Document ID: SEC-2023-1364-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc.
Posted Date: 2023-11-27T05:00Z

[Federal Register Volume 88, Number 226 (Monday, November 27, 2023)]
[Notices]
[Pages 82933-82936]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-26007]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98991; File No. SR-CboeBZX-2023-092]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Delineate the Application Fee From the Entry Fee, To Increase the 
Application Fee for Tier I and Tier II Securities Listed on the 
Exchange in Certain Circumstances, To Change the Assessment Date of the 
Entry Fee, and To Clarify That Both the Entry Fee and Application Fee 
Are Non-Refundable as Provided in Exchange Rule 14.13

November 20, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 8, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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 self-regulatory 
organization. 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 BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (``Commission'' or ``SEC'') 
a proposed rule change to delineate the Application Fee from the Entry 
Fee, to increase the Application Fee for Tier I and Tier II securities 
listed on the Exchange in certain circumstances, to change the 
assessment date of the Entry Fee, and to clarify that both the Entry 
Fee and Application Fee are non-refundable as provided in Exchange Rule 
14.13. The text of the proposed rule change is provided in Exhibit 5.
    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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to amend its rules related to an 
application to list any class of securities (not otherwise identified 
in Rule 14.13) on the Exchange as a Tier I or Tier II security to 
specifically delineate the Application Fee \3\ from the Entry Fee,\4\ 
to increase the Application Fee for Tier I and Tier II Securities 
applying to list on the Exchange in certain circumstances, and to 
change the assessment date of the Entry Fee.\5\ The Exchange is also 
proposing to clarify that both the Entry Fee and Application Fee are 
non-refundable. The Exchange is not proposing to change the total 
combined Entry Fee and Application Fee for either Tier I ($100,000) or 
Tier II ($50,000) securities, but rather to increase the Application 
Fee in situations that it's less likely that an applicant will list on 
the Exchange (as further described below) and to assess the Entry Fee 
at the point that the Exchange has completed the majority of the work 
associated with a potential listing.\6\
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    \3\ See proposed Rule 14.13(b)(1).
    \4\ The Entry Fee is currently set forth in Exchange Rule 
14.13(b)(1)(A) and (B) for Tier I and Tier II securities, 
respectively. As described therein, the Entry Fee includes a non-
refundable Application Fee that must be submitted with the Company's 
application to list on the Exchange.
    \5\ The Exchange initially filed the proposed fee change on 
September 29, 2023 (SR-CboeBZX-2023-077). On October 10, 2023, the 
Exchange withdrew that filing and submitted another proposed fee 
change (SR-CboeBZX-2023-082). On October 20, 2023, the Exchange 
withdrew that filing and submitted another proposed fee change (SR-
CboeBZX-2023-086). On October 31, 2023, the Exchange withdrew that 
filing and [sic] another proposed fee change (SR-CboeBZX-2023-088). 
On November 8, 2023, the Exchange withdrew that filing and submitted 
this proposal.
    \6\ The Exchange notes that the proposed Fees will be applied 
prospectively to all applications submitted after the date of this 
proposal.
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    Currently, under Exchange Rule 14.13(b)(1)(A) and (B), a Company 
that submits an application to list a Tier I or Tier II security on the 
Exchange is assessed an Entry Fee totaling $100,000 or $50,000, 
respectively. The rules further stipulate that the Entry Fee will be 
assessed on the date of listing on the Exchange, except for $25,000 
which represents the Application Fee, and which must be submitted with 
the Company's application.
    The Exchange is now proposing to delineate the Application Fee from 
the Entry Fee under proposed Rules 14.13(b)(1) and (2), respectively. 
However, the Exchange is not proposing a change to the combined total 
of the Entry Fee and Application Fee for either Tier I or Tier II 
securities that list on the Exchange. The Application Fee would 
continue to be $25,000 for both Tier I and Tier II securities unless 
the Company is at any point during the Exchange's review of the 
application simultaneously engaged in the application process to list 
on another national securities exchange, in which case the application 
fee will be $50,000. In such circumstances, there is a higher 
likelihood that the Company may withdraw its application to list on the 
Exchange prior to the issuance of conditional approval, and thus prior 
to assessment of the remainder of the Entry Fee. Given this and because 
of the significant resources necessary to review an application to list 
on the Exchange, the Exchange believes that a higher Application Fee 
will more

