[Federal Register Volume 83, Number 10 (Tuesday, January 16, 2018)]
[Notices]
[Pages 2244-2246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-00534]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82477; File No. SR-CboeBYX-2017-005]


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

January 9, 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 27, 2017, Cboe BYX Exchange, Inc. (the ``Exchange'' or 
``BYX'') 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 fee schedule applicable 
to Members \5\ and non-Members of the Exchange pursuant to BYX Rules 
15.1(a) and (c).
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    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer that has been admitted to membership in the Exchange.'' See 
Exchange Rule 1.5(n).
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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.

[[Page 2245]]

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
    As further described below, the Exchange proposes to amend its fee 
schedule to: (i) Modify its standard rebate to remove liquidity 
yielding fee codes BB,\6\ N,\7\ and W; \8\ (ii) modify its standard fee 
to add liquidity yielding fee codes B,\9\ V \10\ and Y; \11\ and (iii) 
adopt a new tier under footnote 1, Add/Remove Volume Tiers.
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    \6\ Fee code BB is appended to orders that remove liquidity from 
BYX (Tape B). See the Exchange's fee schedule available at http://markets.cboe.com/us/equities/membership/fee_schedule/byx/.
    \7\ Fee code N is appended to orders that remove liquidity from 
BYX (Tape C). Id.
    \8\ Fee code W is appended to orders that remove liquidity from 
BYX (Tape A). Id.
    \9\ Fee code B is appended to displayed orders that add 
liquidity to BYX (Tape B). Id.
    \10\ Fee code V is appended to displayed orders that add 
liquidity to BYX (Tape A). Id.
    \11\ Fee code Y is appended to displayed orders that add 
liquidity to BYX (Tape C). Id.
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Standard Rebates to Remove Liquidity
    The Exchange currently provides a standard rebate of $0.0008 per 
share for orders that remove liquidity from the Exchange in securities 
priced at or above $1.00. The Exchange appends fee codes W, BB and N 
for orders removing liquidity in Tape A, Tape B, and Tape C securities, 
respectively. The Exchange proposes to reduce the standard rebate 
provided for orders yielding these fee codes to a rebate of $0.0005 per 
share. In connection with this change, the Exchange proposes to modify 
the Standard Rates chart contained on the fee schedule to reflect the 
new standard rebate of $0.0005 per share to remove liquidity.
Standard Fee To Add Liquidity
    The Exchange currently charges a standard fee of $0.0018 per share 
for orders that add liquidity to the Exchange in securities priced at 
or above $1.00. The Exchange appends fee codes V, B, and Y for orders 
adding liquidity in Tape A, Tape B, and Tape C securities, 
respectively. The Exchange proposes to increase the standard fee 
charged for orders yielding these fee codes to a fee of $0.0019 per 
share. In connection with this change, the Exchange proposes to modify 
the Standard Rates chart contained on the fee schedule to reflect the 
new standard fee of $0.0019 per share to add liquidity.
New Remove Volume Tier
    The Exchange currently offers six [sic] tiers under footnote 1 that 
offer reduced fees for displayed orders that add liquidity yielding fee 
codes B, V and Y, and an enhanced rebate for orders that remove 
liquidity yielding fee codes BB, N and W, as described above. The 
Exchange proposes to add a new tier under footnote 1, to be known as 
Tier 9, under which a Member would receive an enhanced rebate of 
$0.0017 per share on orders that yield fee codes BB, N and W, where a 
Member has: (i) A Step-Up Remove TCV\12\ from December 2017 equal to or 
greater than 0.075%; and (ii) an ADAV \13\ equal to or greater than 
0.10% of the TCV.\14\
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    \12\ ``Step-Up Remove TCV'' means remove ADV as a percentage of 
TCV in the relevant baseline month subtracted from current remove 
ADV as a percentage of TCV. See the Exchange's fee schedule 
available at http://markets.cboe.com/us/equities/membership/fee_schedule/byx/.
    \13\ ``ADAV'' means average daily volume calculated as the 
number of shares added per day and ``ADV'' means average daily 
volume calculated as the number of shares added or removed, 
combined, per day. ADAV and ADV are calculated on a monthly basis. 
Id.
    \14\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply. Id.
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Implementation Date
    The Exchange proposes to implement the above changes to its fee 
schedule 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 persons using its 
facilities.
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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 proposed changes to fee codes BB, N, and 
W represent an equitable allocation of reasonable dues, fees, and other 
charges because the Exchange's standard rebate for removing liquidity 
continues to be higher than that provided by other exchanges. For 
example, Nasdaq BX, Inc. (``Nasdaq BX'') provides a standard rebate of 
$0.0001 per share for orders that remove liquidity.\17\ The Exchange 
further believes that the standard rebate for fee codes BB, N, and W 
remains equitably allocated and not unreasonably discriminatory because 
such rebate is provided to all Members unless they qualify for enhanced 
rebates based on other factors.
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    \17\ See the Nasdaq BX fee schedule available at http://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing.
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    The Exchange believes that proposed changes to fee codes B, V, and 
Y represent an equitable allocation of reasonable dues, fees, and other 
charges because the Exchange's standard fee for adding liquidity 
continues to be lower than that provided by other exchanges. For 
example, Nasdaq BX charges a standard fee of $0.0020 per share for 
orders that remove liquidity.\18\ The Exchange further believes that 
the standard fee for fee codes B, V, and Y remains equitably allocated 
and not unreasonably discriminatory because such fee is provided to all 
Members unless they qualify for reduced fees based on other factors.
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    \18\ Id.
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    The Exchange believes that the proposed Tier 9 to be added to 
footnote 1 is equitably allocated and reasonable because it will reward 
a Member's growth pattern on the Exchange and such increased volume 
will allow the Exchange to continue to provide and potentially expand 
its incentive programs. The Exchange further believes that the proposed 
tier is reasonable, fair and equitable because the liquidity from the 
proposed change would benefit all investors by deepening the Exchange's 
liquidity pool, offering additional flexibility for all investors to 
enjoy cost savings, supporting the quality of price discovery, 
promoting market transparency and improving investor protection. The 
Exchange also believes the proposed rebate of $0.0017 per share for 
Tier 9 is reasonable in that it is equivalent to the top tier rebate to 
remove liquidity provided by Nasdaq BX.\19\ The proposed pricing 
structure is also not unfairly discriminatory in that it is available 
to all Members.
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    \19\ Id.
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    In addition, volume-based fees such as that proposed herein have 
been widely adopted by exchanges and are equitable because they are 
open to all Members on an equal basis and provide

