Document ID: SEC-2023-0544-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe C2 Exchange, Inc.
Posted Date: 2023-05-17T04:00Z

[Federal Register Volume 88, Number 95 (Wednesday, May 17, 2023)]
[Notices]
[Pages 31543-31549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10470]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97486; File No. SR-C2-2023-012]

Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Update 
Its Fees 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 C2 Exchange, Inc. (``Exchange'' or ``C2'') 
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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe C2 Exchange, Inc. (the ``Exchange'' or ``C2'') proposes to 
update its Fees 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://markets.cboe.com/us/options/regulation/rule_filings/ctwo/), 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 Cboe Data Services, LLC 
(``CDS'') section of its Fees Schedule.\3\ Particularly, the Exchange 
proposes to (i) reformat the section of its Fees Schedule pertaining to 
market data fees, (ii) harmonize various market data related 
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\
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    \3\ The Exchange initially filed the proposed fee changes on 
January 3, 2023 (SR-C2-2023-001). On March 1, 2023, the Exchange 
withdrew that filing and replaced it with SR-C2-2023-007, which was 
submitted 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.
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Reformatting
    The Exchange first proposes to eliminate references to CDS and 
instead refer to the ``Exchange'', as well as rename the section 
currently titled ``Cboe Data Services, LLC Fees'' to ``Market Data 
Fees'' to align with the terminology and heading of its affiliates, BZX 
Options and EDGX Options. The Exchange notes that no substantive 
changes are being made with the

[[Page 31544]]

elimination of the references to CDS fees. Rather, 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. The Exchange also proposes to reformat and reorganize the 
layout of the fees under the Cboe Data Services, LLC (``CDS'') section 
of the Fees Schedule to align with formatting of the corresponding 
section in the fee schedules of the Exchange's affiliated options 
exchanges, Cboe BZX Exchange, Inc. (``BZX Options'') and Cboe EDGX 
Exchange, Inc. (``EDGX Options''), including adding a new 
``Definitions'' section under the CDS Fees (or as proposed, the Market 
Data Fees) section. As part of the reformatting, the Exchange notes 
that it is moving up the ``Trial Usage'' description from the end of 
the Fees Schedule towards the top (no changes are being made to the 
language under this section).
Definitions
    In order to provide consistent rules and terminology amongst the 
Exchange and its affiliated options exchanges, Cboe Options Exchange, 
Inc. (``Cboe Options''), Cboe BZX Exchange, Inc. (``BZX Options'') and 
Cboe EDGX Exchange, Inc. (``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.\5\ As such, the proposed rule change deletes a 
defined term, adds certain defined terms, relocates certain 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.
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    \5\ Cboe 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.
    \6\ All Distributors of C2 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.

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           Defined term                      Provision             Current location      Description of change
----------------------------------------------------------------------------------------------------------------
Customer..........................  A ``Customer'' is any       Section I of the Cboe  Deletes defined termto
                                     person, company or other    Data Services, LLC     align terms with BZX
                                     entity that, pursuant to    (``CDS'') Section of   Options and EDGX
                                     a market data agreement     the Fees Schedule.     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 that
                                     whether that data is                               does not have a market
                                     distributed externally or                          data agreement in place
                                     used internally.                                   with CDS is not
                                    An entity or person that                            considered a
                                     receives BBO data from a                           ``Customer'' since the
                                     Customer through a                                 Exchange is not
                                     Display Only Service is                            proposing to use that
                                     not a ``Customer'' unless                          term in the Fees
                                     it has a market data                               Schedule with respect to
                                     agreement in place with                            market data fees and
                                     CDS''.                                             does not believe it's
                                                                                        necessary to clarify
                                                                                        this point in the Fees
                                                                                        Schedule.\6\ Neither BZX
                                                                                        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'' under
                                     product is any entity                              new ``Definitions''
                                     that receives the                                  section of the C2
                                     Exchange Market Data                               Options Fees Schedule.
                                     product directly from the                          An Exchange Market Data
                                     Exchange or indirectly                             Product refers to any
                                     through another entity                             Data Product set forth
                                     and then distributes it                            in the Market Data Fees
                                     internally or externally                           section of the
                                     to a third party.                                  Exchange's Fees
                                                                                        Schedule. Entities, not
                                                                                        individual persons,
                                                                                        distribute market data.
                                                                                        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 Fees
                                                                                        Schedule.
Internal Distributor..............  An Internal Distributor of  N/A..................  Codifies definition of ''
                                     an Exchange Market Data                            Internal Distributor
                                     product is a Distributor                           under new
                                     that receives the                                  ``Definitions'' section
                                     Exchange Market Data                               of the C2 Options Fees
                                     product and then                                   Schedule. Definition is
                                     distributes that data to                           identical to the
                                     one or more Users within                           definition used by BZX
                                     the Distributor's own                              Options and EDGX
                                     entity.                                            Options.
External Distributor..............  An External Distributor of  N/A..................  Codifies definition of
                                     an Exchange Market Data                            ``External Distributor''
                                     product is a Distributor                           under new
                                     that receives the                                  ``Definitions'' section
                                     Exchange Market Data                               of the C2 Options Fees
                                     product and then                                   Schedule. Definition is
                                     distributes that data to                           identical to the
                                     a third party or one or                            definition used by BZX
                                     more Users outside the                             Options and EDGX
                                     Distributor's own entity.                          Options.
User..............................  A User of an Exchange       N/A..................  Codifies definition of
                                     Market Data product is a                           ``User'' under new
                                     natural person, a                                  ``Definitions'' section
                                     proprietorship,                                    of the C2 Options Fees
                                     corporation, partnership,                          Schedule. Definition is
                                     or entity, or device                               identical to the one
                                     (computer or other                                 used by BZX Options and
                                     automated service), that                           EDGX Options.
                                     is entitled to receive
                                     Exchange data.

