Document ID: SEC-2023-0546-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2023-05-17T04:00Z

[Federal Register Volume 88, Number 95 (Wednesday, May 17, 2023)]
[Notices]
[Pages 31554-31562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10471]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97487; File No. SR-CBOE-2023-022]

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

May 11, 2023.
    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 April 28, 2023, Cboe Exchange, Inc. (``Exchange'' or ``Cboe 
Options'') 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 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

---------------------------------------------------------------------------

[[Page 31555]]

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 update the Cboe Data Services, LLC Fee 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the fees set forth in the Cboe Data 
Services, LLC (``CDS'') Fee Schedule.\3\ The Exchange proposes to (i) 
relocate the fees in the CDS Fees Schedule to the Exchange's Fees 
Schedule (ii) harmonize various definitions to align with the 
definitions used by the Exchange's affiliates, and (iii) modify its 
fees relating to the distribution of the BBO data feed.\4\
---------------------------------------------------------------------------

    \3\ The Exchange initially filed the proposed fee changes on 
January 3, 2023 (SR-CBOE-2023-001). On March 1, 2023, the Exchange 
withdrew that filing and replaced it with SR-CBOE-2023-013, which 
was filed on February 28, 2023. On April 28, 2023, the Exchange 
withdrew that filing and submitted this filing.
    \4\ The BBO Data Feed is a real-time data feed that includes the 
following information: (i) outstanding quotes and standing orders at 
the best available price level on each side of the market; (ii) 
executed trades time, size, and price; (iii) totals of customer 
versus non-customer contracts at the best bid and offer (``BBO''); 
(iv) all-or-none contingency orders priced better than or equal to 
the BBO; (v) expected opening price and expected opening size; (vi) 
end-of-day summaries by product, including open, high, low, and 
closing price during the trading session; (vi) recap messages any 
time there is a change in the open, high, low or last sale price of 
a listed option; (vii) COB information; and (viii) product IDs and 
codes for all listed options contracts. The quote and last sale data 
contained in the BBO data feed is identical to the data sent to the 
Options Price Reporting Authority (``OPRA'') for redistribution to 
the public.
---------------------------------------------------------------------------

Relocation of CDS Fees
    The Exchange first proposes to consolidate the Cboe Data Services, 
LLC (CDS) Fee Schedule and the Cboe Options Fees Schedule. 
Historically, the CDS Fee Schedule set forth fees relating to real-time 
Cboe Options market data products and has been maintained separately 
from the Cboe Options Fees Schedule. The Exchange proposes to eliminate 
the CDS Fee Schedule in its entirety and relocate the fees under the 
CDS Fees Schedule to the Cboe Options Fees Schedule. The Exchange 
believes this provides a more streamlined fee schedule for Cboe Options 
fees and allows TPHs to more readily and easily find all fees 
applicable to Cboe Options. The Exchange also proposes to refer to the 
``Exchange'' in lieu of ``CDS'' in the revised Fees Schedule to align 
with terminology used by its affiliated options exchanges Cboe BZX 
Exchange, Inc. (``BZX Options'') and Cboe EDGX Exchange, Inc. (``EDGX 
Options''). The Exchange notes that no substantive changes are being 
made with the relocation of the CDS fees and elimination of references 
to CDS other than those discussed further below. The Exchange lastly 
notes that each of its affiliated options exchanges also reflect their 
respective fees for their respective real-time exchange market data 
products in the respective exchange's fees schedule (instead of being 
maintained separately), including the Exchange's affiliate Cboe C2 
Exchange, Inc., (``C2 Options''), which relocated its CDS fees schedule 
into the C2 Options Exchange Fees Schedule in 2018.\5\ The Exchange 
also believes the proposed change more accurately reflects the 
Exchange's role as it relates to its market data products as CDS is 
merely an affiliate that is the Cboe contracting entity for all U.S. 
equities and options market data products, but the data products 
themselves are made available by the Exchange.
---------------------------------------------------------------------------

    \5\ See BZX Options Exchange Fees Schedule EDGX Options Exchange 
Fees Schedule and C2 Options Exchange Fees Schedule. See also 
Securities Exchange Act Release No. 83409 (June 12, 20118), 83 FR 
28302 (June 18, 2018) (SR-C2-2018-012).
---------------------------------------------------------------------------

Definitions
    In order to provide consistent rules and terminology amongst the 
Exchange and its affiliated options exchanges, C2 Options, BZX Options 
and EDGX Options (collectively, ``Affiliates'') the Exchange is 
proposing to amend various definitions and product names to harmonize 
with such terms used by its affiliates BZX Options and EDGX Options, as 
well as definitions used in Cboe's Cboe Global Markets Global Data 
Agreement and Cboe Global Markets North American Data Policies.\6\ As 
such, the proposed rule change deletes a defined term, adds certain 
defined terms, and makes certain non-substantive changes to existing 
definitions, as further described in the table below. The proposed rule 
change makes these changes throughout the market data fee language to 
conform to the proposed defined terms and the Exchange uses the 
proposed updated terms herein.
---------------------------------------------------------------------------

    \6\ C2 Options will be submitting a similar filing to harmonize 
its definitions and products names to align with those of BZX 
Options and EDGX Options as well.

