Federal Register / Vol. 89, No. 249 / Monday, December 30, 2024 / Notices 106675 

24 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The Exchange initially submitted the proposed 

rule change on August 30, 2024 and was effective 

September 3, 2024 (SR–CboeBZX–2024–082). On 

September 13, 2024, the Exchange withdrew that 

filing and submitted SR–CboeBZX–2024–088. On 

November 12, 2024, the Exchange withdrew that 

filing and submitted SR–CboeBZX–2024–113. On 

December 20, 2024, the Exchange withdrew that 

filing and submitted this filing. 

4See Exchange Rule 21.1 (l)(2), definition of 

‘‘logical port.’’ Logical ports include FIX and BOE 

ports (used for order entry), drop logical port 

(which grants users the ability to receive and/or 

send drop copies) and ports that are used for receipt 

of certain market data feeds. 5The term ‘‘Logical Ports’’ used herein shall refer 

to FIX and BOE ports (used for order entry). See 

Cboe BZX Options Fee Schedule, Options Logical 

Port Fees, ‘‘Logical Ports’’ (which exclude Purge 

Port, Multicast PITCH Spin Server Port or GRP 

Port). 6Purge Ports provide users the ability to cancel 

a subset (or all) of open orders across Executing 

Firm ID(s) (‘‘EFID(s)’’), Underlying symbol(s), or 

CustomGroupID(s), across multiple logical ports/ 

sessions. See Securities Exchange Act Release 

79956 (February 3, 2017), 82 FR 10102 (February 9, 

2017) (SR–BatsBZX–2017–05). See also https://

cdn.cboe.com/resources/membership/US_Options_

BOE_Specification.pdf and https://cdn.cboe.com/ 

resources/membership/US_Options_FIX_

Specification.pdf. 

7See Exchange Rule 21.1 (l)(3), definition of 

‘‘bulk port.’’ Bulk Ports provide users with the 

ability to submit and update multiple quote bids 

and offers in one message through logical ports 

enabled for bulk-quoting. 

8A matching engine is a part of the Exchange’s 

System that processes options quotes and trades on 

a symbol-by-symbol basis. Some matching engines 

will process option classes with multiple root 

symbols, and other matching engines will be 

dedicated to one single option root symbol (for 

example, options on SPY will be processed by one 

single matching engine that is dedicated only to 

SPY). A particular root symbol may only be 

assigned to a single designated matching engine. A 

particular root symbol may not be assigned to 

multiple matching engines. 

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–CboeEDGA–2024–051 and should 

be submitted on or before January 21, 

2025. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–30908 Filed 12–27–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–102024; File No. SR– 

CboeBZX–2024–131] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Adopt Fees 

for New Logical Ports in Connection 

With a New Connectivity Offering on 

Its Equity Options Platform 

December 20, 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 December 

20, 2024, Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) proposes to 

adopt fees for new logical ports in 

connection with a new connectivity 

offering on its equity options platform. 

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/ 

equities/regulation/rule_filings/BZX/), 

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 

fee schedule to adopt fees for Unitized 

Logical Ports, a new connectivity 

offering for its equity options platform 

(‘‘BZX Options’’) and adopt new 

Average Daily Quote and Average Daily 

Order fees.3

Unitized Port Fees 

By way of background, Exchange 

Members may interface with the 

Exchange’s Trading System by utilizing 

either the Financial Information 

Exchange (‘‘FIX’’) protocol or the Binary 

Order Entry (‘‘BOE’’) protocol. The 

Exchange further offers a variety of 

logical ports,4 which provide users of 

these ports with the ability within the 

Exchange’s System to accomplish a 

specific function through a connection, 

such as order entry, data receipt or 

access to information. For example, 

such ports include Logical Ports,5 Purge 

Ports,6 and Ports with Bulk Quoting 

Capabilities 7 (‘‘Bulk Ports’’). By way of 

further background, each of these ports 

corresponds to a single running order 

handler. Each order handler processes 

the messages it receives from these ports 

from the connected Members. This 

processing includes determining 

whether the message contains the 

required information to enter the 

System, whether the message 

parameters satisfy port-level (i.e., pretrade) risk controls, and where to send 

that message within the System (i.e., to 

which matching engine).8 Once an order 

handler completes the processing of a 

message, it sends that message to the 

appropriate matching engine. 