[[Page 31545]]

 
Non-Professional User.............  A ``Non-Professional        Section III..........  Relocates definition
                                     User'' is a natural                                under new
                                     person or qualifying                               ``Definitions'' section
                                     trust that uses Data only                          of the C2 Options Fees
                                     for personal purposes and                          Schedule and updates the
                                     not for any commercial                             rule reference to
                                     purpose and, for a                                 ``section 201(11)'' of
                                     natural person who works                           the Investment Advisors
                                     in the United States, is                           Act of 1940 to ``section
                                     not: (i) registered or                             202(a)(11)''.
                                     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.
Professional User.................  A Professional User of an   Section III..........  Relocates definition
                                     Exchange Market Data                               under new
                                     product is any User other                          ``Definitions'' section
                                     than a Non-Professional                            of the C2 Options Fees
                                     User.                                              Schedule and eliminates
                                                                                        reference 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
                                     allows a natural person                            under new
                                     end-user to view and                               ``Definitions'' section
                                     manipulate data using the                          of the C2 Options Fees
                                     Distributor's                                      Schedule. Replaces
                                     computerized service, but                          reference to
                                     not to save, copy, export                          ``Customer'' with
                                     or transfer the data or                            ``Distributor''.
                                     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
                                     computer, workstation or    ``User Fees''.         under new
                                     other item of equipment,                           ``Definitions'' section
                                     fixed or portable, that                            of the C2 Options Fees
                                     receives, accesses and/or                          Schedule.
                                     displays data in visual,
                                     audible or other form.
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    The Exchange also proposes to rename the following market data 
products and fees and use the proposed names herein, in order to align 
with the naming convention used by the Exchange's affiliates, BZX 
Options, EDGX Options and Cboe Options, as applicable for similar data 
products and fees.\7\
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    \7\ See BZX Options Exchange Fees Schedule, Market Data Fees and 
EDGX Options Exchange Fees Schedule, Market Data Fees. See also Cboe 
Data Services, LLC Fees Schedule, Section IV. System Fees.

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               Current name                         Proposed name
------------------------------------------------------------------------
BBO Data Feed.............................  C2 Options Top.
Book Depth Data Feed......................  C2 Options Depth.
Complex Order Book (COB) Data Feed........  C2 Complex Order Book (COB).
Port Fee..................................  Direct Data Access Fee.
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    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 C2 Options 
market data must adhere to.
C2 Options Top Fee Changes
    The Exchange first proposes to modify its current User Fees. The 
Exchange currently charges all Distributors a Distribution Fee of 
$2,500 per month (which applies for Internal and/or External 
Distribution). Additionally, the Exchange currently assesses a ``User 
Fee'' of $50 per month per Device or user ID for use of the data in the 
C2 Options Top Data Feed by ``Display Only Service'' users. The current 
User fee is payable only for ``external'' Display Only Service users 
who receive C2 Options Top and are not employees or natural person 
independent contractors of the Distributor, the Distributor's 
affiliates or an authorized service facilitator.\8\ Internal 
Distributors

[[Page 31546]]

