Document ID: SEC-2019-1505-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe EDGX Exchange, Inc.
Posted Date: 2019-10-17T04:00Z

[Federal Register Volume 84, Number 201 (Thursday, October 17, 2019)]
[Notices]
[Pages 55616-55621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22698]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87293; File No. SR-CboeEDGX-2019-060]

Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend the Fee Schedule To Institute a Derived Data API Service

October 11, 2019.
    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 October 1, 2019, Cboe EDGX Exchange, Inc. (``Exchange'' or ``EDGX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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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 EDGX Exchange, Inc. (``EDGX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (the ``Commission'') a 
proposed rule change to amend the fee schedule to institute a Derived 
Data API Service. The text of the proposed rule change is attached as 
Exhibit 5 [sic].
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

[[Page 55617]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to implement a pricing 
structure that would reduce fees charged to Distributors that 
distribute Derived Data through an Application Programming Interface 
(``API'')--i.e., the Derived Data API Service (the ``Program''). The 
Exchange initially filed to introduce the Program on August 1, 2019 
(``Initial Proposal'') based on customer demand, and in order to be 
able to decrease the cost of Derived Data to Distributors that wish to 
distribute Derived Data through an API Service.\3\ The Initial Proposal 
was published in the Federal Register on August 20, 2019,\4\ and the 
Commission received no commenter letters on the proposal. The Program 
remained in effect until the fee change was temporarily suspended 
pursuant to a suspension order (the ``Suspension Order'').\5\ The 
Suspension Order also instituted proceedings to determine whether to 
approve or disapprove the Initial Proposal.\6\
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    \3\ An ``API Service'' is a type of data feed distribution in 
which a Distributor delivers an API or similar distribution 
mechanism to a third-party entity for use within one or more 
platforms. The service allows Distributors to provide Derived Data 
to a third-party entity for use within one or more downstream 
platforms that are operated and maintained by the third-party 
entity. The Distributor maintains control of the entitlements, but 
does not maintain technical control of the usage or the display.
    \4\ See Securities Exchange Act Release No. 86644 (August 13, 
2019), 84 FR 42971 (August 19, 2019) (SR-CboeEDGX-2019-049).
    \5\ See Securities Exchange Act Release No. 87144 (September 27, 
2019) (SR-CboeEDGX-2019-049) (Federal Register publication pending).
    \6\ Id.
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    The Exchange continues to believe that it is in the best interest 
of its customers and investors to permit the distribution of Derived 
Data through an API Service at a lower cost, and is therefore filing 
again to reduce the fees charged to Distributors that offer an API 
Service. By reducing its pricing, the Exchange hopes to be able to 
better compete with top of book market data products offered by other 
national securities exchanges and the securities information processors 
(``SIPs''). For the reasons expressed both in this filing and the 
Initial Proposal, the Exchange believes that the Program is pro-
competitive, and otherwise consistent with the Exchange Act. In sum, 
the Exchange remains committed to competing for business by offering 
both high quality and cost effective data. Continued operation of the 
Program would ultimately support that goal, and indeed would foster 
additional competition in the market for U.S. equity market data.
Derived Data
    ``Derived Data'' is pricing data or other data that (i) is created 
in whole or in part from Exchange Data, (ii) is not an index or 
financial product, and (iii) cannot be readily 
reverse[hyphen]engineered to recreate Exchange Data or used to create 
other data that is a reasonable facsimile or substitute for Exchange 
Data. The Exchange currently offers a Derived Data White Label Service 
Program that allows Distributors to benefit from discounted fees when 
