Federal Register / Vol. 86, No. 140 / Monday, July 26, 2021 / Notices 40097 

35 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange initially filed the proposed fee 

changes July 1, 2021 (SR–CboeEDGX–2021–031). 

On July 13, 2021 the Exchange withdrew that filing 

and submitted this proposal. 

4See Cboe Global Markets, U.S. Equities Market 

Volume Summary, Month-to-Date (June 23, 2021), 

available at https://markets.cboe.com/us/equities/ 

market_statistics/. 

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–PEARL–2021–34, and 

should be submitted on or before 

August 16, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.35

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–15814 Filed 7–23–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92445; File No. SR– 

CboeEDGX–2021–033] 

Self-Regulatory Organizations; Cboe 

EDGX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fee Schedule 

July 20, 2021. 

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 July 13, 

2021, Cboe EDGX Exchange, Inc. 

(‘‘Exchange’’ or ‘‘EDGX’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX’’ or ‘‘EDGX 

Equities’’) proposes to amend its Fee 

Schedule. The text of the proposed rule 

change is provided in Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

options/regulation/rule_filings/edgx/), 

at the Exchange’s Office of the 

Secretary, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

Fee Schedule applicable to its equities 

trading platform (‘‘EDGX Equities’’) to 

(1) modify the standard rate for 

securities priced at or above $1.00 that 

remove liquidity, (2) remove certain fee 

codes in connection with 

internalization, (3) adopt a new tier 

under each of the Growth Tiers, the 

Non-Displayed Step-Up Volume Tier, 

and the Remove Volume Tiers, and, as 

a result, define the term ‘‘Step-Up 

ADAV’’, and (4) eliminate a Remove 

Volume Tier and a Retail Volume Tier.3

The Exchange first 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. More 

specifically, the Exchange is only one of 

16 registered equities exchanges, as well 

as a number of alternative trading 

systems and other off-exchange venues 

that do not have similar self-regulatory 

responsibilities under the Exchange Act, 

to which market participants may direct 

their order flow. Based on publicly 

available information,4 no single 

registered equities exchange has more 

than 16% of the market share. Thus, in 

such a low-concentrated and highly 

competitive market, no single equities 

exchange possesses significant pricing 

power in the execution of order flow. 

The Exchange in particular operates a 

‘‘Maker-Taker’’ model whereby it pays 

rebates to members that add liquidity 

and assesses fees to those that remove 

liquidity. The Exchange’s Fee Schedule 

sets forth the standard rebates and rates 

applied per share for orders that provide 

and remove liquidity, respectively. 

Currently, for orders in securities priced 

at or above $1.00, the Exchange 

provides a standard rebate of $0.00160 

per share for orders that add liquidity 

and assesses a fee of $0.00280 per share 

for orders that remove liquidity. For 

orders in securities priced below $1.00, 

the Exchange provides a standard rebate 

of $0.00009 per share for orders that add 

liquidity and assesses a fee of 0.30% of 

total dollar value for orders that remove 

liquidity. Additionally, in response to 

the competitive environment, the 

Exchange also offers tiered pricing 

which provides Members opportunities 

to qualify for higher rebates or reduced 

fees where certain volume criteria and 

thresholds are met. Tiered pricing 

provides an incremental incentive for 

Members to strive for higher tier levels, 

which provides increasingly higher 

benefits or discounts for satisfying 

increasingly more stringent criteria. 

Standard Rate: Securities at or Above 

$1.00 That Remove Liquidity 

As stated above, the Exchange 

currently assesses a standard rate of 

$0.00280 per share for orders that 

remove liquidity in securities priced at 

$1.00 or more. The Exchange proposes 

to amend the standard rate for orders 

that remove liquidity in securities 

priced at $1.00 or more from a fee of 

$0.00280 per share to $0.00285 per 

share and reflects this change in the Fee 

Codes and Associated Fee where 

applicable (i.e., corresponding to 


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5 See Nasdaq Pricing 7, Section 118(a)(1), which, 

for example, assesses a charge of $0.0030 for 

member orders that execute against resting 

midpoint liquidity, and that that execute in the 

Nasdaq Market Center generally, in securities 

priced at $1.00 or more; and NYSE American 

Equities Price List, NYSE American Trading Fees 

and Credits, Section I.A.1.a, Standard Rates, which 

assesses a standard rate of $0.0030 per share (unless 

member adds ADV of at least 10,000 shares) for 

orders in securities priced at or above $1 that 

remove liquidity. 

