46028 Federal Register / Vol. 86, No. 156 / Tuesday, August 17, 2021 / Notices 

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

2 17 CFR 240.19b–4. 

name; Social Security Number or tax 

identification number; business contact 

information; contract number; and other 

contract information; fingerprint cards 

and experience and qualifications to 

provide services including principals’ 

names and company descriptions. 

2. Real property owner and tenant 

information: Records related to 

compensation claims by occupants of 

property acquired by USPS, including 

name and address of claimant, address 

of vacated dwelling, and itemized 

expenses. 

3. Crowdsourcing Agreement 

Participant Records: First name, last 

name, email address, team name, 

organization name, team official 

representative or point of contact 

designation status, and password 

established during the registration 

process, idea text and relevant feedback 

responses to challenges regarding 

selected problems and topics, drawings, 

attachments, or documents associated 

with submissions. 

RECORD SOURCE CATEGORIES: 

Contract employees or businesses; 

previous dwelling owner or tenant 

claimant; and USPS claims reviewers 

and adjudicators; feedback and ideas 

provided by participating teams or 

individuals in USPS sponsored 

challenges. 

ROUTINE USES OF RECORDS MAINTAINED IN THE

SYSTEM, INCLUDING CATEGORIES OF USERS AND

THE PURPOSES OF SUCH USES: 

Standard routine uses 1. through 9. 

apply. 

STORING, RETRIEVING, ACCESSING, RETAINING, 

AND DISPOSING OF RECORDS IN THE SYSTEM: 

POLICIES AND PRACTICES FOR STORAGE OF

RECORDS: 

Automated database, computer 

storage media, and paper. 

POLICIES AND PRACTICES FOR RETRIEVAL OF

RECORDS: 

Individual, business, lessor, or 

claimant name; contract name or 

number, Social Security Number, tax 

identification number, business contact 

information, or address of leased 

facility; individuals participating in 

challenges and teams or organizations 

participating in challenges. 

POLICIES AND PRACTICES FOR RETENTION AND

DISPOSAL OF RECORDS: 

1. Unsuccessful proposals and 

architect/engineering questionnaires are 

retained 1 year beyond contract award. 

Contract records are closed at the end of 

the fiscal year in which they become 

inactive and are retained 6 years 

thereafter. 

2. Contractor fingerprint records are 

retained 2 years beyond contractor 

termination date. 

3. Leased property records are closed 

at the end of the calendar year in which 

the lease or rental agreement expires or 

terminates and are retained 6 years and 

3 months from that date. 

4. Real property owner and tenant 

records are retained 6 years unless 

required longer for litigation purposes. 

5. Participant registration information 

for challenges and participant responses 

to challenges are retained for 1 year after 

conclusion of challenge. 

Records existing on paper are 

destroyed by burning, pulping, or 

shredding. Records existing on 

computer storage media are destroyed 

according to the applicable USPS media 

sanitization practice. 

ADMINISTRATIVE, TECHNICAL, AND PHYSICAL

SAFEGUARDS: 

Paper records, computers, and 

computer storage media are located in 

controlled-access areas under 

supervision of program personnel. 

Access to these areas is limited to 

authorized personnel, who must be 

identified with a badge. Access to 

records is limited to individuals whose 

official duties require such access. 

Contractors and licensees are subject to 

contract controls and unannounced onsite audits and inspections. Computers 

are protected by mechanical locks, card 

key systems, or other physical access 

control methods. The use of computer 

systems is regulated with installed 

security software, computer logon 

identifications, and operating system 

controls including access controls, 

terminal and transaction logging, and 

file management software. 

RECORD ACCESS PROCEDURES: 

Requests for access must be made in 

accordance with the Notification 

Procedure above and USPS Privacy Act 

regulations regarding access to records 

and verification of identity under 39 

CFR 266.5. 

CONTESTING RECORD PROCEDURES: 

See Notification Procedures and 

Record Access Procedures above. 