Historically, all order handlers 

connect to all matching engines. That is, 

under the BOEv2 and FIX protocols, 

Members were able to access all 

symbols from a single logical port since 

each port corresponds to a single order 

handler that conveniently connects to 

all matching engines (‘‘convenience 

layer’’). Although the Exchange 

configures the software and hardware 

for its order handlers in the same 

manner, there can be a natural variance 

in the amount of time it takes individual 

order handlers to process messages of 


ddrumheller on DSK120RN23PROD with NOTICES1
106676 Federal Register / Vol. 89, No. 249 / Monday, December 30, 2024 / Notices 

9See Securities Exchange Act Release 100582 

(July 23, 2024), 89 FR 60958 (July 29, 2024) (SR– 

CboeBZX–2024–071). 

10The BOE protocol is a proprietary order entry 

protocol used by Members to connect to the 

Exchange. The current version is BOEv2. 

11See Securities Exchange Act Release No. 

100582 (July 23, 2024) 89 FR 60958 (July 29, 2024) 

(SR–CboeBZX–2024–071). 

12The Exchange anticipates decommissioning 

BOEv2 in February 2025. 

13Members will be able to purchase Unitized 

Logical Ports individually or may purchase a ‘‘set,’’ 

which will provide the total number of ports 

needed to connect to each available matching 

engine. 14Similar to the Exchange’s preexisting Logical 

Ports, the new Unitized Logical Ports allow 

Members to submit orders and quotes. 15Similar to the Exchange’s preexisting Bulk 

Ports, the new Bulk Unitized Logical Ports allow 

Members to submit and update multiple quote bids 

and offers in one message and are particularly 

useful for Members that provide quotations in many 

different options. 16Similar to the Exchange’s preexisting Purge 

Ports, the new Purge Unitized Logical Ports are 

dedicated logical ports that provide the ability to 

cancel/purge all open orders, or a subset thereof, 

across multiple logical ports through a single 

cancel/purge message. They also solely process 

purge messages and are designed to assist Members, 

including Market Makers, in the management of, 

and risk control over, their orders and quotes, 

particularly if the Member is dealing with a large 

number of options. 

17For example, the Exchange currently assesses a 

monthly per port fee of $750 for Logical Ports and 

Purge Ports. It also assesses $1,500 per port month 

for the 1st and 2nd Bulk Ports and $2,500 for the 

3rd or more Bulk Ports. See Cboe BZX Options Fee 

Schedule, Options Logical Port Fees. 

18The Exchange proposes to include this example 

in the Fee Schedule to provide further clarity as to 

the application of the proposed fees. 

the same type under this architecture. 

Factors that contribute to this 

differentiation in processing times 

include the availability of shared 

resources (such as memory), which is 

impacted by (among other things) thencurrent message rates, the number of 

active symbols (i.e., classes), and recent 

messages for a symbol. This natural 

differentiation in processing times 

inherently may cause some messages to 

be sent from an order handler to a 

matching engine ahead of other 

messages that the Exchange’s System 

may have received earlier on a different 

order handler. 

The Exchange recently implemented a 

new architecture and protocol which 

includes, among other things, a single 

gateway per matching engine (‘‘unitized 

layer’’), which renders the abovedescribed natural variance of order 

handler processing irrelevant for 

Members that connect to the unitized 

order handler.9 More specifically, 

effective August 19, 2024, the Exchange 

implemented this new unitized access 

architecture and a new version of its 

Binary Order Entry (BOE) protocol 10

(‘‘BOEv3’’), which also resulted in the 

adoption of new logical port types 

(‘‘Unitized Logical Ports’’), for which 

the Exchange is now seeking to establish 

fees.11 Under the new unitized BOEv3 

architecture, a single BOEv3 order 

handler corresponds to a single 

matching engine and all message traffic 

(including FIX and current BOEv2 12

port traffic) pass through this unitized 

BOEv3 order handler before reaching 

that order handler’s corresponding 

matching engine. If a Member desires to 

access this optional unitized layer of the 

BOEv3 architecture (which it is not 

required to do), the Member would need 

to obtain a Unitized Logical Port for 

each unitized BOEv3 order handler and 

corresponding matching engine(s) that 

process the symbol(s) that Member 

desires to trade.13 The three new port 

types that have been adopted are: (1) 

BOE Unitized Logical Ports,14 (2) Bulk 

Unitized Logical Ports,15 and (3) Purge 

Unitized Logical Ports.16 As noted 

above, use of Unitized Logical Ports is 

completely voluntary, and no Member is 

required, or under any regulatory 

obligation, to utilize them. 

