Document ID: SEC-2020-1122-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2020-07-16T04:00Z

[Federal Register Volume 85, Number 137 (Thursday, July 16, 2020)]
[Notices]
[Pages 43284-43287]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15309]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89285; File No. SR-CBOE-2020-062]

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

July 10, 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 July 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 amend the Silexx trading platform (``Silexx'' or the ``platform'') 
Fees 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 (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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to amend the Silexx Fees Schedule to 
(1) waive certain fees for FLEX and Cboe Silexx, (2) introduce a new 
``CAT File'' fee and (3) eliminate obsolete references to an expired 
upgrade opportunity, effective July 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

[[Page 43285]]

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. With the exception of Silexx FLEX and Cboe 
Silexx, users cannot directly route orders through any of the current 
versions of Silexx to an exchange or trading center nor is the platform 
integrated into or directly connected to Cboe Option's System. The 
Exchange recently made available additional versions of the Silexx 
platform, Silexx FLEX and Cboe Silexx, which do support the trading of 
FLEX and non-FLEX Options, respectively, and allows authorized Users 
with direct access to the Exchange. The Silexx front-end and back-end 
platforms are a software application that are 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 Silexx 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.
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Additional Functionality Fee Waiver
    The Exchange first proposes to waive the following fees for 
additional functionality users may purchase for FLEX and Cboe Silexx:

------------------------------------------------------------------------
 Additional functionality for        Functionality
           platforms                  description              Fee
------------------------------------------------------------------------
Crossing......................  Availability of         $300/month/login
                                 crossing order ticket.  ID.
Port..........................  Provides access to an   $100/month/login
                                 executing broker with   ID.
                                 connectivity to the
                                 Silexx platform for
                                 routing.
Staged Orders, Drop Copies,     Ability to receive      $250/month/FIX
 and Order Routing               staged orders,          Connection.
 Functionality for FIX           receive ``drop
 Connections (sessions).         copies'' of order
                                 fill messages, and
                                 route orders to
                                 executing brokers.
Staged Orders, Drop Copies,     Ability to receive      $500/month/FIX
 and Order Routing               staged orders,          Connection.
 Functionality for FIX           receive ``drop
 Connections (sessions) Using    copies'' of order
 Third-Party FIX Router.         fill messages, and
                                 route orders to
                                 executing brokers
                                 through a third-party
                                 FIX router.
Equity Order Reports (paid by   Daily transmission of   $250/month/
 the trading firm).              equity order reports.   trading firm.
------------------------------------------------------------------------

    Particularly, the above additional functionality permits users to 
add features in accordance with their use of the Silexx platform. The 
Exchange offers each type of additional functionality as a convenience 
and use of each type of additional functionality is discretionary and 
not compulsory. More specifically, the crossing functionality provides 
users who choose to regularly cross orders with access to additional 
crossing order tickets. The port fee applies to connections from users 
to executing brokers, which provides users with access to an executing 
broker with connectivity to the Silexx platform for routing. Financial 
Information eXchange (``FIX'') is an industry-standard, non-proprietary 
API that permits market participants to connect to exchanges. FIX 
connectivity provides users with the ability to receive ``drop copy'' 
order fill messages from their executing brokers. These fill messages 
allow customers to update positions, risk calculations, and streamline 
back-office functions. Additionally, FIX connections can be updated to 
permit the platform to receive orders sent from another system and then 
route these orders through the platform for execution (staged orders) 
as well as provide users with the ability to route orders in various 
ways to executing brokers (such as designation of a market to which the 
broker is to route an order received from the platform and use of a 
broker's ``smart router'' functionality). Some users have connections 
to third-party FIX routers, who currently normalize the format of 
messages of their client. To the extent a FIX router has a connection 
to the Silexx platform, users that also have connections to these 
routers may elect to receive staged orders, drop copies, and order 
routing functionality through a fix router. Additionally, the Silexx 
platform permits users to elect to receive daily transmission of equity 
order reports related to order users submit through the platform. As 
noted above, the Exchange recently adopted Silexx FLEX and Cboe Silexx. 
The Exchange wishes to waive the fees for these additional types of 
functionality \4\ as an incentive to market participants to start or 
continue using these new Silexx platforms as trading tools on their 
trading desks.
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    \4\ The Exchange is not waiving Additional Functionality fees 
for API, PULSe Routing Network via Silexx or Market Data. 
Particularly, the API functionality is not applicable or available 
for Silexx Flex or Cboe Silexx and the PULSe Network via Silexx fee 
is already only applicable to non-Silexx (and non-PULSe) 
workstations. The Exchange lastly does not wish to waive fees for 
market data.
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CAT File Fee
    The Exchange next wishes to adopt a fee for CAT Files. 
Particularly, Silexx intends to make 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. Similar to the fee assessed for Equity Order 
Reports,\5\ the Exchange proposes to adopt a monthly fee of $250 per 
CAT Industry Member ID (``IMID''),\6\ payable by the trading firm for 
CAT Files. The Exchange also proposes to waive this fee for Silexx FLEX 
and Cboe Silexx.
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    \5\ The Equity Order Reports fee is assessed to Silexx users 
that elect to receive daily transmission of Order Audit Trail System 
(``OATS'') reports for its orders submitted through their Silexx 
platform.
    \6\ CAT uses the IMID to determine the firm for which data is 
submitted and to facilitate event linkages within a firm and between 
venues.
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    The Exchange lastly proposes to eliminate obsolete language in the 
``Silexx Platform Version'' table. Particularly, the notes section 
provides that: ``All users of Basic may be upgraded to Pro at no 
additional cost through May 31, 2020''. As that date has passed, and 
the free upgrade is no longer available, the Exchange proposes to 
delete that language in its entirety to avoid potential confusion.
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