NOTIFICATION PROCEDURES: 

Individuals wanting to know if 

information about them is maintained in 

this system of records must address 

inquiries to the appropriate system 

manager. Inquiries about highway 

vehicle contracts must be made to the 

applicable USPS area office. Real 

property owner and tenant claimants 

must address inquiries to the same 

facility to which they submitted the 

claim. Inquiries must contain full 

individual or business name, Social 

Security Number, tax identification 

number, contract number, date of 

contract, or other pertinent identifying 

information. 

EXEMPTIONS PROMULGATED FOR THE SYSTEM: 

None. 

HISTORY: 

June 27, 2012, 77 FR 38342; April 29, 

2005, 70 FR 22516. 

* * * * * 

Ruth B. Stevenson, 

Chief Counsel, Ethics and Legal Compliance. 

[FR Doc. 2021–17648 Filed 8–16–21; 8:45 am] 

BILLING CODE 7710–12–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92635; File No. SR– 

CboeBZX–2021–055] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fee Schedule 

August 11, 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 August 2, 

2021, 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 

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/ 

equities/regulation/rule_filings/bzx/) 

[sic], at the Exchange’s Office of the 

Secretary, and at the Commission’s 

Public Reference Room. 


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Federal Register / Vol. 86, No. 156 / Tuesday, August 17, 2021 / Notices 46029 

3See Cboe Global Markets U.S. Options Market 

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

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

market_statistics/. 

4Orders yielding fee code PY are Customer orders 

that add liquidity in Penny Program Securities and 

are offered a rebate of $0.25, and orders yielding fee 

code XY are Customer orders in XSP options that 

add liquidity and are offered a rebate of $0.25. 

5 ‘‘ADAV’’ means average daily added volume 

calculated as the number of contracts added. ADAV 

is calculated on a monthly basis. 

6 ‘‘OCC Customer Volume’’ or ‘‘OCV’’ means the 

total equity and ETF options volume that clears in 

the Customer range at the Options Clearing 

Corporation (‘‘OCC’’) for the month for which the 

fees apply, excluding volume on any day that the 

Exchange experiences an Exchange System 

Disruption and on any day with a scheduled early 

market close. 

7As a result of eliminating Tier 5, the proposed 

rule change also amends current Tier 6 to be Tier 

5. 

8Orders yielding fee code PP are Market Maker, 

Away Market Maker, or Professional orders that 

remove liquidity in Penny Program Securities and 

are assessed a fee of $0.50. 

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 for its equity options 

platform (‘‘BZX Options’’) in connection 

with its Customer Penny Add Volume 

Tiers, Market Maker, Away Market 

Maker, and Professional Penny Take 

Volume Tiers, and Customer Non-Penny 

Add Volume Tiers, effective August 2, 

2021. 

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 options venues to which market 

participants may direct their order flow. 

Based on publicly available information, 

no single options exchange has more 

than 16% of the market share and 

currently the Exchange represents only 

approximately 8% of the market share.3

Thus, in such a low-concentrated and 

highly competitive market, no single 

options exchange, including the 

Exchange, possesses significant pricing 

power in the execution of option order 

flow. The Exchange believes that the 

ever-shifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow or discontinue to 

reduce use of certain categories of 

products, in response to fee changes. 

Accordingly, competitive forces 

constrain the Exchange’s transaction 

fees, and market participants can readily 

trade on competing venues if they deem 

pricing levels at those other venues to 

be more favorable. The Exchange’s Fee 

Schedule sets forth standard rebates and 

rates applied per contract, which varies 

depending on the Member’s capacity 

(Customer, Firm, Market Maker, etc.), 

whether the order adds or removes 

liquidity, and whether the order is in 

Penny or Non-Penny Program 

Securities. 

Additionally, in response to the 

competitive environment, the Exchange 

also offers tiered pricing which provides 

Members with 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. Among other 

volume tiers, the Exchange currently 

offers Customer Penny Add Volume 

Tiers, Market Maker, Away Market 

Maker, and Professional Penny Take 

Volume Tiers, and Customer Non-Penny 

Add Volume Tiers, to which it proposes 

to make the following changes. 