distributing Derived Data taken from EDGX Top, which is a proprietary 
data product that provides top of book quotations and execution 
information for all equity securities traded on the Exchange.\7\ The 
current program is limited to the distribution of Derived Data to 
subscribers within a White Label Service which is a type of hosted 
display solution in which a Distributor hosts, maintains, and controls 
a website or platform on behalf of a third-party entity.
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    \7\ See Rule 13.8(c).
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    When the Exchange filed to introduce the White Label Service 
Program, a number of Distributors contacted the Exchange to inquire 
about offering a similar program for API Services due to demand for 
such products from their end clients. The Derived Data API Service 
would supplement the current Derived Data White Label Service Program 
by offering discounted fees for Distributors that make Derived Data 
available through an API, thereby allowing Distributors to benefit from 
reduced fees when distributing Derived Data to subscribers that 
establish their own platforms rather than relying on a hosted display 
solution. In turn, the Exchange believes that the Program would allow 
Distributors to reach a broader customer base that includes end clients 
that desire more flexibility and control over how Derived Data is used, 
furthering both the distribution and cost effectiveness of Exchange 
market data, and allowing the Exchange to compete for business that may 
otherwise go to its competitors.
    Although White Label Service Platforms are valuable to certain end 
clients that may not have the technology or resources to build their 
own applications to display Derived Data, such products offer only an 
``off-the-shelf'' solution, as the platform is ultimately designed and 
controlled by the Distributor. Thus, subsequent to the introduction of 
the White Label Service Program, Distributors have encouraged the 
Exchange to offer a Program for API Services that would provide greater 
flexibility and control to end clients who have already developed 
applications and tools for servicing their customers. Unlike the White 
Label Service, where the Distributor is responsible for developing an 
``off-the-shelf'' technology platform that is standard and not designed 
specifically for a particular client, the API Service allows 
Distributors to use Exchange market data to create financial 
instruments, such as contracts for difference, that are then offered 
via API to end clients that can use that information in one or more of 
their own customized applications based on their specific business 
needs and the needs of their downstream users. The API Service would 
therefore offer significant advantages over the White Label Service 
Program, and would provide another alternative pricing option that 
Distributors can choose to utilize (or not) in their efforts to obtain 
high quality and cost effective access to top of book U.S. equities 
data to create Derived Data.
    With the implementation of the API Service Program, the Exchange 
would continue to offer the current White Label Service Platform, 
thereby ensuring that Distributors that prefer the design or cost 
structure of that offering can continue to reap the benefits of that 
program. Offering additional programs for Derived Data based on 
customer demand and the ways in which Derived Data is currently being 
utilized enhances customer choice, and provides alternatives to the 
market that would otherwise not be available to Distributors and their 
end clients.
Current Fee Structure
    The Exchange currently charges a fee of $1,500 per month for 
external distribution of EDGX Top. In addition, external distributors 
of EDGX Top are charged a fee of $4 per month for each Professional 
User and $0.10 per month for each Non-Professional User. The Exchange 
also offers special pricing for Derived Data provided through a White 
Label Service, as mentioned above. This service allows Distributors to 
make Derived Data available on a platform that is branded with a third-
party brand, or co-branded with a third party and a Distributor.\8\ The 
White Label Service Program can be used for a number of different 
purposes, including the display of information or data, or the