The Exchange proposes to establish 

fees for the new Unitized Logical Ports, 

which can be purchased on an 

individual basis (i.e., capable of 

accessing a specified matching engine 

(‘‘Matching Unit’’)) and/or as a set 

(‘‘Unitized Logical Port Set’’) (i.e., will 

include the total number of ports 

needed to connect to each available 

Matching Unit). The proposed fees for 

Unitized Logical Ports purchased 

individually and as sets are as follows: 

BOE Unitized Logical Port ........................................................................ $350/port/month. 

Bulk Unitized Logical Port ........................................................................ $550/port/month. 

Purge Unitized Logical Port ...................................................................... $400/port/month. 

BOE Unitized Logical Port (Set) ............................................................... $2,500/month for 1st and 2nd port set. 

$3,000/month for 3rd–14th port set. 

$3,500/month for 15th–20th port set. 

Bulk Unitized Logical Port (Set) ............................................................... $5,500/month for 1st and 2nd port set. 

$6,000/month for 3rd–14th port set. 

$6,500/month for 15th–20th port set. 

Purge Unitized Logical Port (Set) ............................................................. $2,500/month for 1st and 2nd port set. 

$3,000/month for 3rd–14th port set. 

$3,500/month for 15th–20th port set. 

The proposed fees for Unitized 

Logical Port Sets are progressive. For 

example, if a User were to purchase 11 

BOE Unitized Logical Port Sets, it will 

be charged a total of $32,000 per month 

($2,500 * 2 + $3,000 * 9). As is the case 

today for existing logical ports, the 

monthly fees are assessed and applied 

in their entirety and are not prorated. 

The Exchange notes the current 

standard fees assessed for existing 

logical ports will remain applicable and 

unchanged.17 The proposed fees for 

Unitized Logical Port Sets will be 

assessed per set, per Port Type. As an 

example, if a Member requests three 

BOE Unitized Logical Port Sets, one 

Bulk Unitized Logical Port Set, and one 

Purge Unitized Logical Port Set, the firm 

would be charged $8,000 ($2,500 + 

$2,500 + $3,000) for the three BOE 

Unitized Logical Port Sets, $5,500 for 

the one Bulk Unitized Logical Port Set, 

and $2,500 for the one Purge Unitized 

Logical Port Set.18

Since the Exchange has a finite 

amount of capacity, it also proposes to 

prescribe a maximum limit on the 

number of Unitized Logical Ports that 

may be purchased and used on a per 

firm, per Matching Unit basis. The 

purpose of establishing these limits is to 

manage the allotment of Unitized 

Logical Ports in a fair and reasonable 

manner while preventing the Exchange 

from being required to expend large 

amounts of resources in order to provide 

an unlimited capacity to its matching 

engines. Particularly, the Exchange 

proposes to provide that the two 

structures (i.e., individual unitized ports 

or unitized port sets) can be combined 

for up to a maximum of 20 Unitized 

Logical Ports per Member, per Matching 

Unit, per port type. As an example, a 

Member may request 2 BOE Unitized 

Logical Port Sets and 18 individual BOE 

Unitized Logical Ports for Matching 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 249 / Monday, December 30, 2024 / Notices 106677 

19The Exchange proposes to include this example 

in its Fee Schedule to provide clarity as to how 

Unitized Logical Port fees will be assessed. 

20The Exchange notes that one Member has 

indicated that it may desire more than the current 

maximum in the future. 

21The term ‘‘quote’’ refers to bids and offers 

submitted in bulk messages. A bulk message means 

a single electronic message a user submits with an 

M (Market-Maker) capacity to the Exchange in 

which the User may enter, modify, or cancel up to 

an Exchange-specified number of bids and offers. A 

User may submit a bulk message through a bulk 

port as set forth in Exchange Rule 21.1(j)(3). See 

Rule 16.1 (definition of bulk message). 

22The Exchange proposes to include this example 

in the Fees Schedule to provide further clarity as 

to the application of the proposed fees. 

23See, e.g., Securities Exchange Act Release No. 

