[Federal Register Volume 87, Number 121 (Friday, June 24, 2022)]
[Notices]
[Pages 37894-37899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-13476]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95124; File No. SR-CboeBZX-2022-034]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Amending 
Its Fee Schedule To Establish a New NBBO Setter Program

June 17, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 13, 2022, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 (https://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.

[[Page 37895]]

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 (``BZX Equities'') by: (i) adopting a new 
NBBO Setter Program that, generally speaking, provides an additive 
rebate for executions in certain securities for MPIDs that add 
displayed liquidity to the Exchange at a more aggressive price than the 
current NBBO \3\ and (ii) modifying the criteria in Step Up Tier 2.\4\ 
The Exchange also proposes to delete certain definitions from its Fee 
Schedule that are no longer applicable.
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    \3\ See Exchange Rule 1.5(o) (``NBB, NBO and NBBO'').
    \4\ The Exchange initially filed the proposed fee changes on 
June 1, 2022 (SR-CboeBZX-2022-032). On June 2, 2022, the Exchange 
withdrew that filing and submitted filing SR-CboeBZX-2022-033. On 
June 13, 2022, the Exchange withdrew that filing and submitted this 
filing.
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    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,\5\ no single registered 
equities exchange has more than 17% 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.
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    \5\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (May 26, 2022), available at https://markets.cboe.com/us//market_statistics/.
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    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 $0.0030 per share 
for orders that remove liquidity. For orders in securities priced below 
$1.00, the Exchange does not provide a rebate or assess a fee 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 with opportunities to qualify for higher rebates 
or lower 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 more stringent criteria.
Addition of NBBO Setter Program
    The Exchange proposes to adopt a new volume-based incentive 
program, referred to by the Exchange as the NBBO Setter Program (the 
``Program''), designed to improve market quality on the Exchange in 
certain securities.\6\ Under the proposed Program, qualifying orders in 
specific securities that yield fee codes B,\7\ V,\8\ and Y \9\ will be 
eligible for the proposed additive rebate under proposed Tier 1 of the 
NBBO Setter Program (``NBBO Setter Tier''). More specifically, under 
the proposed new tier, the Exchange will provide an additional rebate 
of $0.0003 per share to MPIDs that have a Step-Up Setter ADAV 
<SUP>10 11 12</SUP> from May 2022 that is equal to or greater than 
350,000 for orders in NBBO Setter Securities \13\ that establish a new 
Setter NBBO.\14\
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    \6\ The Exchange proposes to codify the new Program under 
proposed Footnote 20 of the Fee Schedule.
    \7\ Orders yielding Fee Code ``B'' are displayed orders adding 
liquidity to BZX (Tape B).
    \8\ Orders yielding Fee Code ``V'' are displayed orders adding 
liquidity to BZX (Tape A).
    \9\ Orders yielding Fee Code ``Y'' are displayed orders adding 
liquidity to BZX (Tape C).
    \10\ As proposed, ``Step-Up Setter ADAV'' means Baseline Setter 
ADAV in the relevant baseline month subtracted from Current Setter 
ADAV.
    \11\ As proposed, ``Baseline Setter ADAV'' means ADAV calculated 
as the number of displayed shares added per day that establish a new 
NBBO in NBBO Setter Securities.
    \12\ As proposed, ``Current Setter ADAV'' means ADAV calculated 
as the number of displayed shares added per day that establish a new 
Setter NBBO in NBBO Setter Securities.
    \13\ As proposed, ``NBBO Setter Securities'' means a list of 
securities included in the NBBO Setter Program, the universe of 
which will be determined by the Exchange and published in a Notice 
distributed to Members and on the Exchange's website. At the outset, 
NBBO Setter Securities will include a number of large cap equity 
securities and select ETPs for which the Exchange wishes to 
incentivize enhanced liquidity provision. The Exchange anticipates 
that the NBBO Setter Securities list will generally include between 
500-800 securities and may be periodically updated by the Exchange, 
provided that the Exchange will not remove a security from the NBBO 
Setter Securities list without at least 30 days' prior notice to 
Members (unless the security is no longer eligible for trading on 
the Exchange). The initial set of NBBO Setter Securities will be 
comprised of approximately 550 securities.
    \14\ As proposed, ``Setter NBBO'' means a quotation of at least 
100 shares that is better than the NBBO or a quotation of a notional 
size of at least $10,000.00 that is better than the NBBO. A 
quotation of at least 100 shares or a quotation of a notional size 
of at least $10,000 that merely joins the NBBO (i.e., is ``at'' the 
NBBO'' will not qualify as a Setter NBBO.
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    The $0.0003 per share additive rebate will be provided in addition 
to all other rebates that are otherwise applicable to each of an MPID's 
qualifying orders that are eligible for the additive rebate under the 
NBBO Setter Tier. For example, the standard rebate for an execution 
yielding fee code B is $0.0016 per share (assume the execution occurred 
in a security priced above $1.00). A Member with an ADAV of 15,000,000 
shares would qualify for Add Volume Tier 1 under footnote 1 and would 
instead receive an enhanced rebate of $0.0020 per share. If such Member 
achieved this ADAV and also had a Step-Up Setter ADAV of 350,000 shares 
in NBBO Setter Securities, the Member would also qualify for the NBBO 
Setter Tier additive rebate and would receive a total rebate of $0.0023 
per share on the 350,000 shares that qualified for NBBO Setter Tier 
(representing the original, enhanced rebate of $0.0020 per share plus 
the $0.0003 incentive).
    The Exchange notes that it has previously offered similar NBBO 
Setter Tiers, but eliminated these tiers effective March 1, 2019.\15\ 
The Exchange is now proposing to re-introduce similar incentives to 
encourage Members to contribute to market quality on the Exchange.
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    \15\ See Securities Exchange Act Release No. 85235 (March 1, 
2019), 84 FR 8358 (March 7, 2019) (SR-CboeBZX-2019-012) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend the Fee Schedule Applicable to Members and Non-Members of the 
Exchange Pursuant to BZX Rules 15.1(a) and (c)).
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Step Up Tier 2
    The Step-Up Tiers set forth in footnote 2 of the Fee Schedule 
provide Members an opportunity to qualify for