[[Page 31556]]

----------------------------------------------------------------------------------------------------------------
           Defined term                      Provision           Current CDS location    Description of change
----------------------------------------------------------------------------------------------------------------
Customer..........................  A ``Customer'' is any       Section I............  Deletes defined term to
                                     person, company or other                           align terms with BZX
                                     entity that, pursuant to                           Options and EDGX
                                     a market data agreement                            Options. The concept of
                                     with CDS, is entitled to                           ``Customer'' is also
                                     receive data, either                               better captured through
                                     directly from CDS or                               the proposed new term
                                     through an authorized                              ``Distributor''.
                                     redistributor (i.e., a                             Eliminates language that
                                     Customer or an extranet                            specifies that a person,
                                     service provider),                                 company, entity, third-
                                     whether that data is                               party vendor or Floor
                                     distributed externally or                          Broker that does not
                                     used internally. A third-                          have a market data
                                     party vendor of an                                 agreement in place with
                                     Approved Third-Party                               CDS is not considered a
                                     Device, as defined in the                          ``Customer'' since the
                                     CDS Fee Schedule, is not                           Exchange is not
                                     a Customer unless it has                           proposing to use that
                                     a market data agreement                            term in the Fees
                                     in place with CDS. A                               Schedule with respect to
                                     Floor Broker User, as                              market data fees and
                                     defined in the CDS Fee                             does not believe it's
                                     Schedule, is not a                                 necessary to clarify
                                     Customer unless it has a                           this point in the Fees
                                     market data agreement in                           Schedule.\7\ Neither BZX
                                     place with CDS.                                    Options nor EDGX Options
                                                                                        refer to market data
                                                                                        agreements in their
                                                                                        respective Fees
                                                                                        Schedules.
Distributor.......................  A Distributor of an         N/A..................  Codifies definition of
                                     Exchange Market Data                               ``Distributor'' in
                                     product is any entity                              Footnote 49 of the Cboe
                                     that receives the                                  Options Fees Schedule.
                                     Exchange Market Data                               An Exchange Market Data
                                     product directly from the                          Product refers to any
                                     Exchange or indirectly                             Data Product set forth
                                     through another entity                             in the Market Data Fees
                                     and then distributes it                            section of the
                                     internally or externally                           Exchange's Fees
                                     to a third party.                                  Schedule. Definition is
                                                                                        identical to the
                                                                                        definition used by BZX
                                                                                        Options and EDGX Options
                                                                                        and substantially
                                                                                        similar to the language
                                                                                        in the first sentence of
                                                                                        the definition of
                                                                                        ``Customer'' in the CDS
                                                                                        Fees Schedule.
Internal Distributor..............  An Internal Distributor of  N/A..................  Codifies definition of ''
                                     an Exchange Market Data                            Internal Distributor''
                                     product is a Distributor                           in Footnote 49 of the
                                     that receives the                                  Cboe Options Fees
                                     Exchange Market Data                               Schedule. Definition is
                                     product and then                                   identical to the
                                     distributes that data to                           definition used by BZX
                                     one or more Users within                           Options and EDGX
                                     the Distributor's own                              Options.
                                     entity.
External Distributor..............  An External Distributor of  N/A..................  Codifies definition of
                                     an Exchange Market Data                            ``External Distributor''
                                     product is a Distributor                           in Footnote 49 of the
                                     that receives the                                  Cboe Options Fees
                                     Exchange Market Data                               Schedule. Definition is
                                     product and then                                   identical to the
                                     distributes that data to                           definition used by BZX
                                     a third party or one or                            Options and EDGX
                                     more Users outside the                             Options.
                                     Distributor's own entity.
User..............................  A User of an Exchange       N/A..................  Codifies definition of
                                     Market Data product is a                           ``User'' in Footnote 49
                                     natural person, a                                  of the Cboe Options Fees
                                     proprietorship,                                    Schedule. Definition is
                                     corporation, partnership,                          identical to the one
                                     or entity, or device                               used by BZX Options and
                                     (computer or other                                 EDGX Options.
                                     automated service), that
                                     is entitled to receive
                                     Exchange data.
Non-Professional User.............  A ``Non-Professional        Section III..........  Relocates definition to
                                     User'' is a natural                                Footnote 49 of the Cboe
                                     person or qualifying                               Options Fees Schedule
                                     trust that uses Data only                          and updates the rule
                                     for personal purposes and                          reference to ``section
                                     not for any commercial                             201(11)'' of the
                                     purpose and, for a                                 Investment Advisors Act
                                     natural person who works                           of 1940 to ``section
                                     in the United States, is                           202(a)(11)''.
                                     not: (i) registered or
                                     qualified in any capacity
                                     with the Securities and
                                     Exchange Commission, the
                                     Commodities Futures
                                     Trading Commission, any
                                     state securities agency,
                                     any securities exchange
                                     or association, or any
                                     commodities or futures
                                     contract market or
                                     association; (ii) engaged
                                     as an ``investment
                                     adviser'' as that term is
                                     defined in section
                                     201(11) of the Investment
                                     Advisors Act of 1940
                                     (whether or not
                                     registered or qualified
                                     under that Act); or (iii)
                                     employed by a bank or
                                     other organization exempt
                                     from registration under
                                     federal or state
                                     securities laws to
                                     perform functions that
                                     would require
                                     registration or
                                     qualification if such
                                     functions were performed
                                     for an organization not
                                     so exempt; or, for a
                                     natural person who works
                                     outside of the United
                                     States, does not perform
                                     the same functions as
                                     would disqualify such
                                     person as a Non-
                                     Professional User if he
                                     or she worked in the
                                     United States.

