Document ID: SEC-2017-2087-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe EDGX Exchange, Inc.
Posted Date: 2017-12-18T05:00Z

[Federal Register Volume 82, Number 241 (Monday, December 18, 2017)]
[Notices]
[Pages 60081-60082]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27147]

[[Page 60081]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82300; File No. SR-CboeEDGX-2017-004]

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

December 12, 2017.
    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 1, 2017, 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 EDGX Rules 
15.1(a) and (c).
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    \5\ The term ``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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to modify the Fee Schedule applicable to the 
Exchange's equity options platform (``EDGX Options'') to modify the 
description of certain pricing applicable to complex orders on EDGX 
Options.
    The Exchange recently began accepting complex orders in connection 
with the launch of the EDGX Options complex order book (``COB'').\6\ In 
turn, the Exchange adopted base fees and rebates applicable to complex 
orders to accommodate the acceptance of complex orders,\7\ and then 
adopted various tiers to incentivize the entry of complex orders to the 
Exchange.\8\ In connection with such pricing, the Exchange adopted 
certain pricing applicable to Non-Customer \9\ orders which trade 
against Non-Customers that is variable depending on whether an order 
adds or removes liquidity. In particular, fee codes ZF, ZG, ZH and ZJ 
are assigned depending on whether an order added (ZF and ZH) or removed 
(ZG and ZJ) liquidity.
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    \6\ See Securities Exchange Act Release No. 81891 (October 17, 
2017) (SR-BatsEDGX-2017-29) (order approving rules for EDGX complex 
order book).
    \7\ The Exchange initially filed to adopt complex order pricing 
on October 23, 2017 (SR-BatsEDGX-2017-42). On October 31, 2017 the 
Exchange withdrew SR-BatsEDGX-2017-42 and submitted a filing to 
replace such filing (SR-BatsEDGX-2017-48).
    \8\ The Exchange initially filed to adopt tiers for its complex 
order pricing on November 1, 2017 (SR-BatsEDGX-2017-49). On November 
8, 2017 the Exchange withdrew SR-BatsEDGX-2017-49 and submitted a 
filing to replace such filing (SR-BatsEDGX-2017-50).
    \9\ ``Non-Customer'' applies to any transaction that is not a 
Customer order. See the Exchange's fee schedule available at http://markets.cboe.com/us/options/membership/fee_schedule/edgx.
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    The Exchange proposes to add additional language to footnote 8 of 
the fee schedule to make clear when it considers an order to have added 
or removed liquidity when an order is executed in a Complex Order 
Auction. Specifically, as proposed, footnote 8 would state the 
following:
     For an execution that occurs within a Complex Order 
Auction (``COA'') against an unrelated order received after the COA was 
initiated or a COA response, for the purpose of assigning fee codes the 
initiating order is considered the adder and the unrelated order or COA 
response is considered the remover.
     For an execution that occurs within a COA against an 
unrelated order that was resting on the Exchange's order book when the 
COA was initiated, for the purpose of assigning fee codes the 
initiating order is considered the remover and the unrelated order is 
considered the adder.
    The Exchange proposes this method of assigning add and remove to 
provide the status of adder to the order that should be considered 
``first'' as between an order that initiates a COA or an unrelated 
order posted to the Exchange's order book. There are no cases in which 
an order that responds to a COA would be considered the adder of 
liquidity as, by definition, a response to a COA is always received 
after a COA has been initiated. The Exchange is not proposing to modify 
any of the rates applicable to complex orders processed by the 
Exchange.
Implementation Date
    The Exchange proposes to implement the proposed changes 
immediately.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder that are applicable to a national securities exchange, and, 
in particular, with the requirements of Section 6 of the Act.\10\ 
Specifically, the Exchange believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\11\ in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among Members and other persons using any facility or system which the 
Exchange operates or controls.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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    In particular, the Exchange believes that the proposed fee change 
is reasonable and equitably allocated as it will make clear in the 
context of the COA process the orders that will be assigned fee codes 
for orders that add liquidity and those that will be assigned fee codes 
for orders that remove liquidity. The Exchange further believes that 
the process of assigning status as adder to the order that was first 
between an order that initiates a COA or an order posted to the 
Exchange's order book is a reasonable implementation that is analogous 
to how such status is applied by the Exchange with respect to trading 
on the Exchange generally. The Exchange further believes the proposal

[[Page 60082]]

is not unreasonably discriminatory because the process for assigning 
add and remove values is equally applied to all Members.

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

    The Exchange believes the proposed amendment to its fee schedule 
would 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 the proposed change to add language to the 
Exchange's fee schedule burdens competition, but instead, improves the 
transparency and clarity of the Exchange's fee schedule. Further, the 
Exchange does not believe that the assignment of status as adder or 
remover burdens competition as between Members that submit orders to 
the Exchange that post to the Exchange's order book and Members that 
submit orders that initiate COAs because the process of assigning adder 
and remover status is clearly delineated in the fee schedule and is 
reasonable for the reasons described above.

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 \12\ and paragraph (f) of Rule 19b-4 
thereunder.\13\ 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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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-2017-004 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-2017-004. 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 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-2017-004, and should be 
submitted on or before January 8, 2018.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-27147 Filed 12-15-17; 8:45 am]
 BILLING CODE 8011-01-P