[[Page 37896]]

an enhanced rebate for liquidity adding orders that yield fee codes 
B,\16\ V,\17\ and Y \18\ where they increase their relative liquidity 
each month over a predetermined baseline. The Exchange notes that Step-
Up Tiers are designed to encourage Members that provide displayed 
liquidity on the Exchange to increase their order flow, which would 
benefit all Members by providing greater execution opportunities on the 
Exchange. Tier 2 of the Step-Up Tiers provides an enhanced rebate of 
$0.0032 per share to a Member that (1) has a Step-Up ADAV \19\ from 
June 2021 greater than or equal to 10,000,000 or a Step-Up Add TCV \20\ 
from June 2021 greater than or equal to 0.10% and (2) the Member has an 
ADV greater than or equal to 0.30% of the TCV \21\ or the Member has an 
ADV \22\ greater than or equal to 35,000,000.
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    \16\ Supra note 4.
    \17\ Supra note 5.
    \18\ Supra note 6.
    \19\ Supra note 7.
    \20\ ``Step-Up Add TCV'' means ADAV as a percentage of TCV in 
the relevant baseline month subtracted from current ADAV as a 
percentage of TCV.
    \21\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply.
    \22\ ``ADV'' means average daily volume calculated as the number 
of shares added or removed, combined, per day.
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    The Exchange now proposes to update the current Step-Up ADAV 
baseline month from June 2021 to January 2022. The Exchange believes 
that the change will provide a more current ADAV baseline for Members 
who seek to receive a rebate pursuant to Step-Up Tier 2. Overall, the 
Step-Up tiers, including Step-Up Tier 2 as amended, are designed to 
provide Members with an additional opportunity to receive an enhanced 
rebate 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. The Exchange 
does not propose to change any other criteria for Step-Up Tier 2 
outside of the baseline month used to calculate ADAV.
    The Exchange also proposes to remove the definition of ``Setter Add 
TCV'' from its Fee Schedule as the definition is no longer applicable. 
The Exchange believes this change is non-substantive and will benefit 
Members by providing a more accurate description of terms currently 
used within its Fee Schedule.
    The Exchange notes that the introduction of the NBBO Setter Program 
and the revision to Step-Up Tier 2 will be available to all Members and 
will provide Members an opportunity to receive enhanced rebates. 
Moreover, the proposed changes are designed to encourage Members that 
provide displayed liquidity on the Exchange to increase their overall 
add volume order flow, which would benefit all Members by providing 
greater execution opportunities on the Exchange and to contribute to a 
deeper, more liquid market, to the benefit of all investors.
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.\23\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \24\ 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) \25\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(5).
    \25\ Id.
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    In particular, the Exchange believes that the proposed NBBO Setter 
Tier is reasonable, equitable, and not unfairly discriminatory. The 
proposed NBBO Setter Tier reflects a competitive pricing structure 
designed to incentivize participants to direct their order flow to the 
Exchange and enhance market quality in NBBO Setter Securities. 
Particularly, the Exchange believes the proposed tier, which provides 
an additional rebate to qualifying orders, provides a reasonable means 
to encourage overall growth in Members' MPID order flow that 
establishes a Setter NBBO in NBBO Setter Securities. An overall 
increase in activity would deepen the Exchange's liquidity pool, offer 
more narrow spreads, support the quality of price discovery, promote 
market transparency, and improve market quality for all investors. The 
Exchange believes that its proposed definition of NBBO Setter 
Securities is reasonable, equitable and not unfairly discriminatory 
because the Exchange has identified such securities as securities for 
which it would like to inject additional quoting competition, which it 
believes will generally act to narrow spreads, increase size at the 
inside, and increase liquidity depth in such securities. The Exchange 
also believes that the proposed definition of Setter NBBO is reasonable 
in that it provides MPIDs alternative ways to qualify for a rebate in 
NBBO Setter Securities and encourages MPIDs to quote at the NBBO in 
higher-priced securities in which Members might not otherwise quote at 
least 100 shares due to the higher notional value associated with 
securities priced over $100.00. For example, if an MPID wanted to set 
the NBBO in Alphabet Inc., the MPID would, under the Exchange's 
standard definition of NBBO,\26\ have to provide a round lot quotation 
priced better than approximately $2,228.55,\27\ which equates to a 
notional value of $222,855.00. Under the Exchange's proposed Setter 
NBBO definition, however, the MPID could qualify for the additive 
rebate under the NBBO Setter Tier by providing an odd lot quotation in 
Alphabet Inc. with a notional value of at least $10,000.00 that 
``sets'' (i.e., is better than) the NBBO. The Exchange believes that 
allowing MPIDs to qualify for the additive rebate under NBBO Setter 
Tier by satisfying the definition of Setter NBBO with either a 
quotation of at least 100 shares better than the NBBO or an odd lot 
quotation better than the NBBO with a notional value of at least 
$10,000.00 will promote price discovery and market quality in NBBO 
Setter Securities and, further, that the tightened spreads and 
increased liquidity from the proposal will benefit all investors by 
deepening the Exchange's liquidity pool, offering the potential for 
execution at more aggressive prices, supporting the quality of price 
discovery, enhancing quoting competition across exchanges, promoting 
market transparency, and improving investor protection.
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    \26\ Supra note 3.
    \27\ Pricing data for Alphabet Inc. sourced from https://finance.yahoo.com/quote/GOOG?p=GOOG&.tsrc=fin-srch (last accessed 
June 13, 2022).
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    In addition, the Exchange believes its definitions of ``Baseline 
Setter ADAV,'' ``Current Setter ADAV,'' and ``Step-Up Setter ADAV'' are 
reasonable, equitable and not unfairly discriminatory because

[[Page 37897]]

