Document ID: SEC-2018-1646-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe EDGX Exchange, Inc.
Posted Date: 2018-10-23T04:00Z

[Federal Register Volume 83, Number 205 (Tuesday, October 23, 2018)]
[Notices]
[Pages 53522-53524]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-23038]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84442; File No. SR-CboeEDGX-2018-047]

Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change Related 
to Fees for Use on Cboe EDGX Exchange, Inc.

October 17, 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 October

[[Page 53523]]

3, 2018, Cboe EDGX Exchange, Inc. (the ``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 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 filed a proposal to amend the fee schedule applicable 
to Members \5\ and non-Members of the Exchange pursuant to Exchange 
Rules 15.1(a) and (c).
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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 at the Exchange's 
website at www.markets.cboe.com, at the principal office of the 
Exchange, 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 parts 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 Exchange proposes to amend its fee schedule to adopt new fee 
code DM, effective October 3, 2018. Such flag will be yielded when 
Members add liquidity in the discretionary range using a MidPoint 
Discretionary Order type (``MDO''), which order type was recently 
adopted by the Exchange. In sum, an MDO is a Limit Order that is 
executable at the National Best Bid (``NBB'') for an order to buy or 
the National Best Offer (``NBO'') for an order to sell while resting on 
the EDGX Book, with discretion to execute at prices to and including 
the midpoint of the National Best Bid and Offer (the ``NBBO'').\6\ MDO 
orders can be displayed or hidden. The MDO has two discrete 
components--the displayed portion that is pegged to the NBB or NBO, and 
a non-displayed portion which gives discretion to execute to the mid-
point of the NBBO, subject to certain limits. The Exchange believes the 
proposed pricing is reflective of this concept. Particularly, the 
Exchange notes that displayed MDO orders that add liquidity at the bid 
or offer will receive one of the existing applicable fee codes, B, V, 
Y, 3, or 4 and receive the standard rebate for adding liquidity. The 
standard rebate for adding liquidity in securities priced at or above 
$1.00 is $0.0020 per share and $0.00003 per share for securities priced 
below $1.00. Non-displayed MDO orders that add liquidity at the bid or 
offer will receive the existing non-displayed add fee code, HA. The 
rebate for orders yielding fee code HA is $0.00150 per share for 
securities priced at or above $1.00 and $0.00003 for securities priced 
below $1.00. The Exchange lastly proposes that Members that add 
liquidity in the discretionary range using a MDO order will receive a 
rebate of $0.0015 per share for securities priced at or above $1.00 and 
provide a rebate of $0.00003 per share for securities priced below 
$1.00. The Exchange notes that the proposed pricing for orders that add 
liquidity using MDO orders within the discretionary range is the same 
as the pricing for non-displayed MDO orders that add liquidity at the 
bid or offer (i.e., orders yielding fee code HA). The Exchange notes 
that pursuant to Footnote 11 of the Fees Schedule, orders that add non-
displayed liquidity (e.g., orders yielding fee code HA) may not receive 
a rebate if the order has a Discretionary Range instruction. As such, 
the Exchange proposes to adopt a new fee code, DM, to be appended to 
all MDO orders that add liquidity within the discretionary range.
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    \6\ See Securities Exchange Act Release No. 84327 (October 1, 
2018) (SR-CboeEDGX-2018-041) (notice of filing and immediate 
effectiveness of proposed rule change to adopt MDOs).
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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,\7\ in general, and 
furthers the objectives of Section 6(b)(4),\8\ 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.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed rebates for orders yielding fee 
code DM are reasonable because the amount of the rebates are the same 
as the respective rebates applied to other non-displayed orders.\9\ The 
Exchange believes the proposed rebates for orders yielding DM is 
equitable and not unfairly discriminatory because it applies uniformly 
to all members. The Exchange also notes that it believes it is 
equitable and reasonable to provide a rebate to MDOs because MDOs add 
liquidity at the NBBO while offering price improvement opportunities to 
incoming contra-side orders that execute within its discretionary 
range. The Exchange believes it's equitable and not unfairly 
discriminatory to provide a lower rebate to non-displayed add MDO 
orders (i.e., orders yielding fee codes HA and DM) compared to 
displayed add MDO orders (i.e., orders yielding fee codes, B, V, Y, 3, 
or 4) because such pricing incentivizes the entry of displayed 
liquidity on the Exchange, which is consistent with the Exchange's 
pricing generally.
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    \9\ See e.g., Cboe EDGX U.S. Equities Exchange Fee Schedule, Fee 
Code and Associated Fees, Fee Code HA.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    This proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The Exchange does not believe that this change represents a 
significant departure from previous pricing offered by the Exchange or 
from pricing offered by the Exchange's competitors. The proposed 
rebates would apply uniformly to all Members, and Members may opt to 
disfavor the Exchange's pricing if they believe that alternatives offer 
them better value. Accordingly, the Exchange does not believe that the 
proposed changes will impair the ability of Members or competing venues 
to maintain their competitive standing in the financial markets. 
Further, excessive fees would serve to impair an exchange's ability to 
compete for order flow and members rather than burdening competition. 
The Exchange believes that its proposal would not burden intramarket 
competition because the proposed rate would apply uniformly to all 
Members.

[[Page 53524]]

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 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 \10\ and paragraph (f) of Rule 19b-4 
thereunder.\11\ 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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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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 [email protected]. Please include 
File Number SR-CboeEDGX-2018-047 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-2018-047. 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 this 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 Number SR-CboeEDGX-2018-047 and should be 
submitted on or before November 13, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-23038 Filed 10-22-18; 8:45 am]
BILLING CODE 8011-01-P