Document ID: SEC-2019-1710-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2019-11-18T05:00Z

[Federal Register Volume 84, Number 222 (Monday, November 18, 2019)]
[Notices]
[Pages 63701-63709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24862]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87495; File No. SR-CBOE-2019-106]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Fees Schedule in Connection With Migration

November 8, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 1, 2019, Cboe Exchange, Inc. (``Exchange'' or ``Cboe 
Options'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its Fees Schedule in connection with migration. 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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
    In 2016, the Exchange's parent company, Cboe Global Markets, Inc. 
(formerly named CBOE Holdings, Inc.) (``Cboe Global''), which is also 
the parent company of Cboe C2 Exchange, Inc. (``C2''), acquired Cboe 
EDGA Exchange, Inc. (``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX'' or 
``EDGX Options''), Cboe BZX Exchange, Inc. (``BZX'' or ``BZX 
Options''), and Cboe BYX Exchange, Inc. (``BYX'' and, together with 
Cboe Options, C2, EDGX, EDGA, and BZX, the ``Cboe Affiliated 
Exchanges''). Cboe Options intends to migrate its trading platform to 
the same system used by the Cboe Affiliated Exchanges, and also migrate 
its current billing system to a new billing system, on October 7, 2019 
(the ``migration''). Accordingly, the Exchange proposes to amend 
certain fees in the Fees Schedule in connection with the migration.\3\
---------------------------------------------------------------------------

    \3\ The Exchange initially filed the proposed fee changes on 
October 4, 2019 (SR-CBOE-2019-097). On October 18, 2019, (but 
business date October 21, 2019) the Exchange withdrew that filing 
and replaced it with SR-CBOE-2019-101. On November 1, 2019, the 
Exchange withdrew that filing and submitted this filing.
---------------------------------------------------------------------------

Consolidated Rate Tables
    First, the Exchange proposes to reorganize and rename its standard 
transaction fee tables. Particularly, the Exchange proposes to 
consolidate its current rate tables for equity, ETF and ETN, and Index 
Products excluding Underlying Symbol List A into a single table and 
relocate its transaction fees relating to Sector Indexes into that 
table. As proposed, the Fees Schedule will consist of two transaction 
fee tables renamed as: (1) ``Rate Table--All Products Excluding 
Underlying Symbol List A'' and (2) ``Rate Table--Underlying Symbol List 
A''. The Exchange also proposes to make other clarifying, non-
substantive changes such as: (i) Separating out Clearing Trading Permit 
Holder Proprietary fees for Underlying Symbol List A into two line 
items: (1) Underlying Symbol List A excluding VIX and (2) VIX and (ii) 
consolidating and relocating fees for Broker-Dealer, Non-Trading Permit 
Holder Market Maker, Professional and Joint Back Office orders in RUT, 
RLG, RLV, RUI and UKXM into the section immediately above it (i.e., for 
fees for Broker-Dealer, Non-Trading Permit Holder Market Maker, 
Professional and Joint Back Office orders in OEX, XEO, SPX (incl SPXW) 
and VIX). The Exchange also proposes to indicate in the rate table that 
fees for RLG, RLV, RUI and UKXM are $0.00, as such fees are currently 
waived.\4\ The Exchange notes the proposed consolidation and non-
substantive changes are intended to make the Fees Schedule easier to 
read and not intended to change any fees other than what is discussed 
below.
---------------------------------------------------------------------------

    \4\ The Exchange notes such waiver is in place through December 
31, 2019. See Cboe Options Footnote 40, which footnote is appended 
to corresponding rates in the rate table as applicable. The proposed 
addition of Fee Code WR in the rate table is not intended to make 
such waiver permanent and Footnote 40 continues to apply.