6An internalized trade is a trade where the two 

orders inadvertently match against each other and 

share the same Market Participant Identifier 

(‘‘MPID’’). 

7Additionally, if a Member adds an ADV of at 

least 10,000,000 shares, then the Member’s rate for 

internalization (fee codes EA or ER) decreases to 

FREE per share per side, for securities priced at, 

above, or below $1. See EDGX Fee Schedule, 

Footnote 7. 

8B is appended to orders that add liquidity to 

EDGX in Tape B securities, V is appended to order 

that add liquidity to EDGX in Tape A securities, Y 

is appended to orders that add liquidity to EDGX 

in Tape C securities, 3 is appended to orders that 

add liquidity to EDGX in pre and post market in 

Tape A or C securities, and 4 is appended to orders 

that add liquidity to EDGX in pre and post market 

in Tape A or C securities. Each is provided the 

standard rebate of $0.00160. 

9ADV means average daily volume calculated as 

the number of shares added to, removed from, or 

routed by, the Exchange, or any combination or 

subset thereof, per day. ADV is calculated on a 

monthly basis. 

10TCV 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. 

11Step-Up Add TCV means ADAV as a 

percentage of TCV in the relevant baseline month 

subtracted from current ADAV as a percentage of 

TCV. 

12 DM is appended to orders that add liquidity 

using MidPoint Discretionary order within 

discretionary range; HA is appended to nondisplayed orders that add liquidity; MM is 

appended to non-displayed orders that add 

liquidity using Mid-Point Peg; and RP is appended 

to non-displayed orders that add liquidity using 

Supplemental Peg. Each is provided a rebate of 

$0.00100. 

13BB is appended to orders that remove liquidity 

from EDGX in Tape B securities, N is appended to 

orders that remove liquidity from EDGX in Tape C 

securities, and W is appended to orders that remove 

liquidity from EDGX in Tape A securities. Each, as 

proposed, is assessed a fee of $0.00285. 

14ADAV means average daily added volume 

calculated as the number of shares added per day. 

ADAV is calculated on a monthly basis. 

15As a result, the proposed rule change updates 

the name of the current Non-Displayed Step-Up 

Tier to Non-Displayed Step-Up Tier 1. 

16As a result, the proposed rule change updates 

the name the current Remove Volume Tier 1 to 

Remove Volume Tier 2. Note that current Remove 

Volume Tier 3 is being deleted as proposed herein. 

standard fee codes N, W, 6, BB and ZR). 

The Exchange notes that the proposed 

standard rate is in line with, yet also 

competitive with, rates assessed by 

other equities exchanges on orders in 

securities priced at $1.00 or more.5

Eliminate Internalization Fee Codes 

The Fee Codes and Associate Fees 

section of the Fee Schedule lists all 

available fee codes for orders on EDGX. 

In particular, current fee code EA is 

appended to internalization 6 orders that 

add displayed liquidity and current fee 

code ER is appended to internalization 

orders that remove displayed liquidity. 

