Document ID: SEC-2020-0592-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc.
Posted Date: 2020-04-15T04:00Z

[Federal Register Volume 85, Number 73 (Wednesday, April 15, 2020)]
[Notices]
[Pages 21056-21060]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07947]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88617; File No. SR-CboeBZX-2020-032]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 11.8(e) Related to the Exchange's Lead Market Maker Program and To 
Make Corresponding Changes to its Fee Schedule

April 10, 2020.
    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 8, 2020, 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 and II 
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.
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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

    The Exchange proposes a rule change to amend Rule 11.8(e) related 
to the Exchange's Lead Market Maker Program and to make corresponding 
changes to its Fee Schedule.
    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 Rule 11.8(e) applicable to the 
Exchange's Lead Market Maker (``LMM'') Program \3\ for Cboe-listed 
securities to include Primary Equity Securities \4\ and Closed-End 
Funds \5\ and to make corresponding changes to its Fee Schedule.\6\ 
Currently, the LMM Program includes only ETPs \7\ listed on the 
Exchange. The Exchange believes that the proposal will enhance 
liquidity in Cboe-listed Primary Equity Securities and Closed-End Funds 
by offering daily incentives that are directly tied to an LMM meeting 
market quality metrics in such securities, as further described below. 
The Exchange is not proposing to make any changes to the LMM Program 
itself other than to include Primary Equity Securities and Closed-End 
Funds and to establish the performance standards applicable to such 
securities.\8\
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    \3\ See Securities Exchange Act Release No. 86213 (June 27, 
2019), 84 FR 31951 (July 3, 2019) (the ``Original LMM Filing'').
    \4\ As defined in Rule 14.1(a), the term ``Primary Equity 
Security'' means a Company's first class of Common Stock, Ordinary 
Shares, Shares or Certificates of Beneficial Interest of Trust, 
Limited Partnership Interests or American Depositary Receipts 
(``ADRs'') or Shares (``ADSs'').
    \5\ As provided in Rule 14.8(a), the term ``Closed-End Funds'' 
means closed-end management investment companies registered under 
the Investment Company Act of 1940.
    \6\ The Exchange notes that there is currently only one Primary 
Equity Security listed on the Exchange (Cboe Global Markets, Inc., 
ticker ``CBOE'') and zero Closed-End Funds.
    \7\ As defined in Rule 11.8(e)(1)(A), the term ``ETP'' means any 
security listed pursuant to Exchange Rule 14.11.
    \8\ The Exchange notes that the Designated Market Maker 
(``DMM'') Program on the New York Stock Exchange LLC (``NYSE'') is 
comparable to the Exchange's LMM Program in that it is designed to 
incentivize liquidity provision and create enhanced market quality 
in listed securities. The DMM Program applies to all securities that 
may be listed on NYSE, which includes ETPs, Primary Equity 
Securities, and Closed-End Funds, consistent with this proposal, 
among others. See NYSE Rule 104, ``Dealings and Responsibilities of 
DMMs.''
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Current LMM Program
    Under the LMM Program, the Exchange offers daily incentives for 
LMMs in ETPs listed on the Exchange for which the LMM meets certain 
Minimum Performance Standards.\9\ Such daily incentives are determined 
based on the number of Cboe-listed ETPs for which the LMM meets such 
Minimum Performance Standards and the average auction volume across 
such securities. Generally speaking, the more LMM Securities \10\ for 
which the LMM meets the Minimum Performance Standards and the higher 
the auction volume across those ETPs, the greater the total daily 
payment to the LMM. Such daily incentives are structured as follows:
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    \9\ As defined in Rule 11.8(e)(1)(D), the term ``Minimum 
Performance Standards'' means a set of standards applicable to an 
LMM that may be determined from time to time by the Exchange. Such 
standards will vary between LMM Securities depending on the price, 
liquidity, and volatility of the LMM Security in which the LMM is 
registered. The performance measurements will include: (A) Percent 
of time at the NBBO; (B) percent of executions better than the NBBO; 
(C) average displayed size; and (D) average quoted spread. For 
additional detail, see Original LMM Filing.
    \10\ As defined in Rule 11.8(e)(1)(C), the term ``LMM Security'' 
means an ETP that has an LMM.

