Document ID: SEC-2023-1433-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2023-12-13T05:00Z

[Federal Register Volume 88, Number 238 (Wednesday, December 13, 2023)]
[Notices]
[Pages 86411-86413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27273]

[[Page 86411]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99111; File No. SR-CBOE-2023-064]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Fees for the Cboe Silexx Platform

December 7, 2023.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 1, 2023, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') 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.
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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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend fees for the Cboe Silexx platform. The text of the proposed 
rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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 fees for the Cboe Silexx platform 
(``Silexx platform''),\3\ effective December 1, 2023. By way of 
background, the Silexx platform consists of a ``front-end'' order entry 
and management trading platform (also referred to as the ``Silexx 
terminal'') for listed stocks and options that supports both simple and 
complex orders, and a ``back-end'' platform which provides a connection 
to the infrastructure network. From the Silexx platform (i.e., the 
collective front-end and back-end platform), a Silexx user has the 
capability to send option orders to U.S. options exchanges, send stock 
orders to U.S. stock exchanges (and other trading centers), input 
parameters to control the size, timing, and other variables of their 
trades, and also includes access to real-time options and stock market 
data, as well as access to certain historical data. The Silexx platform 
is designed so that a user may enter orders into the platform to send 
to an executing broker (including Trading Permit Holders (``TPHs'')) of 
its choice with connectivity to the platform, which broker will then 
send the orders to Cboe Options (if the broker is a TPH) or other U.S. 
exchanges (and trading centers) in accordance with the user's 
instructions. The Silexx front-end and back-end platforms are a 
software application that is installed locally on a user's desktop. 
Silexx grants users licenses to use the platform, and a firm or 
individual does not need to be a TPH to license the platform.
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    \3\ Cboe Silexx, Inc. (``Cboe Silexx''), which is a subsidiary 
of the Exchange's parent, Cboe Global Markets, Inc., offers the 
Silexx platform.
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    The Exchange offers several versions of its Silexx platform. 
Originally, the Exchange offered the following versions of the Silexx 
platform: Basic, Pro, Sell-Side, Pro Plus Risk and Buy-Side Manager 
(``Legacy Platforms''). The Legacy Platforms are designed so that a 
User may enter orders into the platform to send to the executing 
broker, including TPHs, of its choice with connectivity to the 
platform. The executing broker can then send orders to Cboe Options (if 
the broker-dealer is a TPH) or other U.S. exchanges (and trading 
centers) in accordance with the User's instructions. Users cannot 
directly route orders through any of the Legacy Platforms to an 
exchange or trading center nor is the platform integrated into or 
directly connected to Cboe Option's System. In 2019, the Exchange made 
available a new version of the Silexx platform, Silexx FLEX, which 
supports the trading of FLEX Options and allows authorized Users with 
direct access to the Exchange to establish connectivity and submit 
orders directly to the Exchange.\4\ In 2020, the Exchange made an 
additional version of the Silexx platform available, Cboe Silexx, which 
supports the trading of non-FLEX Options and allows authorized Users 
with direct access to the Exchange to establish connectivity and submit 
orders directly to the Exchange.\5\ Cboe Silexx is essentially the same 
platform as Silexx FLEX, with the same applicable functionality, except 
that it additionally supports non-FLEX trading. Use of the Silexx 
platform is completely optional.
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    \4\ See Securities Exchange Act Release No. 87028 (September 19, 
2019) 84 FR 50529 (September 25, 2019) (SR-CBOE-2019-061). Only 
Users authorized for direct access and who are approved to trade 
FLEX Options may trade FLEX Options via Cboe Silexx. Only authorized 
Users and associated persons of Users may establish connectivity to 
and directly access the Exchange, pursuant to Rule 5.5 and the 
Exchange's technical specifications.
    \5\ See Securities Exchange Act Release No. 88741 (April 24, 
2020) 85 FR 24045 (April 30, 2020) (SR-CBOE-2020-040). Only 
authorized Users and associated persons of Users may establish 
connectivity to and directly access the Exchange, pursuant to Rule 
5.5 and the Exchange's technical specifications.
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CAT Fees
    The Exchange has adopted a fee for CAT Files.\6\ Particularly, 
Silexx makes Consolidated Audit Trail (``CAT'')-formatted files 
available to Silexx users for orders processed by the user via Silexx 
applications. Users may also elect to have Silexx, which is a CAT 
Reporter Agent, submit these files to CAT on their behalf. The Exchange 
assesses a monthly fee of $250 per trading firm for CAT Files, payable 
by the trading firm for CAT files related to its own and its customers' 
executions. The Exchange proposes to increase the monthly fee for CAT 
Files for all Silexx users, from $250 per month to $500 per month.
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    \6\ See Securities Exchange Release No. 89285 (July 10, 2020) 85 
FR 43284 (July 16, 2020) (SR-CBOE-2020-062).
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Data Management Fee
    The Exchange also proposes to introduce a Data Management fee for 
users of Legacy Platforms. This fee will cover the administrative costs 
of supporting and maintaining data feeds a Legacy user may have, as 
well as the cost of additional data provided in the terminal such as 
earnings and dividends. The Exchange proposes to assess $20 per month 
per Login ID.