Orders that yield fee code EA and ER 

are assessed a fee of $0.0005 per share 

in securities priced at or above $1.00 

and 0.15% of the dollar value in 

securities priced below $1.00.7 The 

Exchange now proposes to eliminate 

these fee codes. The Exchange notes that 

a majority of other equities exchanges 

do not assess different rates for 

internalization orders, and therefore, in 

order to remain competitive with rates 

assessed on orders that add or remove 

liquidity on most other equities 

exchanges, the Exchange wishes to also 

not apply a different rate for such orders 

that are internalized. Internalization 

orders that add or remove liquidity will 

simply yield the applicable existing fee 

codes for all other orders that add or 

remove liquidity and receive the same 

corresponding rates that currently apply 

to all other orders that add or remove 

liquidity. For example, an 

internalization order that adds liquidity 

in Tape B securities will yield existing 

fee code B and receive the current 

corresponding rebate of $0.00160 for 

securities priced at or above $1.00 or 

$0.00009 for securities priced below a 

$1.00. The Exchange also notes that as 

a result of the proposed deletion of 

these fee codes, the proposed rule 

change deletes footnote 7 of the Fee 

Schedule, which provides that a 

Member’s rate for internalization (fee 

codes EA or ER) decreases to ‘‘free’’ per 

share per side if a Member adds an ADV 

of at least 10,000,000 shares. 

New Growth, Non-Displayed Step-Up 

Volume, and Remove Volume Tier 

Under footnote 1 of the Fee Schedule 

the Exchange currently offers various 

Add/Remove Volume Tiers. 

Specifically, the Exchange offers two 

Growth Tiers that each provide an 

enhanced rebate for Members’ 

qualifying orders yielding fee codes B, 

V, Y, 3 and 4,8 where a Member reaches 

certain add volume-based criteria, 

including ‘‘growing’’ its volume over a 

certain baseline month. For example, 

Growth Tier 1 provides an enhanced 

rebated of $0.0026 per share on 

qualifying orders (i.e., orders yielding 

fee code B, V, Y, 3 and 4) where a 

Member (1) adds an ADV 9 of greater 

than or equal to 0.20% of the TCV,10

and (2) has a Step-Up Add TCV 11 from 

March 2019 that is greater than or equal 

to 0.10%. The Exchange also offers one 

Non-Displayed Step-Up Volume Tiers 

that provides an enhanced rebate for 

Members’ orders yielding fee codes DM, 

HA, MM, and RP,12 where a Member 

may receive an enhanced rebated of 

$0.0025 per share on qualifying orders 

(i.e., orders yielding fee code DM, HA, 

MM or RP) where a Member (1) has a 

Step-Up Add TCV from January 2021 

greater than or equal to 0.10%, (2) adds 

an ADV greater than or equal to 0.50% 

of the TCV, and (3) removes an ADV 

greater than or equal to 0.75% of the 

TCV. Finally, the Exchange also 

currently offers two Remove Volume 

Tiers. For example, Remove Volume 

Tier 1 currently offers a reduced fee of 

$0.0027 per share on qualifying orders 

yielding fee codes BB, N and W13 in 

securities priced at or above $1.00 and 

0.28% of total dollar value on qualifying 

orders in securities process below $1.00, 

where a Member (1) has an ADAV 14

greater than or equal to 0.25% TCV with 

displayed orders that yield fee codes B, 

V or Y, or (2) adds Retail Order ADV 

(i.e., yielding fee code ZA) greater than 

or equal to 0.45% of the TCV. 

The Exchange now proposes to adopt 

a new Growth Tier 2, a new NonDisplayed Step-Up Volume Tier 2,15 and 

a new Remove Volume Tier 1.16 Each 

new tier provides the same set of 

additional criteria in which Members 

may strive to achieve to receive an 

enhanced rebate or reduced fee, as 

applicable—a Member must (1) add a 

Step-Up ADAV from June 2021 greater 

than or equal to 0.10% of the TCV, or 

add a Step-Up ADAV from June 2021 

greater than or equal to 8,000,000, (2) 

and have a total remove ADV greater 

than or equal to 0.70% of the TCV. The 

proposed rule change also adopts a new 

definition, under the definitions section 

of the Fee Schedule, for the term ‘‘StepUp ADAV’’, as referenced in each of the 

proposed new tiers. Specifically, as 

proposed ‘‘Step-up ADAV’’ means 

ADAV in the relevant baseline month 

subtracted from current ADAV. 