[[Page 31557]]

 
Professional User.................  A Professional User of an   Section III..........  Relocates definition to
                                     Exchange Market Data                               Footnote 49 of the Cboe
                                     product is any User other                          Options Fees Schedule
                                     than a Non-Professional                            and eliminates reference
                                     User.                                              to ``natural person''
                                                                                        recipient of ``Data'' to
                                                                                        align with the
                                                                                        ``Professional User''
                                                                                        definition used by BZX
                                                                                        Options and EDGX
                                                                                        Options, as well as
                                                                                        Cboe's market data
                                                                                        policies and agreements.
Display Only Service..............  A ``Display Only Service''  Section I............  Relocates definition to
                                     allows a natural person                            Footnote 49 of the Cboe
                                     end-user to view and                               Options Fees Schedule.
                                     manipulate data using the                          Replaces reference to
                                     Distributor's                                      ``Customer'' with
                                     computerized service, but                          ``Distributor''.
                                     not to save, copy, export
                                     or transfer the data or
                                     any results of the
                                     manipulation to any other
                                     computer hardware,
                                     software or media, except
                                     for printing it to paper
                                     or other non-magnetic
                                     media.
Device............................  A ``Device'' means any      Section I under        Relocates definition to
                                     computer, workstation or    ``Display Only User    Footnote 49 of the Cboe
                                     other item of equipment,    Fees''.                Options Fees Schedule.
                                     fixed or portable, that
                                     receives, accesses and/or
                                     displays data in visual,
                                     audible or other form.
Approved Third-Party Device.......  An ``Approved Third-Party   Section I under        Relocates definition to
                                     Device'' means any          ``Floor Broker User    Footnote 49 of the Cboe
                                     computer, workstation or    Fees''.                Options Fees Schedule.
                                     other item of equipment,
                                     fixed or portable, that
                                     receives, accesses and/or
                                     displays data in visual,
                                     audible or other form
                                     that has been provided by
                                     a third-party and that
                                     has been approved, by
                                     Cboe Options, for use on
                                     the Cboe Options trading
                                     floor.
Floor Broker User.................  A ``Floor Broker User'' is  Section I under        Relocates definition to
                                     a person or entity          ``Floor Broker User    Footnote 49 of the Cboe
                                     registered with Cboe        Fees''.                Options Fees Schedule.
                                     Options as a floor broker
                                     pursuant to Cboe Options
                                     Rules.
----------------------------------------------------------------------------------------------------------------

    The Exchange also proposes to rename the following market data 
products and use the proposed names herein, in order to align with the 
naming convention used by the Exchange's affiliates, BZX Options and 
EDGX Options, for similar data products.\8\
---------------------------------------------------------------------------

    \7\ All Distributors of Cboe Options proprietary market data 
products are subject to Cboe Global Markets North American Data 
Policies and must still sign the Cboe Global Markets Global Data 
Agreement.
    \8\ See BZX Options Exchange Fees Schedule, Market Data Fees and 
EDGX Options Exchange Fees Schedule, Market Data Fees.

------------------------------------------------------------------------
              Current name                        Proposed name
------------------------------------------------------------------------
BBO Data Feed..........................  Cboe Options Top.
Book Depth Data Feed...................  Cboe Options Depth.
Complex Order Book (COB) Data Feed.....  Cboe Options Complex Order Book
                                          (COB).
FLEX Options Data Feed.................  Cboe Options FLEX Options.
------------------------------------------------------------------------

    The Exchange believes the proposed changes to eliminate, modify and 
adopt the terms discussed above will add transparency to the Fees 
Schedule and will protect investors, as the changes provide more 
clarity within the rule and more harmonized rule language across the 
Fees Schedules of the Cboe affiliated options exchanges, as well as 
well as definitions used in Cboe's Cboe Global Markets Global Data 
Agreement and Cboe Global Markets North American Data Policies. 
Further, the Exchange notes that the above-described changes relating 
to definitions are non-substantive changes or provide additional detail 
in the rule regarding current market participants that purchase or use 
the Exchange's market data products. None of these differences impact 
the manner in which any of the terms and corresponding fees apply, 
including how the Exchange would have otherwise characterized a 
Distributor or User (Professional or Non-Professional) as such 
definitions are more consistent with the definitions already used in 
the Cboe Global Markets Global Data Agreement and Cboe Global Markets 
North American Data Policies, to which all firms receiving Cboe Options 
market data must adhere to.
Cboe Options Top Fee Changes
    The Exchange next proposes to modify the current monthly Data Fee 
for Cboe Options Top. Currently, the Exchange assesses a ``Data Fee'' 
of $9,000 per month for internal use and external redistribution of the 
Cboe Options Top Data Feed. A Distributor receiving the Cboe Options 
Top Data Feed from another entity or directly from the Exchange is 
assessed the Data Fee by the Exchange and is entitled to use the Data 
internally and/or distribute it externally. The Exchange now proposes 
to adopt separate fees for internal and external distribution. 
Specifically, the Exchange proposes to maintain the current monthly fee 
of $9,000 for internal distribution but adopt a lower fee of $5,000 per 
month for external distribution.\9\
---------------------------------------------------------------------------

    \9\ Under the proposal, a Distributor that wishes to distribute 
Cboe Options Top internally and externally would be subject to a 
combined monthly fee of $14,000 (i.e., $9,000 for internal 
distribution and $5,000 for external distribution).
---------------------------------------------------------------------------