[[Page 21057]]

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                                                                          Average aggregate daily auction volume in LMM securities
                                                   -----------------------------------------------------------------------------------------------------
                                                                                                                                           3,000,001 or
                                                       0-10,000     10,001-100,000     100,001-         500,001-          1,000,001-          greater
----------------------------------------------------------------------------------------500,000---------1,000,000----------3,000,000--------------------
Daily Incentive for each Qualified ETP 1-5........             $10             $25             $40              $50               $150              $200
Daily Incentive for each Qualified ETP 6-25.......              10              25              25               30                100               150
Daily Incentive for each Qualified ETP 26-50......              10              10              20               25                 75               100
Daily Incentive for each Qualified ETP 51-100.....              10              10              15               20                 50                75
Daily Incentive for each Qualified ETP Greater                  10              10              15               15                 25                50
 Than 100.........................................
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    By way of example, if an LMM has 30 LMM Securities, each of which 
is a Qualified ETP,\11\ 10 of which each have an average daily auction 
volume of 5,000 shares (combined between the opening and closing 
auction), 10 of which each have an average daily auction volume of 
50,000 shares (combined between the opening and closing auction), and 
10 of which each have an average daily auction volume of 200,000 shares 
(combined between the opening and closing auction), then the LMM would 
fall into the fifth column (10*5,000 + 10*50,000 + 10*200,000 = 
2,550,000 average aggregate daily auction volume). As such, the LMM 
would receive $150 each for five Qualified ETPs, $100 each for 
Qualified ETPs 6-25, and $75 each for Qualified ETPs 26-30. This would 
result in a daily payment of ($150*5) + ($100*20) + ($75*5) = $3,125 to 
the LMM.
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    \11\ As provided in footnote 14 of the Fee Schedule, a 
``Qualified ETP'' is an ETP for which an LMM is a Qualified LMM.
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    LMMs that meet a more stringent set of standards also receive 
enhanced daily incentives, as follows:

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                                                                          Average aggregate daily auction volume in LMM securities
                                                   -----------------------------------------------------------------------------------------------------
                                                                                                                                           3,000,001 or
                                                       0-10,000     10,001-100,000     100,001-         500,001-          1,000,001-          greater
----------------------------------------------------------------------------------------500,000---------1,000,000----------3,000,000--------------------
Daily Incentive for each Enhanced ETP 1-5.........           $2.50           $6.25             $10           $12.50             $37.50               $50
Daily Incentive for each Enhanced ETP 6-25........            2.50            6.25            6.25             7.50                 25             37.50
Daily Incentive for each Enhanced ETP 26-50.......            2.50            2.50               5             6.25              18.75                25
Daily Incentive for each Enhanced ETP 51-100......            2.50            2.50            3.75                5              12.50             18.75
Daily Incentive for each Enhanced ETP Greater Than            2.50            2.50            3.75             3.75               6.25             12.50
 100..............................................
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    Using the same example as above, where the LMM has 30 LMM 
Securities, 10 of which are Enhanced ETPs,\12\ which have 2,550,000 
shares of average aggregate daily auction volume in LMM Securities, the 
issuer would fall into the fifth column. As such, the LMM would receive 
an additional $37.50 for each of its first five Enhanced ETPs and an 
additional $25 each for Enhanced ETPs 6-10. This would result in an 
additional daily payment of ($37.50*5) + ($25*5) = $312.50 to the LMM.
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    \12\ As defined in footnote 14 of the Fee Schedule, an 
``Enhanced ETP'' a Qualified ETP for which an LMM also meets certain 
enhanced market quality standards.
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    LMMs also receive free transactions in closing auctions in ETPs for 
which they are the LMM in order to incentivize LMMs to provide 
liquidity in the closing auction for their LMM Securities.
Proposed Changes
    As noted above, the Exchange is proposing to make several limited 
changes to Rule 11.8(e) and its Fee Schedule in order to add Primary 
Equity Securities and Closed-End Funds to the existing LMM Program and 
to establish the performance standards applicable to such securities. 
The Exchange is not proposing to change any of the functionality or 
pricing associated with the current LMM Program.
    Specifically, the Exchange is proposing to add a new definition 
under Rule 11.8(e)(1) for the term ``Listed Security,'' which would 
mean ``any ETP or any Primary Equity Security or Closed-End Fund listed 
on the Exchange pursuant to Rule 14.8 or 14.9.'' The Exchange is also 
proposing to amend the definition of ``LMM Security'' under Rule 
11.8(e)(1) such that it would be defined as ``a Listed Security that 
has an LMM,'' instead of ``an ETP that has an LMM.'' The Exchange is 
also proposing to make certain numbering changes in order to facilitate 
the addition of the definition of ``Listed Security.''
    The Exchange is also proposing to amend Rule 11.8(e)(2) such that 
one of the factors that will be used as the basis for selecting LMMs 
shall be ``experience with making markets in the applicable security 
type'' instead of ``experience making markets in ETPs.''
    The Exchange is also proposing to replace each instance of the term 
``ETP'' under footnote 14 of its Fee Schedule with ``Security'' in 
order to make clear that such pricing applies to all LMM Securities and 
not just ETPs.
    Finally, the Exchange is proposing to add specific requirements 
around what constitutes a Qualified Security and Enhanced Security for 
Primary Equity Securities and Closed End Funds. Specifically, the 
Exchange is proposing to amend the definition of Minimum Performance 
Standards in current Rule 11.8(e)(1)(D) such that for Primary