[[Page 55618]]

creation of derivative instruments, primarily contracts for 
difference,\9\ but is unavailable to Distributors that make such 
information available through an API. Such Distributors are not 
eligible for discounted Derived Data pricing today, and are instead 
liable for the fees normally applicable for the distribution of EDGX 
Top, as listed at the beginning of this paragraph.
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    \8\ The Distributor maintains control of the application's data, 
entitlements and display.
    \9\ A contract for difference is an agreement to exchange the 
difference between the current value of an asset and its future 
value. If the price increases, the seller pays the buyer the amount 
of the increase. If the price decreases, the buyer pays the seller 
the amount of the decrease.
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Discounted Fees for Derived Data API Service
    As proposed, a Distributor that provides a Derived Data API Service 
for Derived Data taken from EDGX Top would be liable for the following 
fees instead of the fees normally applicable for the distribution of 
EDGX Top. Instead of the regular fee for external distribution, 
Distributors would be charged a tiered External Subscriber Fee based on 
the number of API Service Platforms (i.e., ``External Subscribers'') 
that receive Derived Data from the Distributor through a Derived Data 
API Service.
    As proposed, Distributors would continue to be charged a fee of 
$1,500 per month for each External Subscriber if the Distributor makes 
Derived Data available to 1-5 External Subscribers. Distributors that 
make Derived Data available to additional External Subscribers would 
benefit from discounted pricing based on the number of External 
Subscribers. Specifically, the external distribution fee would be 
lowered by 16.67% to $1,250 per month for each External Subscriber if 
the Distributor makes Derived Data available to 6-20 External 
Subscribers, and further lowered another 16.67% to $1,000 per month for 
each External Subscriber if the Distributor makes Derived Data 
available to 21 or more External Subscribers.
    As is the case under the Derived Data White Label Service, the 
External Subscriber Fee would be non-progressive and based on the 
number of External Subscribers that receive Derived Data from the 
Distributor. For example, a Distributor providing Derived Data based on 
EDGX Top to six External Subscribers that are API Service Platforms 
would be charged a monthly fee of $7,500 (i.e., 6 External Subscribers 
x $1,250 each). The Derived Data API Service, however, would allow end 
clients to, at their discretion, choose to use Derived Data in one or 
more customized applications (e.g., mobile application, website, 
terminal) without incurring additional External Subscriber fees. That 
is, the fees would be charged per API Service, and not based in any way 
on the number of applications used by the end client to serve their 
downstream users. By contrast, under the White Label Service, end 
clients are generally limited to a single platform managed by the 
Distributor, rather than uncontrolled access to an API, and would be 
subject to the full External Subscriber fee for access to that single 
platform without the ability to offer additional platforms for the same 
fee.
    The Exchange would continue to charge a monthly Professional User 
fee of $4 per month for each Professional User that accesses Derived 
Data through an API Service. The current Non-Professional User fee of 
$0.10 per month would be eliminated when participating in the Derived 
Data API Service, further reducing costs for Distributors that provide 
access to such data to downstream investors.
Financial Product Distribution Program
    With the proposed introduction of the Derived Data API Service, the 
Exchange would bring together the Derived Data White Label Service and 
Derived Data API Service under the common heading ``Financial Product 
Distribution Program.'' The Financial Product Distribution Program 
would encompass both of these products.
    Similar to the Derived Data White Label Service, the Derived Data 
API Service would be entirely optional, in that it applies only to 
Distributors that opt to use Derived Data from EDGX Top to create an 
API Service, as described herein. It does not impact or raise the cost 
of any other Exchange product, nor does it affect the cost of EDGX Top, 
except in instances where Derived Data is made available on an API 
Service. A Distributor that provides a White Label Service or API 
Service for Derived Data taken from EDGX Top would be liable for the 
fees associated with the White Label Service or API Service instead of 
the fees normally applicable for the distribution of EDGX Top. A 
Distributor that provides a White Label Service or API Service for EDGX 
Top data that is not Derived Data or distributes Derived Data through a 
platform other than a White Label Service or API Service would be 
liable for the fees normally applicable for the distribution of EDGX 
Top.
Market Background
    The market for top of book data is highly competitive as national 
securities exchanges compete both with each other and with the SIPs to 
provide efficient, reliable, and low cost data to a wide range of 
investors and market participants. In fact, Regulation NMS requires all 
U.S. equities exchanges to provide their best bids and offers, and 
executed transactions, to the two registered SIPs for dissemination to 
the public. Top of book data is therefore widely available to investors 
today at a relatively modest cost. National securities exchanges may 
also disseminate their own top of book data, but no rule or regulation 
of the Commission requires market participants to purchase top of book 
data from an exchange.
    In an effort to widen distribution to market participants that use 
equities market data to compute pricing for certain derivatives 
instruments, national securities exchanges including the Exchange, its 
affiliate, Cboe BZX Exchange Inc., and The Nasdaq Stock Market LLC 
(``Nasdaq'') offer discounted pricing for Derived Data that is created 
using their top of book products. The Program would therefore compete 
with similar products offered by other national securities exchanges 
that offer discounted fees to market participants that purchase Derived 
Data. Derived Data is largely used to create derivative instruments, 
such as contracts for difference, rather than to trade equity 
securities, and is often purchased by market data customers outside of 
the U.S. where such derivative instruments are more commonly offered. 
As a result, customers that purchase top of book data to create Derived 
Data do not need a consolidated quotation, and typically only purchase 
top of book data to create Derived Data from one source. Customers 
therefore choose where to obtain top of book data to create Derived 
Data based on two factors: (1) Data quality, i.e., how much the quoted 
prices reflect the overall market for particular securities, and (2) 
the cost of obtaining that data. The Program would allow the Exchange 
to better compete on the second of these factors by reducing the cost 
of market data charged to Distributors that offer an API Service.
    As explained, the Exchange filed the Initial Proposal to introduce 
the Program in August in order to provide an attractive pricing option 
to Distributors that wish to provide Derived Data through an API 
Service rather than a White Label Service due to the advantages of this 
form of distribution, including more flexibility and control for end 
clients. Although that filing was suspended by the Commission, the 
Exchange believes that the experience of its affiliates in offering a 
similar Program reflect the competitive nature of the market for the