    The Exchange next proposes to modify its current User Fees. The 
Exchange currently charges a ``User

[[Page 31558]]

Fee'' of $50 per month per Device or user ID for use of the data in the 
Cboe Options Top Data Feed by ``Display Only Service'' users. The 
current User fee is payable only for ``external'' Display Only Service 
users who receive Cboe Options Top and are not employees or natural 
person independent contractors of the Distributor, the Distributor's 
affiliates or an authorized service facilitator.\10\ Internal 
Distributors may currently distribute Cboe Options Top Data to an 
unlimited number of internal Users and Devices within the Distributor 
at no further cost (aside from the above-mentioned monthly Distribution 
Fee). The Exchange proposes to eliminate the current Cboe Options Top 
User fee and in its place adopt Professional and Non-Professional User 
fees for Cboe Options Top that would apply to both Internal and 
External Distributors for all Professional and Non-Professional Users. 
The Exchange proposes to charge Cboe Options Top Distributors a monthly 
fee of $15.50 per Professional User and a monthly fee of $0.30 per Non-
Professional User.\11\
---------------------------------------------------------------------------

    \10\ Pursuant to the Cboe Global Markets North American Data 
Policies, Distributors must report the number of authorized external 
devices that receive Cboe Options Top data during a calendar month 
within 15 days after such month in the manner and format specified 
by the Exchange from time to time to determine applicable fees. In 
connection with a Distributor's distribution of the market data 
product, Distributors are required to report all Professional and 
Non-Professional Users in accordance with the following: Distributor 
should count as one User each unique User that the Distributor has 
entitled to have access to the market data product. However, where a 
device is dedicated specifically to a single individual, the 
Distributor should count only the individual and need not count the 
device. Distributor should identify and report each unique User. If 
a User uses the same unique method to gain access to the market data 
product, the Distributor should count that as one User. However, if 
a unique User uses multiple methods to gain access to the market 
data product (e.g., a single User has multiple passwords and user 
identifications), the Distributor should report all of those methods 
as an individual User. Distributors should report each unique 
individual person who receives access through multiple devices as 
one User so long as each device is dedicated specifically to that 
individual. If a Distributor entitles one or more individuals to use 
the same device, the Distributor should include only the 
individuals, and not the device, in the count.
    \11\ Distributors that receive Cboe Options Top Data will be 
required to count every Professional User and Non-Professional User 
to which they provide the data feed.
---------------------------------------------------------------------------

    Next, the Exchange proposes to eliminate a fee waiver for 
Distributors of Cboe Options Top Data. In particular, the CDS Fee 
Schedule currently provides that the monthly data fee of $9,000 per 
month for the Cboe Options Depth feed \12\ and Cboe Options COB feed 
\13\ are waived for Distributors of Cboe Options Top Data. The Exchange 
proposes to eliminate the fee waivers for Cboe Options Depth and Cboe 
Options COB for External Distributors of Cboe Options Top (i.e., the 
monthly $9,000 data fee for Cboe Options Depth will only continue to be 
waived for Internal Distributors of Cboe Options Top Data and the 
monthly $3,000 data fee for Cboe Options COB will only continue to be 
waived for Internal Distributors of Cboe Options Top and/or 
Distributors (Internal or External) of Cboe Options Depth Feed). The 
Exchange wishes only to eliminate the availability of the fee waiver 
for External Distributors of Cboe Options Top for both Cboe Options 
Depth and Cboe Options COB because such distributors will already be 
receiving the benefit of the proposed reduced fee for external 
distribution of Cboe Options Top as compared to Internal Distributors 
of Cboe Options Top who will continue to be charged the higher fee of 
$9,000.
---------------------------------------------------------------------------

    \12\ The Cboe Options Depth feed is a real-time, low latency 
data feed that includes all data contained in the Cboe Options Top 
feed (as described above) plus outstanding quotes and standing 
orders for an additional four price levels on each side of the 
market, with aggregate size (``Book Depth''). The data in the Cboe 
Options Depth feed is refreshed periodically during the trading 
session.
    \13\ The Cboe Options COB feed is a real-time feed that consists 
of data regarding the Exchange's Complex Order Book and related 
complex order information. The Cboe Options COB feed includes ``best 
bid and offer'' or ``BBO'' quotes and identifying information for 
all Cboe Options-traded complex order strategies, as well as all 
executed Cboe Options complex order trades (and identifies whether 
the trade was a customer trade or whether a complex order in the COB 
is a customer order).
---------------------------------------------------------------------------