[[Page 2246]]

additional benefits or discounts that are reasonably related to: (i) 
The value to an exchange's market quality; (ii) associated higher 
levels of market activity, such as higher levels of liquidity provision 
and/or growth patterns; and (iii) the introduction of higher volumes of 
orders into the price and volume discovery processes. The Exchange 
believes that the proposed tier is a reasonable, fair and equitable, 
and not an unfairly discriminatory allocation of fees and rebates, 
because it will provide Members with an additional incentive to reach 
certain thresholds on the Exchange.

(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 not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that this change represents a significant departure from previous 
pricing offered by the Exchange or from pricing offered by the 
Exchange's competitors. The proposed rates would apply uniformly to all 
Members, and Members may opt to disfavor the Exchange's pricing if they 
believe that alternatives offer them better value. Accordingly, the 
Exchange does not believe that the proposed changes will impair the 
ability of Members or competing venues to maintain their competitive 
standing in the financial markets. Further, excessive fees would serve 
to impair an exchange's ability to compete for order flow and members 
rather than burdening competition. The Exchange believes that its 
proposal would not burden intramarket competition because the proposed 
rate would apply uniformly to all Members.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from Members or other interested 
parties.

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 
thereunder.\21\ 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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    \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

    <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#ea989f868fc7898587878f849e99aa998f89c48d859c"><span class="__cf_email__" data-cfemail="c5b7b0a9a0e8a6aaa8a8a0abb1b685b6a0a6eba2aab3">[email protected]</span></a>. Please include 
File Number SR-CboeBYX-2017-005 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-CboeBYX-2017-005. 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-CboeBYX-2017-005 and should be submitted 
on or before February 6, 2018.
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    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00534 Filed 1-12-18; 8:45 am]
 BILLING CODE 8011-01-P


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