[[Page 21058]]

Equity Securities and Closed-End Funds, Minimum Performance Standards 
will specifically require the following:
    (i) registration as a market maker in good standing with the 
Exchange;
    (ii) time at the inside requirements, which, for Qualified 
Securities, require that an LMM maintain quotes at the NBB and the NBO 
at least 5% of Regular Trading Hours where the security has a 
consolidated average daily volume equal to or greater than 500,000 
shares and at least 15% of Regular Trading Hours where the security has 
a consolidated average daily volume of less than 500,000 shares. For 
Enhanced Securities, an LMM must quote at the NBB and the NBO at least 
5% of Regular Trading Hours where the security has a consolidated 
average daily volume equal to or greater than 500,000 shares and at 
least 40% of Regular Trading Hours where the security has a 
consolidated average daily volume of less than 500,000 shares;
    (iii) auction participation requirements, which, for a Qualified 
Security, require that the Opening Auction price is within 4% of the 
last Reference Price, as defined in Rule 11.23(a)(19), and 2% for an 
Enhanced Security. For a Qualified Security, such requirements provide 
that the Closing Auction price must be within 3% of the last Reference 
Price and 1% for an Enhanced Security;
    (iv) market-wide NBB and NBO spread and size requirements, which 
require 300 shares at both the NBB and NBO during at least 50% of 
Regular Trading Hours for both Qualified Securities and Enhanced 
Securities. For Qualified Securities, the NBBO spread of such shares 
must be no wider than 2% for a security priced equal to or greater than 
$5 and no wider than 7% for a security priced less than $5. For 
Enhanced Securities, the NBBO spread of such shares must be no wider 
than 1% for securities priced equal to or greater than $5 and no wider 
than 2% for securities priced less than $5; and
    (v) depth of book requirements, which, for securities priced equal 
to or greater than $5 requires at least $150,000 of displayed posted 
liquidity on both the buy and the sell side within the percentages 
described below during at least 90% of Regular Trading Hours and, for 
securities priced less than $5, at least $50,000 of displayed posted 
liquidity on both the buy and the sell side within the percentages 
described below during at least 90% of Regular Trading Hours. For 
Qualified Securities, such liquidity must be within 2% of both the NBB 
and NBO for securities priced equal to or greater than $5 and within 7% 
of both the NBB and NBO for securities priced less than $5. For 
Enhanced Securities, such liquidity must be within 1% of both the NBB 
and NBO for securities priced equal to or greater than $5 and within 2% 
of both the NBB and NBO for securities priced less than $5.
    As a follow-on to the examples above and to reiterate that the 
Exchange is not proposing to make any changes to the LMM Program, but 
only to include Primary Equity Securities and Closed-End Funds in the 
existing LMM Program and to establish the performance standards 
applicable to such securities, if an LMM has 30 LMM Securities, each of 
which is a Qualified Security, 10 of which e ach have an average daily 
auction volume of 5,000 shares (combined between the opening and 
closing auction), 10 of which each have an average daily auction volume 
of 50,000 shares (combined between the opening and closing auction), 
and 10 of which each have an average daily auction volume of 200,000 
shares (combined between the opening and closing auction), then the LMM 
would fall into the fifth column (10*5,000 + 10*50,000 + 10*200,000 = 
2,550,000 average aggregate daily auction volume). As such, the LMM 
would receive $150 each for five Qualified Securities, $100 each for 
Qualified Securities 6-25, and $75 each for Qualified Securities 26-30. 
This would result in a daily payment of ($150*5) + ($100*20) + ($75*5) 
= $3,125 to the LMM. The Exchange notes that this example is identical 
to the first example above and that this would be the outcome 
regardless of the breakdown of how many of the Qualified Securities are 
ETPs, Primary Equity Securities, and Closed-End Funds, as would the 
example above related to Enhanced ETPs.
Implementation Date
    The Exchange proposes to implement these amendments immediately.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\13\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \14\ 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) \15\ 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 its listing business operates in a highly-competitive 
market in which market participants, which includes both issuers of 
securities and LMMs, can readily transfer their listings or opt not to 
participate, respectively, if they deem fee levels, liquidity provision 
incentive programs, or any other factor at a particular venue to be 
insufficient or excessive. The proposed rule changes reflect a 
competitive pricing structure designed to incentivize issuers to list 
new products and transfer existing products to the Exchange and market 
participants to enroll and participate as LMMs on the Exchange, which 
the Exchange believes will enhance market quality in all ETPs, Primary 
Equity Securities, and Closed-End Funds listed on the Exchange.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ Id.
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    The Exchange believes that the proposal to include Primary Equity 
Securities and Closed-End Funds in the LMM Program is consistent with 
the Act for the same reasons that ETPs are currently include in the LMM 
Program: Because it will enhance market quality in Cboe-listed Primary 
Equity Securities and Closed-End Funds both throughout the day and in 
the closing auction by incentivizing liquidity provision on the 
Exchange and requiring LMMs to meet the Minimum Performance Standards. 
Specifically, the Exchange believes that the proposal will enhance 
market quality in Cboe-listed Primary Equity Securities and Closed-End 
Funds by incentivizing liquidity provision on the Exchange in such 
securities and requiring LMMs to meet the Minimum Performance Standards 
in order to receive daily incentives in such securities in the same way 
that the LMM Program provides enhanced market quality on the Exchange 
in ETPs. Further, the Exchange believes that adding Primary Equity 
Securities and Closed-End Funds will further act to strengthen the LMM 
Program by providing additional potential securities for an LMM to take 
on in order to

[[Page 21059]]