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

[[Page 63702]]

Fee Codes
    The Exchange first proposes to adopt and codify in its Fees 
Schedule fee codes for its standard transaction fees. The Exchange 
notes that on the Affiliated Exchanges, rather than returning a 
monetary value indicating the rebate or charge for an execution, a fee 
code is utilized as an indication of a fee classification corresponding 
to an item on the venue's fee schedule. Upon migration, the Exchange's 
new billing system will also utilize various fee codes. The Exchange 
believes incorporating these fee codes directly into the fees schedule 
will provide clarity in the Fees Schedule and allow Trading Permit 
Holders (``TPHs'') to more easily validate their bills on a monthly 
basis.\5\ The Exchange notes that none of these changes substantively 
amend any fee or rebate, nor do they alter the manner in which the 
Exchange assesses fees or calculates rebates.
---------------------------------------------------------------------------

    \5\ The Exchange also proposes to publish a list of its fee 
codes on its website. The list will include the fee or rebate, fee 
code, and a description for each possible execution that could occur 
on the Exchange. The Exchange notes that this table is merely a 
consolidated table which lists each of the proposed fee codes that 
will be incorporated directly into the Fees Schedule.
---------------------------------------------------------------------------

Linkage
    In addition to adopting fee codes for standard transaction fees, 
the Exchange proposes to adopt fee codes for Linkage Routing Fees. 
Currently, the Exchange's Fees Schedule provides generally that for 
Customer orders, in addition to the customary Cboe Options execution 
charges for each Customer order that is routed, the Exchange passes 
through the actual transaction fee assessed by the exchange(s) to which 
the order was routed plus an additional $0.15 per contract.\6\ The 
Exchange also does not pass through or otherwise charge customer orders 
(of any size) routed to other exchanges that were originally 
transmitted to the Exchange from the trading floor through an Exchange-
sponsored terminal (e.g., PULSe Workstation). For Non-Customer Orders, 
the Exchange assesses a $0.70 per contract routing fee in addition to 
the customary Cboe Options execution charges. Effective, October 7, 
2019, the Exchange proposes to specifically specify the exact charge 
for linkage for each type of transaction and adopt a corresponding fee 
code. Particularly, the Exchange will list the fee code and transaction 
fee for routed (i) Customer orders routed to NYSE American, LLC 
(``AMEX''), BOX Exchange LLC (``BOX''), NASDAQ BX, Inc. (``BX''), Cboe 
EDGX Exchange, Inc. (``EDGX''), Nasdaq MRX, LLC (``MRX''), Miami 
International Securities Exchange, LLC (``MIAX''), or Nasdaq PHLX LLC 
(``PHLX'') for ETF orders equal to or greater than 100 contracts, (ii) 
Customer orders routed to AMEX, BOX, BX, EDGX, MRX, MIAX, or PHLX for 
ETF orders less than 100 contracts and equity options, (iii) Customer 
orders routed to NYSE Arca, Inc. (``ARCA''), Cboe BZX Exchange, Inc., 
(``BZX''), Cboe C2 Exchange, Inc. (``C2''), Nasdaq ISE, LLC (``ISE''), 
Nasdaq GEMX, LLC (``GEMX''), MIAX Emerald, LLC (``Emerald''), MIAX 
PEARL, LLC (``Pearl''), or Nasdaq Stock Market LLC (``NOMX'') for ETF 
orders equal to or greater than 100 contracts in Penny and Non-Penny 
classes, (iv) Customer orders routed to ARCA, BZX, C2, ISE, GEMX, 
Emerald, Pearl or NOMX for ETF orders less than 100 contracts and 
equity options in Penny and Non-Penny classes, (v) and Non-Customer 
Orders in Penny and Non-Penny classes. The proposed fees are as 
follows:
---------------------------------------------------------------------------

    \6\ Multiple orders from the same executing firm for itself or 
for a CMTA or correspondent firm in the same series on the same side 
of the market that are received within 500 milliseconds are 
currently aggregated for purposes of determining the order quantity 
and will continue to be aggregated post-migration.

----------------------------------------------------------------------------------------------------------------
                 Capacity                        Fee                            Description
----------------------------------------------------------------------------------------------------------------
Customer.................................           $0.33  Routed to AMEX, BOX, BX, EDGX, MRX, MIAX, PHLX, >=
                                                            100 contracts, ETF.
                                                     0.15  Routed to AMEX, BOX, BX, EDGX, MRX, MIAX, PHLX, < 100
                                                            contracts ETF, Equity.
                                                     0.83  Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX,
                                                            >= 100 contracts ETF, Penny.
                                                     1.18  Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX,
                                                            >= 100 contracts ETF, Non-Penny.
                                                     0.65  Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX,
                                                            <100 contracts ETF, Equity, Penny.
                                                     1.00  Routed to ARCA, BZX, C2, ISE, GMNI, EMLD, PERL, NOMX,
                                                            <100 contracts ETF, Equity, Non-Penny.
Non-Customer.............................            1.17  Routed, Penny.
                                                     1.45  Routed, Non-Penny.
----------------------------------------------------------------------------------------------------------------

