Document ID: SEC-2018-1090-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe EDGX Exchange, Inc.
Posted Date: 2018-07-11T04:00Z

[Federal Register Volume 83, Number 133 (Wednesday, July 11, 2018)]
[Notices]
[Pages 32170-32172]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14849]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83600; File No. SR-CboeEDGX-2018-024]

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

July 6, 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 June 29, 2018, Cboe EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Exchange. The 
Exchange has designated the proposed rule change as one establishing or 
changing a member due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to implement proposed changes to its 
fee schedule for its equity options platform (``EDGX Options'') 
relating to logical and physical connectivity fees, effective July 2, 
2018.
    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 implement proposed changes to its fee 
schedule for its equity options platform (``EDGX Options'') relating to 
logical and physical connectivity fees, effective July 2, 2018.
Logical Connectivity
    The Exchange proposes to amend certain logical connectivity fees. 
Currently, EDGX Options market participants may utilize a variety of 
logical connectivity ports. A logical port provides users with the 
ability within the Exchange's system to accomplish a specific function 
through a connection, such as order entry, data receipt, or access to 
information. Currently, with respect to logical port fees, the Exchange 
only assesses a fee for Purge Ports. Additionally, logical connectivity 
fees are limited to logical ports in the Exchange's primary data center 
and no logical port fees are assessed for redundant secondary data 
center ports.
    The Exchange first proposes to adopt a $500 per month, per port fee 
for all logical ports excluding Purge, Multicast Pitch Spin Server, GRP 
and Bulk Ports.\5\ The Exchange notes that fees for these excluded 
ports are explicitly set forth in the Fees Schedule. The Exchange notes 
that the proposed fee of $500 per port is in line with the fee assessed 
for similar ports on BZX Options and C2 Options.\6\
---------------------------------------------------------------------------

    \5\ The Exchange notes that even though Ports with Bulk Quoting 
Capabilities (``Bulk Ports'') already has its own line item in the 
logical connectivity fees table, it's not explicitly excluded from 
the general ``Logical Ports'' line item. The Exchange proposes to 
add a reference relating to its exclusion to maintain clarity in the 
Fees Schedule.
    \6\ See Cboe BZX Options Exchange Fee Schedule, Options Logical 
Port Fees and Cboe C2 Options Exchange Fees Schedule, Logical 
Connectivity Fees.
---------------------------------------------------------------------------

    Next, the Exchange proposes to adopt fees for Multicast PITCH/Spin 
Server and GRP ports. Multicast PITCH Spin Server Ports and GRP Ports 
are used to request and receive a retransmission of data from the 
Exchange's Multicast PITCH data feed. The Exchange's Multicast PITCH/
Top data feed is available from two primary feeds, identified as the 
``A feed'' and the ``C feed'', which contain the same information but 
differ only in the way such feeds are received. The Exchange also 
offers two redundant feeds,

[[Page 32171]]

identified as the ``B feed'' and the ``D feed.'' The Exchange proposes 
to adopt a $500 per month, per set fee. All secondary feed Multicast 
PITCH Spin Server and GRP Ports will be provided for redundancy at no 
additional cost. The Exchange notes that the proposed fee is in line 
with the fee assessed for the same ports on BZX Options and C2 
Options.\7\
---------------------------------------------------------------------------

    \7\ Id.
---------------------------------------------------------------------------

    Lastly, the Exchange proposes to amend fees for ports with bulk 
quoting capabilities (``Bulk Ports''). A Bulk Port is a logical port 
that provides users with the ability to submit bulk messages to enter, 
modify or cancel orders designated as Post Only Orders, provided such 
orders are entered with a Time-in-Force of DAY or a Time-in-Force of 
GTD with an expiration time on that trading day. The Exchange does not 
currently assess fees for Bulk Ports. The Exchange now proposes to 
adopt a monthly fee of $600 per port. The Exchange notes that the 
proposed Bulk Port fee is less than the fee assessed for similar ports 
on BZX Options and C2 Options.\8\
---------------------------------------------------------------------------

    \8\ Id.
---------------------------------------------------------------------------