For achieving the proposed criteria, a 

Member will receive a proposed 

enhanced rebate of $0.0027 per share on 

qualifying orders (i.e., yielding fee codes 

B, V, Y, 3 and 4) pursuant to proposed 

Growth Tier 2, a proposed enhanced 

rebate of $0.0025 per share on 

qualifying orders (i.e., yielding fee codes 

DM, HA, MM and RP) pursuant to 

proposed Non-Displayed Step-Up 

Volume Tier 2, and a proposed reduced 

fee of $0.00275 per share on qualifying 

orders (i.e., yielding fee codes BB, N and 

W) in securities priced at or above $1.00 

and 0.28% of total dollar value in 


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17As a result of the five decimal format of the 

proposed reduced fee in proposed Remove Volume 

Tier 1, the proposed rule change also updates the 

decimal format of the reduced fee that currently 

corresponds to Remove Volume Tier 2 (current Tier 

1) in order to provide uniformity across the Remove 

Volume tiers. This formatting update does not alter 

the current reduced fee amount offered under 

Remove Volume Tier 2 (current Tier 1). 

18 15 U.S.C. 78f. 

19 15 U.S.C. 78f(b)(4). 

20 15 U.S.C. 78f(b)(5). 

21See supra note 5. 

22See generally NYSE Price List, Transaction 

Fees; Nasdaq Equity 7, Section 118(a)(1), Fees for 

Execution and Routing of Orders in Nasdaq-Listed 

Securities; and BZX Equities Fee Schedule, 

Footnote 1, Add/Remove Volume Tiers. 

23See EDGX Equities Fee Schedule, Footnote 1, 

Add/Remove Volume Tiers. 

securities priced below $1.00 pursuant 

to proposed Remove Volume Tier 1.17

Overall, the new Growth, NonDisplayed Step-Up Volume, and 

Remove Volume tiers are designed to 

provide Members with an additional 

opportunity to receive an enhanced 

rebate or reduced fee by increasing their 

order flow to the Exchange, which 

further contributes to a deeper, more 

liquid market and provides even more 

execution opportunities for active 

market participants. Incentivizing an 

increase in both liquidity adding 

volume and in liquidity removing 

volume, through additional criteria and 

enhanced rebate opportunities, 

encourages liquidity adding Members 

on the Exchange to contribute to a 

deeper, more liquid market, and 

liquidity executing Members on the 

Exchange to increase transactions and 

take execution opportunities provided 

by such increased liquidity, together 

providing for overall enhanced price 

discovery and price improvement 

opportunities on the Exchange. As such, 

increased overall order flow benefits all 

Members by contributing towards a 

robust and well-balanced market 

ecosystem. 

Eliminate a Remove Volume Tier and 

Retail Volume Tier 

Finally, the Exchange proposes to 

eliminate Remove Volume Tier 2 and 

Retail Volume Tier 3. Current Remove 

Volume Tier 2 provides a reduced fee of 

$0.0026 on qualifying orders (i.e., 

yielding fee codes BB, N and W) in 

securities priced at or above $1.00 and 

0.28% of total dollar value in securities 

priced below $1.00, where a Member (1) 

has a Step-Up Add TCV from January 

2021 greater than or equal to 0.15%, (2) 

has an ADAV greater than or equal to 

0.08% of the TCV for Non-Displayed 

orders that yield fee codes DM, HA, HI, 

MM, or RP, and (3) removes an ADV 

greater than or equal to 0.75% of the 

TCV. Current Retail Volume Tier 3 

offers an enhanced rebate of $0.0037 per 

share on qualifying orders (i.e., yielding 

fee code ZA), where a Member (1) has 

a Retail Step-Up Add TCV (i.e., yielding 

fee code ZA) from May 2020 greater 

than or equal to 0.10%, and (2) removes 

an ADV greater than or equal to 0.70% 

of the TCV. The Exchange proposes to 

eliminate Remove Volume Tier 2 and 

Retail Volume Tier 3 as no Members are 

currently satisfying the criteria under 

these tiers, nor have satisfied such 

criteria over the last three months. The 

Exchange no longer wishes to, nor is it 

required to, maintain such tiers. More 

specifically, the proposed rule change 

removes these tiers as the Exchange 

would rather redirect future resources 

and funding into other programs and 

tiers intended to incentivize increased 

order flow. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,18

in general, and furthers the objectives of 

Section 6(b)(4),19 in particular, as it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its Members and 

