data distributors are required by any rule or regulation purchase this 
data or to make this data available. Accordingly, Distributors and 
Users can discontinue use at any time and for any reason, including due 
to an assessment of the reasonableness of fees charged. Firms have a 
wide variety of alternative market data products from which to choose, 
such as similar proprietary data products offered by other exchanges 
and consolidated data. Moreover, the Exchange is not required to make 
any proprietary data products available or to offer any specific 
pricing alternatives to any customers.
    In addition, the fees that are the subject of this rule filing are 
constrained by competition. As explained below in the Exchange's 
Statement on Burden on Competition, the existence of alternatives to 
the Cboe One Summary Feed and ETF Implied Liquidity Feed further ensure 
that the Exchange cannot set unreasonable fees, or fees that are 
unreasonably discriminatory, when vendors and subscribers can elect 
such alternatives. That is, the Exchange competes with other exchanges 
(and their affiliates) that provide similar market data products. For 
example, the Cboe One Summary Feed and/or ETF Implied Liquidity Feed 
provides investors with alternative market data and competes with 
similar market data product currently offered by other exchanges. If 
another exchange (or its affiliate) were to charge less to distribute 
its similar product than the Exchange charges to create the Cboe One 
Summary Feed and/or ETF Implied Liquidity Feed, prospective Users 
likely would not subscribe to, or would cease subscribing to either 
market data product.
    The Exchange notes that the Commission is not required to undertake 
a cost-of-service or rate-making approach. The Exchange believes that, 
even if it were possible as a matter of economic theory, cost-based 
pricing for non-core market data would be so complicated that it could 
not be done practically.\19\
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    \19\ The Exchange believes that cost-based pricing would be 
impractical because it would create enormous administrative burdens 
for all parties, including the Commission, to cost-regulate a large 
number of participants and standardize and analyze extraordinary 
amounts of information, accounts, and reports. In addition, it is 
impossible to regulate market data prices in isolation from prices 
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort 
incentives, including those to minimize costs and to innovate, 
leading to further waste. Under cost-based pricing, the Commission 
would be burdened with determining a fair rate of return, and the 
industry could experience frequent rate increases based on 
escalating expense levels. Even in industries historically subject 
to utility regulation, cost-based ratemaking has been discredited. 
As such, the Exchange believes that cost-based ratemaking would be 
inappropriate for proprietary market data and inconsistent with 
Congress's direction that the Commission use its authority to foster 
the development of the national market system, and that market 
forces will continue to provide appropriate pricing discipline. See 
Appendix C to NYSE's comments to the Commission's 2000 Concept 
Release on the Regulation of Market Information Fees and Revenues, 
which can be found on the Commission's website at http://www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities 
Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200 
(December 17, 2014) (SR-NYSE-2014-64) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change to Establish an 
Access Fee for the NYSE Best Quote and Trades Data Feed, Operative 
December 1, 2014).
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    The Exchange believes that lowering the Internal Distribution fee 
for both the Cboe One Summary Feed and the ETF Implied Liquidity Feed 
is equitable and reasonable because the lower fee coupled with the 
adoption of per User fees is designed to provide a price structure for 
Internal Distributors that is competitive and attracts additional 
subscribers to each market data feed. The Exchange also believes that 
it is reasonable to charge a lower fee to Internal Distributors than 
External Distributors because External Distributors redistribute the 
data to their subscribers for a fee while Internal Distributors do not.
    The Exchange believes it is reasonable to waive the Distributor fee 
for Internal Distributors of the ETF Implied Liquidity Feed that also 
receive the Cboe One Feed as both include the aggregate BBO for all 
displayed orders on the Cboe Equity Exchanges and an identical waiver 
is currently granted to External Distributors. The key difference here 
is that the ETF Implied Liquidity Feed also contains the Exchange's 
proprietary calculation of the ETF's implied liquidity. Waiver of the 
Distributor fee for Internal Distributors that also receive and pay the 
Internal Distributor for the Cboe One Feed is equitable and reasonable 
because those Internal Distributors are being charged the Internal 
Distributor fees for the Cboe One Feed, which would be charged the 
proposed rate of $1,500 per month for Cboe One Summary and the existing 
rate of $15,000 per month for Cboe One Premium. The fee waiver here is 
equitable due to both products providing the same key data element--the 
aggregated BBO of the Cboe Equity Exchanges. While the ETF Implied 
Liquidity Feed also includes the Exchange's proprietary calculation of 
an ETF's implied liquidity, the Exchange notes that Internal 
Distributors of the ETF Implied Liquidity Feed would now be subject to 
the per User fees. Therefore, the Exchange believes it is equitable and 
reasonable to waive the Internal Distributor fees in such case. The 
Exchange did not previously extend this waiver to Internal Distributors 
because Internal Distributors of the Cboe One Feed were not charged 
User fees like External Distributors. Since that is no longer the case, 
the Exchange believes it is reasonable to extend the waiver to Internal 
Distributors as proposed herein.
    The Exchange believes that implementing the Professional and Non-
Professional User fees for the Cboe One Summary Feed and the ETF 
Implied Liquidity Feed are equitable and reasonable because they will 
result in greater availability to Professional and Non-Professional 
Users. The addition of per User fees also enables the fee for