[[Page 55619]]

creation and distribution of Derived Data.\10\ Specifically, after Cboe 
BZX Exchange, Inc. (``BZX'') initially reduced the fees charged for API 
Services under its initial proposal to introduce an API Service, it 
successfully onboarded one new customer that switched from a competitor 
product offered by Nasdaq due to the attractive pricing.\11\ The 
Exchange has also been discussing the Program with a handful of 
additional prospective clients that are interested in offering API 
Services. Without the proposed pricing discounts, the Exchange believes 
that prospective customers may not be interested in purchasing top of 
book data from the Exchange, and would instead continue purchasing such 
data from other national securities exchanges or the SIPs, potentially 
at a higher cost than would be available pursuant to the Program. 
Continued operation of the Program would therefore serve to both reduce 
fees for customers and to provide alternatives to data and pricing 
offered by competitors. Ultimately, the Exchange believes that it is 
critical that it be allowed to compete by offering attractive pricing 
to customers as increasing the availability of such products ensures 
continued competition with alternative offerings. Such competition may 
be constrained when competitors are impeded from offering alternative 
and cost effective solutions to customers.
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    \10\ On August 1, 2019 both the Exchange and BZX filed to 
introduce API Services for Derived Data. The BZX filing was also 
suspended by the Commission but remained in effect prior to being 
suspended. See Securities Exchange Act Release No. 87125 (September 
26, 2019) (SR-CboeBZX-2019-070) (Federal Register publication 
pending).
    \11\ See Cboe Innovation Spotlight, ``Invast Global--An 
alternative prime broker,'' available at https://markets.cboe.com/us/equities/market_data_products/spotlight.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\12\ in general, and 
furthers the objectives of Section 6(b)(4),\13\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its members and other recipients of 
Exchange data.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
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    The Exchange also believes that the proposed rule change is 
consistent with Section 11(A) of the Act.\14\ Specifically, the 
proposed rule change supports (i) fair competition among brokers and 
dealers, among exchange markets, and between exchange markets and 
markets other than exchange markets, and (ii) the availability to 
brokers, dealers, and investors of information with respect to 
quotations for and transactions in securities. In addition, the 
proposed rule change is consistent with Rule 603 of Regulation NMS,\15\ 
which provides that any national securities exchange that distributes 
information with respect to quotations for or transactions in an NMS 
stock do so on terms that are not unreasonably discriminatory.
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    \14\ 15 U.S.C. 78k-1.
    \15\ See 17 CFR 242.603.
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    In adopting Regulation NMS, the Commission granted SROs and broker-
dealers increased authority and flexibility to offer new and unique 
market data to the public. It was believed that this authority would 
expand the amount of data available to consumers, and also spur 
innovation and competition for the provision of market data. The 
Exchange believes that the proposed fee change would further broaden 
the availability of U.S. equity market data to investors, consistent 
with the principles of Regulation NMS.
    The Exchange operates in a highly competitive environment. Indeed, 
there are thirteen registered national securities exchanges that trade 
U.S. equities and offer associated top of book market data products to 
their customers. The national securities exchanges also compete with 
the SIPs for market data customers. 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.'' \16\ The proposed fee change is a result of the 
competitive environment, as the Exchange seeks to amend its fees to 
attract additional subscribers for one of its proprietary top of book 
data offerings through the introduction of a Derived Data API Service.
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    \16\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    The Exchange believes that it is reasonable to introduce reduced 
fees for the use of Derived Data on API Services as the proposed fee 
reduction would facilitate cost effective access to market information 
that is used primarily to create certain derivative instruments rather 
than to trade U.S. equity securities. The fees that are the subject of 
this rule filing are constrained by competition, and it is this 
competition that is driving the proposed fee change. Indeed, the 
Program is designed to allow the Exchange to compete more effectively 
for market data distributors that purchase market information to offer 
Derived Data to investors. The existence of alternatives to the Program 
ensures that the Exchange cannot set unreasonable or unfairly 
discriminatory fees, as subscribers are free to elect such 
alternatives. That is, the Exchange competes with other exchanges that 
provide similar market data products and pricing programs. Expanding 
the availability of diverse competitive products actually promotes 
additional competition as it ensures that alternative products from 
different sources are readily available to Distributors and the broader 
market. The Exchange therefore believes that introduction of pricing 
programs such as the Derived Data API Service are not only constrained 
by competition but also ensure continued competition that acts as a 
constraint on the pricing of services provided by other national 
securities exchanges and the SIPs.
    Derived Data is primarily purchased for the creation of certain 
derivative instruments rather than for the trading of U.S. equity 
securities. As a result, Distributors of Derived Data do not need a 
consolidated view of the market across multiple exchanges, and 
generally purchase such data from a single exchange. If a competing 
exchange were to charge less for a similar product than the Exchange 
charges under the proposed fee structure, prospective subscribers may 
choose not subscribe to, or cease subscribing to, the Program. The 
Exchange believes that lowering the cost of accessing Derived Data may 
make the Exchange's market information more attractive, and encourage 
additional Distributors to subscribe to EDGX Top market data instead of 
competitor products.
    Indeed, the Exchange's affiliate, BZX, has already successfully 
onboarded one new Distributor that has decided to purchase top of book 
data from that exchange to create Derived Data rather than purchasing 
top of book data from a competitor exchange, and the Exchange is in 
discussions with a handful of other Distributors that are interested in 
procuring market data from the Exchange due to the attractive pricing 
offered pursuant to the Program. Distributors can discontinue use at 
any time and for any reason, including due to an assessment of the 
reasonableness of fees charged. Further, firms have a wide variety of 
alternative market data products from which to choose, such as

