Document ID: SEC-2020-1488-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2020-09-17T04:00Z

[Federal Register Volume 85, Number 181 (Thursday, September 17, 2020)]
[Notices]
[Pages 58093-58095]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20472]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89830; File No. SR-CBOE-2020-085]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
To Adopt Fees for a Recently Adopted New Version of the Silexx Platform

September 11, 2020.
    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 September 1, 2020, 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 adopt fees for a recently adopted new version of the 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 adopt fees for a new version of the Silexx 
platform (``Cboe Silexx''), effective October 1, 2020. 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,\3\ 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. Historically, users could not directly route 
orders through any of the then-current versions of Silexx 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 an additional version of the Silexx platform, Silexx FLEX, 
which supports the trading of FLEX Options and allows authorized Users 
with direct access to the Exchange.\4\ Most recently, the Exchange made 
a new 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.\5\ 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. 
Use of any version of the Silexx platform is completely optional.
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    \3\ The platform also permits users to submit orders for 
commodity futures, commodity options and other non-security products 
to be sent to designated contract markets, futures commission 
merchants, introducing brokers or other applicable destinations of 
the users' choice.
    \4\ See Securities Exchange Act Release No. 87028 (September 19, 
2019) 84 FR 50529 (September 25, 2019) (SR-CBOE-2019-061).
    \5\ See Securities Exchange Act Release No. 88741 (April 24, 
2020) 85 FR 24045 (April 30, 2020) (SR-CBOE-2020-040).
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    The Exchange proposes to adopt fees for the recently adopted Cboe 
Silexx. Particularly, the Exchange proposes to adopt a monthly fee of 
$275 per Login Id for the first 8 Login IDs (i.e., Logins Ids 1-8), a 
fee of $100 per each additional Login ID for the next 8 Login Ids 
(i.e., Login Ids 9-16), and provide that each Login Id thereafter would 
be free (i.e., 17+ Login Ids). The Exchange proposes to provide that 
the fee will also be waived for the first month for

[[Page 58094]]

any individual market participant. The waiver will apply to the month 
the Login Id is first purchased.\6\
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    \6\ For example, if an individual User subscribes to a Cboe 
Silexx Login ID on October 15th, the Login ID fee would be waived 
for the month of October only.
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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,\10\ 
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.
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that its proposed fees are reasonable and 
appropriate as it is competitive with similar products available 
throughout the market, including a similar front-end order entry system 
offered by the Exchange (i.e., the PULSe workstation), the current 
Silexx platforms and a similar front-end order entry system offered by 
Nasdaq ISE (i.e., ISE's PrecISE terminals),\11\ Additionally, as 
discussed, use of Cboe Silexx is discretionary and not compulsory. 
Indeed, Users can choose to route orders, including to Cboe Options, 
without the use of the platform. The Exchange is making 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 that will be offered by the 
Exchange. Moreover, the Exchange notes market participants have had the 
ability to use and learn the new Silexx platform at no charge for the 
last six months. The Exchange believes the proposed fees are equitable 
and not unfairly discriminatory because they apply to all market 
participants uniformly.
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    \11\ See Silexx Fees Schedule, which assesses between $200-$600 
per month for the current Silexx platforms, other than FLEX which is 
assessed no fee. See also Cboe Options Fees Schedule, which provides 
for a PULSe workstation monthly fee of $400 per user per TPH for 
each of the 1st 15 logins and $100 per month for each additional 
login and $400 per month per user for non-TPHs and see Nasdaq ISE's 
Pricing Schedule, Section 7, which provides for a PrecISE Trade 
Terminal monthly fee of $350 per user for each of the 1st 10 users 
and $100 per month for each additional user.
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    The Exchange believes the proposed one-month fee waiver for all new 
individual users of Cboe Silexx is reasonable as such users will not 
have to pay the Cboe Silexx fee for one month and because it also acts 
as an incentive for individual users to start using the Silexx platform 
as a trading tool on their trading desks. Moreover, the Silexx Fees 
Schedule already provides new user firms a one-month fee waiver of 
Silexx platform fees.\12\ The proposal also gives new users additional 
time to become familiar with and fully acclimated to all of the 
functionality that Cboe Silexx offers. Additionally, as Cboe Silexx is 
a relatively new platform, the Exchange wishes to incentivize and 
encourage its use. The proposed 1-month fee waiver applies to all new 
individual users uniformly.
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    \12\ See Silexx Fees Schedule.
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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 it 
relates to an optional platform. All new market participants are 
entitled to a month-fee waiver, and all current users have been able to 
use Cboe Silexx for the past six months at no charge. The proposed fee 
and waiver will apply to similarly situated participants uniformly, as 
described in detail above. Also as discussed, the use of the platform 
will 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 proposed 
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 the Cboe 
Silexx platform, they may simply use those products instead. Use of 
such functionality is completely voluntary.
    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 product that are widely available throughout the 
industry, including from some exchanges, at similar prices.\13\ 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.
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    \13\ See supra note 14.
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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 \14\ and paragraph (f) of Rule 19b-4 \15\ 
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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f).

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[[Page 58095]]

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-CBOE-2020-085 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-2020-085. 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-CBOE-2020-085 and should be submitted on 
or before October 8, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-20472 Filed 9-16-20; 8:45 am]
BILLING CODE 8011-01-P