Customer Penny Add Volume Tiers 

The Exchange currently offers seven 

Customer Penny Add Volume Tiers 

under footnote 1 of the Fee Schedule 

that provide enhanced rebates between 

$0.35 and $0.53 per contract for 

qualifying Customer orders (i.e., that 

yield fee code PY or XY) 4 where a 

Member meets certain liquidity 

thresholds. The Exchange proposes to 

update Tier 6, which currently offers an 

enhanced rebate of $0.53 per contract 

for qualifying orders (i.e., that yield fee 

code PY or XY) where a Member has an 

ADAV 5 in Customer orders greater than 

or equal to 1.70% of average OCV.6

Specifically, the proposed rule change 

updates the percentage of Customer 

orders over average OCV from 1.70% to 

2.00% and adds an additional prong of 

criteria that a Member must achieve in 

order to receive the current enhanced 

rebate. The proposed second prong of 

criteria requires a Member, in addition 

to meeting the existing criteria (as 

updated), to reach an ADAV in 

Customer Non-Penny orders greater 

than or equal to 0.50% of average OCV. 

The proposed rule change does not alter 

the existing enhanced rebate amount 

offered in Tier 6. 

The proposed rule change also 

eliminates Tier 5 7 and Tier 7. Tier 5 

currently offers an enhanced rebate of 

$0.53 per contract for qualifying orders 

where a Member has (1) an ADAV in 

Customer orders greater than or equal to 

0.80% of average OCV, (2) an ADAV in 

Market Maker orders greater than or 

equal to 0.35% of average OCV, and (3) 

on BZX Equities an ADAV greater than 

or equal to 0.30% of average TCV. Tier 

7 currently offers the same enhanced 

rebate ($0.53) per contract for qualifying 

orders where a Member has (1) an 

ADAV in Customer orders greater than 

or equal to 0.50% of average OCV, (2) 

an ADAV in Market Maker orders 

greater than or equal to 2.75% of 

average OCV, and (3) an ADAV in Firm 

Non-Penny orders greater than or equal 

to 0.05% of average OCV. 

The Exchange proposes to eliminate 

Tiers 5 and 7 as no Members are 

currently satisfying the criteria under 

these tiers, nor have recently satisfied 

such criteria. 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 like to 

provide more consolidated, streamlined 

Customer Penny Add Volume Tiers by 

offering a single tier that provides an 

enhanced rebate of $0.53 (current Tier 

6/new Tier 5) and would also rather 

redirect future resources and funding 

into other programs and tiers intended 

to incentivize increased order flow. The 

Exchange believes that the proposed 

updated criteria in current Tier 6 (new 

Tier 5) is designed to provide a different 

opportunity for Members to achieve the 

tier to receive the same enhanced rebate. 

Market Maker, Away Market Maker, and 

Professional Penny Take Volume Tiers 

The Exchange currently offers three 

Market Maker, Away Market Maker, and 

Professional Take Volume Tiers under 

footnote 3 of the Fee Schedule that 

provide a reduced fee between $0.45 

and $0.47 per contract for qualifying 

orders (i.e., that yield fee code PP) 8

where a Member meets certain liquidity 

thresholds. The Exchange proposes to 

update each of the three Market Maker, 

Away Market Maker, and Professional 


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46030 Federal Register / Vol. 86, No. 156 / Tuesday, August 17, 2021 / Notices 

9 ‘‘ADRV’’ means average daily removed volume 

calculated as the number of contracts removed. 

ADRV is calculated on a monthly basis. 

10The proposed rule change also makes a 

nonsubstantive edit by making ‘‘Customer NonPenny Add Volume Tier’’ plural. 

11Orders yielding fee code NY are Customer 

orders that add liquidity in Non-Penny Program 

Securities and are offered a rebate of $0.85. 

12As a result of new Tier 2, the proposed rule 

change also amends current Tier 2 to be Tier 3. 

