Document ID: SEC-2018-0925-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BYX Exchange, Inc.
Posted Date: 2018-06-19T04:00Z

[Federal Register Volume 83, Number 118 (Tuesday, June 19, 2018)]
[Notices]
[Pages 28472-28474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13085]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83426; File No. SR-CboeBYX-2018-007]

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

June 13, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on 
June 1, 2018, Cboe BYX Exchange, Inc. (``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

[[Page 28473]]

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 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

1. Purpose
    The Exchange proposes to amend its fee schedule applicable to its 
equities trading platform (``BYX Equities'') to (i) eliminate Add 
Volume Tier 6 and (ii) modify criteria in certain Add and Remove Volume 
Tiers, effective June 1, 2018.
    By way of background, for orders that yield fee codes B, V, and Y, 
the Exchange assesses a standard transaction fee of $0.0019 per share 
for orders that add liquidity for securities at or above $1.00. The 
Exchange also currently offers six tiers under footnote 1 that offer 
reduced fees for orders that add liquidity yielding fee codes B, V, and 
Y. The Exchange first proposes to eliminate Add Volume Tier 6. Add 
Volume Tier 6 currently provides Members a reduced fee of $0.0017 per 
share where a MPID (i) has an ADAV \6\ of greater than or equal to 
0.10% of the TCV \7\ and (ii) has a Step-Up ADAV \8\ of greater or 
equal to 0.05% of the TCV from September 2017 baseline. The Exchange no 
longer wishes to maintain this tier level. As such, the Exchange 
proposes to eliminate Add Volume Tier 6 from the Fees Schedule and 
renumber the subsequent Volume Tiers accordingly.
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    \6\ ``ADAV'' means average daily volume calculated as the number 
of shares added per day. ADAV is calculated on a monthly basis. See 
BYX Equities Exchange Fee Schedule.
    \7\ ``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. See BYX Equities Exchange Fee Schedule.
    \8\ ``Step-Up ADAV'' means ADAV in the relevant baseline month 
subtracted from current ADAV. See BYX Equities Exchange Fee 
Schedule.
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    The Exchange next proposes to modify the criteria for Add Volume 
Tiers 2 and 3. Pursuant to Add Volume Tier 2, a Member will be assessed 
a reduced fee of $0.0013 per share where a Member adds an ADAV greater 
than or equal to 0.40% of the TCV. The Exchange proposes to increase 
the ADAV requirement to greater than or equal to 0.45% of the TCV. 
Pursuant to Add Volume Tier 3, a Member will be assessed a reduced fee 
of $0.0012 per share where a Member adds an ADAV greater than or equal 
to 0.80% of the TCV. The Exchange proposes to increase the ADAV 
requirement to greater than or equal to 1.00% of the TCV.
    The Exchange next proposes to modify the criteria for Remove Volume 
Tiers 8 and 9. Currently, for orders that yield fee codes N, W, and BB, 
the Exchange provides a rebate of $0.0005 per share for orders that 
remove liquidity for securities at or above $1.00. The Exchange 
currently offers four tiers under footnote 1 that offer enhanced 
rebates for orders that remove liquidity yielding fee codes BB, N, and 
W. Pursuant to Remove Volume Tier 8 (proposed to be renumbered to 
Remove Volume Tier 7), a Member will receive an enhanced rebate of 
$0.0016 per share where a Member (i) has a Step-Up Remove \9\ TCV from 
July 2017 greater than or equal to 0.05% and (ii) has a remove ADV \10\ 
greater than or equal to 0.20% of TCV. The Exchange proposes to modify 
the second prong to increase the ADV requirement to greater than or 
equal to 0.25% of the TCV.
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    \9\ ``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. See BYX Equities Exchange Fee Schedule.
    \10\ ``ADV'' means average daily volume calculated as the number 
of shares added or removed, combined, per day. ADV is calculated on 
a monthly basis. See BYX Equities Exchange Fee Schedule.
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    Pursuant to Remove Volume Tier 9 (proposed to be renumbered Remove 
Volume Tier 8), a Member will receive an enhanced rebate of $0.0017 per 
share where a Member (i) has a Step-Up Remove TCV from December 2017 
greater than or equal to 0.075% and (ii) has an ADV greater than or 
equal to 0.10% of TCV. The Exchange proposes to modify the first prong 
to increase the Step-Up Remove TCV from 0.075% to 0.10% of TCV. The 
Exchange notes that the modification to the first prong renders the 
second prong unnecessary, as the second prong criteria will always be 
met if the proposed first prong criteria is met. The Exchange therefore 
proposes to eliminate the second prong of Remove Volume Tier 9.
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.\11\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \12\ 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. Additionally, 
the Exchange believes the proposed rule change is consistent with 
Section 6(b)(4) of the Act,\13\ which requires that Exchange rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its Members and other persons using its facilities.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposal to eliminate Add Volume 
Tier 6 is reasonable, fair, and equitable because the current tier is 
not providing the desired result of incentivizing

[[Page 28474]]

Members to increase their participation in BYX Equities. Therefore, 
eliminating the tier will have a negligible effect on order flow and 
market behavior. The Exchange believes the proposed change is not 
unfairly discriminatory because it will apply equally to all Members.
    The Exchange next notes that volume-based discounts such as those 
currently maintained on the Exchange have been widely adopted by 
exchanges and are equitable and non-discriminatory because they are 
open to all Members on an equal basis and provide additional benefits 
or discounts that are reasonably related to the value of an exchange's 
market quality associated with higher levels of market activity, such 
as higher levels of liquidity provision and/or growth patterns, and 
introduction of higher volumes of orders into the price and volume 
discovery processes. While the proposed modification to Add/Remove 
Volume Tiers 2, 3, 8 and 9 makes such tiers slightly more difficult to 
attain, it is intended to incentivize Members to send additional volume 
to the Exchange in an effort to qualify or continue to qualify for the 
reduced fees and enhanced rebates, as applicable, made available by the 
tiers. As such, the Exchange also believes that the proposed changes 
are reasonable. The Exchange notes that increased volume on the 
Exchange provides greater trading opportunities for all market 
participants.

(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 any of the proposed change to the Exchange's tiered pricing 
structure burden competition, but instead, that they enhance 
competition as they are intended to increase the competitiveness of BYX 
by modifying pricing incentives in order to attract order flow and 
incentivize participants to increase their participation on the 
Exchange. 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 structures to be unreasonable or 
excessive. The Exchange does not believe the proposed amendments would 
burden intramarket competition as they would be available to all 
Members uniformly.

(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) of the Act \14\ and paragraph (f) of Rule 19b-4 
thereunder.\15\ 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.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f).
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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 [email protected]. Please include 
File Number SR-CboeBYX-2018-007 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-CboeBYX-2018-007. 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-CboeBYX-2018-007 and should be submitted 
on or before July 10, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-13085 Filed 6-18-18; 8:45 am]
 BILLING CODE 8011-01-P