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Internal Distribution, thereby lowering their overall costs where the 
number of Users they account for is low. Moreover, introducing a modest 
Non-Professional User fee is reasonable because it provides an 
additional method for Non-Professional investors to access the data by 
providing the same data that is available to Professional Users. The 
Exchange believes that the proposed fees are equitable and not unfairly 
discriminatory because they will be charged uniformly to Internal 
Distributors and Users. The Exchange notes that the amount of the per 
User fees for Internal Distribution equal those charged for External 
Distribution for both the Cboe One Summary Feed and ETF Implied 
Liquidity Feed.
    The fee structure of differentiated Professional and Non-
Professional fees is utilized by the Exchange for the Cboe One Feed and 
has long been used by other exchanges for their proprietary data 
products, and by the Nasdaq UTP and the CTA and CQ Plans in order to 
reduce the price of data to retail investors and make it more broadly 
available.\20\ Offering the Cboe One Summary Feed and ETF Implied 
Liquidity Feed to Non-Professional Users with the same data available 
to Professional Users results in greater equity among data recipients.
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    \20\ See Securities Exchange Act Release Nos. 74285 (February 
18, 2015), 80 FR 9828 (February 24, 2015) (SR-BATS-2015-11); 74283 
(February 18, 2015), 80 FR 9809 (February 24, 2015) (SR-EDGA-2015-
09); 74282 (February 17, 2015), 80 FR 9487 (February 23, 2015) (SR-
EDGX-2015-09); and 74284 (February 18, 2015), 80 FR 9792 (February 
24, 2015) (SR-BYX-2015-09) (``Initial Cboe One Feed Fee Filings''). 
See also, e.g., Securities Exchange Act Release No. 20002, File No. 
S7-433 (July 22, 1983) (establishing nonprofessional fees for CTA 
data); and Nasdaq Rules 7023(b) and 7047.
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    The proposed expansion of the Enterprise Fee to Internal 
Distributors of the Cboe One Summary Feed is reasonable because it 
could result in a fee reduction for Internal Distributors with a large 
number of Professional and Non-Professional Users. If an Internal 
Distributor has a smaller number of Professional Users of the Cboe One 
Summary Feed, then it may continue using the per User structure. By 
reducing prices for Internal Distributors with a large number of 
Professional and Non-Professional Users, the Exchange believes that 
more Internal Distributors may choose to receive and to distribute the 
Cboe One Summary Feed, thereby expanding the distribution of this 
market data for the benefit of investors.
    The Exchange further believes that the proposed Enterprise Fee is 
reasonable because it will simplify reporting for certain Internal 
Distributors that have large numbers of Professional and Non-
Professional Users. Internal Distributors that pay the proposed 
Enterprise Fee will not have to report the number of Users on a monthly 
basis as they currently do, but rather will only have to count natural 
person users every six months, which is a significant reduction in 
administrative burden. Finally, the Exchange believes that it is 
equitable and not unfairly discriminatory to establish an Enterprise 
Fee because it reduces the Exchange's costs and the Distributor's 
administrative burdens in tracking and auditing large numbers of Users.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
Exchange's ability to price the Cboe One Summary Feed and the ETF 
Implied Liquidity Feed is constrained by: (i) Competition among 
exchanges, other trading platforms, and Trade Reporting Facilities 
(``TRF'') that compete with each other in a variety of dimensions; (ii) 
the existence of inexpensive real-time consolidated data and market-
specific data and free delayed data; and (iii) the inherent 
contestability of the market for proprietary data.
    The Exchange and its market data products are subject to 
significant competitive forces and the proposed fees represent 
responses to that competition. To start, the Exchange competes 
intensely for order flow. It competes with the other national 
securities exchanges that currently trade equities, with electronic 
communication networks, with quotes posted in FINRA's Alternative 
Display Facility, with alternative trading systems, and with securities 
firms that primarily trade as principal with their customer order flow. 
The Cboe One Summary Feed will enhance competition because it not only 
provides content that is competitive with the similar products offered 
by other exchanges, but will provide pricing that is competitive as 
well. The Cboe One Summary Feed provides investors with an alternative 
option for receiving market data and competes directly with similar 
market data products currently offered by the NYSE and Nasdaq.\21\
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    \21\ See Nasdaq Basic, http://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic (data feed offering the BBO and Last Sale 
information for all U.S. exchange-listed securities based on 
liquidity within the Nasdaq market center, as well as trades 
reported to the FINRA/Nasdaq Trade Reporting Facility 
(``TRF''));Nasdaq NLS Plus, http://www.nasdaqtrader.com/Trader.aspx?id=NLSplus (data feed providing last sale data as well 
as consolidated volume from the following Nasdaq OMX markets for 
U.S. exchange-listed securities: Nasdaq, FINRA/Nasdaq TRF, Nasdaq 
OMX BX, and Nasdaq OMX PSX); Securities Exchange Act Release No. 
73553 (November 6, 2014), 79 FR 67491 (November 13, 2014) (SR-NYSE-
2014-40) (Notice of Amendment No. 1 and Order Granting Accelerated 
Approval to a Proposed Rule Change, as Modified by Amendment No.1, 
To Establish the NYSE Best Quote & Trades (``BQT'') Data Feed); 
https://www.nyse.com/market-data/real-time/nyse-bqt (data feed 
providing unified view of BBO and last sale information for the 
NYSE, NYSE Arca, and NYSE MKT).
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    In addition, when establishing the proposed fees, the Exchange 
considered the competitiveness of the market for proprietary data and 
all of the implications of that competition. The Exchange believes that 
it has considered all relevant factors and has not considered 
irrelevant factors in order to establish fair, reasonable, and not 
unreasonably discriminatory fees and an equitable allocation of fees 
among all Users. The existence of alternatives to the Cboe One Summary 
Feed and the ETF Implied Liquidity Feed ensures that the Exchange 
cannot set unreasonable fees, or fees that are unreasonably 
discriminatory, when vendors and subscribers can elect these 
alternatives or choose not to purchase a specific proprietary data 
product if its cost to purchase is not justified by the returns any 
particular vendor or subscriber would achieve through the purchase.
    Lastly, the Exchange represents that the proposed pricing of the 
Cboe One Summary Feed and the ETF Implied Liquidity Feed provides 
investors with alternative market data and competes with similar market 
data product currently offered by other exchanges.\22\ In addition, the 
Exchange notes the concerns regarding whether a competing vendor could 
create a similar product on the same price basis as the Exchange