60102 (June 11, 2009), 74 FR 29251 (June 19, 2009) 

(SR–NYSEArca–2009–50) (adopting fees applicable 

to Members based on the number of orders entered 

compared to the number of executions received in 

a calendar month). It appears that Nasdaq similarly 

assesses a penalty charge to its members that exceed 

certain ‘‘weighted order-to-trade ratios’’. See Price 

List—Trading Connectivity, NASDAQ, available at 

https://www.nasdaqtrader.com/ 

trader.aspx?id=pricelisttrading2. See also Securities 

Exchange Act Release No. 91406 (March 25, 2021), 

86 FR 16795 (March 31, 2023) (SR–EMERALD– 

2021–10) (adopting an ‘‘Excessive Quoting Fee’’ to 

ensure that Market Makers do not over utilize the 

exchange’s System by sending messages to the 

MIAX Emerald, to the detriment of all other 

Members of the exchange). 

Unit 1, providing a total max of 20 BOE 

Unitized Logical Ports on Matching Unit 

1 specifically. This would result in 

having 20 BOE Unitized Logical Ports 

on Matching Unit 1 and 2 BOE Unitized 

Ports on all additional Matching Units 

as part of the 2 BOE Unitized Logical 

Port Sets requested. Additionally, a firm 

may request 20 Bulk Unitized Logical 

Port Sets and 20 Purge Unitized Logical 

Port Sets as those would constitute 

different port types.19 The Exchange 

believes the proposed cap will be 

sufficient for the vast majority of 

Members.20 The Exchange notes that it 

will monitor interest in Unitized Logical 

Ports and system capacity availability 

with the goal of increasing these limits 

to meet Members needs if and when the 

demand is there, and the Exchange is 

able to accommodate it. Additionally, 

Members will still be able to utilize the 

existing logical port connectivity 

offerings with no maximum limit in 

addition to their Unitized Logical Port 

allocation. 

Average Daily Quotes and Average Daily 

Order Fees 

The Exchange also proposes to adopt 

Average Daily Order (‘‘ADO’’) and 

Average Daily Quote (‘‘ADQ’’) fees. 

‘‘ADO’’ represents the total number of 

orders for the month, divided by the 

number of trading days. ‘‘ADQ’’ 

represents the total number of quotes for 

the month, divided by the number of 

trading days. When measuring a 

Member’s ADO and ADQ, orders, 

quotes, cancel/replace modify orders, 

and quote updates which submit a bid 

or offer and do not include cancels, are 

included. Further ADO and ADQ will 

include orders and quotes submitted by 

a Member from all logical port types 

(i.e., non-unitized logical ports and 

Unitized Logical Ports). Each Member 

may submit up to 2,000,000 average 

daily orders or up to 250,000,000 

average daily quotes per calendar month 

without incurring any ADO or ADQ 

fees. In the event that the average 

number of quotes per trading day during 

a calendar month submitted exceeds 

250,000,000, each incremental usage of 

up to 20,000 average daily quotes will 

incur an additional fee as set forth in the 

table below. Similarly, in the event that 

the average number of orders per trading 

day during a calendar month submitted 

exceeds 2,000,000, each incremental 

usage of up to 1,000 average daily orders 

will incur an additional ADO fee as set 

forth in the table below.21 A Member’s 

ADO and ADQ will be aggregated 

together with any affiliated Member 

sharing at least 75% common 

ownership. 

ADQ Fee rate per 

20,000 ADQ 

Fee 

Tier 1 <= 250,000,000 Tier 2 >250,000,000 Tier 3 >500,000,000 Tier 4 >1,000,000,000 Tier 5 >3,500,000,000 

$0.00 $0.05 $0.075 $0.10 $0.20 

ADO Fee Rate per 

1,000 ADO ........... Tier 1 <= 2,000,000 Tier 2 >2,000,000 Tier 3 >2,500,000 Tier 4 >3,000,000 Tier 5 >3,500,000 

$0.00 $1.00 $1.50 $2.00 $2.50 

As an example, a Member that has 

510,000,000 ADQ would subsequently 

have 25,500 ‘‘ADQ increments’’ 

(510,000,000 ADQ/20,000 ADQ 

increments). While 12,500 of the 25,500 

ADQ increments are free within Tier 1, 

12,500 of the ADQ increments would be 

fee liable at $0.050 within Tier 2, while 

the remaining 500 ADQ increments 

would be fee liable at $.075 within Tier 

3, resulting in a total ADQ fee of 

$662.50 for that month.22

The Exchange notes that market 

participants with incrementally higher 

ADO or ADQ have the potential residual 

effect of exhausting system resources, 

bandwidth, and capacity. Higher ADO 

or ADQ may therefore, in turn, create 

latency and impact other Members’ 

ability to receive timely executions. The 

proposed fee structure has multiple 

thresholds, and the proposed fees are 

incrementally greater at higher ADO and 

ADQ rates because the potential impact 

on exchange systems, bandwidth and 

capacity becomes greater with increased 

ADO and ADQ rates. As noted above, 

the proposal contemplates that a 

Member would have to exceed the high 

ADO rate of 2,000,000 and a Market 

Maker would have to exceed the high 

ADQ rate of 250,000,000 before that 

market participant would be charged a 

fee under the proposed respective tiers. 