issuers and other persons using its 

facilities. The Exchange also believes 

that the proposed rule change is 

consistent with the objectives of Section 

6(b)(5) 20 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, and, 

particularly, is not designed to permit 

unfair discrimination between 

customers, issuers, brokers, or dealers. 

As described above, the Exchange 

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 

proposed rule changes reflect a 

competitive pricing structure designed 

to incentivize market participants to 

direct their order flow to the Exchange, 

which the Exchange believes would 

enhance market quality to the benefit of 

all Members. 

Regarding the proposed change to the 

standard rates, the Exchange believes 

that amending the standard rate for 

orders that remove liquidity in 

securities priced at or above $1.00 is 

reasonable because, as stated above, in 

order to operate in the highly 

competitive equities markets, the 

Exchange and its competing exchanges 

seek to offer similar pricing structures, 

including assessing comparable 

standard fees for orders in securities 

priced at or above $1.00.21 Thus, the 

Exchange believes the proposed 

standard rate change is reasonable as it 

is generally aligned with and 

competitive with the amounts assessed 

for the orders in securities at or above 

$1.00 on other equities exchanges. The 

Exchange also believes that amending 

this standard rate amount represents an 

equitable allocation of fees and is not 

unfairly discriminatory because they 

will continue to automatically apply to 

all Members’ orders that remove 

liquidity in securities at or above $1.00 

uniformly. 

The Exchange also believes the 

proposed rule change to remove fee 

codes EA and ER is reasonable as the 

Exchange has observed that a majority 

of other equities exchanges do not 

assess a different rate for internalization 

orders that add or remove liquidity, and 

therefore, seeks to more competitively 

align its rates assessed on orders that 

add or remove liquidity with those 

assessed on other equities exchanges by 

also not applying a different rate for 

internalized orders. The Exchange 

believes that it is reasonable, equitable 

and not unfairly discriminatory to 

assess internalization orders that add or 

remove liquidity the same existing 

corresponding rates currently applied to 

orders that add or remove liquidity that 

are not internalized. Such current rates 

will apply automatically and uniformly 

to internalizing orders that add or 

remove liquidity as they do today for all 

other orders that add or remove 

liquidity. 

Also, as described above, the 

Exchange notes that relative volumebased incentives and discounts have 

been widely adopted by exchanges,22

including the Exchange,23 and are 

reasonable, equitable and nondiscriminatory because they are open to 

all members on an equal basis and 

provide additional benefits or discounts 

that are reasonably related to (i) the 

value to an exchange’s market quality 

and (ii) associated higher levels of 

market activity, such as higher levels of 

liquidity provision and/or growth 

patterns. Competing equity exchanges 

offer similar tiered pricing structures, 

including schedules of rebates and fees 


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24See supra note 16. 

that apply based upon members 

achieving certain volume and/or growth 

thresholds, as well as assess similar fees 

or rebates for similar types of orders, to 

that of the Exchange. 

