Document ID: SEC-2021-0531-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2021-04-20T04:00Z

[Federal Register Volume 86, Number 74 (Tuesday, April 20, 2021)]
[Notices]
[Pages 20554-20556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08034]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91547; File No. SR-CBOE-2021-021]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
To Amend Its Fees Schedule To Adopt Reduced Permit Fees for New Floor 
Brokers

April 14, 2021.
    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 April 1, 2021, Cboe Exchange, Inc. (``CBOE'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its Fees Schedule to adopt reduced permit fees for new Floor 
Brokers. The text of the proposed rule change is provided in Exhibit 5.

[[Page 20555]]

    The text of the proposed rule change is also available on the 
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its Fees Schedule to adopt reduced 
permit fees for new Floor Brokers. By way of background, a Floor Broker 
Permit (``FB Permit'') entitles the holder to act as a Floor Broker on 
the floor of the exchange. The Exchange currently maintains a Floor 
Trading Permit Sliding Scale, which allows Floor Brokers to pay reduced 
rates for higher quantity of FB Permits. Particularly, Floor Brokers 
pay $7,500 for the first FB Permit, $5,700 per permit for the 2nd and 
3rd FB Permits, $4,500 per permit for the 4th and 5th FB permits and 
$3,200 for each additional FB Permit. The Exchange proposes to now 
adopt a discount for FB Permits for new Trading Permit Holders 
(``TPHs'') or for TPHs that have not held a FB Permit in at least 
twelve (12) months (collectively referred to herein as ``New Floor 
Brokers''). Specifically, the Exchange proposes to assess New Floor 
Brokers $500 per permit for up to two FB Permits. Thereafter, any 
additional permit would be subject to the current Floor Trading Permit 
Sliding Scale.\3\ A New Floor Broker is only eligible for reduced fees 
for 6 months starting from the month the 1st permit is activated. The 
Exchange believes the proposed change may incentivize new market 
participants to become Floor Brokers on the Exchange and help offset 
initial costs of operation as Floor Brokers. The Exchange also notes 
the proposed reduced rate is consistent with the rates charged by 
another Exchange to Floor Broker participants.\4\
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    \3\ For example, if a new Floor Broker purchases 4 FB Permits, 
the first two permits will be assessed $500 each per month, and the 
third permit would be assessed $5,700 per month and the fourth 
permit would be assessed $4,500 per month. See Cboe Options Fees 
Schedule, Floor Trading Permit Sliding Scales.
    \4\ See NYSE American Options Fees Schedule, Section III 
(Monthly Trading Permit, Rights, Floor Access and Premium Product 
Fees).
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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,\5\ in general, and 
furthers the objectives of Section 6(b)(4),\6\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and issuers and other persons 
using its facilities. The Exchange also believes that the proposed rule 
change is consistent with the objectives of Section 6(b)(5) \7\ 
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, and, particularly, is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. Additionally, the Exchange believes the proposed 
rule change is consistent with the Section 6(b)(5) \8\ requirement that 
the rules of an exchange not be designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 15 U.S.C. 78f.(b)(5).
    \8\ Id.
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    In particular, the Exchange believes that the proposed discount for 
the first two FB Permits for New Floor Brokers is reasonable as such 
market participants will pay lower costs for those permits. Also as 
noted above, the proposed discounted rate is consistent with the amount 
charged by another exchange for Floor Broker permits.\9\ The Exchange 
notes it is not otherwise amending any of the rates in the Floor 
Trading Permits Sliding Scale. The Exchange believes the proposed 
change is also reasonable as it may incentivize new market participants 
to become Floor Brokers on the Exchange and help offset initial costs 
associated with becoming a Floor Broker. The Exchange believes the 
proposed discount is equitable and not unfairly discriminatory because 
all New Floor Brokers are eligible. The Exchange also believes it's 
equitable and not unfairly discriminatory to provide the discount to 
New Floor Brokers because it is designed to encourage new market 
participants to become Floor Brokers on the Exchange that may not 
otherwise do so because of the expense involved in becoming a Floor 
Broker. The Exchange also believes it's equitable and not unfairly 
discriminatory to offer a discount to Floor Brokers because Floor 
Brokers serve an important function in facilitating the execution of 
orders via open outcry, which as a price-improvement mechanism, the 
Exchange wishes to encourage and support. Further, the proposed change 
is designed to further encourage the execution of orders via open 
outcry, which should increase volume, which would benefit all market 
participants Lastly, the Exchange notes that it is not aware of any 
market participant that is expected to qualify as a New Floor Broker 
within the next month, but to the extent that this discount proves 
attractive to market participants, they are welcome to become Floor 
Brokers on the Exchange and receive the proposed discount.
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    \9\ See NYSE American Options Fees Schedule, Section III 
(Monthly Trading Permit, Rights, Floor Access and Premium Product 
Fees).
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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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange does not 
believe that the proposed rule change will impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because, while it is limited to 
Floor Brokers, Floor Brokers serve an important function in 
facilitating the execution of orders via open outcry, which as a price-
improvement mechanism, the Exchange wishes to encourage and support. 
Further, the proposed change is designed to encourage more Floor 
Brokers which may further encourage more execution of orders via open 
outcry, which should increase volume, which would benefit all market 
participants trading via open outcry. The Exchange does not believe 
that the proposed change will impose an unnecessary or inappropriate 
burden on intermarket competition because it only

[[Page 20556]]

applies to Cboe Options. To the extent that this discount proves 
attractive to Floor Brokers on other options exchanges, or its results 
prove attractive to market participants on other exchanges, such Floor 
Brokers or market participants may elect to become Floor Brokers or 
market participants at the Exchange.

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)(ii) \10\ of the Act.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved
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    \11\ 15 U.S.C. 78s(b)(2)(B).
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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 rule-comments@sec.gov. Please include 
File No. SR-CBOE-2021-021 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-CBOE-2021-021. 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 No. SR-CBOE-2021-021, and should be submitted on 
or before May 11, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-08034 Filed 4-19-21; 8:45 am]
BILLING CODE 8011-01-P