    The Exchange notes that the linkage routing rates for (i) Non-
Customer Orders and (ii) Customer Orders routed to AMEX, BOX, BX, EDGX, 
MRX, MIAX, and PHLX are not changing. Rather the Exchange is merely 
expressing the fee as single rate for (1) Non-Customer orders by 
combining the $0.70 per contract fee and the customary Cboe Options 
execution charges (i.e., $0.47 per contract for Penny Classes and $0.75 
per contract for Non-Penny Classes) and (2) for Customer Orders by 
combining the $0.15 per contract fee plus the customary Cboe Options 
execution charges (i.e., $0.00 for equity options and ETF orders less 
than 100 contracts and $0.18 per contract for ETF orders equal to or 
greater than 100 contracts) and the actual transaction fee assessed by 
the Exchange to which the order was routed (i.e., $0.00 for AMEX, BOX, 
BX, EDGX, MRX, MIAX, and PHLX .The Exchange notes that it is amending 
the linkage fee with respect to any order routed to ARCA, BZX, C2, ISE, 
GEMX, Emerald, Pearl and NOMX. Particularly, unlike orders routed to 
AMEX, BOX, BX, EDGX, MRX, MIAX, and PHLX, which do not assess fees for 
Customer orders, ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX each 
assess slightly different fees for Customer orders. Instead of 
assessing different and distinct fees for orders routed to each of 
ARCA, BZX, C2, ISE GEMX, Emerald, Pearl and NOMX, the Exchange proposes 
to simplify billing for these orders and instead assess the same 
fee.\7\ Particularly, the Exchange proposes to assess the $0.15 per 
routing contract fee plus the customary Cboe Options execution charges 
(i.e., $0.00 for equity options and ETF orders less than 100 contracts 
and $0.18 per contract for ETF orders equal to or greater than 100 
contracts) and the $0.50 per contract for Penny Classes and $0.85 per 
contract for Non-Penny Classes. The Exchange notes that other 
exchanges, including two of its Affiliated Exchanges, assess linkage 
fees expressed as a single fee for orders routed to these exchanges and 
that the proposed fees are in line with, and in some instances

[[Page 63703]]

lower than, those fees.\8\ The Exchange lastly proposes to eliminate 
the exception that the Exchange will not pass through or otherwise 
charge customer orders (of any size) routed to other exchanges that 
were originally transmitted to the Exchange from the trading floor 
through an Exchange-sponsored terminal (e.g., PULSe Workstation). The 
Exchange notes that it is not required to maintain such an exception 
and that it expects the impact of the proposed change to be relatively 
small.
---------------------------------------------------------------------------

    \7\ The Exchange notes that the range of standard fees assessed 
by ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX for Customer 
Orders in Penny Classes is between $0.41 per contract to $0.50 per 
contract and in Non-Penny Classes is either $0.84 per contract or 
$0.85 per contract.
    \8\ See Cboe BZX Options Exchange Fee Schedule and Cboe EDGX 
Options Exchange Fee Schedule, which both assess for Routed Customer 
Orders to ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX $0.85 
per contract for penny classes and $1.25 per contract for non-penny 
classes (yielding fee codes RQ and RR, respectively). See also MIAX 
Options Fees Schedule which assess for Routed Customer Orders to 
ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX $0.65 per contract 
for penny classes and $1.00 per contract for non-penny classes.
---------------------------------------------------------------------------