[[Page 86412]]

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.\7\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \8\ 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) \9\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. Additionally, the Exchange also believes the 
proposed rule change is consistent with section 6(b)(4) of the Act, 
which requires that Exchange rules provide for the equitable allocation 
of reasonable dues, fees, and other charges among its Trading Permit 
Holders and other persons using its facilities.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Id.
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    In particular, the Exchange believes the proposed monthly fee for 
CAT Files is reasonable, equitable, and not unfairly discriminatory 
because the CAT Files fee will apply to all users that elect to receive 
CAT Files. Further, the Exchange notes receipt of the CAT Files is 
completely voluntary and not compulsory. Indeed, all users of Silexx 
can extract the necessary data from Silexx to create a CAT report 
themselves to comply with their reporting obligations even if they 
choose not to purchase the optional CAT Files. The Exchange believes 
the CAT File fee, as proposed, remains reasonable, as the moderate 
increase is the first increase to the fee since its introduction in 
2020.
    The Exchange also believes the proposed Data Management fee is 
reasonable, equitable, and not unfairly discriminatory because the fee 
will apply to all users of the Legacy Platforms. Additionally, the 
Exchange believes the proposed fee is reasonable as it accounts for 
administrative costs that Cboe Silexx is incurring, but not charging 
users, to maintain support for Legacy Platforms while Cboe Silexx 
transitions away from the Legacy Platforms. Further, the Exchange 
believes the proposed rule change to waive the Data Management fee for 
Silexx FLEX and Cboe Silexx is reasonable because users of these newer 
platforms would do not need to receive the support for older platforms. 
As noted in previous filings, the Exchange is in the process of 
transitioning the Legacy Platforms to the current version of Cboe 
Silexx and Silexx FLEX.\10\ The Exchange believes not assessing these 
fees for Silexx FLEX and Cboe Silexx also serves as an incentive to 
market participants to transition to the current version of Cboe Silexx 
from the Legacy Platforms.
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    \10\ See Securities Exchange Release No. 98722 (October 11, 
2023) 88 FR 71619 (October 17, 2023) (SR-CBOE-2023-060). Only 
authorized Users and associated persons of Users will continue to be 
able to establish connectivity to and directly access the Exchange, 
pursuant to Rule 5.5 and the Exchange's technical specifications. 
Unauthorized Users will not be able to connect directly to the 
Exchange. The new Cboe Silexx platform will function in the same 
manner as the Legacy Platforms versions currently available to 
Users: it will be completely voluntary; orders entered through the 
platform will receive no preferential treatment as compared to 
orders electronically sent to Cboe Options in any other manner; 
orders entered through the platform will be subject to current 
trading rules in the same manner as all other orders sent to the 
Exchange, which is the same as orders that are sent through the 
Exchange's System today; the Exchange's System will not distinguish 
between orders sent from Silexx and orders sent in any other manner; 
and Silexx will provide technical support, maintenance and user 
training for the new platform version upon the same terms and 
conditions for all Users. The Exchange plans to decommission the 
Legacy Platforms at a future to-be-determined date, at which time 
the Legacy Platforms will be unavailable to users.
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    Finally, the Exchange notes that use of the platform is 
discretionary and not compulsory, as users can choose to route orders, 
including to Cboe Options, without the use of the platform. The 
Exchange makes the platform available as a convenience to market 
participants, who will continue to have the option to use any order 
entry and management system available in the marketplace to send orders 
to the Exchange and other exchanges; the platform is merely an 
alternative offered by the Exchange.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed change will not 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed rule change will apply to similarly situated participants 
uniformly, as described in detail above.
    The Exchange does not believe that the proposed rule changes will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed change applies only to Cboe Options. Additionally, Cboe Silexx 
is similar to types of products that are widely available throughout 
the industry, including from some exchanges, at similar prices. To the 
extent that the proposed changes make Cboe Options a more attractive 
marketplace for market participants at other exchanges, such market 
participants are welcome to become Cboe Options market participants. 
Further, the proposed rule change relates to an optional platform. As 
discussed, the use of the platform continues to be completely voluntary 
and market participants will continue to have the flexibility to use 
any entry and management tool that is proprietary or from third-party 
vendors, and/or market participants may choose any executing brokers to 
enter their orders. The Cboe Silexx platform is not an exclusive means 
of trading, and if market participants believe that other products, 
vendors, front-end builds, etc. available in the marketplace are more 
beneficial than Cboe Silexx, they may simply use those products 
instead, including for routing orders to the Exchange (indirectly or 
directly if they are authorized Users). Use of the functionality is 
completely voluntary.

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 \11\ and paragraph (f) of Rule 19b-4 \12\ 
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

[[Page 86413]]

Commission will institute proceedings to determine whether the proposed 
rule change should be approved or disapproved.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CBOE-2023-064 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-CBOE-2023-064. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CBOE-2023-064 and should be 
submitted on or before January 3, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27273 Filed 12-12-23; 8:45 am]
BILLING CODE 8011-01-P