increase their average aggregate daily auction volume in their LMM 
Securities, allowing both new and existing LMMs with the possibility of 
receiving increased daily incentives. The Exchange also believes that 
it is appropriate to include Primary Equity Securities and Closed-End 
Funds in the LMM Program, which currently only applies to ETPs, 
because, despite being issued by different types of Companies,\16\ the 
metrics used to measure market quality as Minimum Performance Standards 
in ETPs under the current LMM Program are generally the same metrics 
that are used to measure market quality for Primary Equity Securities 
and Closed-End Funds.\17\ Specifically, tighter spreads, deeper 
liquidity, and enhanced auction executions result in better overall 
market quality in an LMM Security and result in better executions for 
investors, regardless of whether the instrument the investor is buying 
or selling as a Primary Equity Security, a Closed-End Fund, or an ETP. 
Further to this point, the term ETP encapsulates all securities listed 
on the Exchange pursuant to Rule 14.11, which includes securities 
issued by varying types of trusts, debt instruments issued by banks, 
among others, that hold or track varying types of instruments including 
U.S. and foreign equity securities, Closed-End Funds, corporate debt, 
treasury securities, commodities, and more. The term ETP is already a 
broad term and the Exchange believes that adding Primary Equity 
Securities and Closed-End Funds to the LMM Program is generally 
consistent with the rationale underlying the LMM Program applying to 
ETPs. In addition, adding Primary Equity Securities and Closed-End 
Funds to the existing LMM Program will further incentivize existing 
LMMs to act as LMM for Primary Equity Securities and Close-End Funds 
by: (i) Allowing an LMM apply the pricing applicable to its existing 
average aggregate daily auction volume in its LMM Securities to any new 
Primary Equity Securities and Closed-End Funds; and (ii) keeping the 
administration of the LMM Program as straight-forward as possible by 
simply adding Primary Equity Securities and Closed-End Funds to the 
structure that LMMs are already familiar with.
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    \16\ As defined in Rule 14.1(a)(3), the term Company means the 
issuer of a security listed or applying to list on the Exchange. For 
purposes of Chapter XIV, the term ``Company'' includes an issuer 
that is not incorporated, such as, for example, a limited 
partnership.
    \17\ To this point, the Exchange notes that all of the proposed 
Minimum Performance Standards applicable to Primary Equity 
Securities and Closed-End Funds as provided in proposed Rule 
11.8(e)(1)(E)(i)-(v) fall within the ranges currently applicable to 
ETPs as provided in the Original LMM Filing.
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    The Exchange believes that these changes will both enhance 
liquidity in Cboe-listed Primary Equity Securities and Closed-End Funds 
and help the Exchange to compete as a primary listing venue for such 
products. Similarly, the Exchange believes that it will allow it to 
better compete as a listing venue in that it will allow the Exchange to 
implement a liquidity provision program that includes security types 
already included in a liquidity provision program on its competitor, as 
described above.
    The Exchange also believes that the proposal to add Primary Equity 
Securities and Closed-End Funds to the LMM Program is a reasonable 
means to incentivize liquidity provision in such securities listed on 
the Exchange. The marketplace for listings is extremely competitive and 
there are several other national securities exchanges that offer 
listings for ETPs, Primary Equity Securities, and Closed-End Fund. 
Transfers between listing venues occur frequently \18\ for numerous 
reasons, including market quality. This proposal is intended to help 
