Document ID: SEC-2018-0757-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc.
Posted Date: 2018-05-16T04:00Z

[Federal Register Volume 83, Number 95 (Wednesday, May 16, 2018)]
[Notices]
[Pages 22728-22730]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10380]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83210; File No. SR-CboeBZX-2018-030]

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

May 10, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on May 1, 2018, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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 BZX 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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[[Page 22729]]

    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 applicable to its 
equities trading platform (``BZX Equities'') to: (i) Eliminate fee code 
HA and replace it with new fee codes HV, HB and HY, (ii) add a Non-
Displayed Add Volume Tier; and (iii) modify the rate associated with 
fee code D, effective May 1, 2018.
Fee Codes HA, HV, HB, HY
    Currently, fee code HA is appended to all non-displayed orders that 
add liquidity and receive a rebate of $0.00150 per share. The Exchange 
proposes to eliminate fee code HA and replace it with fee codes HV, HB 
and HY. Particularly, the Exchange proposes to separate out fee code HA 
into three separate fee codes, each representing a different Tape for 
non-displayed orders that add liquidity. The Exchange proposes to adopt 
fee code HV for Tape A non-displayed orders that add liquidity; fee 
code HB for Tape B non-displayed orders that add liquidity; and fee 
code HY for Tape C non-displayed orders that add liquidity. The 
Exchange notes it currently maintains separate fee codes based on Tapes 
for other types of orders as well.\6\ In connection with this change, 
the Exchange proposes to eliminate references to fee code HA throughout 
the Fee Schedule and replace it with references to HV, HB, HY.
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    \6\ See e.g., Cboe BZX U.S. Equities Exchange Fee Schedule, Fee 
Codes W and BB, and N which fee codes represent orders removing 
liquidity from BZX for Tapes A, B and C respectively.
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New Volume Tier
    The Exchange currently provides a standard rebate of $0.00150 per 
share for non-displayed orders that add liquidity. The Exchange 
proposes to adopt a new Non-Displayed Add Volume Tape A Volume Tier, 
Tier 1 under Footnote 1 (``HV Volume Tier'') which would be available 
for qualifying orders which yield fee code HV. Particularly, under the 
proposed HV Volume Tier, a Member may receive an enhanced rebate of 
$0.00260 per share where they add an ADV \7\ greater than or equal to 
0.20% of the TCV \8\ as Non-Displayed orders that yield fee codes HI or 
HV.\9\ The Exchange believes the proposed change will encourage Members 
to increase their liquidity on the exchange. The Exchange also notes 
that other Exchanges maintain other volume tiers specific to a 
particular Tape.\10\
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    \7\ ``ADV'' means average daily volume calculated as the number 
of shares added or removed, combined, per day. ADAV and ADV are 
calculated on a monthly basis. Id.
    \8\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply. Id.
    \9\ Fee code HI is appended to non-displayed orders that receive 
price improvement and add liquidity. Id.
    \10\ See e.g., Cboe EDGX U.S. Equities Exchange Fee Schedule, 
Tape B Volume Tiers.
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Fee Code D
    The Exchange lastly proposes to increase the fee for orders 
yielding fee code D, which results from an order routed to the New York 
Stock Exchange (``NYSE'') using Destination Specific, RDOT, RDOX, TRIM 
or SLIM routing strategy. Particularly, NYSE recently implemented 
certain pricing changes related to Tapes B and C securities, including 
adopting a per tape fee of $0.00280 per share to remove liquidity from 
the Exchange for member organizations with an Adding ADV of at least 
50,000 shares for that respective Tape.\11\ Based on the changes in 
pricing at NYSE, the Exchange is proposing to increase its fee for 
orders executed at NYSE that yield fee code D from $0.00265 to 
$0.00280.
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    \11\ See NYSE Trader Update, NYSE--Fees for Trading Tapes B and 
C securities, dated April 2, 2018, available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Fee_Change_BandC_April2018.pdf.
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2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with the objectives of Section 6 of the Act,\12\ in general, and 
furthers the objectives of Section 6(b)(4),\13\ 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. The Exchange also notes that it operates in a highly-
competitive market in which market participants can readily direct 
order flow to competing venues if they deem fee levels at a particular 
venue to be excessive or incentives to be insufficient. The proposed 
rule changes reflect a competitive pricing structure designed to 
incentivize market participants to direct their order flow to the 
Exchange.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposal to eliminate fee code HA and 
replace it with fees codes HV, HB and HY is reasonable, equitable and 
not unfairly discriminatory because the standard rebate for current fee 
code HA and proposed fee codes HV, HB and HY, is not changing and 
because it applies uniformly to all Members. Additionally, as noted 
above, the Exchange already maintains separate fee codes based on Tapes 
for other types of orders.\14\
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    \14\ See e.g., Cboe BZX U.S. Equities Exchange Fee Schedule, Fee 
Codes W and BB, and N which fee codes represent orders removing 
liquidity from BZX for Tapes A, B and C respectively.
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    The Exchange believes the adoption of the HV Volume Tier under 
footnote 1 is reasonable because it provides Members an opportunity to 
receive an enhanced rebate for Non-Displayed orders that add liquidity 
and is a reasonable means to encourage Members to increase their 
liquidity on the Exchange. The Exchange further believes that the 
proposed tier represents an equitable allocation of reasonable dues, 
fees, and other charges because the thresholds necessary to achieve the 
tier encourages Members to add additional liquidity to the Exchange. 
The Exchange also notes that the Exchange already utilities similar 
volume tiers with similar criteria \15\ and also notes that other 
exchanges maintain Tape-specific volume tiers.\16\ The Exchange further 
believes the proposed fee change is equitable and non-discriminatory 
because it applies uniformly to all Members.
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    \15\ See Cboe BZX U.S. Equities Exchange Fee Schedule, Add 
Volume Tiers applicable to current fee code HA.
    \16\ See e.g., Cboe EDGX U.S. Equities Exchange Fee Schedule, 
Tape B Volume Tiers.
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    The Exchange believes the proposed fee is reasonable because it 
reflects a pass-through of the pricing increase by NYSE noted above. 
The Exchange further believes the proposed fee change is non-
discriminatory because it applies uniformly to all Members.

[[Page 22730]]

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that any of the proposed change to the Exchange's tiered pricing 
structure burden competition, but instead, that they enhance 
competition as they are intended to increase the competitiveness of BZX 
by modifying pricing incentives in order to attract order flow and 
incentivize participants to increase their participation on the 
Exchange and to reflect a pass through of a pricing increase by NYSE. 
The Exchange notes that it operates in a highly competitive market in 
which market participants can readily direct order flow to competing 
venues if they deem fee structures to be unreasonable or excessive. The 
proposed changes are generally intended to enhance the rebates for 
liquidity added to the Exchange, which is intended to draw additional 
liquidity to the Exchange. The Exchange does not believe the proposed 
amendments would burden intramarket competition as they would be 
available to all Members uniformly.

(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 unsolicited 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 \17\ and paragraph (f) of Rule 19b-4 
thereunder.\18\ 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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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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 proposal 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 No. SR-CboeBZX-2018-030 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 No. SR-CboeBZX-2018-030. 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 will also be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File No. SR-CboeBZX-2018-030 and should be submitted on 
or before June 6, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10380 Filed 5-15-18; 8:45 am]
 BILLING CODE 8011-01-P