[[Page 82934]]

closely align with the time at which the Exchange incurs the cost of 
reviewing an application and will ensure that the Exchange is 
compensated for its time and resources even if an issuer withdraws its 
application prior to receiving conditional approval.
    The Exchange's listing application for Tier I or Tier II securities 
requires a Company to disclose whether it is simultaneously engaged in 
the application process to list on another national securities 
exchange. If a Company were to indicate such, it would be assessed the 
$50,000 Application Fee at the time of application. If a Company is not 
simultaneously engaged in the application process to list on another 
national securities exchange at the time of application, but later 
submits such an application prior to receiving conditional approval to 
list on the Exchange, the Company would be required to notify the 
Exchange of such application and the additional $25,000 Application Fee 
would be assessed at that time. The Exchange is not proposing 
additional fees for Companies that decide not to list with the 
Exchange. Where a Company that is already engaged in the application 
process with another exchange, such a Company will be subject to the 
higher Application Fee upon application with the Exchange. Where a 
Company is already engaged in the listing process with the Exchange and 
is considering listing with another exchange, such a Company can have 
any level of engagement short of filing an application on that other 
exchange without subjecting itself to any additional fees. Such a 
Company could also terminate the application process with the Exchange 
and begin the listing process with another exchange and not be subject 
to any additional fees. As such, the Exchange believes this proposal is 
not imposing any meaningful burden on competition. Rather, the Exchange 
is merely trying to ensure that it is compensated for the resources 
that it expends in a situation where it is less likely that the full 
Entry Fee will be paid.
    Based on the above proposed changes to Rule 14.13(b), the Exchange 
also proposes to renumber and update rule references throughout Rule 
14.13(b) to conform to those changes. Additionally, the Exchange 
proposes to make conforming changes to proposed Rules 14.13(b)(2)(F) 
and (G) to state that neither the Entry Fee or Application Fee provided 
under proposed Rules 14.13(b)(1) and (2) will be applicable to certain 
securities.
    The Exchange is also proposing that the Entry Fee be assessed for 
both Tier I and Tier II securities on the date the Exchange provides 
conditional approval \7\ of the Company's application. The Exchange's 
review of an application for listing a Tier I or Tier II security 
requires significant Exchange resources, a majority of which are 
required prior to the issuance of conditional approval. Therefore, the 
Exchange believes the proposal to assess the Entry Fee (less the 
Application Fee) at the time conditional approval is issued is 
reasonable as it more closely aligns with the time that the largest 
costs are incurred by the Exchange. Further, it ensures that the 
Exchange is compensated for its time and resources even if an issuer 
determines not to list with the Exchange after receiving conditional 
approval.
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    \7\ Conditional approval is approval issued by the Exchange for 
a security to list on the Exchange subject to certain conditions 
being met.
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    Last, the Exchange proposes to delete the text of existing Rule 
14.13(b)(1)(E), which provides that if the application is withdrawn or 
is not approved, the Entry Fee (less the non-refundable Application 
Fee) shall be refunded. As noted in current Exchange Rule 14.13(a), the 
Application Fee is, and will continue to be, non-refundable. While Rule 
14.13(b)(1)(E) implies that an Entry Fee (less the Application Fee) may 
be refundable, it would not occur in practice as the Entry Fee is 
currently charged on the date of initial listing. Therefore, the 
Exchange proposes to delete the text of Rule 14.13(b)(1)(E) and to 
modify Rule 14.13(a) to clarify that both the Application Fee and Entry 
Fee are non-refundable.
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.\8\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \9\ 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 the 
Section 6(b)(5) \10\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers as well as Section 6(b)(4) \11\ 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
    \11\ 15 U.S.C. 78f(b)(4).
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    The Exchange first notes that its corporate listing business 
operates in a highly-competitive market in which Companies can readily 
list on another national securities exchange if they deem fee levels or 
any other factor at a particular venue to be insufficient or excessive. 
Exchange Rule 14.13 reflects a competitive pricing structure designed 
to incentivize Companies to list new Tier I or Tier II securities, 
which the Exchange believes will enhance competition both among 
Companies and listing venues, to the benefit of investors.
    The Exchange believes it is reasonable to delineate between the 
Application Fee and Entry Fee within the Exchange's rules. The 
separation of the two fees will clarify when each of the fees are 
assessed by the Exchange and the total amount that will be assessed. 
Furthermore, the Exchange believes the corresponding changes throughout 
Rule 14.13(b) to modify rule references and numbering will maintain a 
clear and understandable rulebook, to the benefit of all investors.
    The Exchange believes its proposal to charge a higher Application 
Fee if the Company is at any point during the Exchange's review of the 
application simultaneously engaged in the application process to list 
on another national securities exchange, is reasonable. Specifically, 
in such circumstances, there is a higher likelihood that the Company 
will withdraw its application to list prior to the issuance of 
conditional approval, and thus prior to assessment of Entry Fee (less 
the Application Fee). Given this and because of the significant 
resources necessary to review an application to list on the Exchange, 
the Exchange believes that a higher Application Fee will more closely 
align with the time at which the Exchange incurs the cost of reviewing 
an application and will ensure that the Exchange is compensated for its 
time and resources even if an issuer