The Exchange believes that it is in the 

interests of all Members and market 

participants who access the Exchange to 

not allow other market participants to 

exhaust System resources, but to 

encourage efficient usage of network 

capacity. The Exchange also believes 

this proposal (and in particular the 

proposed fee amounts associated with 

higher ADO and ADQ) will reduce the 

incentive for market participants to 

engage in excessive order/quote and 

trade activity that may require the 

Exchange to otherwise increase its 

storage capacity and will encourage 

such activity to be submitted in good 

faith for legitimate purposes. 

The Exchange also represents that the 

proposed fees are not intended to raise 

revenue; rather, as noted above, it is 

intended to encourage efficient behavior 

so that market participants do not 

exhaust System resources. Moreover, 

the Exchange intends to provide 

Members with daily reports, free of 

charge, which will detail their order and 

trade activity in order for those firms to 

be fully aware of all order and trade 

activity they (and their affiliates) are 

sending to the Exchange. This will 

allow Members to monitor their 

behavior and determine whether it is 

approaching any of the ADO or ADQ 

thresholds that trigger the proposed 

fees. 

The Exchange lastly notes that other 

exchanges have adopted various fee 

programs that assess incrementally 


ddrumheller on DSK120RN23PROD with NOTICES1
106678 Federal Register / Vol. 89, No. 249 / Monday, December 30, 2024 / Notices 

24 15 U.S.C. 78f(b). 

25 15 U.S.C. 78f(b)(5). 

26 Id. 

27 15 U.S.C. 78f(b)(4). 

28See Securities Exchange Act Release 100582 

(July 23, 2024), 89 FR 60958 (July 29, 2024) (SR– 

CboeBZX–2024–071). 

29See Cboe U.S. Options Fees Schedule, BZX 

Options, Options Logical Port Fees, Ports with Bulk 

Quoting Capabilities. 

higher fees to Members that have 

incrementally higher order and/or 

quoting trading activity for similar 

reasons.23

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.24 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 25 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) 26 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) 27 of the Act, which 

requires that Exchange rules provide for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

Members and other persons using its 

facilities. 

The Exchange believes the proposed 

fees are reasonable because Unitized 

Logical Ports provide an optional, 

valuable service in that the ports are 

intended to create a more consistent, 

deterministic experience for messages 

once received within the Exchange’s 

System under the recently adopted 

unitized BOEv3 architecture. As 

discussed above, the new architecture 

(and thereby the new Unitized Logical 

Ports) was designed to create a more 

consistent, deterministic experience for 

messages once received within the 

Exchange’s System, which the Exchange 

believes improves the overall access 

experience on the Exchange and will 

enable future system enhancements. As 

noted, the BOEv3 protocol and 

architecture, along with the three new 

corresponding Unitized Logical Ports, 

are intended to reduce the natural 

variance of order handler processing 

times for messages, and as a result 

reduce the potential resulting 

‘‘reordering’’ of messages when they are 

sent from order handlers to matching 

engines. The adoption of the unitized 

BOEv3 structure (including the 

corresponding new Unitized Ports) was 

a technical solution that is intended to 

reduce the potential of this reordering 

and increase determinism.28 The 

Exchange believes the proposed fees are 

also reasonable to offset costs incurred 

in order to build out an entirely new 

unitized architecture. 

The Exchange also emphasizes that 

the use of the Unitized Logical Ports is 

not necessary for trading on the 

Exchange and, as noted above, is 

entirely optional. Users can also 

continue to access the Exchange through 

existing logical port offerings at existing 

rates. It is a Member’s specific business 

needs that will drive its decision 

whether to use Unitized Logical Ports in 

lieu of, or in addition to, existing logical 

ports (or, as emphasized, not use them 

at all). If a User finds little benefit in 

having these ports based on its business 

model and trading strategies, or 

determines the Unitized Logical ports 

are not cost-efficient for its needs, or 

does not provide sufficient value to the 

firm, such User may continue 

connecting to the Exchange in the 

manner it does today, unchanged. 