    The Exchange lastly proposes to establish a $300,000 per month 
Enterprise Fee that will permit a Distributor to purchase a monthly 
(and optional) Enterprise license to receive the Cboe Options Top Data 
for distribution to an unlimited number of Professional and Non-
Professional Users. The Enterprise Fee is an alternative to 
Professional and Non-Professional User fees and is assessed in addition 
to the Distribution Fee, which the Exchange proposes to make clear in 
the Fee Schedule. The Enterprise Fee may provide an opportunity to 
reduce fees. For example, if a Distributor has 20,000 Professional 
Users who each receive Cboe Options Top at $15.50 per month (as 
proposed), then that Distributor will pay $310,000 per month in 
Professional User fees. If the Distributor instead were to purchase the 
proposed Enterprise license, it would alternatively pay a flat fee of 
$300,000 for an unlimited number of Professional and Non-Professional 
Users. A Distributor must pay a separate Enterprise Fee for each entity 
that controls the display of Cboe Options Top if it wishes for such 
Users to be covered by the Enterprise Fee rather than by per User 
fees.\14\ A Distributor that pays the Enterprise Fee will not have to 
report its number of such Users on a monthly basis. Rather, every six 
months, the Distributor must provide the Exchange with a count of the 
total number of Professional and Non-Professional Users of Cboe Options 
Top Data.\15\ The Exchange notes that the purchase of an Enterprise 
license is voluntary, and a firm may elect to instead use the per User 
structure and benefit from the proposed per User Fees described above. 
For example, a firm that does not have a sufficient number of Users to 
benefit from purchase of the license need not do so.
---------------------------------------------------------------------------

    \14\ For example, if a Distributor (e.g., Refinitiv) that 
distributes Cboe Options Top to Retail Brokerage Firm A and Retail 
Brokerage Firm B (which ``entities'' redistribute BZX Options Top to 
its respective Users) and wishes to have the Users under each firm 
covered by an Enterprise license, the Distributor would be subject 
to two Enterprise Fees.
    \15\ See Cboe Global Markets north American Data Policies.
---------------------------------------------------------------------------

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.\16\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \17\ 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 the 
section 6(b)(5) requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange also believes this proposal is 
consistent with section 6(b)(8) of the Act, which requires that the 
rules of an exchange not impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.\18\ 
The

[[Page 31559]]

Exchange lastly believes the proposed rule change is consistent with 
section 6(b)(4) of the Act,\19\ 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.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ 15 U.S.C. 78f(b)(8).
    \19\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange first notes that it operates in a highly competitive 
environment. Indeed, there are currently 16 registered options 
exchanges that trade options. Based on publicly available information, 
no single options exchange has more than 18% of the market share.\20\ 
The Exchange believes top-of-book quotation and transaction data is 
highly competitive as national securities exchanges compete vigorously 
with each other to provide efficient, reliable, and low-cost data to a 
wide range of investors and market participants. Indeed, there are 
several competing products offered by other national securities 
exchanges today, not counting products offered by the Exchange's 
affiliates, and each of the Exchange's affiliated U.S. options 
exchanges also offers similar top-of-book data.\21\ Each of those 
exchanges offer top-of-book quotation and last sale information based 
on their own quotation and trading activity that is substantially 
similar to the information provided by the Exchange through the Cboe 
Options Top Feed. Further, the quote and last sale data contained in 
the Cboe Options Data Feed is identical to the data sent to OPRA for 
redistribution to the public, including data relating to the Exchange's 
proprietary and exclusively listed products.\22\ Accordingly, Exchange 
top-of-book data is widely available today from a number of different 
sources.
---------------------------------------------------------------------------

    \20\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (April 24, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
    \21\ See e.g., NYSE Arca Options Proprietary Market Data Fees 
Schedule, MIAX Options Exchange, Fee Schedule, Section 6 (Market 
Data Fees), Nasdaq PHLX Options 7 Pricing Schedule, Section 10 
(Proprietary Data Feed Fees) and C2 Options Exchange Fees Schedule, 
Cboe Data Services, LLC Fees.
    \22\ The Exchange notes that it makes available the BBO data and 
last sale data that is included in the Cboe Options Top Data Feed no 
earlier than the time at which the Exchange sends that data to OPRA.
---------------------------------------------------------------------------

    Moreover, the Cboe Options Top Data Feed is distributed and 
purchased on a voluntary basis, in that neither the Exchange nor market 
data distributors are required by any rule or regulation to make this 
data available. Accordingly, Distributors and Users can discontinue use 
at any time and for any reason, including due to an assessment of the 
reasonableness of fees charged. As described above, market participants 
have a wide variety of alternative market data products from which to 
choose, such as similar proprietary data products offered by other 
exchanges and consolidated data. Further, the Exchange is not required 
to make any proprietary data products available or to offer any 
specific pricing alternatives to any customers. Moreover, persons 
(including broker-dealers) who subscribe to any exchange proprietary 
data feed must also have equivalent access to consolidated Options 
Information \23\ from OPRA for the same classes or series of options 
that are included in the proprietary data feed (including for 
exclusively listed products), and proprietary data feeds cannot be used 
to meet that particular requirement.\24\ As such, all proprietary data 
feeds are purely optional and only those that deem the product to be of 
sufficient overall value and usefulness would purchase it.
---------------------------------------------------------------------------

    \23\ ``Consolidated Options Information'' means consolidated 
Last Sale Reports combined with either consolidated Quotation 
Information or the BBO furnished by OPRA. Access to consolidated 
Options Information is deemed ``equivalent'' if both kinds of 
information are equally accessible on the same terminal or work 
station. See Limited Liability Company Agreement of Options Price 
Reporting Authority, LLC (``OPRA Plan''), Section 5.2(c)(iii). The 
Exchange notes that this requirement under the OPRA Plan is also 
reiterated under the Cboe Global Markets Global Data Agreement and 
Cboe Global Markets North American Data Policies, which subscribers 
to any exchange proprietary product must sign and are subject to, 
respectively. Additionally, the Exchange's Data Order Form (used for 
requesting the Exchange's market data products) requires 
confirmation that the requesting market participant receives data 
from OPRA.
    \24\ Id.
---------------------------------------------------------------------------