[[Page 82935]]

withdraws its application prior to receiving conditional approval. The 
Exchange is not proposing additional fees for Companies that decide not 
to list with the Exchange. Where a Company that is already engaged in 
the application process with another exchange, such a Company will be 
subject to the higher Application Fee upon application with the 
Exchange. Where a Company is already engaged in the listing process 
with the Exchange and is considering listing with another exchange, 
such a Company can have any level of engagement short of submitting an 
application on that other exchange without subjecting itself to any 
additional fees. Such a Company could also terminate the application 
process with the Exchange and begin the listing process with another 
exchange and not be subject to any additional fees. As such, the 
Exchange believes this proposal is not imposing any meaningful burden 
on competition. Rather, the Exchange is merely trying to ensure that it 
is compensated for the resources that it expends in a situation where 
it is less likely for the full Entry Fee to be paid. While such an 
arrangement could result in Companies that do not list with the 
Exchange paying a higher Application Fee, the Exchange does not believe 
the proposal will disincentivize Companies to submit applications to 
list on other national securities exchanges and thereby burden 
competition. Rather, the Exchange believes the proposal will reasonably 
compensate the Exchange for its review of the application and may 
incentivize Companies to choose not to engage in or terminate the 
application process on the Exchange when there is a higher likelihood 
that the Company will list on another national securities exchange.
    While the Exchange is only proposing to charge a higher Application 
Fee in certain circumstances, the Exchange believes this is not 
unfairly discriminatory because it more closely aligns the fee 
assessment with the time at which Exchange costs are incurred for 
limited circumstances where the Exchange believes there is a higher 
likelihood that the application will be withdrawn prior to the issuance 
of conditional approval. The Exchange further notes that should a 
Company not withdraw its application and receive conditional approval 
to list a Tier I or Tier II security on the Exchange, it will pay no 
more than any other Company listing such a security.
    The Exchange's proposal to assess the Entry Fee, less the 
Application Fee on the date the Exchange provides conditional approval 
is reasonable as it more closely aligns with the time that resource 
costs are incurred by the Exchange and ensures the Exchange is 
compensated for its costs incurred in reaching a conditional approval. 
There are several reasons for which a Company may not list a Tier I or 
Tier II that has already received conditional approval to list on the 
Exchange. For example, as discussed above, a Company may choose to list 
on another national securities exchange rather than the Exchange. 
Alternatively, a Company may not meet other regulatory requirements or 
the conditions provided in the conditional approval that would prevent 
them from listing on any national securities exchange, including the 
Exchange. While the Exchange recognizes that a Company may not list on 
the Exchange after receiving conditional approval for reasons outside 
of their control, the Exchange does not believe that the proposal is 
discriminatory among issuers as it simply aligns with the time that 
resource costs are incurred by the Exchange. The Exchange also believes 
that this amendment is not unfairly discriminatory as it will apply to 
all Companies that submit an application to list a Tier I or Tier II 
security on the Exchange equally.
    The Exchange notes that Rule 14.13(b)(2)(C) provides for the Entry 
Fee of Exchange Traded Products (``ETPs'') listed on the Exchange. 
Unlike Tier I and Tier II securities listed on the Exchange, the 
Exchange only charges an Entry Fee to ETPs for which a proposed rule 
change pursuant to Section 19(b) of the Exchange Act (an ``Exchange 
Rule Filing'') is required to be filed with the Commission. Such fee is 
assessed at the time the Exchange Rule Filing is filed with the 
Commission. Similar to the proposed fee, the Entry Fee applicable to 
ETPs is assessed in close proximity to the time the Exchange incurs the 
cost to prepare and file an Exchange Rule Filing rather than on the 
date of initial listing. Given this, the Exchange does not believe the 
proposal unfairly discriminates issuers of Tier I or Tier II securities 
from issuers of ETPs on the Exchange.
    Lastly, the Exchange's proposal to delete the text of Rule 
14.13(b)(1)(E) and modify Rule 14.13(a) is reasonable because it will 
clarify that both the Application Fee and Entry Fee are non-refundable. 
Exchange Rule 14.13(a) currently provides that the Application Fee is 
non-refundable. While the Rule 14.13(b)(1)(E) implies that the Entry 
Fee may be refundable, it is never refundable in practice as it is 
currently assessed on the date of initial listing on the Exchange. 
Furthermore, the Exchange believes that the Application Fee and Entry 
Fee are reasonably designed to compensate the Exchange for the cost 
incurred by reviewing an application to list on the Exchange. 
Therefore, as such review is nearly complete at the time conditional 
approval is provided by the Exchange, it is reasonable that Entry Fee 
is non-refundable.
    Given the foregoing, the Exchange believes the proposed fee 
amendments are consistent with the Act.