Indeed, the Exchange notes that since 

the adoption of Unitized Logical Ports 

on August 19, only approximately 27% 

of logical ports, bulk ports and purge 

ports being used are Unitized Logical 

Ports and approximately 73% are the 

preexisting Logical Ports, Bulk Ports and 

Purge Ports. Moreover, the Exchange 

believes that providing Members the 

option of purchasing Unitized Logical 

Ports individually or in sets provides 

Members further flexibility and an 

opportunity for cost savings for those 

Members that wish to only trade a 

subset of classes. 

The Exchange also believes that the 

proposed Unitized Logical Port fees are 

equitable and not unfairly 

discriminatory because they continue to 

be assessed uniformly to similarly 

situated users in that all Users who 

choose to purchase Unitized Logical 

Ports will be subject to the same 

proposed tiered fee schedule. Moreover, 

Members purchasing Unitized Logical 

Ports will only do so if they find a 

benefit and sufficient value in such 

ports as, all Members can otherwise 

continue to use the preexisting logical 

connectivity options. As such, Members 

can choose whether or not to purchase 

Unitized Logical Ports based on their 

respective business needs. 

The proposed ascending tier structure 

for Unitized Logical Port Sets is 

reasonable, equitable and not unfairly 

discriminatory as it’s designed to 

encourage market participants to be 

efficient with their respective Unitized 

Logical Port usage. It also is designed so 

that Members that use a higher 

allotment of the Exchange’s system 

resources pay higher rates, rather than 

placing that burden on market 

participants that have more modest 

needs. The Exchange believes the 

proposed ascending fee structure is 

therefore another appropriate means, in 

conjunction with an established 

Unitized Logical Port limit, to manage 

this finite resource (system capacity) 

and ensure its apportioned fairly. 

Furthermore, the Exchange already 

assesses higher fees to those that 

consume more Exchange resources for 

the existing non-Unitized Bulk Ports.29

The proposed limit on Unitized Logical 

Ports is also reasonable, equitable and 

not unfairly discriminatory as the 

Exchange believes that it is in the 

interests of all Members and market 

participants who access the Exchange to 

not allow Members to exhaust System 

resources, but to encourage efficient 

usage of network capacity. The 

Exchange also notes that the new BOEv3 

unitized architecture is subject to 

software limitations on the number of 

sessions that can be created on any one 

unitized process. Consideration was 

given to this limitation as well as to the 

amount of ports firms had indicated 

they would need prior to the 

implementation of Unitized Logical 

Ports. 

The Exchange believes the proposed 

ADO and ADQ fees are reasonable as 

Members that do not exceed the high 

thresholds of 2,000,000 ADO and 

250,000,000 ADQ will not be charged 

any fee under the proposed tiers. The 

Exchange notes that in establishing the 

proposed thresholds, it evaluated 

average ADO and ADQ rates over 

several months and the thresholds were 

designed to protect the Exchange’s 

Matching Engines from being adversely 

impacted from sustained and excessive 

orders/quotes throughout the course of 

a given month. The ADQ thresholds are 

also designed to ensure Market Makers 

quoting activity, which acts as 

important source of liquidity, is not 


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Federal Register / Vol. 89, No. 249 / Monday, December 30, 2024 / Notices 106679 

30Since the implementation of the proposal on 

September 3, 2024, the Exchange notes that it has 

not received any feedback from Market Maker 

participants that the proposal has impeded their 

ability to meet their quoting obligations. 

31See Securities Exchange Act Release No. 73639 

(November 19, 2014), 79 FR 72251 (December 5, 

2014) (File No. S7–01–13) (Regulation SCI Adopting 

Release). 

32See supra note 20. 

33See Cboe Global Markets, U.S. Options Market 

Volume Summary, Month-to-Date (August 27, 

2024), available at https://www.cboe.com/us/ 

options/market_statistics/ which reflects the 

Exchange representing only 3.3% of total market 

share. 

impeded by the proposal.30 The 

Exchange believes it’s reasonable, 

equitable and not unfairly 

discriminatory to assess higher fees 

when a Member has higher ADO and 

ADQ rates because the potential impact 

on exchange systems, bandwidth and 

capacity becomes greater with increased 

ADO and ADQ rates. The Exchange 

believes the proposed fee amounts are 

reasonable as the Exchange believes 

them to be commensurate with the 

proposed thresholds. Particularly, the 

proposed fee amounts that correspond 

to higher ADO and ADQ rates are 

designed to incentivize Members to 

reduce excessive order and quoting 

trade activity that the Exchange believes 

can be detrimental to all market 

participants at those levels and 

encourage such activity to be made in 

good faith and for legitimate purposes. 