    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. Particularly, in 
Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \25\ Making 
similar data products available to market participants fosters 
competition in the marketplace, and constrains the ability of exchanges 
to charge supracompetitive fees. In the event that a market participant 
views one exchange's data product as more or less attractive than a 
competitor they can and do switch between similar products. The 
proposed fees are a result of the competitive environment, as the 
Exchange seeks to adopt fees to attract purchasers of Cboe Options Top 
Data.
---------------------------------------------------------------------------

    \25\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    The Exchange believes the proposed External Distribution fee is 
reasonable as it would represent a decreased fee for any Distributor 
who is only interested in distributing Cboe Options Top externally. 
Providing an opportunity for lower cost access to U.S. options market 
data such as Cboe Options Top benefits a wide range of investors that 
participate in the national market system and makes it more broadly 
available, including non-professional retail investors who, by 
definition, do not receive the data for commercial purposes and 
therefore would not be receiving the data via internal distribution. 
The Exchange believes the proposed fees for external distribution of 
Cboe Options Top will also continue to be allocated fairly and 
equitably, and are not unfairly discriminatory, as the proposed fee 
will apply equally to all Distributors that choose to subscribe to Cboe 
Options Top and distribute that data to external Users. More 
specifically, as proposed, all External Distributors of Cboe Options 
Top will be subject to the same external distribution fee, regardless 
of the type of business that they operate, or the use they plan to make 
of the data feed. Thus, all External Distributors would have access to 
Cboe Options Top for purposes of external distribution on the same 
equitable and non-discriminatory terms.
    The Exchange believes that it is also fair and equitable, and not 
unfairly discriminatory to charge different fees for internal and 
external distribution of the Cboe Options Top. Although the proposed 
distribution fee charged to External Distributors will be lower than 
the existing distribution fee charged to Internal Distributors, 
External Distributors are subject to User fees for both Non-
Professional Users and Professional Users, whereas Internal 
Distributors will only subject to fees for Professional Users (or 
alternatively the proposed Enterprise Fee). Moreover, Internal 
Distributors of Cboe Options Top will still have the benefit of 
receiving Cboe Options Depth and/or Cboe Options COB at no additional 
cost, whereas the waiver to receive Cboe Options Depth will not be 
available for External Distributors of Cboe Options Top. The Exchange 
also notes that Cboe Options Depth and Cboe Options COB are more likely 
to be distributed internally as such data is used by Professional 
Users, including employees of Distributors, whereas Cboe Options Top is 
more likely to be distributed externally as such data is expected to be

[[Page 31560]]

used more frequently by Non-Professional Users who, by definition, do 
not receive the data for commercial purposes (e.g., retail investors). 
The Exchange therefore believes that the proposed reduced fee for 
External Distributors is reasonable because it may encourage more 
distributors to choose to offer the Cboe Options Top Data Feed, thereby 
expanding the distribution of this market data for the benefit of 
investors, and particularly retail investors.
    The Exchange next notes it is not required to charge a single 
distribution fee to cover more than one of its available data products, 
but none-the-less has opted to not charge for separate data fees for 
Cboe Options Depth and Cboe Options COB for Distributors of Cboe 
Options Top, since such waiver was adopted in January 1, 2015 
[sic].\26\ However, the Exchange no longer wishes to maintain the fee 
waiver of Cboe Options Depth or Cboe Options COB for External 
Distributors of Cboe Options Top. The Exchange believes the proposed 
elimination of the waivers is reasonable, equitable and not unfairly 
discriminatory because although External Distributors will not receive 
the benefit of the fee waiver, they will be subject to a lower 
distribution fee as compared to Internal Distributors of Cboe Options 
Top who will continue to be charged the higher fee of $9,000. 
Additionally, the Exchange notes that all Distributors of Cboe Options 
COB are also Distributors of Cboe Options Depth, and therefore already 
have (and will continue to have) their monthly distribution fee for 
Cboe Options COB waived since Distributors of Cboe Options Depth 
qualify for a waiver of the monthly distribution fee for Cboe Options 
COB.\27\ Moreover, the Exchange does not anticipate the impact of the 
proposed rule change to be significant as most market participants 
(over 70%) buy either Cboe Options Top or Cboe Options Depth (and not 
both) and nearly 80% of Distributors of Cboe Options Top and Cboe 
Options Depth distribute such products internally. Further, 
Distributors are not required to distribute, and Users are not required 
to receive, any one particular data product and may choose to receive 
none, one, or several of the Exchange's market data products. Only 
those that deem any product or products to be of sufficient overall 
value and usefulness would purchase such product(s). The Exchange is 
also not required to maintain a single fee that covers multiple market 
data products. In fact, other exchanges similarly have adopted separate 
fees for different data products that historically had otherwise been 
provided under a single fee.\28\ The Exchange believes the proposed 
change is equitable and not unfairly discriminatory as it will apply 
uniformly to External Distributors.
---------------------------------------------------------------------------

    \26\ See Securities Exchange Act Release No. 70683 (October 15, 
2013), 78 FR 62798 (October 22, 2013) (SR-CBOE-2013-087).
    \27\ See Cboe Data Services, LLC (CDS) Fee Schedule, Section 
III, Complex Order Book (``COB'') Data Feed, Data Fee.
    \28\ See Securities Exchange Act Release No. 79556 (December 14, 
2016), 81 FR 92935 (December 20, 2016) (SR-NASDAQ-2016-167).
---------------------------------------------------------------------------