Take Volume Tiers. The three tiers 

currently offer the following: 

• Tier 1 currently offers a reduced fee 

of $0.45 per contract for qualifying 

orders (i.e., that yield fee code PP) 

where a Member has (1) an ADAV in 

Customer orders greater than or equal to 

0.80% of average OCV, (2) an ADAV in 

Market Maker orders greater than or 

equal to 0.35% of average OCV, (3) on 

BZX Equities an ADAV greater than or 

equal to 1.00% of average TCV, and (4) 

an ADAV in Customer Non-Penny 

orders greater than or equal to 0.10% of 

average OCV. 

• Tier 2 currently offers a reduced fee 

of $0.47 per contract for qualifying 

orders where a Member has an ADAV in 

Customer orders greater than or equal to 

1.30% of average OCV. 

• Tier 3 currently offers a reduced fee 

of $0.45 per contract for qualifying 

orders where a Member has (1) an 

ADAV in Customer orders greater than 

or equal to 2.00% of average OCV, and 

(2) an ADAV in Customer Non-Penny 

orders greater than or equal to 0.40% of 

average OCV. 

The proposed rule change updates the 

three tiers to offer the following: 

• As proposed, Tier 1 offers a new 

reduced fee of $0.49 per contract for 

qualifying orders where a Member has 

(1) an ADAV in Customer orders greater 

than or equal to 1.00% of average OCV, 

and (2) Member has an ADRV 9 in 

Market Maker/Away Market Maker 

orders greater than or equal to 1.00% of 

average OCV. The proposed rule change 

eliminates the criteria in current prong 

3 and 4. 

• As proposed, Tier 2 offers a new 

reduced fee of $0.48 per contract for 

qualifying orders where a Member 

achieves the existing criteria plus 

proposed additional criteria in new 

prong two—a Member also has an 

ADRV in Market Maker/Away Market 

Maker orders greater than or equal to 

1.00% of average OCV. 

• As proposed, Tier 3 offers a new 

reduced fee of $0.47 per contract for 

qualifying orders where a Member 

achieves the existing criteria plus 

proposed additional criteria in new 

prong three—a Member also has an 

ADRV in Market Maker/Away Market 

Maker orders greater than or equal to 

2.00% of average OCV. 

The Exchange believes that the 

proposed updates to the Market Maker, 

Away Market Maker, and Professional 

Penny Take Volume Tiers will provide 

different and additional opportunities 

for such Members to achieve the 

corresponding reduced fees, 

encouraging these liquidity providing 

market participants to increase their 

overall order flow, both add (ADAV) 

and remove (ADRV) volume, to the 

Exchange. This, in turn, may facilitate 

tighter spreads and more price 

improvement opportunities, signaling 

increased activity from other market 

participants, and thus may ultimately 

contribute to deeper and more liquid 

markets and a more robust and wellbalanced market ecosystem on the 

Exchange, to the benefit of all market 

participants. 

Customer Non-Penny Add Volume Tiers 

The Exchange currently offers five 

Customer Non-Penny Add Volume 

Tiers 10 under footnote 12 of the Fee 

Schedule, which provide enhanced 

rebates between $0.92 and $1.06 per 

contract for qualifying Customer orders 

(i.e., that yield fee code NY) 11 where a 

Member meets certain liquidity 

thresholds. The Exchange proposes to 

update Tier 1, Tier 4 and Tier 5. These 

tiers currently offer the following: 

• Tier 1 currently offers an enhanced 

rebate of $0.92 per contract for 

qualifying orders (i.e., that yield fee 

code NY) where a Member has (1) 

ADAV in Customer orders greater than 

or equal to 0.50% of average OCV, and 

(2) an ADAV in Market Maker orders 

greater than or equal to 2.75% of 

average OCV. 

• Tier 4 currently offers an enhanced 

rebate of $1.05 per contract for 

qualifying orders where a Member has 

an ADAV in Customer orders greater 

than or equal to 2.10% of average OCV. 

• Tier 5 currently offers an enhanced 

rebate of $1.06 per contract for 

qualifying orders where a Member has 

(1) an ADAV in Customer orders greater 

than or equal to 2.00% of average OCV, 

and (2) an ADAV in Customer NonPenny orders greater than or equal to 

1.00% of average OCV. 