Physical Port Clarification
    The Exchange next proposes to add clarifying language relating to 
its Options Physical Connectivity Fees. First, the Exchange proposes to 
clarify that all Physical Connectivity Fees will be prorated based on 
the remaining trading days in the calendar month. The Exchange notes 
that while this is current practice, it is not currently codified under 
the Options Physical Connectivity Fees section (although similar 
language is found under the Options Logical Port Fees section). The 
Exchange also proposes to clarify that physical ports (other than 
Disaster Recovery physical ports) may be used to connect to C2 Options, 
Cboe BZX, Cboe BYX and Cboe EDGA. Disaster Recovery physical ports may 
be used to connect to the Disaster Recovery Systems for C2 Options, 
Cboe BZX, Cboe BYX, Cboe EDGA, Cboe Options and CFE. Additionally, the 
Exchange proposes to make clear that Members and non-Members will only 
be assessed a single fee for any physical port or Disaster Recovery 
physical port that accesses the identified exchanges, respectively. The 
Exchange notes that similar language appears in the Fees Schedule of C2 
Options.\9\
---------------------------------------------------------------------------

    \9\ See e.g., Cboe C2 Options Exchange Fees Schedule, Physical 
Connectivity Fees.
---------------------------------------------------------------------------

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.\10\ Specifically, the 
Exchange believes the proposed rule change is consistent with Section 
6(b)(4) of the Act,\11\ which provides that Exchange rules may provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its Permit Holders and other persons using its 
facilities. Additionally, the Exchange believes the proposed rule 
change is consistent with the Section 6(b)(5) \12\ requirement that the 
rules of an exchange not be designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes it's reasonable to assess the proposed fees 
for each of the logical connectivity ports described above as the 
proposed fees enable the Exchange to continue to maintain and improve 
its market technology and services. Additionally, the Exchange notes 
the proposed fees are in line with, and indeed less than, the fees 
assessed on certain of its affiliated exchanges for similar 
connectivity.\13\ The proposed logical connectivity fees are also 
equitable and not unfairly discriminatory because the Exchange will 
apply the same fees to all market participants that use the same 
respective connectivity options.
---------------------------------------------------------------------------

    \13\ See Affiliated Exchange Fee Schedules, Logical Port Fees.
---------------------------------------------------------------------------

    The Exchange also believes it's reasonable, equitable and not 
unfairly discriminatory to prorate physical connectivity fees because 
it provides for a more precise assessment of physical connectivity fees 
based on when a user obtains a new physical port or Disaster Recovery 
physical port. The Exchange believes it's reasonable, equitable and not 
unfairly discriminatory to assess a physical port fee only once if it 
connects with another affiliate exchange because only one port is being 
used and the Exchange does not wish to charge multiple fees for the 
same port. The Exchange believes listing the affiliate exchanges that 
physical ports and Disaster Recovery physical ports can connect to adds 
clarity to the fee schedule and avoids potential confusion. The 
alleviation of confusion removes impediments to and perfects the 
mechanism of a free and open market and a national market system.

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange does not 
believe that the proposed change represents a significant departure 
from pricing offered by the Exchange's affiliates. Additionally, 
members may opt to disfavor the Exchange's pricing if they believe that 
alternatives offer them better value. Accordingly, the Exchange does 
not believe that the proposed change will impair the ability of members 
or competing venues to maintain their competitive standing in the 
financial markets. The Exchange believes that fees for connectivity are 
constrained by the robust competition for order flow among exchanges 
and non-exchange markets. Further, excessive fees for connectivity, 
would serve to impair an exchange's ability to compete for order flow 
rather than burdening competition. The Exchange also does not believe 
the proposed rule change would impact intramarket competition as it 
would apply to all members and non-members equally.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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 \14\ and paragraph (f) of Rule 19b-4 \15\ 
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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing,

[[Page 32172]]

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 SRb-4CboeEDGX-2018-024 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 SRb-4CboeEDGX-2018-024. 
This file number should be included on the subject line if email is 
used. To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for website 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street NE, Washington, DC 20549, on official business days between the 
hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SRb-4CboeEDGX-2018-024 and 
should be submitted on or before August 1, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14849 Filed 7-10-18; 8:45 am]
 BILLING CODE 8011-01-P