    The Exchange believes the proposed changes to adopt new 
Professional and Non-Professional User fees are reasonable as the User 
fees continue to be in line with User fees assessed by other exchanges 
for similar data.\29\ Moreover, Display Only Service Users will now be 
subject to lower fees as the Exchange proposes to significantly reduce 
the monthly User fees from $50 per Device or User ID for Display Only 
Service User to $15.50 per Professional User or $0.30 per Non-
Professional User. Although External Distributors are currently only 
subject to a User fee for external Users that are Display Only Service 
Users, the proposed fee for all external Users (which are likely to be 
Non-Professional Users) is significantly lower (i.e., $0.30 per Non-
Professional User) than the current $50 User fee. Moreover, the 
proposed fee structure of differentiated Professional and Non-
Professional fees that are paid by both Internal and External 
Distributors has long been used by other exchanges, including the 
Exchange, for their proprietary data products, and by the OPRA plan in 
order to reduce the price of data to retail investors and make it more 
broadly available.\30\ The Exchange also believes offering Cboe Options 
Top Data to Non-Professional Users at a rate lower than the rate for 
Professional Users results in greater equity among data recipients, as 
Professional Users are categorized as such based on their employment 
and participation in financial markets, and thus, are compensated to 
participate in the markets. Although Non-Professional Users too can 
receive significant financial benefits through their participation in 
the markets, the Exchange believes it is reasonable to charge more to 
those Users who are more directly engaged in the markets. The Exchange 
believes that the proposed fees are equitable and not unfairly 
discriminatory because they will be charged uniformly to Distributors 
for their Professional and Non-professional Users.
---------------------------------------------------------------------------

    \29\ See e.g., Nasdaq PHLX Options 7 Pricing Schedule, Section 
10 (Proprietary Data Feed Fees), which provides for a fee of $40 per 
month to professional users and $1.00 per month to non-professional 
users to cover the usage of PHLX Options (TOPO) Data, TOPO Plus 
Orders, PHLX Orders and PHLX Depth Data feeds. See also NYSE 
American Options Proprietary Market Data Fees schedule, which 
provides for a fee of $50 per month to professional users and $1.00 
per month to non-professional users of American Options Top Data, 
American Options Deep and American Options Complex products. By 
comparison, the total Professional User fee for Cboe Options Top and 
Cboe Options COB is in line with the above Professional User fee at 
$40.50 per Professional User (i.e., $15.50 per Professional Users of 
Cboe Options Top, as proposed, and $25 per Professional User of Cboe 
Options COB). The Exchange's combined Non-Professional User Fee at 
$0.30 per Non-Professional User (i.e., $0.30 per Non-Professional 
User of Cboe Options Top, as proposed, and $0 per Non-Professional 
User of Cboe Options COB) is lower than PHLX's and NYSE American's 
aforementioned Non-Professional User fees. Cboe Options Depth is not 
included in the above comparison because there are no User fees 
based on Professional or Non-Professional classification, but rather 
a $50 per month, per Device or User ID fee for Display Only Service 
external users only. Further there are no fees for any internal 
Users.
    \30\ See, e.g., Securities Exchange Act Release No. 59544 (March 
9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131) 
(establishing the $15 Non-Professional User Fee (Per User) for NYSE 
OpenBook); See, e.g., Securities Exchange Act Release No. 67589 
(August 2, 2012), 77 FR 47459 (August 8, 2012) (revising OPRA's 
definition of the term ``Nonprofessional''); and See Securities 
Exchange Act Release No. 70683 (October 15, 2013), 78 FR 62798 
(October 22, 2013) (SR-CBOE-2013-087) (establishing Professional and 
Non-Professional User fees for Cboe Options COB Data Feed).
---------------------------------------------------------------------------

    Although Internal Distributors do not currently pay any User fees 
for Cboe Options Top, the Exchange believes its reasonable, equitable 
and not unfairly discriminatory to start assessing User fees, as 
internal and external users will be treated the same. Additionally, 
other exchanges also assess User fees for internal users of similar 
data, including the Exchange's affiliates.\31\ Moreover, the proposed 
rates Internal Distributors will be subject to for User fees are in 
line with User fees assessed by other exchanges for similar data.\32\ 
The Exchange believes the proposed monthly User fees for which Internal 
Distributors of Cboe Options Top will now be subject to are equitably 
allocated because they would be charged on an equal basis for all 
internal Users that receive Cboe Options Top.
---------------------------------------------------------------------------

    \31\ See BZX Options Fees Schedule, Market Data Fees and EDGX 
Options Fees Schedule, Market Data Fees. See also Nasdaq PHLX 
Options 7 Pricing Schedule, Section 10 (Proprietary Data Feed Fees).
    \32\ See supra note 29.
---------------------------------------------------------------------------

    The proposed Enterprise Fee for Cboe Options Top Feed is equitable 
and reasonable as the proposed fee could result in a fee reduction for 
Distributors with a large number of Professional and Non-Professional 
Users. If a Distributor has a smaller number of Professional Users of 
Cboe Options Top Data, then it