The proposed rule change updates 

Tier 1, Tier 4 and Tier 5 as follows: 

• As proposed, Tier 1 offers a new 

enhanced rebate of $0.90 per contract 

for qualifying orders where a Member 

has an ADAV in Customer Non-Penny 

orders greater than or equal to 0.25% of 

average OCV. The proposed rule change 

eliminates the second prong of criteria. 

• As proposed, Tier 4 offers a new 

enhanced rebate of $1.01 per contract 

for qualifying orders where a Member 

has an ADAV in Customer orders greater 

than or equal to 0.85% of average OCV 

plus proposed additional criteria in new 

prong two—where a Member also has an 

ADAV in Customer Non-Penny orders 

greater than or equal to 0.25% of 

average OCV. 

• As proposed, Tier 5 offers a new 

enhanced rebate of $1.02 per contract 

for qualifying orders where a Member 

has (1) an ADAV in Customer orders 

greater than or equal to 0.90% of 

average OCV, and (2) an ADAV in 

Customer Non-Penny orders greater 

than or equal to 0.40% of average OCV. 

The proposed rule change also adopts 

new Tier 2,12 new Tier 6, new Tier 7 

and new Tier 8, which, as proposed, 

offer the following: 

• As proposed, Tier 2 offers an 

enhanced rebate of $0.95 per contract 

for qualifying orders where a Member 

has (1) an ADAV in Customer orders 

greater than or equal to 0.50% of 

average OCV, and (2) an ADAV in 

Customer Non-Penny orders greater 

than or equal to 0.25% of average OCV. 

• As proposed, Tier 6 offers an 

enhanced rebate of $1.03 per contract 

for qualifying orders where a Member 

has (1) has an ADAV in Customer orders 

greater than or equal to 1.00% of 

average OCV, and (2) an ADAV in 

Customer Non-Penny orders greater 

than or equal to 0.45% of average OCV. 

• As proposed, Tier 7 offers an 

enhanced rebate of $1.04 per contract 

for qualifying orders where a Member 

has (1) an ADAV in Customer orders 

greater than or equal to 1.30% of 

average OCV, and (2) an ADAV in 

Customer Non-Penny orders greater 

than or equal to 0.50% of average OCV. 

• As proposed, Tier 8 offers an 

enhanced rebate of $1.05 per contract 

for qualifying orders where a Member 

has (1) an ADAV in Customer orders 

greater than or equal to 1.30% of 

average OCV, and (2) an ADAV in 

Customer Non-Penny orders greater 

than or equal to 0.60% of average OCV. 

Finally, the proposed rule change 

eliminates Tier 3, which currently offers 

an enhanced rebate of $1.02 per contract 

for qualifying orders where a Member 

has (1) an ADAV in Customer orders 

greater than or equal to 0.50% of 

average OCV, (2) an ADAV in Market 

Maker orders greater than or equal to 

2.75% of average OCV, and (3) an 

ADAV in Firm Non-Penny orders 

greater than or equal to 0.05% of 

average OCV. 

The proposed updates to and addition 

of tiers under the Customer Non-Penny 

Add Volume Tiers are designed to 

encourage increased Customer order 


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Federal Register / Vol. 86, No. 156 / Tuesday, August 17, 2021 / Notices 46031 

13 15 U.S.C. 78f. 

14 15 U.S.C. 78f(b)(4). 

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

16See, e.g., NYSE Arca Options Fee Schedule, 

Trade-Related charges for Standard Options, which 

similarly provide various ranges of credits and 

discounts for volume-based tiers geared toward 

different market participants in penny or nonpenny classes, such as Customer Penny Posting 

Credit Tiers, Firm and Broker-Dealer Penny Posting 

Tiers, and Customer Posting Credit Tiers in NonPenny Issues; and Cboe EDGX U.S. Options 

Exchange Fee Schedule, Footnotes, which provide 

for similar Customer Volume Tiers and Market 

Maker Volume Tiers. 

