Document ID: SEC-2018-1638-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe EDGX Exchange, Inc.
Posted Date: 2018-10-22T04:00Z

[Federal Register Volume 83, Number 204 (Monday, October 22, 2018)]
[Notices]
[Pages 53349-53350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-22904]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84431; File No. SR-CboeEDGX-2018-046]

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

October 16, 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 October 1, 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 amend the Exchange's fee schedule 
applicable to its equities trading platform (``EDGX Equities'') to 
eliminate the Investor Depth Tier.
    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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The EDGX Equities fee schedule offers seven Add Volume Tiers that 
provide enhanced rebates, ranging from of $0.0025 to $0.0032 per share, 
for displayed orders that add liquidity in Tapes A, B, and C and yield 
fee codes B,\5\ V,\6\ Y,\7\ 3 \8\ and 4.\9\ The purpose of the proposed 
rule change is to amend the EDGX Equities fee schedule to eliminate the 
Investor Depth Tier as this tier has not been successful in attracting 
the required order flow to the Exchange. Currently, under the Investor 
Depth Tier a Member is eligible for an enhanced rebate of $0.0031 per 
share where that Member: (i) Adds an average daily volume (``ADV'') 
\10\ greater than or equal to 0.12% of the total consolidated volume 
(``TCV''); \11\ (ii) has an ``added liquidity'' as a percentage of 
``added plus removed liquidity'' greater than or equal to 85%; and 
(iii) adds an ADV greater than or equal to 400,000 shares as non-
displayed orders that yield fee code HA,\12\ HI,\13\ and/or MM.\14\ The 
Investor Depth Tier was designed to encourage Members to bring a

[[Page 53350]]

combination of displayed and non-displayed order flow to the Exchange. 
As the Exchange does not believe that this tier has been successful in 
attracting the required order flow, the Exchange proposes to eliminate 
the Investor Depth Tier. Members that meet the requirements of the 
remaining six Add Volume Tiers will continue to receive rebates 
pursuant to those tiers. Furthermore, Members that do not meet the 
requirements for any of the Add Volume Tiers will continue to be paid 
the standard rebate of $0.0020 applicable to fee codes B, V, Y, 3 and 
4.
---------------------------------------------------------------------------

    \5\ ``B'' is associated with displayed orders that add liquidity 
on EDGX for Tape B.
    \6\ ``V'' is associated with displayed orders that add liquidity 
on EDGX for Tape A.
    \7\ ``Y'' is associated with displayed orders that add liquidity 
on EDGX for Tape C.
    \8\ ``3'' is associated with displayed orders that add liquidity 
on EDGX for Tape A or C during the post-market or pre-market trading 
sessions.
    \9\ ``4'' is associated with displayed orders that add liquidity 
on EDGX for Tape B during the post-market or pre-market trading 
sessions.
    \10\ ``ADV'' means average daily volume calculated as the number 
of shares added to, removed from, or routed by, the Exchange, or any 
combination or subset thereof, per day. ADV is calculated on a 
monthly basis.
    \11\ ``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.
    \12\ ``HA'' is associated with non-displayed orders that add 
liquidity on EDGX.
    \13\ ``HI'' is associated with non-displayed orders that add 
liquidity on EDGX and receive price improvement.
    \14\ ``MM'' is associated with non-displayed orders that add 
liquidity on EDGX using a Mid-Point Peg.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6 of the Act,\15\ in general, and Section 6(b)(4) of the Act,\16\ in 
particular, in that 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.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed elimination of the Investor 
Depth Tier is reasonable and equitable as this tier has not been 
successful in attracting the required order flow to the Exchange. As 
explained in the purpose section of this proposed rule change, the 
Exchange offers a range of Add Volume Tiers that provide enhanced 
rebates to qualifying displayed orders that add liquidity in Tape A, B, 
and C securities. These tiers are designed to encourage more active 
participation on the Exchange by providing higher rebates to Members 
that meet specified requirements. The Investor Depth Tier, in 
particular, was designed to encourage Members to bring different types 
of order flow to the Exchange, including both displayed and non-
displayed liquidity. However, this tier has not been successful in 
attracting the required order flow. The Exchange therefore believes 
that it is appropriate to eliminate this tier at this time. The 
Exchange also believes that the proposed fee change is equitable and 
not unfairly discriminatory as it applies to all Members on an equal 
basis. With the proposed change, no Member would be eligible for an 
enhanced rebate based on meeting the requirements of the eliminated 
Investor Depth Tier. Members will continue to be able to achieve 
enhanced rebates for displayed orders that add liquidity by meeting the 
requirements of any of the six remaining Add Volume Tiers. In addition, 
Members that do not meet the requirements for any of the Add Volume 
Tiers will continue to be paid the standard rebate applicable to fee 
codes B, V, Y, 3 and 4.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
proposed elimination of the Investor Depth Tier is designed to remove 
an incentive that the Exchange believes was not successful, and will 
apply to all Members. The Exchange operates in a highly competitive 
market in which market participants can readily direct their order flow 
to competing venues. In such an environment, the Exchange must 
continually review, and consider adjusting, its fees and rebates to 
remain competitive with other exchanges. For the reasons described 
above, the Exchange believes that the proposed fee changes reflect this 
competitive environment.

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

    No written comments were either solicited or received.

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 \17\ and paragraph (f) of Rule 19b-4 
thereunder.\18\ 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.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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-CboeEDGX-2018-046 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-CboeEDGX-2018-046. 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 this 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 Number SR-CboeEDGX-2018-046 and should be 
submitted on or before November 13, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-22904 Filed 10-19-18; 8:45 am]
BILLING CODE 8011-01-P