the Exchange compete as a listing venue. Further, the Exchange notes 
that the proposed incentives are not transaction fees, nor are they 
fees paid by participants to access the Exchange. Rather, the proposed 
payments are based on achieving certain objective market quality 
metrics.
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    \18\ For example, 16 ETPs transferred their listings to the 
Exchange on May 13, 2019. See http://ir.cboe.com/~/media/Files/C/
CBOE-IR-V2/press-release/2019/cboe-welcomes-16-barclays-etns.pdf.
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    Further, the Exchange believes that it is reasonable, equitable, 
and not unfairly discriminatory to add Primary Equity Securities and 
Closed-End Funds to the LMM Program. Specifically, the Exchange 
believes that the proposal is reasonable, equitable, and not unfairly 
discriminatory because it will enhance market quality in Cboe-listed 
Primary Equity Securities and Closed-End Funds by incentivizing 
liquidity provision on the Exchange in such securities and requiring 
LMMs to meet the Minimum Performance Standards in order to receive 
daily incentives in such securities. While the proposed payments apply 
only to LMMs, such LMMs must meet rigorous Minimum Performance 
Standards in order to receive even the lower Qualified Security 
payments, resulting in better market quality in Exchange-listed 
securities and better executions for investors. Further, in order to 
qualify as an Enhanced Security and receive an additional payment above 
the payment for Qualified Securities, an LMM must meet even more 
rigorous market quality metrics in the security, which further enhances 
market quality and investor executions in Exchange-listed securities. 
Where an LMM does not meet the Minimum Performance Standards, they will 
not receive the payments. Further, registration as an LMM is available 
equally to all Members and allocation of listed securities between LMMs 
is governed by Exchange Rule 11.8(e)(2). If an LMM does not meet the 
Minimum Performance Standards for three out of the past four months, 
the LMM is subject to forfeiture of LMM status for that LMM Security, 
at the Exchange's discretion.
    Further, the daily payment amounts are based specifically on the 
Exchange's revenue model. For securities with greater auction volume, 
the Exchange generally makes more money and, thus, is able to offer 
LMMs with LMM Securities that have higher average aggregate daily 
auction volume higher payments. The buckets and payments are modeled 
based both on current revenue and product distribution among LMMs as 
well as expected revenue and product distribution in the future 
including organic growth among existing products, securities 
transferring to the Exchange, and additional participants in the LMM 
Program. The Exchange believes that it is fair and reasonable and not 
unfairly discriminatory to offer different pricing between the 
different auction volume tiers because those tiers and possible 
payments are specifically tailored to the Exchange's expected revenue 
from that auction volume.
    Specifically, the proposed payment per Qualified Security (and thus 
the total payment to an LMM) generally goes up as the CADV moves from 
left to right because as the average aggregate daily auction volume in 
LMM Securities increases, the Exchange will generate additional revenue 
and can thus support increased payments to LMMs. Similarly, the 
proposed payments per Qualified Security generally go down as the 
number of Qualified Securities goes up in order to ensure that the 
daily incentive payments do not exceed the Exchange's revenue for that 
LMM's LMM Securities while still providing incentives for LMMs to take 
on additional ETPs, Primary Equity Securities, and Closed-End Funds. As 
such, the Exchange believes that the proposal represents an equitable 
allocation of payments.