Capacity
    Recently, the Exchange filed to codify capacity codes in its 
Rules.\9\ By way of background, the Exchange currently refers to 
capacity as ``origin code'', which codes are used to specify which type 
of market participant the order belongs to. Cboe Options origin codes 
had previously been codified in Regulatory Circular RG13-038. The 
recently codified Capacities (effective October 7, 2019), are the same 
as the Exchange's current origin codes (prior to October 7, 2019), 
except the proposed rule change replaces ``W'' with ``U'' and deletes 
``Y'' (orders for the account of a specialist registered in the 
underlying stock at the primary exchange for trading the stock), which 
will not be available following migration. The Exchange's Fees Schedule 
currently identifies market participant types by ``origin code''. In 
light of the codified capacity codes in the Exchange Rules, the 
Exchange proposes to update references to ``origin'' to ``capacity'' 
and also update the proposed corresponding codes. The codes are as 
follows: B (account of a broker or dealer, including a Foreign Broker-
Dealer), C (Public Customer account), F (OCC clearing firm proprietary 
account), J (joint back office account), L (non-Trading Permit Holder 
affiliate account), M (Market-Maker account), N (market-maker or 
specialist on another options exchange), U (Professional account). 
Additionally, the Exchange proposes to eliminate all references to the 
term ``Voluntary Professional'' as the Exchange is eliminating 
Voluntary Professionals, effective October 7, 2019.\10\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No 86173 (June 20, 2019) 
84 FR 30267 (June 26, 2019) (SR-CBOE-2019-027).
    \10\ Id.
---------------------------------------------------------------------------

Execution Surcharge
    The Exchange currently assesses an Execution Surcharge of $0.21 per 
contract for SPX Customer and Non-Customer, Non-Market Maker orders 
during the Regular Trading Hours (``RTH'') session only (i.e., the 
surcharge does not apply during the Global Trading Hours (``GTH'') 
session. Additionally, pursuant to Footnote 21 of the Fees Schedule, 
the Surcharge does not apply to (i) orders in SPX or SPXW options in 
the SPX electronic book for those SPX or SPXW options that are executed 
during opening rotation on the final settlement date of VIX options and 
futures which have the expiration that contribute to the VIX settlement 
and (ii) orders executed by a floor broker using a PAR terminal. The 
Exchange proposes to amend the Execution Surcharge in two ways.
    First, the Exchange notes that upon migration, the Exchange will 
use the same Book for GTH and RTH (whereas today, each session has a 
separate Book). As such, the Exchange proposes to apply the SPX 
Execution Surcharge in both sessions. The Exchange notes that other 
executions surcharges, such as the SPXW Execution Surcharge, are also 
assessed in both RTH and GTH.
    Next, the Exchange proposes to amend one of the exceptions to the 
SPX and SPXW Execution Surcharge. As noted above, the execution 
surcharge is currently waived for all SPX and SPXW option series that 
are (i) executed in the electronic book during opening rotation on the 
final settlement date of VIX options and futures and (ii) which have 
the expiration that is used to calculate the exercise or final 
settlement value (``constituent options series''). While the Exchange 
knows which expiration will be used to calculate the exercise or final 
settlement value prior to the opening, the actual SPX and SPXW series 
that the Exchange will use to calculate the exercise or settlement 
value (``settlement strip'') are not known until after the opening. As 
such, the current exception applies to all constituent options series, 
as TPHs do not know which series in the constituent options series will 
ultimately contribute to the VIX settlement. Upon migration however, 
the Exchange will determine the settlement strip (i.e., series actually 
used) pursuant to an algorithm prior to the opening and announce such 
series.\11\ As such, the Exchange believes it's appropriate to limit 
the current exception and apply it only to SPX/SPXW options that (i) 
are executed in the electronic book during opening rotation on the 
final settlement date of VIX options and futures and (ii) which have 
the expiration that are used in the VIX settlement calculation (as 
opposed to the constituent options series which encompasses series that 
may not have ultimately contributed to the VIX settlement calculation).
---------------------------------------------------------------------------

    \11\ See Exchange Rule 5.31(j)(1). The Exchange will disseminate 
the highest call strike and the lowest put strike that establish the 
strike range to all subscribers to the Exchange's data feeds that 
deliver opening auction update messages, no later than 8:45 a.m. 
Eastern Time on exercise settlement value determination days. The 
Exchange may update this strike range until 9:15 a.m. Eastern Time, 
and will disseminate any updates during that time period as soon as 
reasonably possible. Therefore, the final strike range of the 
settlement strip that the Exchange disseminates at 9:15 a.m. Eastern 
Time to market participants will be identical to that which the 
Exchange will use to calculate the VIX settlement value itself.
---------------------------------------------------------------------------