In particular, the Exchange believes 

the proposed new Growth, NonDisplayed Step-Up Volume, and 

Remove Volume tiers are reasonable 

because each new tier will be available 

to all Members, as the existing tiers 

currently are, and provide all Members 

with an additional opportunity to 

receive an enhanced rebate or reduced 

fee, as applicable. The Exchange further 

believes the proposed new Growth, 

Non-Displayed Step-Up, and Remove 

Volume tiers are a reasonable means to 

encourage overall growth in Members’ 

overall order flow to the Exchange and 

to incentivize Members to continue to 

provide liquidity adding and liquidity 

removing to the Exchange by offering 

them an additional opportunity to 

receive an enhanced rebate or reduced 

fee on qualifying orders than those 

opportunities currently under the Add/ 

Remove Volume Tiers in Footnote 1 of 

the Fee Schedule. The Exchange 

believes that the proposed tiers will 

generally benefit all market participants 

by incentivizing continuous liquidity 

and thus, deeper more liquid markets as 

well as increased execution 

opportunities. Indeed, the Exchange 

notes that greater add volume order flow 

may provide for deeper, more liquid 

markets and execution opportunities at 

improved prices, and greater remove 

volume order flow may increase 

transactions on the Exchange, which the 

Exchange believes incentivizes liquidity 

providers to submit additional liquidity 

and execution opportunities. This 

overall increase in activity deepens the 

Exchange’s liquidity pool, offers 

additional cost savings, supports the 

quality of price discovery, promotes 

market transparency and improves 

market quality, for all investors. The 

Exchange also believes the proposed 

rule change to define the term ‘‘Step-Up 

ADAV’’ is reasonable as it will clarify 

terminology used in the Fee Schedule, 

to the benefit of all Members. 

Further, the Exchange believes that 

the proposed tiers are reasonable as they 

do not represent a significant departure 

from the criteria or corresponding rates 

currently offered in the Fee Schedule, 

and that the proposed enhanced rebates 

or enhanced fee, as applicable, are 

commensurate with the new criteria. 

More specifically, the Exchange believes 

that the proposed criteria, which is the 

same in each new tier, and 

corresponding rates are commensurate 

with surrounding tiers; in that the 

proposed criteria in new Growth Tier 2 

is incrementally more difficult than that 

of Growth Tier 1 and thus appropriately 

offers a greater incentive, the proposed 

criteria in new Remove Volume Tier 1 

is incrementally less difficult than that 

of Remove Volume Tier 2 (current Tier 

1) 24 and thus appropriately offers a 

lesser incentive, and the proposed 

criteria in new Non-Displayed Step-Up 

Volume Tier 2 is about the same in 

difficulty as the current Non-Displayed 

Step-Up Volume Tier and thus 

appropriately offers the same incentive. 

The Exchange also believes that the 

proposal represents an equitable 

allocation of fees and rebates and is not 

unfairly discriminatory because all 

Members are eligible for the new 

Growth, Non-Displayed Step-Up 

Volume, and Remove Volume tiers and 

have the opportunity to meet the tiers’ 

criteria and receive the applicable 

enhanced rebate or reduced fee if such 

criteria is met. Without having a view of 

activity on other markets and offexchange venues, the Exchange has no 

way of knowing whether this proposed 

rule change would definitely result in 

any Members qualifying for the 

proposed tiers. While the Exchange has 

no way of predicting with certainty how 

the proposed tiers will impact Member 

activity, the Exchange anticipates that at 

least five Members will be able to satisfy 

the criteria proposed under each of the 

three new tiers. The Exchange also notes 

that proposed tiers will not adversely 

impact any Member’s ability to qualify 

for reduced fees or enhanced rebate 

offered under other tiers. Should a 

Member not meet the proposed new 

criteria, the Member will merely not 

receive that corresponding enhanced 

rebate or reduced fee, as applicable. 

Finally, the Exchange believes the 

proposed rule change to eliminate 

Remove Volume Tier 2 and Retail 

Volume Tier 3 is reasonable because the 

Exchange is not required to maintain 

this tier or provide Members an 

opportunity to receive reduced fees or 

enhanced rebates. The Exchange 

believes the proposal to eliminate these 

tiers is also equitable and not unfairly 

discriminatory because it applies to all 

Members (i.e., the tier will not be 

available for any Member). The 

Exchange notes that recently no 

Members have satisfied the criteria of 

Remove Volume Tier 2 nor the criteria 

of Retail Volume Tier 3. The Exchange 

also notes that the proposed rule change 

to remove these two tiers merely results 

in Members not receiving a reduced fee 

or enhanced rebate, as applicable, 

which as noted above, the Exchange is 

not required to offer or maintain. 