[[Page 1396]]

are not present here. The proposed changes are limited to fees for 
Internal Distributers who use the data for internal use only and not 
for the redistribution and sale to external parties.
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    \22\ Id. See also Nasdaq's Global Index Data Service (``GIDS'') 
available at http://business.nasdaq.com/intel/indexes/index-data/index.html#!/tcm:5044-12151 (providing on a real-time basis intraday 
portfolio values, daily valuation information, such as NAV per 
Share, estimated cash per Share, estimated cash per creation unit, 
total cash per creation unit and total shares outstanding of the 
fund and ETF directory messages designed to provide the symbols of 
the ETF valuations). See footnote 28 of Securities Exchange Act 
Release No. 77714 (April 26, 2016), 81 FR 26281 (May 2, 2016) 
(describing Nasdaq's GIDS within the order approving SR-Nasdaq-2016-
028). See also footnote 29 of Securities Exchange Act Release No. 
78592 (August 16, 2016), 81 FR 56729 (August 22, 2016) (describing 
Nasdaq's GIDS within the order approving SR-Nasdaq-2016-061). See, 
e.g., the NYSE Arca, Inc.'s (``NYSE Arca'') EOD ETF Report available 
at http://www.nyxdata.com/Data-Products/NYSE-Arca-EOD-ETF-Report 
(providing information such as the ETF's closing trades and quotes 
at different key points during the trading day, as well referential 
information such as shares outstanding, the primary market, and 
NAV).
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(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received from Members, Participants or Others

    The Exchange has neither solicited nor received written 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 \23\ and paragraph (f) of Rule 19b-4 
thereunder.\24\ 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.
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    \23\ 15 U.S.C. 78s(b)(3)(A).
    \24\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

    <bullet> Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#0270776e672f616d6f6f676c7671427167612c656d74"><span class="__cf_email__" data-cfemail="5220273e377f313d3f3f373c2621122137317c353d24">[email protected]</span></a>. Please include 
File Number SR-CboeBZX-2017-019 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CboeBZX-2017-019. 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 (http://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 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-CboeBZX-2017-019 and should be submitted 
on or before February 1, 2018.
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    \25\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00309 Filed 1-10-18; 8:45 am]
 BILLING CODE 8011-01-P


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