17See generally BZX Options Fee Schedule, 

Footnotes. 

flow by providing different and 

additional opportunities to receive an 

enhanced rebate. The Exchange believes 

that an increase in Customer order flow 

may attract an additional corresponding 

increase in order flow from other market 

participants, also contributing overall 

towards a robust and well-balanced 

market ecosystem, to the benefit of all 

market participants. Also, like the 

proposed elimination of certain 

Customer Penny Add Volume Tiers 

above, the Exchange proposes to 

eliminate Customer Non-Penny Add 

Volume Tier 3 as no Members are 

currently satisfying the criteria under 

this tier, nor have recently satisfied such 

criteria. The Exchange no longer wishes 

to, nor is it required to, maintain this 

tier, and 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,13

in general, and furthers the objectives of 

Section 6(b)(4),14 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) 15 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 change reflects 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. The Exchange notes that 

volume-based incentives and discounts 

have been widely adopted by 

exchanges,16 including the Exchange,17

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. Additionally, as noted above, 

the Exchange operates in a highly 

competitive market. The Exchange is 

only one of several options venues to 

which market participants may direct 

their order flow, and it represents a 

small percentage of the overall market. 

Competing options exchanges offer 

similar tiered pricing structures to that 

of the Exchange, including schedules of 

rebates and fees that apply based upon 

Members achieving certain volume and/ 

or growth thresholds. 

Overall, the Exchange believes that 

the proposed rule changes to the 

Customer Penny Add Volume, Market 

Maker, Away Market Maker, and 

Professional Take Volume, and 

Customer Non-Penny Add Volume Tiers 

are reasonable in that they are 

reasonably designed to incentivize 

Members to submit both add (ADAV) 

and remove (ADRV) order flow to the 

Exchange, thereby contributing to a 

deeper and more liquid market. More 

specifically, 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 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. 

Additionally, the Exchange believes that 

it is reasonable and equitable to 

incentivize Market Maker (including 

Away Market Maker), Professional and 

Customer order flow, as these market 

participants provide key liquidity to the 

Exchange. For instance, Market Maker 

(including Away Market Maker) activity 

facilitates tighter spreads and signals 

additional corresponding increase in 

order flow from other market 

participants. Increased overall order 

flow benefits all investors by deepening 

the Exchange’s liquidity pool, 

potentially providing even greater 

execution incentives and opportunities. 

Professionals generally provide a greater 

competitive stream of order flow (by 

definition, more than 390 orders in 

listed options per day on average during 

a calendar month), thus, providing 

increased competitive execution and 

improved pricing opportunities for all 

market participants. Customer order 

flow attracts additional liquidity to the 

Exchange, particularly in Non-Penny 

classes, as proposed. Such additional 

liquidity provides more trading 

opportunities and signals an increase in 

Market-Maker activity, which facilitates 

tighter spreads. This may cause an 

additional corresponding increase in 

order flow from other market 

participants, contributing overall 

towards a robust and well-balanced 

market ecosystem. 

In particular, the Exchange believes 

that it is reasonable and equitable to 

eliminate Customer Penny Add Volume 

Tiers 5 and 7, as well as Customer NonPenny Add Volume Tier 3, because the 

Exchange is not required to maintain 

this tier or provide Members an 

opportunity to receive reduced fees or 

enhanced rebates. As stated, no 

Members are currently satisfying the 

criteria under these tiers, nor have 

recently satisfied such criteria. 

Moreover, the Exchange believes it is 

reasonable to provide more 

consolidated, streamlined Customer 

Penny Add Volume Tiers by offering a 

single tier that provides an enhanced 

rebate of $0.53 (current Tier 6/new Tier 

5), and believes that the proposed 

updated criteria in this single tier 

(current Tier 6/new Tier 5) is reasonably 

designed to provide a different 

opportunity for Members to achieve the 

tier to receive the same enhanced rebate. 

