Document ID: SEC-2018-1982-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc.
Posted Date: 2018-12-26T05:00Z

[Federal Register Volume 83, Number 246 (Wednesday, December 26, 2018)]
[Notices]
[Pages 66328-66329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27816]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84844; File No. SR-CboeBZX-2018-087]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Fee Schedule

December 18, 2018.
    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 3, 2018, Cboe BZX Exchange, Inc. (the ``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 
Exchange has designated the proposed rule change as one establishing or 
changing a member due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing with the Securities and Exchange Commission 
(``Commission'') a proposed rule change to amend the fee schedule 
applicable to Members and non-Members \5\ of the Exchange pursuant to 
BZX Rules 15.1(a) and (c). Changes to the fee schedule pursuant to this 
proposal are effective upon filing.
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    \5\ A Member is defined as ``any registered broker or dealer 
that has been admitted to membership in the Exchange.'' See Exchange 
Rule 1.5(n).
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    The text of the proposed rule change is 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 its fee schedule applicable to its 
equities trading platform (``BZX Equities'') to increase the rebate 
under the Non-Displayed Add Volume Tape A Tier 1, effective December 3, 
2018.
    The Exchange currently provides a standard rebate of $0.00150 per 
share for non-displayed orders that add liquidity. The Exchange also 
provides an enhanced rebate under Non-Displayed Add Volume Tape A 
Volume Tier, Tier 1 under Footnote 1 (``HV Volume Tier'') which is 
available for qualifying non-displayed orders that add liquidity (Tape 
A), (i.e., orders which yield fee code HV). Particularly, under the HV 
Volume Tier, a Member may receive an enhanced rebate of $0.00260 per 
share where they add an ADV \6\ greater than or equal to 0.20% of the 
TCV \7\ as Non-Displayed orders that yield fee codes HI or HV.\8\ The 
Exchange proposes to increase the HV Volume Tier rebate from $0.00260 
per share to $0.00275 per share. The Exchange believes the proposed 
change will encourage Members to increase non-displayed add liquidity 
on the exchange. The Exchange also notes that another Exchange offers 
the same rebate amount for similar transactions.\9\
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    \6\ ``ADV'' means average daily volume calculated as the number 
of shares added or removed, combined, per day. ADAV and ADV are 
calculated on a monthly basis.
    \7\ ``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.
    \8\ Fee code HI is appended to non-displayed orders that receive 
price improvement and add liquidity.
    \9\ See New York Stock Exchange Price List 2018, which provides 
that the equity per share credit for all Midpoint Passive Liquidity 
(``MPL'') orders that provide liquidity, other than MPL orders from 
Designated Market Makers (``DMMs''), will receive a rebate of 
$0.00275 per share if a Member adds an ADV greater than or equal to 
0.14% Tape A NYSE consolidated average daily volume (``CADV''), 
excluding any liquidity added by a DMM.
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2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with the objectives of Section 6 of the Act,\10\ in general, and 
furthers the objectives of Section 6(b)(4),\11\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and other persons using its 
facilities. The Exchange also 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. The proposed 
rule changes reflect a competitive pricing structure designed to 
incentivize market participants to direct their order flow to the 
Exchange.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes increasing the rebate under the HV Volume 
Tier is reasonable because Members are provided an opportunity to 
receive an enhanced rebate for Non-Displayed orders that add liquidity 
and is a reasonable means to encourage Members to increase their 
liquidity on the Exchange. The Exchange also notes that another 
Exchange offers a similar rebate.\12\ The Exchange also believes the 
proposed fee change is equitable and non-discriminatory because it 
applies uniformly to all Members.
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    \12\ See New York Stock Exchange Price List 2018, which provides 
that the equity per share credit for all MPL orders that provide 
liquidity, other than MPL orders from DMMs, will receive a rebate of 
$0.00275 per share if a Member adds an ADV greater than or equal to 
0.14% Tape A CADV, excluding any liquidity added by a DMM.
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B. Self-Regulatory Organization's Statement on Burden on Competition

[[Page 66329]]

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed change burdens competition, but instead, enhances 
competition as it is intended to increase the competitiveness of BZX by 
modifying pricing incentives in order to attract order flow and 
incentivize participants to increase their participation on the 
Exchange. The Exchange 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 structures to be unreasonable or 
excessive. The proposed change is intended to enhance the rebate 
offered for certain non-displayed liquidity added to the Exchange, 
which is intended to draw additional liquidity to the Exchange. The 
Exchange does not believe the proposed amendment would burden 
intramarket competition as it would be available to all Members 
uniformly.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from Members or other interested 
parties.

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 \13\ and paragraph (f) of Rule 19b-4 
thereunder.\14\ 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.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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 proposal 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 No. SR-CboeBZX-2018-087 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 No. SR-CboeBZX-2018-087. 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 such filing will also 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 No. SR-CboeBZX-2018-087 and 
should be submitted on or before January 16, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27816 Filed 12-21-18; 8:45 am]
BILLING CODE 8011-01-P