[[Page 31561]]

may continue using the per User structure and benefit from the proposed 
per Cboe Options Top User Fee reductions. By reducing prices for 
Distributors with a large number of Professional and Non-Professional 
Users, the Exchange believes that more firms may choose to receive and 
to distribute Cboe Options Top Data, thereby expanding the distribution 
of this market data for the benefit of investors.
    The Exchange further believes that the proposed Enterprise Fee is 
reasonable because it will simplify reporting for certain recipients 
that have large numbers of Professional and Non-Professional Users. 
Firms that pay the proposed Enterprise Fee will not have to report the 
number of Users on a monthly basis as they currently do, but rather 
will only have to count Professional and Non-Professional users every 
six months, which is a significant reduction in administrative burden. 
Finally, as described above the Enterprise Fee is entirely optional. A 
firm that does not have a sufficient number of Users to benefit from 
purchase of the license need not do so.
    The Exchange lastly believes the proposed changes relating to the 
defined terms and terminology will provide additional specificity and 
clarity, while also harmonizing the various definition with that of its 
affiliates and providing more consistency with definitions used in the 
Cboe Global Markets Global Data Agreement and Cboe Global Markets North 
American Data Policies. Doing so would ensure consistent terms amongst 
the Exchange and its affiliates, as well as the Exchange's data 
agreements and policies, thereby reducing the potential for confusion 
amongst market data subscribers of the Exchange's and its affiliates' 
market data products. Additionally, the proposed new terms are 
identical to the terms already used by the Exchange's affiliates BZX 
Options and EDGX Options. Similarly, the Exchange believes the proposal 
to relocate the fees in the CDS Fees Schedule to the Cboe Options Fees 
Schedule will provide for a more streamlined fees schedule and allow 
TPHs to more readily and easily find all fees applicable to Cboe 
Option, thereby reducing potential confusion. Further, the Exchange is 
the only exchange of the Cboe options exchanges that currently 
maintains a separate fees schedule for its market data product fees. 
Accordingly, the Exchange believes the proposed changes remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, protect investors and the 
public interest.

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

    The Exchange does not believe that the proposed rule change would 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
operates in a highly competitive environment, and its ability to price 
top-of-book data is constrained by competition among exchanges that 
offer similar data products to their customers. For example, Top-of-
book data is broadly disseminated by competing U.S. options exchanges. 
Further, the Exchange's proposal to eliminate the waiver for the Cboe 
Options Depth and Cboe Options COB data fees for External Distributors 
of Cboe Options Top does not modify the existing fee amounts, but 
simply eliminates waivers to receive such data products free of charge 
that the Exchange is not required to maintain. Other exchanges are free 
to adopt a similar waiver if they choose. In this competitive 
environment potential Distributors are free to choose which competing 
product to purchase to satisfy their respective needs for market 
information. Often, the choice comes down to price, as market data 
participants look to purchase cheaper data products, and quality, as 
market participants seek to purchase data that represents significant 
market liquidity.
    The Exchange believes that the proposed fees do not put any market 
participants at a relative disadvantage compared to other market 
participants. As discussed, the proposed fees and eliminated waiver 
would apply to all similarly situated Distributors of Cboe Options Top 
on an equal and non-discriminatory basis. The Exchange believes the 
reduced fees for External Distributors and not Internal Distributors of 
Cboe Options Top is appropriate given External Distributors are subject 
to both the proposed Non-Professional and Professional user fees as 
compared to Internal Distributors who are only subject to Professional 
user fee (since non-professional users, by definition, do not receive 
the data for commercial purposes and therefore would not be receiving 
the data via internal distribution) s, [sic]. Additionally, Internal 
Distributors will continue to receive the benefit of a fee waiver for 
Cboe Options Depth and Cboe Options COB, which are more commonly used 
products for internal distribution amongst Professional Users. The 
Exchange believes the differentiated fees for Professional and Non-
Professional Users of Cboe options Top is appropriate given 
Professional Users are categorized as such based on their employment 
and participation in financial markets, and thus, are compensated to 
participate in the markets. Non-Professional Users too can receive 
significant financial benefits through their participation in the 
markets, however the Exchange believes it is reasonable to charge more 
to those Users who are more directly engaged in the markets. The 
Exchange therefore believes that the proposed fee neither favors nor 
penalizes one or more categories of market participants in a manner 
that would impose an undue burden on competition.
    The Exchange believes that the proposed fees do not impose a burden 
on competition or on other SROs that is not necessary or appropriate in 
furtherance of the purposes of the Act. In particular, market 
participants are not forced to subscribe to Cboe Options Top Data, or 
any of the Exchange's data feeds, as described above. As noted, the 
quote and last sale data contained in the Exchange's Cboe Options Top 
feed is identical to the data sent to OPRA for redistribution to the 
public, including data relating to the Exchange's proprietary and 
exclusively listed products. Accordingly, Exchange top-of-book data is 
therefore widely available today from a number of different sources.
    Because market data customers can find suitable substitute feeds, 
an exchange that overprices its market data products stands a high risk 
that users may substitute another product. These competitive pressures 
ensure that no one exchange's market data fees can impose an undue 
burden on competition, and the Exchange's proposed fees do not do so 
here.

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 \33\ and paragraph (f) of Rule 19b-4 \34\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may

[[Page 31562]]

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.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78s(b)(3)(A).
    \34\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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-CBOE-2023-022 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-2023-022. 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. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to File Number SR-CBOE-2023-022 and should be submitted on 
or before June 7, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
---------------------------------------------------------------------------

    \35\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10471 Filed 5-16-23; 8:45 am]
BILLING CODE 8011-01-P