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 market for listing 
services is extremely competitive and listed companies may freely 
choose alternative venues based on the aggregate fees assessed, and the 
value provided by each listing.
    While the proposal does not change the combined amount of the Entry 
Fee and Application Fee for both Tier I and Tier II securities that 
list on the Exchange, certain Companies may pay a higher Application 
Fee. Nonetheless, the Exchange does not believe that the proposal will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Specifically, the proposal 
to assess a higher Application Fee in certain circumstances as 
described herein is reasonable because it more closely aligns the fee 
assessment with the time at which the Exchange incurs costs in only 
limited circumstances where the Exchange believes there is a higher 
likelihood that the application will be withdrawn prior to the issuance 
of conditional approval. As discussed above, the Exchange is not 
proposing additional fees for Companies that decide not to list with 
the Exchange. Where a Company that is already engaged in the 
application process with another exchange, such a Company will be 
subject to the higher Application Fee upon application with the 
Exchange. Where a Company is already engaged in the listing process 
with the Exchange and is considering listing with another exchange, 
such a Company can have any level of engagement short of filing an 
application on that other exchange without subjecting itself to any 
additional fees. Such a Company could also terminate the application 
process with the Exchange and begin the listing process with another 
exchange and not be subject to any additional fees. As such, this 
proposal is not imposing any meaningful burden on competition.

[[Page 82936]]

Rather, the Exchange is merely trying to ensure that it is compensated 
for the resources that it expends in a situation where it is less 
likely for the full Entry Fee to be paid. While such an arrangement 
could result in Companies that do not list with the Exchange paying a 
higher Application Fee, the Exchange does not believe the proposal will 
disincentivize Companies to submit applications to list on other 
national securities exchanges and thereby burden competition. Rather, 
the Exchange believes the proposal will reasonably compensate the 
Exchange for its review of the application and may incentivize 
Companies to choose not to engage in or terminate the application 
process on the Exchange when there is a higher likelihood that the 
Company will list on another national securities exchange.
    In addition, as proposed Companies that don't list on the Exchange, 
either by choice or because it failed to meet the conditions set forth 
in the conditional approval or some other regulatory requirement, will 
be assessed the Entry Fee less the Application Fee at the time of 
conditional approval. Therefore, Companies that receive conditional 
approval, but do not list on the Exchange will pay a fee they would not 
be subject to under the current rule. The Exchange does not believe 
that this fee assessment will impose any burden on competition that is 
not necessary or appropriate in furtherance of the purposes of the Act 
because it simply aligns the fee with the time that resource costs are 
incurred by the Exchange. Therefore, the Exchange believes the proposal 
is consistent with Section 6(b)(8) of the Act.
    The Exchange believes that the proposed amendments do not encumber 
competition for listings with other listing venues, which are similarly 
free to set their fees. Rather, it reflects competition among listing 
venues and will further enhance competition.

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) of the Act \12\ and paragraph (f) of Rule 19b-4 \13\ 
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.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2023-092 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-2023-092. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CboeBZX-2023-092 and should 
be submitted on or before December 18, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-26007 Filed 11-24-23; 8:45 am]
BILLING CODE 8011-01-P