[[Page 21060]]

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

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
the proposed change burdens competition, but rather, enhances 
competition as it is intended to increase the competitiveness of BZX 
both among Members by incentivizing Members to become LMMs in BZX-
listed securities and as a listing venue by enhancing market quality in 
BZX-listed securities. The marketplace for listings is extremely 
competitive and there are several other national securities exchanges 
that offer listings. Transfers between listing venues occur frequently 
\19\ for numerous reasons, including market quality. This proposal is 
intended to help the Exchange compete as a listing venue. Accordingly, 
the Exchange does not believe that the proposed change will impair the 
ability of issuers, LMMs, or competing listing venues to maintain their 
competitive standing. The Exchange also notes that the proposed change 
is intended to enhance market quality in BZX-listed Primary Equity 
Securities and Closed-End Funds, to the benefit of all investors in 
such BZX-listed securities. The Exchange does not believe the proposed 
amendment would burden intramarket competition as it would be available 
to all Members uniformly. Registration as an LMM is available equally 
to all Members and allocation of listed securities between LMMs is 
governed by Exchange Rule 11.8(e)(2). Further, if an LMM does not meet 
the Minimum Performance Standards for three out of the past four 
months, the LMM is subject to forfeiture of LMM status for that LMM 
Security, at the Exchange's discretion.
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    \19\ For example, 16 ETPs transferred their listings to the 
Exchange on May 13, 2019. See http://ir.cboe.com/~/media/Files/C/
CBOE-IR-V2/press-release/2019/cboe-welcomes-16-barclays-etns.pdf.
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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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \20\ and Rule 19b-
4(f)(6) thereunder.\21\
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \22\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \23\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing. Waiver 
of the operative delay would allow the Exchange to expand its LMM 
Program to Primary Equity Securities and Closed-End Funds without 
delay, which the Exchange believes will provide market quality 
enhancements. The Commission notes that a similar program on another 
exchange applies to these types of securities \24\ and that the 
proposed performance standards are similar to those already in place on 
the Exchange with respect to ETPs listed on the Exchange. Therefore, 
the Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the operative delay and 
designates the proposed rule change operative upon filing.\25\
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    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 17 CFR 240.19b-4(f)(6)(iii).
    \24\ See supra note 8.
    \25\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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 shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

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 rule-comments@sec.gov. Please include 
File Number SR-CboeBZX-2020-032 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-2020-032. 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-2020-032, and should be 
submitted on or before May 6, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07947 Filed 4-14-20; 8:45 am]
BILLING CODE 8011-01-P