As noted above, the Exchange believes 

that it is in the interests of all Members 

and market participants who access the 

Exchange to not allow Members to 

exhaust System resources, but to 

encourage efficient usage of network 

capacity. The Exchange therefore also 

believes that the proposed fees 

appropriately reflect the benefits to 

different firms of being able to send 

orders and quotes into the Exchange’s 

System and also believes the proposed 

fees are one method of facilitating the 

Commission’s goal of ensuring that 

critical market infrastructure has ‘‘levels 

of capacity, integrity, resiliency, 

availability, and security adequate to 

maintain their operational capability 

and promote the maintenance of fair 

and orderly markets.’’ 31

The Exchange believes adopting the 

proposed ADO and ADQ fees are 

reasonable as unfettered usage of 

System capacity and network resource 

consumption can have a detrimental 

effect on all market participants who 

access and use the Exchange. As 

discussed above, high ADO and ADQ 

rates may adversely impact system 

resources, bandwidth, and capacity 

which may, in turn, create latency and 

impact other Members’ ability to receive 

timely executions. The Exchange 

believes the proposed fees are therefore 

reasonable as they are designed to focus 

on activity that is truly disproportionate 

while fairly allocating costs. 

Further, the Exchange believes that 

the proposed ADO and ADQ fees are 

equitable and not unfairly 

discriminatory because they will be 

assessed uniformly to similarly situated 

users in that all Members that exceed 

the thresholds in connection with ADO 

and ADQ will be assessed the proposed 

ADO and ADQ rates. Regarding ADO an 

ADQ, no market participant is assessed 

any fees unless it exceeds the proposed 

thresholds. As noted above, the 

Exchange believes the proposed ADO 

and ADQ thresholds (i.e., 2,000,000 

ADO and 250,000,000 ADQ) are 

appropriately high rates respectively, 

such that the Exchange expects the vast 

majority of Members to not exceed 

them. While the Exchange has no way 

of predicting with certainty how the 

proposed changes will impact Member 

activity, based on trading activity from 

the prior months the Exchange would 

expect that, absent any changes to 

Member behavior, all Members would 

fall within proposed ADO Tier 1 (and 

thus not be subject to any new fees) and 

approximately 74% of Members would 

fall within proposed ADQ Tier 1 (and 

thus also not be subject to any new 

fees). With respect to the remaining 

Members (approximately 26%) that 

would exceed the ADQ Tier 1 threshold 

based on current activity, the Exchange 

would anticipate, absent any change in 

behavior, approximately 3 Members to 

fall within Tier 2, approximately 6 

Members to fall within Tier 3, 

approximately 3 Members to fall within 

Tier and no Members to fall within Tier 

5. Notwithstanding this impact, the 

Exchange believes that Market Makers 

are able to continue providing important 

liquidity to the Exchange and meet their 

quoting obligations [sic]. 

The Exchange believes it’s equitable 

and not unfairly discriminatory to 

assess incrementally higher fees to 

Members that have higher ADO and 

ADQ rates because the potential impact 

on exchange systems, bandwidth and 

capacity becomes greater with increased 

ADO and ADQ. The Exchange also 

believes it’s equitable and not unfairly 

discriminatory to aggregate Members 

trading activity with any affiliated 

Member sharing at least 75% common 

ownership in order to prevent members 

from shifting their order flow or quoting 

activity to other affiliates in order to 

circumvent the proposed fees. 