[[Page 43286]]

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 Section 6(b)(4) of 
the Act,\9\ 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\ 15 U.S.C. 78f(b)(4).
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    In particular, the Exchange believes the proposed rule change to 
waive certain additional functionality fees for Silexx FLEX and Cboe 
Silexx is reasonable because users using the functionality for these 
newer platforms would not be subject to such fees. The Exchange 
believes not assessing these fees for Silexx FLEX and Cboe Silexx also 
serves as an incentive to market participants to start using these 
recently adopted Silexx platforms as additional trading tools on their 
trading desks. Moreover, the Exchange notes that Silexx FLEX and Cboe 
Silexx are available to all market participants at no cost.\10\ The 
proposal is equitable and not unfairly discriminatory as it applies to 
all users of Silexx FLEX and Cboe Silexx uniformly. Additionally, the 
Exchange notes that use of each version of the platform, including each 
type of additional functionality, is discretionary and not compulsory.
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    \10\ See Silexx Fees Schedule, Silexx Platform Version Table.
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    The Exchange believes the proposed monthly fee for CAT Files is 
reasonable as it is the same rate for other similar reports (i.e., 
Equity Order Reports). Additionally, the Exchange believes the proposed 
fee is reasonable as the Exchange believes it is substantially lower 
than the cost assessed by third-party vendors for similar CAT files. 
The proposal is equitable and not unfairly discriminatory as it applies 
to all users other than Silexx FLEX and Cboe Silexx. As discussed 
above, the Exchange believes waiving additional functionality fees, 
including the proposed fee for CAT files, for Silexx FLEX and Cboe 
Silexx is reasonable, equitable and not unfairly discriminatory as such 
platforms are new and the Exchange wishes to incentivize their use to 
market participants. Finally, the Exchange notes receipt of the CAT 
files is completely voluntary and not compulsory.
    Lastly, the Exchange believes its proposal to eliminate language 
regarding an outdated free upgrade alleviates potential confusion and 
maintains clarity in the fees schedule, thereby removing impediments 
to, and perfecting, the mechanism of a free and open market and a 
national market system, and, in general, protecting investors and the 
public interest.

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

    Cboe Options 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 that 
the proposed rule change will not impose any burden on intramarket 
competition because the proposed rule changes apply to all similarly 
situated users of Silexx uniformly. The Exchange notes that each 
additional type of Silexx functionality, including the new CAT Files, 
are available to all market participants, and users have discretion to 
determine which, if any, types of functionality and reports to 
purchase.
    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. 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.

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 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2020-062 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-2020-062. 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

[[Page 43287]]

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-2020-062 and should be 
submitted on or before August 6, 2020.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-15309 Filed 7-15-20; 8:45 am]
BILLING CODE 8011-01-P