Document ID: SEC-2019-0483-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc.
Posted Date: 2019-04-16T04:00Z

[Federal Register Volume 84, Number 73 (Tuesday, April 16, 2019)]
[Notices]
[Pages 15645-15646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07503]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85591; File No. SR-CboeBZX-2019-024]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
To Modify Its Fee Schedule

April 10, 2019.
    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 3, 2019, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') is filing 
with the Securities and Exchange Commission (``Commission'') a proposed 
rule change to modify its fee schedule. The text of the proposed rule 
change is attached as Exhibit 5 [sic].
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), 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 BZX Options fee schedule to 
modify the definitions of fee codes RQ and RR to include routing to a 
new options market, MIAX Emerald LLC (``MIAX Emerald''), effective 
April 3, 2019. The Exchange's current approach to routing fees is to 
set forth in a simple manner certain sub-categories of fees that 
approximate the cost of routing to other options exchanges based on the 
cost of transaction fees assessed by each venue as well as costs to the 
Exchange for routing (i.e., clearing fees, connectivity and other 
infrastructure costs, membership fees, etc.) (collectively, ``Routing 
Costs''). The Exchange then monitors the fees charged as compared to 
the costs of its routing services and adjusts its routing fees and/or 
sub-categories to ensure that the Exchange's fees do indeed result in a 
rough approximation of overall Routing Costs, and are not significantly 
higher or lower in any area.
    Currently, fee code RR is appended to Customer orders in non-Penny 
Pilot securities that are routed to ARCA, C2, ISE, ISE Gemini, MIAX 
Pearl or NOM and assessed a fee of $1.25 per contract. Additionally, 
fee code RQ is appended to Customer orders in Penny Pilot securities 
that are routed to ARCA, C2, ISE, ISE Gemini, MIAX Pearl or NOM and 
assessed a fee of $0.85 per contract. The Exchange proposes to modify 
the definitions of fee code RQ and PR to include MIAX Emerald. The 
Exchange

[[Page 15646]]

anticipates that the proposed fee structure will approximate the cost 
of routing orders to MIAX Emerald. The Exchange is proposing the 
charges set forth above to maintain a simple and fair fee schedule with 
respect to routing fees that approximate the total cost of routing, 
including Routing Costs.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the Section 6 of the Act,\3\ in general, and Section 6(b)(4),\4\ 
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. As explained above, the 
Exchange generally attempts to approximate the cost of routing to other 
options exchanges, including other applicable costs to the Exchange for 
routing. The Exchange believes its proposed fees are reasonable taking 
into account Routing Costs based on the rates charged by MIAX Emerald. 
The Exchange believes that a pricing model based on approximate Routing 
Costs is a reasonable, fair and equitable approach to pricing. 
Specifically, the Exchange believes that its proposal to adopt routing 
fees to MIAX Emerald is fair, equitable and reasonable because the fees 
are generally an approximation of the anticipated cost to the Exchange 
for routing orders to MIAX Emerald. The Exchange notes that routing 
through the Exchange is voluntary. The Exchange also believes that the 
proposed fee structure for orders routed to and executed at MIAX 
Emerald is fair and equitable and not unreasonably discriminatory in 
that it applies equally to all Members.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 believes the 
proposed routing fee will not impose an undue burden on competition 
because the Exchange will uniformly assess the routing fee on all 
Members. The Exchange does not believe that the proposed changes 
represent a significant departure from routing fees offered by the 
Exchange's competitors. Additionally, Members may opt to disfavor the 
Exchange's pricing if they believe that alternatives offer them better 
value or if they view the proposed fee as excessive. Further, excessive 
fees for participation would serve to impair an exchange's ability to 
compete for order flow and members rather than burdening competition.

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 \5\ and paragraph (f) of Rule 19b-4 \6\ 
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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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-CboeBZX-2019-024 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 SR-CboeBZX-2019-024. 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 SR-CboeBZX-2019-024 and should be submitted 
on or before May 7, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-07503 Filed 4-15-19; 8:45 am]
 BILLING CODE 8011-01-P