Furthermore, the proposed rule change 

to eliminate both Remove Volume Tier 

2 and Retail Volume Tier 3 enables the 

Exchange to redirect resources and 

funding into other programs and tiers 

intended to incentivize increased order 

flow. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule changes will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. Rather, as 

discussed above, the Exchange believes 

that the proposed change would 

encourage the submission of additional 

order flow to a public exchange, thereby 

promoting market depth, execution 

incentives and enhanced execution 

opportunities, as well as price discovery 

and transparency for all Members. As a 

result, the Exchange believes that the 

proposed change furthers the 

Commission’s goal in adopting 

Regulation NMS of fostering 

competition among orders, which 

promotes ‘‘more efficient pricing of 

individual stocks for all types of orders, 

large and small.’’ 

The Exchange believes the proposed 

rule change does not impose any burden 

on intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Particularly, 

the proposed rule change to update the 

standard fee applicable to liquidity 

removing orders in securities priced at 

or above a $1.00 does not impose any 

burden on intramarket competition 

because the standard rate will continue 

to apply automatically and uniformly to 

all liquidity removing orders priced at 

or above $1.00. Similarly, all Members’ 

internalizing orders that add or remove 

liquidity will no longer yield fee codes 

EA or ER, and, instead, will 

automatically and uniformly be assessed 

the fees already in place for all other 

orders generally that add or remove 

liquidity. The Exchange also notes that 

the proposed new Growth, NonDisplayed Step-Up Volume, Remove 

Volume tiers applies to all Members 

equally in that all Members are eligible 

for these tiers, have a reasonable 

opportunity to meet the tiers’ criteria 

and will receive the enhanced rebates or 

reduced fee on their qualifying orders if 

such criteria is met. Additionally, the 

proposed tiers are designed to attract 

additional order flow to the Exchange. 

The Exchange believes that the new 

criteria will incentivize market 

participants to direct liquidity adding 

and removing order flow to the 

Exchange, providing for additional 

execution opportunities for market 


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Federal Register / Vol. 86, No. 140 / Monday, July 26, 2021 / Notices 40101 

25Supra note 4. 

26See Securities Exchange Act Release No. 51808 

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

27NetCoalition 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)). 

28 15 U.S.C. 78s(b)(3)(A). 

29 17 CFR 240.19b–4(f). 30 17 CFR 200.30–3(a)(12). 

participants and improved price 

transparency. Greater overall order flow, 

trading opportunities, and pricing 

transparency benefits all market 

participants on the Exchange by 

enhancing market quality and 

continuing to encourage Members to 

send orders, thereby contributing 

towards a robust and well-balanced 

market ecosystem. Finally, the Exchange 

does not believe the proposed rule 

change to eliminate a Remove Volume 

Tier and Retail Volume Tier will impose 

any burden on intramarket competition 

because it applies to all Members 

uniformly, as in, the tiers will no longer 

be available to any Member. 

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. 

Members have numerous alternative 

venues that they may participate on and 

direct their order flow, including other 

equities exchanges, off-exchange 

venues, and alternative trading systems. 

Additionally, the Exchange represents a 

small percentage of the overall market. 

Based on publicly available information, 

no single equities exchange has more 

than 16% of the market share.25

Therefore, no exchange possesses 

significant pricing power in the 

execution of order flow. Indeed, 

participants can readily choose to send 

their orders to other exchange and offexchange 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.’’ 26 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’ . . . .’’.27 Accordingly, the 

Exchange does not believe its proposed 

fee 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 28 and paragraph (f) of Rule 

19b–4 29 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CboeEDGX–2021–033 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CboeEDGX–2021–033. 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–CboeEDGX–2021–033, and 

should be submitted on or before 

August 16, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–15812 Filed 7–23–21; 8:45 am] 

BILLING CODE 8011–01–P 


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