the definitions will apply to all MPIDs equally and describe how an 
MPID may qualify for an enhanced rebate under the NBBO Setter Tier. The 
Exchange also believes that it is reasonable to apply different methods 
for calculating Baseline Setter ADAV and Current Setter ADAV. 
Specifically, Baseline Setter ADAV includes only round lot quotations 
that set the NBBO while Current Setter ADAV includes both quotations of 
at least 100 shares that are better than the NBBO and quotation of a 
notional size of at least $10,000.00 that is better than the NBBO. As 
such, Current Setter ADAV is by definition always equally or more 
inclusive than Baseline Setter ADAV and can only act to the advantage 
of Members in meeting the NBBO Setter Tier.\28\ Accordingly, the 
Exchange believes that the proposal is reasonable, equitably allocated, 
and not unfairly discriminatory because it is consistent with the 
overall goal of enhancing market quality.
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    \28\ While the Baseline Setter ADAV is calculated using round 
lots, which may be less than 100 shares for certain securities, and 
the Current Setter ADAV is calculated using at least 100 shares or 
$10,000.00 in notional size, the Current Setter ADAV remains more 
inclusive than the Baseline Setter ADAV because the $10,000.00 
notional size criteria is less than the notional value of a round 
lot for the only security with a round lot under 100 shares that 
will be an NBBO Setter Security. Specifically, ticker NVR requires a 
quotation of only 10 shares in order to establish a round lot 
quotation and be included in the Baseline Setter ADAV. All other 
NBBO Setter Securities initially selected by the Exchange require a 
quotation of at least 100 shares to establish a round lot quotation. 
While NVR requires a quotation of fewer shares to establish a round 
lot, for the entirety of the baseline month of May 2022, a quote in 
NVR would have satisfied the $10,000.00 notional size criteria with 
a quotation of less than 10 shares, meaning that the Current Setter 
ADAV criteria remains more inclusive than the Baseline Setter ADAV 
criteria.
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    The Exchange notes that the proposed NBBO Setter Tier is not 
dissimilar from other volume-based rebates and fees (``Volume Tiers'') 
that have been widely adopted by exchanges, including the Exchange, and 
are equitable and not unfairly discriminatory because they are open to 
all members on an equal basis and provide higher rebates that are 
reasonably related to the value of an Exchange's market quality. Much 
like Volume Tiers are generally designed to incentivize higher levels 
of liquidity provision and/or growth patterns on the Exchange, the 
proposed NBBO Setter Tier is designed to incentivize enhanced market 
quality on the Exchange through tighter spreads, greater size at the 
inside, and greater quoting depth in NBBO Setter Securities by offering 
an additive rebate in NBBO Setter Securities. As such, the Exchange 
believes the proposed additive rebate in qualifying orders for NBBO 
Setter Securities will act to enhance liquidity and competition across 
exchanges in NBBO Setter Securities by providing a rebate reasonably 
related to such enhanced market quality to the benefit of all 
investors, thereby promoting the principles discussed in Section 
6(b)(5) of the Act.\29\ Additionally, the Exchange notes that the 
proposed tier is comparable to other pricing tiers adopted by the 
Exchange and other exchanges that provide an enhanced rebate or 
supplemental incentive for firms that achieve a specified volume 
threshold in a specified group of securities.\30\
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    \29\ Supra note 18.
    \30\ See Exchange Fee Schedule, Footnote 13, Tape B Volume and 
Quoting Tiers. See also MEMX Fee Schedule, Displayed Liquidity 
Incentive Tiers and Nasdaq Fee Schedule, NBBO Program.
