Document ID: SEC-2018-1130-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe EDGA Exchange, Inc.
Posted Date: 2018-07-20T04:00Z

[Federal Register Volume 83, Number 140 (Friday, July 20, 2018)]
[Notices]
[Pages 34630-34632]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15505]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83643; File No. SR-CboeEDGA-2018-012]

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

July 16, 2018.
    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 July 2, 2018, Cboe EDGA Exchange, Inc. (``Exchange'' or ``EDGA'') 
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 EDGA 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 amend its fee schedule to (i) amend its 
pricing model, (ii) eliminate Add Volume Tier 1 and (iii) amend certain 
routing fees, effective July 2, 2018.
    Currently, the Exchange utilizes a low pricing model under which it 
charges a low fee or provides the execution free of charge. The 
Exchange proposes to amend its fee schedule to replace its current low 
pricing model to an inverted pricing model under which the Exchange 
will charge a fee to add liquidity and provide a rebate to remove 
liquidity.
Displayed Order Fee Change
    In securities priced at or above $1.00, the Exchange currently 
charges a fee of $0.00030 per share for Displayed orders that add or 
remove liquidity. The Exchange proposes to assess a standard rate of 
$0.00080 per share for Displayed orders that add liquidity for 
securities at or above $1.00 that are appended with fee codes B, V, Y, 
3 or 4. The Exchange also proposes to provide a rebate of $0.00040 per 
share for orders that remove liquidity for securities at or above $1.00 
that are appended with fee codes N, W, 6, or BB. All Displayed orders 
in securities priced below $1.00 would continue to be free.
Non-Displayed Order Fee Change
    In securities priced at or above $1.00, the Exchange currently 
charges a fee of $0.00050 per share for Non-Displayed orders that 
remove liquidity other than orders that yield fee code DT and DR (i.e., 
orders that yield fee codes HR, MT, PT). The Exchange notes that it 
does not assess a fee or provide a rebate for Non-Displayed orders that 
remove liquidity using Midpoint Discretionary Orders within 
discretionary range and yield fee code DT. The Exchange does assess a 
fee of $0.00030 for Non-Displayed orders that remove liquidity using 
MidPoint Discretionary Orders that are not within discretionary range 
and yield fee code DR. The Exchange does not currently assess a fee or 
provide a rebate for Non-Displayed orders that add liquidity other than 
orders that yield fee code DA (i.e., orders that yield fee codes DM, 
HA, MM, RP, PA). The Exchange does assess a fee of $0.00030 per share 
for Non-

[[Page 34631]]