[[Page 55620]]

similar proprietary data products offered by other national securities 
exchanges, including those that choose to offer discounted fees for the 
distribution of Derived Data in an effort to compete for this business.
    The proposed rule change would provide an alternate fee structure 
for providing EDGX Top market data to Distributors that make Derived 
Data available to External Subscribers via API Services. As proposed, 
if a Distributor uses an API Service to distribute Derived Data, the 
Distributor will be charged a fee that is tiered based on the number of 
External Subscribers that are provided access to that data instead of 
the higher fee normally charged for external distribution. The Exchange 
believes that this fee is equitable and not unfairly discriminatory 
because the Exchange will apply the same fees to any similarly situated 
Distributors that elect to participate in the Program based on the 
number of External Subscribers provided access to Derived Data through 
an API Service, with Distributors providing access to six or more 
External Subscribers receiving a discount compared to the current 
pricing applicable for external distribution of EDGX Top.
    The Exchange believes that it is equitable and not unfairly 
discriminatory to begin providing discounted rates to Distributors that 
provide access to at least six External Subscribers as the discounted 
rates are designed to incentivize firms to grow the number of External 
Subscribers that purchase Derived Data from the Exchange. The Exchange 
understands that Distributors that may provide this sort of API Service 
typically serve a relatively larger number of External Subscribers, and 
would therefore be able to meet the proposed threshold by providing 
Derived Data taken from EDGX Top to those customers. The one current 
subscriber to the API Service offered on the Exchange's affiliate, BZX, 
intends to provide Derived Data to significantly more than six External 
Subscribers.
    The Exchange would also continue to charge a small fee for 
Professional Users but would eliminate Non-Professional User fees for 
data provided under the Program. The Exchange believes that it is 
equitable and not unfairly discriminatory to charge a fee for 
Professional Users but no fee for Non-Professional Users. Non-
Professional Users are already subject to a heavily discounted fee for 
EDGX Top market data relative to Professional Users. Differential fees 
for Professional and Non-Professional Users are widely used by the 
Exchange and other exchanges for their proprietary market data as this 
reduces costs for retail investors and makes market data more broadly 
available. The Exchange believes that eliminating fees for Non-
Professional Users that access Derived Data from Distributors pursuant 
to the Program is consistent with longstanding precedent indicating 
that it is consistent with the Act to provide reasonable incentives to 
retail investors that rely on the public markets for their investment 
needs.
    Further, the proposed fees will only apply to Distributors that 
elect to participate in the Program by distributing Derived Data 
through an API Service. EDGX Top market data is distributed and 
purchased on a voluntary basis, in that neither the Exchange nor market 
data distributors are required by any rule or regulation to make this 
data available. Distributors of EDGX Top are not required to 
participate in the proposed Program, which is merely an alternative 
option being proposed by the Exchange to potentially lower costs for 
market data that is Derived Data. As previously explained, the Exchange 
currently offers discounted fees for Distributors that distribute 
Derived Data on a White Label Service. Expanding the universe of 
customers that can benefit from discounted fees for distributing 
Derived Data would serve to further increase the accessibility of the 
Exchange's market data products. Although the proposed pricing for the 
Program differs from the pricing currently in place for the White Label 
Service Program, the Exchange believes that its pricing reflects the 
relative benefits provided to Distributors that offer an API Service 
that allows end clients to offer one or more customized applications to 
their customers rather than simply offering a single ``off-the-shelf'' 
solution designed and controlled by the Distributors. Indeed, the 
Program was developed by the Exchange in response to demand for such a 
product for Distributors that believe that they would be better able to 
serve their end clients with an API Service. Distributors that prefer 
the design or cost structure of the White Label Service Program would 
continue to be able to subscribe to that offering. Based on customer 
feedback, however, the Exchange believes that the API Service Program 
would be valuable to a number of Distributors that have expressed 
interest specifically in that offering.