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    The Exchange also believes that the proposed change to the baseline 
month calculation in Step-Up Tier 2 is reasonable in that it will 
provide a more current calculation on which the ADAV or TCV criteria 
may be satisfied. Step-Up Tier 2 will continue to be available to all 
Members and provide all Members with an additional opportunity to 
receive an enhanced rebate, albeit using slightly modified criteria. 
The Exchange further believes Step-Up Tier 2, even as amended, 
continues to provide a reasonable means to encourage overall growth in 
Members' order flow to the Exchange and to incentivize Members to 
continue to provide liquidity adding volume to the Exchange by offering 
them an additional opportunity to receive an enhanced rebate on 
qualifying orders. An overall increase in activity would deepen the 
Exchange's liquidity pool, offer additional cost savings, support the 
quality of price discovery, promote market transparency and improve 
market quality for all investors.
    The Exchange also believes that the proposal represents an 
equitable allocation of fees and rebates and is not unfairly 
discriminatory because all Members will be eligible for the Step-Up 
Tier 2 and proposed NBBO Setter Tier rebates and have the opportunity 
to meet the Tiers' criteria and receive the corresponding enhanced or 
additional rebate if such criteria is met. Without having a view of 
activity on other markets and off-exchange venues, the Exchange has no 
way of knowing whether these proposed changes would definitely result 
in any Members qualifying for the Step-Up Tier 2 or NBBO Setter Tier. 
While the Exchange has no way of predicting with certainty how the 
proposed changes will impact Member activity, the Exchange anticipates 
approximately four Members will be able to compete for and reach the 
criteria under Step-Up Tier 2, as amended, and anticipates 
approximately three to five Members will be able to compete for and 
reach the criteria under proposed NBBO Setter Tier. The Exchange also 
notes that proposed changes will not adversely impact any Member's 
ability to qualify for reduced fees or enhanced rebates offered under 
other tiers. Should a Member not meet the proposed new criteria or 
proposed new NBBO Setter Tier, the Member will merely not receive that 
corresponding enhanced or additional rebate.
    The Exchange also believes that the clarifying change to delete a 
non-applicable definition (i.e., the ``Setter Add TCV'' definition) 
from the Definitions section of the Fee Schedule is reasonable, fair 
and equitable and non-discriminatory because it is non-substantive and 
is designed to make sure that the Fee Schedule is as clear and 
understandable as possible. The Exchange notes the Setter Add TCV 
definition was only applicable to a former NBBO setter program that the 
Exchange no longer maintains and is not otherwise applicable to any 
fees, rebates or other incentive programs.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.
    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 
NBBO Setter Tier will be eligible to all Members' MPIDs equally in that 
all Members' MPIDs have the opportunity to submit orders that could set 
the Setter NBBO and therefore qualify for the proposed additive rebate 
in NBBO Setter Securities. Furthermore, the Exchange believes that the 
proposed NBBO Setter Tier would incentivize Members to submit 
additional aggressively priced displayed liquidity to the Exchange, and 
to increase their order flow on the Exchange generally, thereby 
contributing to a deeper and more liquid market and promoting price 
discovery and market quality on the Exchange to the benefit of all 
market participants and enhancing the attractiveness of the Exchange as 
a trading venue, which the Exchange believes, in turn, would continue 
to encourage market participants to direct additional order flow to the 
Exchange.