The Exchange lastly believes that its 

proposal is reasonable, equitably 

allocated and not unfairly 

discriminatory because it is not 

intended to raise revenue for the 

Exchange; rather, it is intended to 

encourage efficient behavior so that 

Members do not exhaust System 

resources. Moreover, as noted above, 

competing options exchanges similarly 

assess fees to deter Members from over 

utilizing the exchange’s System by 

having excessive order and/or quoting 

trading activity.32

The Exchange finally notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. The 

Exchange is only one of 18 options 

exchanges which market participants 

may direct their order flow and/or 

participate on, and it represents a small 

percentage of the overall market.33

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change to adopt fees 

for Unitized Logical Ports will impose 

any burden on intramarket competition 

that is not necessary in furtherance of 

the purposes of the Act because the 

proposed fees for will apply equally to 

all similarly situated Members. As 

discussed above, Unitized Logical Ports 

are optional and Members may choose 

to utilize Unitized Logical Ports, or not, 

based on their views of the additional 

benefits and added value provided by 

these ports. The Exchange believes the 

proposed fees will be assessed 

proportionately to the potential value or 

benefit received by Members with a 

greater number of Unitized Logical Ports 

and notes that Members may determine 

to cease using Unitized Logical Ports. As 

discussed, Members can also continue 

to access the Exchange through existing 

Logical Ports, which fees are not 

changing. 

Similarly, the Exchange does not 

believe that the proposed rule change to 

adopt ADO and ADQ fees will impose 

any burden on intramarket competition 

that is not necessary in furtherance of 

the purposes of the Act because such 

fees will apply equally to all similarly 

situated Members. Particularly, the 

proposed fees apply uniformly to all 

Members, in that any Member who 

exceeds the ADO and/or ADQ Tier 1 

thresholds will be subject to a fee under 

the proposed corresponding tiers. The 

Exchange believes that the proposed 

change neither favors nor penalizes one 

or more categories of market 

participants in a manner that would 


ddrumheller on DSK120RN23PROD with NOTICES1
106680 Federal Register / Vol. 89, No. 249 / Monday, December 30, 2024 / Notices 

34See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 

35NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

83 (December 9, 2008) (SR–NYSEArca–2006–21)). 

36 15 U.S.C. 78s(b)(3)(A). 

37 17 CFR 240.19b–4(f). 38 17 CFR 200.30–3(a)(12). 

impose an undue burden on 

competition. Rather, the proposal seeks 

to benefit all market participants by 

encouraging the efficient utilization of 

the Exchange’s network while taking 

into account the important liquidity 

provided by its Members. As discussed 

above potential impact on exchange 

systems, bandwidth and capacity 

becomes greater with increased ADO 

and ADQ rates. The Exchange also 

anticipates that the vast majority of 

Members on the Exchange will not be 

subject to any fees under the proposed 

tiers. Accordingly, the Exchange 

believes that the proposed ADO and 

ADQ fees do not favor certain categories 

of market participants in a manner that 

would impose a burden on competition. 

Next, the Exchange believes the 

proposed rule change does not impose 

any burden on intermarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

As previously discussed, the Exchange 

operates in a highly competitive market, 

including competition for exchange 

memberships. Market Participants have 

numerous alternative venues that they 

may participate on, including 17 other 

options exchanges (including 3 other 

non-Cboe options exchanges), as well as 

off-exchange venues, where competitive 

products are available for trading. 

Indeed, participants can readily choose 

to submit their order flow to other 

exchange and off-exchange venues if 

they deem fee levels at those other 

venues to be more favorable. Moreover, 

the Commission has repeatedly 

expressed its preference for competition 

over regulatory intervention in 

determining prices, products, and 

services in the securities markets. 

Specifically, in Regulation NMS, the 

Commission highlighted the importance 

of market forces in determining prices 

and SRO revenues and, also, recognized 

that current regulation of the market 

system ‘‘has been remarkably successful 

in promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 34 The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 

the execution of order flow from broker 

dealers’ . . . .’’35 Accordingly, the 

Exchange does not believe its proposed 

change imposes any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

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 36 and paragraph (f) of Rule 

19b–4 37 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. 

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 rule-comments@

sec.gov. Please include file number SR– 

CboeBZX–2024–131 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–CboeBZX–2024–131. 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–CboeBZX–2024–131 and should be 

submitted on or before January 21, 2025. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.38

J. Matthew DeLesDernier, 

Deputy Secretary. 

[FR Doc. 2024–31191 Filed 12–27–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

35426; 812–15590] 

Kurv ETF Trust and Kurv Investment 

Management LLC 

December 19, 2024. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’ or ‘‘SEC’’). 

ACTION: Notice. 

Notice of an application under section 

6(c) of the Investment Company Act of 

1940 (‘‘Act’’) for an exemption from 

section 15(a) of the Act, as well as from 

certain disclosure requirements in rule 


ddrumheller on DSK120RN23PROD with NOTICES1