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

    The Exchange does not believe that the proposed rule change would 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
operates in a highly competitive environment, and its ability to price 
these data products is constrained by: (i) Competition among exchanges 
that offer similar data products, and pricing options, to their 
customers; and (ii) the existence of inexpensive real-time consolidated 
data disseminated by the SIPs. Top of book data is disseminated by both 
the SIPs and the thirteen equities exchanges. There are therefore a 
number of alternative products available to market participants and 
investors. In this competitive environment potential subscribers are 
free to choose which competing product to purchase to satisfy their 
need for market information. Often, the choice comes down to price, as 
broker-dealers or vendors look to purchase the cheapest top of book 
data product, or quality, as market participants seek to purchase data 
that represents significant market liquidity. In order to better 
compete for this segment of the market, the Exchange is proposing to 
reduce fees charged to Distributors that distribute Derived Data 
through an API. The Exchange believes that this would facilitate 
greater access to such data, ultimately benefiting investors that are 
provided access to such data.
    The proposed fees apply to data derived from EDGX Top, which is 
subject to competition from both the SIPs and exchanges that offer 
similar products, including but not limited to those that choose to 
provide similar pricing options for Derived Data. A number of national 
securities exchanges, including the Exchange, its affiliated Cboe U.S. 
equities exchanges, and Nasdaq offer pricing discounts for Derived Data 
today. These pricing programs reduce the cost of accessing top of book 
market information that is used, among other things, to create 
derivative instruments rather than to trade U.S. equity securities. In 
order to better compete for this segment of the market, the Exchange is 
proposing to expand the programs that it offers to include a Derived 
Data API Service, allowing additional market data customers to benefit 
from discounted pricing. The Exchange does not believe that the 
proposed price reduction for Derived Data offered through an API would 
cause any unnecessary or inappropriate burden on intermarket 
competition as other exchanges and data vendors are free to lower their 
prices to better compete with the Exchange's offering. The Exchange 
believes that the proposed rule change is pro-competitive as it seeks 
to offer pricing incentives to

[[Page 55621]]

customers to better position the Exchange as it competes to attract 
additional market data subscribers.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

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 \17\ and paragraph (f) of Rule 19b-4 \18\ 
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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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CboeEDGX-2019-060 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-CboeEDGX-2019-060. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-CboeEDGX-2019-060 and should be 
submitted on or before November 7, 2019.
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    \19\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-22698 Filed 10-16-19; 8:45 am]
 BILLING CODE 8011-01-P