[[Page 37898]]

Greater liquidity benefits all Members by providing more trading 
opportunities and encourages Members to send additional orders to the 
Exchange, thereby contributing to robust levels of liquidity, which 
benefits all market participants. The proposed change to the baseline 
ADAV calculation in Step-Up Tier 2 equally does not impose a burden on 
intramarket competition that is not in furtherance of the Act in that 
the proposed change applies to all Members equally and will incentivize 
Members to increase their order flow on the Exchange by providing a 
more current baseline upon which the ADAV or TCV is based. The only 
proposed change to Step-Up Tier 2 is to the baseline month on which the 
ADAV or TCV will be calculated in order for a Member to be eligible to 
receive the enhanced rebate. The proposed non-substantive change to the 
Definitions section of the Fee Schedule is similarly non-burdensome as 
it will be available to all Members and provide a clear description of 
the terms applicable to the Fee Schedule.
    The Exchange notes that its proposed NBBO Setter Program does not 
impose a burden on intermarket competition as the proposal is intended 
to increase competition in U.S. equity securities that the Exchange 
believes will contribute to a deeper and more liquid market in these 
securities, which would in turn promote price discovery and market 
quality on the Exchange to the benefit of all market participants and 
enhancing the attractiveness of the Exchange as a trading venue, which 
the Exchange believes, in turn, would continue to encourage market 
participants to direct additional order flow to the Exchange. The 
Exchange does not believe that the proposed changes represent a 
significant departure from pricing current offered by the Exchange or 
pricing offered by other equities exchanges. Members may opt to 
disfavor the Exchange's pricing if they believe that alternatives offer 
them better value. Accordingly, the Exchange does not believe that the 
proposed changes will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets. 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 17% of the market share.\31\ 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 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.'' \32\ 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 broker-dealers 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'. . .''.\33\
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    \31\ Supra note 3.
    \32\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \33\ NetCoalition 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)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange 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 \34\ and paragraph (f) of Rule 19b-4 \35\ 
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.
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    \34\ 15 U.S.C. 78s(b)(3)(A).
    \35\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

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

Electronic Comments

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#c7b5b2aba2eaa4a8aaaaa2a9b3b487b4a2a4e9a0a8b1"><span class="__cf_email__" data-cfemail="94e6e1f8f1b9f7fbf9f9f1fae0e7d4e7f1f7baf3fbe2">[email protected]</span></a>. Please include 
File Number SR-CboeBZX-2022-034 on the subject line.

Paper Comments

    <bullet> 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-2022-034. 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. 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

[[Page 37899]]

information that you wish to make available publicly. All submissions 
should refer to File Number SR-CboeBZX-2022-034 and should be submitted 
on or before July 15, 2022.
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    \36\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-13476 Filed 6-23-22; 8:45 am]
BILLING CODE 8011-01-P


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