Document ID: SEC-2018-0425-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BYX Exchange, Inc.
Posted Date: 2018-03-14T04:00Z

[Federal Register Volume 83, Number 50 (Wednesday, March 14, 2018)]
[Notices]
[Pages 11262-11264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-05078]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82833; File No. SR-CboeBYX-2018-002]

Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Related to 
Transaction Fees

March 8, 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 March 1, 2018, Cboe BYX Exchange, Inc. (the ``Exchange'' or 
``BYX'') 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

[[Page 11263]]

Exchange pursuant to BYX Rules 15.1(a) and (c).
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    \5\ The term ``Member'' is defined as ``any registered broker or 
dealer that has been admitted to membership in the Exchange.'' See 
Exchange Rule 1.5(n).
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    The text of the proposed rule change is available at the Exchange's 
website at www.markets.cboe.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The Exchange proposes to amend its fee schedule to adopt a new tier 
under footnote 1, Add/Remove Volume Tiers. The Exchange currently 
offers six tiers under footnote 1 that offer reduced fees for displayed 
orders that add liquidity yielding fee codes B,\6\ V \7\ and Y,\8\ and 
two tiers [sic] that offer an enhanced rebate for orders that remove 
liquidity yielding fee codes BB,\9\ N,\10\ and W.\11\
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    \6\ Fee code B is appended to displayed orders that add 
liquidity to BYX (Tape B). See the Exchange's fee schedule available 
at http://markets.cboe.com/us/equities/membership/fee_schedule/byx/.
    \7\ Fee code V is appended to displayed orders that add 
liquidity to BYX (Tape A). Id.
    \8\ Fee code Y is appended to displayed orders that add 
liquidity to BYX (Tape C). Id.
    \9\ Fee code BB is appended to orders that remove liquidity from 
BYX (Tape B). Id.
    \10\ Fee code N is appended to orders that remove liquidity from 
BYX (Tape C). Id.
    \11\ Fee code W is appended to orders that remove liquidity from 
BYX (Tape A). See the Exchange's fee schedule available at http://markets.cboe.com/us/equities/membership/fee_schedule/byx/.
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    The Exchange proposes to add a new tier under footnote 1, to be 
known as Tier 10, under which a Member would receive an enhanced rebate 
of $0.0017 per share on orders that yield fee codes BB, N and W, where 
a Member has: (i) A Step-Up Remove TCV \12\ from January 2018 equal to 
or greater than 0.30%; and (ii) a remove ADV \13\ equal to or greater 
than 0.70% of the TCV.\14\ The Exchange proposes to implement the above 
changes to its fee schedule on March 1, 2018.
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    \12\ ``Step-Up Remove TCV'' means remove ADV as a percentage of 
TCV in the relevant baseline month subtracted from current remove 
ADV as a percentage of TCV. Id.
    \13\ ``ADV'' means average daily volume calculated as the number 
of shares added or removed, combined, per day. ADV are calculated on 
a monthly basis. Id.
    \14\ ``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.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\15\ in general, and 
furthers the objectives of Section 6(b)(4),\16\ 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 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. The proposed rule change reflects a competitive pricing 
structure designed to incent market participants to direct their order 
flow to the Exchange. The Exchange believes that the proposed tier is 
equitable and non-discriminatory in it would apply uniformly to all 
Members.
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    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(4).
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    In addition, volume-based fees such as that proposed herein have 
been widely adopted by exchanges and are equitable because they are 
open to all Members on an equal basis and provide additional benefits 
or discounts that are reasonably related to: (i) The value to an 
exchange's market quality; (ii) associated higher levels of market 
activity, such as higher levels of liquidity provision and/or growth 
patterns; and (iii) the introduction of higher volumes of orders into 
the price and volume discovery processes. The Exchange believes that 
the proposed tier is a reasonable, fair and equitable, and not an 
unfairly discriminatory allocation of fees and rebates, because it will 
provide Members with an additional incentive to reach certain 
thresholds on the Exchange.
    In particular, the Exchange believes that the proposed Tier 10 to 
be added to footnote 1 is equitably allocated and reasonable because it 
will reward a Member's growth pattern on the Exchange and such 
increased volume will allow the Exchange to continue to provide and 
potentially expand its incentive programs. The Exchange further 
believes that the proposed tier is reasonable, fair and equitable 
because the liquidity from the proposed change would benefit all 
investors by deepening the Exchange's liquidity pool, offering 
additional flexibility for all investors to enjoy cost savings, 
supporting the quality of price discovery, promoting market 
transparency and improving investor protection. The Exchange also 
believes the proposed rebate of $0.0017 per share for Tier 10 is 
reasonable in that it is equivalent to the top tier rebate to remove 
liquidity provided by Nasdaq BX.\17\ The proposed pricing structure is 
also not unfairly discriminatory in that it is available to all 
Members.
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    \17\ See the Nasdaq BX fee schedule available at http://www.nasdaqtrader.com/Trader.aspx?id=bx_pricing.
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(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 this change represents a significant departure from previous 
pricing offered by the Exchange or from pricing offered by the 
Exchange's competitors. The proposed rates would apply uniformly to all 
Members, and Members may opt to disfavor the Exchange's pricing if they 
believe that alternatives offer them better value. Accordingly, the 
Exchange does not believe that the proposed changes will impair the 
ability of Members or competing venues to maintain their competitive 
standing in the financial markets. Further, excessive fees would serve 
to impair an exchange's ability to compete for order flow and members 
rather than burdening competition. The Exchange believes that its 
proposal would not burden intramarket competition because the proposed 
rate would apply uniformly to all Members.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any 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)

[[Page 11264]]

of the Act \18\ and paragraph (f) of Rule 19b-4 thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f).
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    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.

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-CboeBYX-2018-002 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-CboeBYX-2018-002. 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-CboeBYX-2018-002 and should be submitted on 
or before April 4, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-05078 Filed 3-13-18; 8:45 am]
 BILLING CODE 8011-01-P