Document ID: SEC-2018-0943-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc.
Posted Date: 2018-06-20T04:00Z

[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)]
[Notices]
[Pages 28694-28695]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13164]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83438; File No. SR-CboeBZX-2018-039]

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

June 14, 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 June 1, 2018, 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 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 fee schedule applicable 
to Members \5\ and non-Members of the Exchange pursuant to BZX Rules 
15.1(a) and (c). OR [sic]
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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 (``BZX Equities''). Particularly, the 
Exchange proposes to amend the NBBO Setter Tiers effective June 1, 
2018.
    The Exchange currently offers two NBBO Setter Tiers under footnote 
19, which provide an additional rebate of $0.00015 to $0.0004 per share 
for orders that establish a new National Best Bid or Offer (``NBBO'') 
and which are appended with fee code B, V or Y. The Exchange notes that 
the proposed [sic] the NBBO Setter Tiers are additive rebates, and 
thus, can be combined with other incentives and structures offered by 
the Exchange. The Exchange proposes to amend both NBBO Setter Tiers 1 
and 2.
    First, the Exchange proposes to amend NBBO Setter Tier 1. 
Currently, a Member will receive a rebate of $0.00015 per share where a 
Member has a Setter Add TCV \6\ of greater than or equal to 0.10%. The 
Exchange proposes to increase the rebate for NBBO Setter Tier 1 from 
$0.00015 to $0.0003 per share. The Exchange also proposes to increase 
the Setter Add TCV requirement from 0.10% to 0.15%.
---------------------------------------------------------------------------

    \6\ ``Setter Add TCV'' [sic] 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.
---------------------------------------------------------------------------

    Lastly, the Exchange proposes to amend NBBO Setter Tier 2. 
Currently, a Member will receive a rebate of $0.0004 per share where a 
Member has a Setter Add TCV of greater than or equal to 0.15%. The 
Exchange proposes to increase the Setter Add TCV requirement from 0.15% 
to 0.20%.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with the objectives of Section 6 of the Act,\7\ in general, and 
furthers the objectives of Section 6(b)(4),\8\ 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. The Exchange also 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 levels at a particular 
venue to be excessive or incentives to be insufficient. The proposed 
rule changes reflect a competitive pricing structure designed to 
incentivize market participants to direct their order flow to the 
Exchange.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes the modification to the additional rebate 
provided by the NBBO Setter Tier 1 under footnote 19 is a reasonable 
means to encourage Members to not only

[[Page 28695]]

increase their liquidity on the Exchange, but also to contribute to the 
market quality of the Exchange by offering aggressively priced 
liquidity. The Exchange further believes that the proposed increased 
rebate represents an equitable allocation of reasonable dues, fees, and 
other charges because the thresholds necessary to achieve the tiers 
would continue to encourage Members to add additional liquidity to the 
Exchange. The revised additional rebate was modestly changed and 
continues to reasonably reflect the difficulty of achieving each tier's 
required criteria. The proposed change also is not unreasonably 
discriminatory as it applies equally to all Members.
    The Exchange also 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 the criteria 
set forth in NBBO Setter Tiers 1 and 2 makes such tiers slightly more 
difficult to attain, it is intended to incentivize Members to send 
additional volume and aggressively priced liquidity, in an effort to 
qualify or continue to qualify for the rebates 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 BZX 
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 proposed changes are generally intended to enhance the 
rebates for liquidity added to the Exchange, which is intended to draw 
additional liquidity to the Exchange. 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 \9\ and paragraph (f) of Rule 19b-4 
thereunder.\10\ 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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-2018-039 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-2018-039. 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-2018-039 and should be submitted 
on or before July 11, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-13164 Filed 6-19-18; 8:45 am]
BILLING CODE 8011-01-P