may currently distribute C2 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 C2 Options Top User fee and in its 
place adopt Professional and Non-Professional User fees for C2 Options 
Top that would apply to both Internal and External Distributors for all 
Professional and Non-Professional Users. Particularly, the Exchange 
proposes to charge C2 Options Top Distributors a monthly fee of $5.00 
per Professional User and a monthly fee of $0.10 per Non-Professional 
User.\9\
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    \8\ Pursuant to the Cboe Global Markets North American Data 
Policies, Distributors must report the number of authorized external 
devices that receive C2 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.
    \9\ Distributors that receive C2 Options Top Data will be 
required to count every Professional User and Non-Professional User 
to which they provide the data feed.
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    The Exchange lastly proposes to establish a $10,000 per month 
Enterprise Fee that will permit a Distributor to purchase a monthly 
(and optional) Enterprise license to receive the C2 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 10,000 Professional 
Users who each receive C2 Options Top at $5.00 per month (as proposed), 
then that Distributor will pay $50,000 per month in Professional Users 
fees. If the Distributor instead were to purchase the proposed 
Enterprise license, it would alternatively pay a flat fee of $10,000 
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 C2 Options Top if it wishes for such Users to 
be covered by an Enterprise Fee rather than by per User fees.\10\ 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 C2 Options Top.\11\ 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.
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    \10\ For example, if a Distributor (e.g., Refinitiv) that 
distributes C2 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.
    \11\ See Cboe Global Markets north American Data Policies.
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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.\12\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \13\ 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.\14\ 
In addition, the Exchange believes that the proposed rule change is 
consistent with section 11(A) of the Act as it supports (i) fair 
competition among brokers and dealers, among exchange markets, and 
between exchange markets and markets other than exchange markets, and 
(ii) the availability to brokers, dealers, and investors of information 
with respect to quotations for and transactions in securities.\15\ The 
Exchange also believes the proposed rule change is consistent with 
section 6(b)(4) of the Act,\16\ 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.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ 15 U.S.C. 78f(b)(8).
    \15\ 15 U.S.C. 78k-1.
    \16\ 15 U.S.C. 78f(b)(4).
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    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.\17\ 
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.\18\ 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 C2 
Options Top Feed. Further, the quote and last sale data contained in 
the C2 Options Data Feed is identical to the data sent to OPRA for 
redistribution to the public.\19\ Accordingly, Exchange top-of-book 
data is widely available today from a number of different sources.
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    \17\ 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/.
    \18\ 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 Cboe Data Services, LLC Fees 
Schedule.
    \19\ The Exchange notes that it makes available the BBO data and 
last sale data that is included in the C2 Options Top Data Feed no 
earlier than the time at which the Exchange sends that data to OPRA.
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    Moreover, the C2 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

[[Page 31547]]

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 \20\ 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.\21\ 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.
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    \20\ ``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.
    \21\ Id.
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    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.'' \22\ 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 C2 Options Top 
Data.
---------------------------------------------------------------------------

    \22\ 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 changes to adopt new 
Professional and Non-Professional User fees are reasonable as the User 
fees continue to be to be in line with User fees assessed by other 
exchanges for similar data.\23\ 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 $5.00 per Professional User or 
$0.10 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., $0.10 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 for all Users, not just Display Only Service users, 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.\24\ The Exchange also believes offering C2 Options Top 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.
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    \23\ 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 C2 Options Top and 
C2 Options COB is in line, and in fact lower than the above 
Professional User fee at $30 per Professional User (i.e., $5 per 
Professional Users of C2 Options Top, as proposed, and $25 per 
Professional User of C2 Options COB). The Exchange's combined Non-
Professional User Fee at $0.10 per Non-Professional User (i.e., 
$0.30 per Non-Professional User of C2 Options Top, as proposed, and 
$0 per Non-Professional User of C2 Options COB) is lower than PHLX's 
and NYSE American's aforementioned Non-Professional User fees. C2 
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, more Device or User ID 
fee for Display Only Service users only. Further there are no fees 
for any internal Users.
    \24\ 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).
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    Although Internal Distributors do not currently pay any User fees 
for C2 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.\25\ 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.\26\ The 
Exchange believes the proposed monthly User fees for which Internal 
Distributors of C2 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 C2 Options Top.
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    \25\ 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).
    \26\ See supra note 23.
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    The proposed Enterprise Fee for C2 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 
C2 Options Top Data, then it may continue using the per User structure 
and benefit from the proposed per C2 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 C2 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

[[Page 31548]]

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 reformate the fees will provide for a more streamlined fees 
schedule, thereby reducing potential confusion. 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. 
In this competitive environment potential Distributors are free to 
choose which competing product to purchase to satisfy their need for 
market information. Often, the choice comes down to price, as market 
data customers 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 would apply to all 
similarly situated Distributors of C2 Options Top on an equal and non-
discriminatory basis. The Exchange believes the differentiated fees for 
Professional and Non-Professional Users of C2 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 C2 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 C2 Option Top feed is 
identical to the data sent to OPRA for redistribution to the public. 
Accordingly, Exchange top-of-book data is 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 \27\ and paragraph (f) of Rule 19b-4 \28\ 
thereunder. 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. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \27\ 15 U.S.C. 78s(b)(3)(A).
    \28\ 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-C2-2023-012 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-C2-2023-012. 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

[[Page 31549]]

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-C2-2023-012 and should be submitted on or before June 7, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
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    \29\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10470 Filed 5-16-23; 8:45 am]
BILLING CODE 8011-01-P