Regarding the proposed rule change to 

the Market Maker, Away Market Maker, 

and Professional Penny Take Volume 

Tiers, the Exchange believes that it is 

reasonable and equitable to 

incrementally increase the difficulty in 

meeting the tiers’ criteria, by marginally 

increasing the volume threshold over 

average OCV and by adding additional 

prongs of criteria, as it is reasonably 

designed to incentivize Members to 

submit additional requisite liquidity to 


khammond on DSKJM1Z7X2PROD with NOTICES
46032 Federal Register / Vol. 86, No. 156 / Tuesday, August 17, 2021 / Notices 

18Securities Exchange Act Release No. 51808, 70 

FR 37495, 37498–99 (June 29, 2005) (S7–10–04) 

(Final Rule). 

19See supra note 3. 

meet the updated criteria. The Exchange 

also believes that the marginally 

increased reduced fees, as proposed, 

offered under each of the Market Maker, 

Away Market Maker, and Professional 

Penny Take Volume Tiers continue to 

be a reasonable distribution of reduced 

fees, commensurate with the 

corresponding proposed criteria. The 

Exchange notes that it offers similar 

reduced rates for criteria of comparable 

difficulty in other volume-based tier 

programs. For example, Tier 2 of the 

Non-Customer Non-Penny Take Volume 

Tiers in Footnote 13 of the Fee Schedule 

offers a higher reduced fee ($1.07) than 

the proposed reduced fees ($0.49, $0.48 

and $0.47) where a Member must meet 

three different prongs of criteria. 

The Exchange also believes that it is 

reasonable and equitable to update the 

Customer Non-Penny Add Volume Tiers 

to provide different criteria (which the 

Exchange does not believe is necessarily 

more or less difficult than the existing 

criteria) and to also provide new criteria 

via new tiers because these 

modifications and additions are 

reasonably designed to provide 

Members with increased supplementary 

opportunities to receive corresponding 

enhanced rebates. The Exchange also 

believes that the marginally decreased 

enhanced rebates, as proposed, continue 

to be a reasonable distribution of 

enhanced rebates, commensurate with 

the corresponding proposed criteria, as 

the Customer Non-Penny Add Volume 

Tiers continue to offer a range of 

enhanced rebates ($0.90 to $1.05, as 

proposed) within a comparable range as 

offered today ($0.92 to $1.06). The 

proposed rule change just provides 

additional opportunities within the 

proposed comparable range of enhanced 

rebates for Members to meet criteria and 

receive an enhanced rebate. 

The Exchange believes that the 

proposed updated and new tiers 

represent an equitable allocation of fees 

and are not unfairly discriminatory 

because the Customer Penny Add 

Volume, Market Maker, Away Market 

Maker, and Professional Penny Take 

Volume, and Customer Non-Penny Add 

Volume Tiers Add Penny Tiers, as 

proposed, will continue to apply 

uniformly to all qualifying Members, in 

that all Members that submit the 

requisite order flow per each tier 

program have the opportunity to 

compete for and achieve the proposed 

tiers. The proposed changes to and 

additions of criteria in the Customer 

Penny Add Volume, Market Maker, 

Away Market Maker, and Professional 

Penny Take Volume, and Customer 

Non-Penny Add Volume Tiers are 

designed as an incentive to any and all 

Members interested in meeting modified 

and new tier criteria to submit 

additional, requisite order flow directly 

to the Exchange’s Book. Without having 

a view of activity on other markets and 

off-exchange venues, the Exchange has 

no way of knowing whether this 

proposed rule change will 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: 

Between five and six Members will be 

able to compete for and potentially 

achieve the proposed criteria in 

Customer Penny Add Volume Tier 5 

(current Tier 6); at least two Members 

will be able to compete for and 

potentially achieve the proposed criteria 

in each of the updated Market Maker, 

Away Market Maker, and Professional 

Penny Take [sic] Tiers 1, 2 and 3; and 

at least four Members will be able to 

compete for and potentially achieve the 

proposed criteria in across the updated 

Customer Non-Penny Add Volume Tiers 

1, 4 and 5, and new Tiers 6, 7 and 8. 