Displayed orders that add liquidity using Midpoint Discretionary orders 
not within dictionary range and yield fee code DA. In connection with 
its proposal to implement an inverted pricing model, and to simplify 
its fee schedule, the Exchange now proposes to provide a rebate of 
$0.00040 per share to all Non-Displayed orders in securities priced 
above $1.00 that remove liquidity and to charge $0.00080 per share to 
all Non-Displayed orders that add liquidity. The Exchange does not 
propose to amend the fees charged for Non-Displayed orders in 
securities priced below $1.00.
    Additionally, in light of the change in pricing model, the Exchange 
does not wish to maintain Add Volume Tier 1 and accordingly proposes to 
eliminate it from the fee schedule.
    The Exchange next proposes to amend certain routing fees. 
Particularly, for securities at or above $1.00, the Exchange proposes 
to amend routing fees for the following orders: (i) Routed orders, pre 
and post market, which yield fee code 7 and are charged $0.00270 per 
share, (ii) routed orders to EDGX, which yield fee code I and are 
charged $0.00290 per share; (iii) routed orders, which yield fee code X 
and are charged $0.00290 per share; (iv) routed orders using ROUX 
routing strategy, which yield fee code RX and are charged $0.00280 per 
share and (v) routed orders using ROUT routing strategy, which yield 
fee code RT and are charged $0.00260 per share. The Exchange is 
proposing to amend those rates as follows: (i) the fee for routed 
orders, pre and post market, which yield fee code 7, would be increased 
to $0.00300 per share; (ii) the fee for routed orders to EDGX, which 
yield fee code I, would be increased to $0.00300 per share; (iii) the 
fee for routed orders, which yield fee code X, would be increased to 
$0.00300 per share; (iv) the fee for routed orders using ROUX routing 
strategy, which yield fee code RX, would be increased to $0.00290 per 
share and (v) the fee for routed orders using ROUT routing strategy, 
which yield fee code RT, would be increased to $0.00280 per share. The 
Exchange notes that the proposed amounts are in line with amounts 
assessed for similar transaction on other exchanges.\6\
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    \6\ See e.g., Cboe EDGX U.S. Securities Fee Schedule, Fee Codes 
and Associated Fees. See also NYSE National, Inc. Schedule of Fees 
and Rebates, Section II, Routing Fees.
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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 its proposal to replace its current low fee 
model with a taker-maker pricing model where it would charge a fee for 
adding liquidity and provide a rebate for removing liquidity is 
equitable and reasonable as it would serve to simplify its fee schedule 
to provide a standard rate for orders that add liquidity and a standard 
rebate for orders that remove liquidity, while also eliminating its 
pricing incentive under Add Volume Tier 1. The proposed fee structure 
provides a simple and straightforward model that would treat Displayed 
and Non-Displayed orders equally.
    The Exchange believes providing rebates for orders removing 
liquidity is reasonable, equitable and not unfairly discriminatory 
because it provides an incentive to bring additional liquidity to the 
Exchange, thereby promoting price discovery and enhancing order 
execution opportunities for Members. The Exchange believes that 
assessing fees for orders that add liquidity is reasonable, equitable 
and not unfairly discriminatory because the Exchange must balance the 
cost of credits for orders that remove liquidity. The Exchange believes 
the proposed changes are equitable and not unfairly discriminatory 
because they apply equally to all members. The Exchange also notes that 
other exchanges utilize taker-maker pricing models and notes that the 
proposed fees and rebates are in line with the fees and rebates 
assessed on other exchanges for similar transactions.\9\
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    \9\ See e.g., Cboe BYX U.S. Equities Fee Schedule, Standard 
Rates, for transactions that add and remove liquidity. See also NYSE 
National, Inc. Schedule of Fees and Rebates, Section I.A General 
Rates, for transaction fees for adding liquidity.
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    The elimination of Add Volume Tier 1 is also equitable and 
reasonable because it would aid in simplifying the fee schedule and 
result in all Members being charged the same rates for all transactions 
regardless of their monthly volumes. The proposed change also applies 
to all Members.
    The Exchange lastly believes its proposed changes relating to 
certain routing fees are reasonable taking into account routing costs 
and also notes that the proposed changes are in line with amounts 
assessed by other exchanges.\10\ The Exchange believes the proposed 
changes to its routing fees are equitable and not unfairly 
discriminatory because the proposed changes apply equally to all 
Members. The Exchange notes that routing through the Exchange is 
voluntary and also notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues or providers of routing services if they deem fee 
levels to be excessive.
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    \10\ See e.g., Cboe EDGX U.S. Securities Fee Schedule, Fee Codes 
and Associated Fees. See also NYSE National, Inc. Schedule of Fees 
and Rebates, Section II, Routing Fees.
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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's 
competitors. The proposed rates and 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.

(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 \11\ and paragraph (f) of Rule 19b-4 
thereunder.\12\ 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

[[Page 34632]]

investors, or otherwise in furtherance of the purposes of the Act.
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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 [email protected]. Please include 
File Number SR-CboeEDGA-2018-012 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-CboeEDGA-2018-012. 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-CboeEDGA-2018-012 and should be 
submitted on or before August 10, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-15505 Filed 7-19-18; 8:45 am]
 BILLING CODE 8011-01-P