The Exchange also notes that the 

proposed tiers will not adversely impact 

any Member’s pricing or their ability to 

qualify for other rebate tiers. Rather, 

should a Member not meet the proposed 

criteria for a tier, the Member will 

merely not receive the corresponding 

enhanced rebate or reduced fee, as 

applicable. Finally, the Exchange 

believes the proposal to eliminate 

certain tiers is equitable and not 

unfairly discriminatory because it 

applies to all Members, in that, such 

tiers will not be available for any 

Member. 

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 intramarket or 

intermarket competition that is 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 

liquidity to a public exchange, thereby 

promoting market depth, price 

discovery and transparency and 

enhancing order execution 

opportunities 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.’’ 18

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 tiers apply to all Members 

equally, in that, all Members that submit 

the requisite order flow per each tier 

program are eligible to achieve the tiers’ 

proposed criteria, have a reasonable 

opportunity to meet the tiers’ proposed 

criteria and will all receive the 

corresponding reduced fees or enhanced 

rebates (as existing and proposed) if 

such criteria is met. Overall, the 

proposed rule change is designed to 

attract additional overall Customer and 

liquidity provider order flow to the 

Exchange, which, as described above, 

brings different, yet key, liquidity and 

trading activity to the Exchange, 

resulting in overall tighter spreads, more 

execution opportunities at improved 

prices, and/or deeper levels of liquidity, 

which ultimately improves price 

transparency, provides continuous 

trading opportunities and enhances 

market quality on the Exchange, and 

generally continues to encourage 

Members to send orders to the 

Exchange, thereby contributing towards 

a robust and well-balanced market 

ecosystem to the benefit of all market 

participants. 

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 

director their order flow, including 15 

other options exchanges and offexchange venues. Additionally, the 

Exchange represents a small percentage 

of the overall market. Based on publicly 

available information, no single options 

exchange has more than 16% of the 

market share.19 Therefore, no exchange 

possesses significant pricing power in 

the execution of option order flow. 

Indeed, participants can readily choose 

to send their orders 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 


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Federal Register / Vol. 86, No. 156 / Tuesday, August 17, 2021 / Notices 46033 

20See Securities Exchange Act Release No. 51808 

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

21NetCoalition 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)). 

22 15 U.S.C. 78s(b)(3)(A). 

23 17 CFR 240.19b–4(f). 24 17 CFR 200.30–3(a)(12). 

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.’’ 20 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’. . . .’’.21 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 22 and paragraph (f) of Rule 

19b–4 23 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– 

CboeBZX–2021–055 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–2021–055. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeBZX–2021–055 and 

should be submitted on or before 

September 7, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–17538 Filed 8–16–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–560; OMB Control No. 

3235–0622] 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736. 

Extension: 

Interagency Statement on Sound Practices 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the 

Securities and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the existing collection of information 

provided for in the proposed 

Interagency Statement on Sound 

Practices Concerning Elevated Risk 

Complex Structured Finance 

Transactions (‘‘Statement’’) under the 

Securities Exchange Act of 1934 (15 

U.S.C. 78a et seq.) (‘‘Exchange Act’’) and 

the Investment Advisers Act of 1940 (15 

U.S.C. 80b et seq.) (‘‘Advisers Act’’). The 

Commission plans to submit this 

existing collection of information to the 

Office of Management and Budget 

(‘‘OMB’’) for extension and approval. 

The Statement was issued by the 

Commission, together with the Office of 

the Comptroller of the Currency, the 

Board of Governors of the Federal 

Reserve System, the Federal Deposit 

Insurance Corporation, and the Office of 

Thrift Supervision (together, the 

‘‘Agencies’’), in May 2006. The 

Statement describes the types of internal 

controls and risk management 

procedures that the Agencies believe are 

particularly effective in assisting 

financial institutions to identify and 

address the reputational, legal, and 

other risks associated with elevated risk 

complex structured finance 

transactions. 

The primary purpose of the Statement 

is to ensure that these transactions 

receive enhanced scrutiny by the 

institution and to ensure that the 

institution does not participate in illegal 

or inappropriate transactions. 


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