CFLEX AIM Response
    The Exchange currently assesses a fee for CFLEX AIM Responses. More 
specifically, the CFLEX AIM Response fee applies to all broker-dealer 
and non-TPH Holder market-maker responses in all FLEX products, except 
Sector Indexes and Underlying Symbol List A,\12\ executed in the FLEX 
AIM or FLEX SAM auctions. This fee applies to such executions instead 
of the applicable standard transaction fee. The Exchange notes that 
currently FLEX Options trade on the Exchange's FLEX Hybrid Trading 
System (``CFLEX''), which is the Exchange's trading platform that 
allows FLEX Traders to submit electronic and open outcry request for 
quotes (``RFQs''), FLEX quotes in response to those RFQs, and FLEX 
Orders into the electronic book. Upon the Exchange's trading platform 
migration, FLEX trading will occur on the same Exchange System \13\ as 
all other options trading occurs on the Exchange.\14\ The Exchange 
notes it intends to continue to offer a FLEX AIM and FLEX SAM process 
to provide FLEX Orders with price improvement and electronic crossing 
opportunities. As FLEX trading

[[Page 63704]]

(including FLEX AIM and SAM) will occur on the same trading platform as 
all other options trading (including AIM and SAM), the Exchange no 
longer wishes to maintain a distinct fee for FLEX AIM responses and 
proposes to eliminate the separate fee for FLEX AIM responses. The 
proposed change will result in FLEX AIM and FLEX SAM trades being 
treated the same as all AIM and SAM executions (i.e., no fees assessed 
for responses). In connection with the proposed change, the Exchange 
also proposes to eliminate Footnote 20 which applies to the CFLEX AIM 
Response Fee.
---------------------------------------------------------------------------

    \12\ As of October 7, 2019, Underlying Symbol List A includes: 
OEX, XEO, RUT, RLG, RLV, RUI, UKXM, SPX (includes SPXw) and VIX. See 
Cboe Options Fees Schedule, Footnote 34.
    \13\ The term ``System'' means the Exchange's hybrid trading 
platform that integrates electronic and open outcry trading of 
option contracts on the Exchange, and includes any connectivity to 
the foregoing trading platform that is administered by or on behalf 
of the Exchange, such as a communications hub.
    \14\ In connection with the transition of FLEX trading from the 
CFLEX system to the same system all other trading will occur, the 
Exchange proposes to eliminate references to ``CFLEX'' (and ``FLEX 
Hybrid Trading System'') and replace it with references to ``FLEX''.
---------------------------------------------------------------------------

Facilitation Waiver
    Pursuant to Footnote 11 of the Fees Schedule, the Exchange 
currently waives Clearing Trading Permit Holder Proprietary (capacity 
codes ``F'' and ``L'') transaction fees for (1) facilitation orders 
executed in open outcry or as a CFLEX transaction for products other 
than Sector Indexes and Underlying Symbol List A and (2) facilitation 
orders executed in open outcry, or electronically via AIM or as a QCC 
or CFLEX transactions orders in Sector Indexes.\15\ Footnote 11 also 
currently defines ``Facilitation orders'' for this purpose as any order 
in which a Clearing Trading Permit Holder (``F'' capacity code) or Non-
Trading Permit Holder Affiliate (``L'' capacity code) is contra to any 
other capacity code, provided the same executing broker and clearing 
firm are on both sides of the transaction (for open outcry) or both 
sides of a paired. The Exchange proposes to update Footnote 11 to 
provide that the current waivers for facilitation orders will apply 
only to volume executed in open outcry. The Exchange believes the 
proposed change would have a de minimis impact as historically there 
have been very few facilitation orders executed electronically. Lastly, 
in light of the proposed change, the Exchange proposes to eliminate 
Footnote 12 in its entirety. Particularly, Footnote 12 currently 
provides the Clearing Trading Permit Holder Proprietary Transaction Fee 
shall be waived for Clearing Trading Permit Holders executing 
facilitation orders in FLEX Options in all underlying symbols excluding 
Underlying Symbol List A and Sector Indexes. In light of the proposal 
to only waive fees for open outcry facilitation, this footnote would no 
longer be true with respect to facilitation orders executed 
electronically. The Exchange proposes to eliminate the footnote in its 
entirety in lieu of updating the footnote as it believes the language 
is redundant to Footnote 11, and is therefore not necessary to 
maintain. FLEX open outcry facilitations will continue to be waived and 
covered under Footnote 11.
---------------------------------------------------------------------------

    \15\ Facilitation for Sector Indexes are currently only waived 
through December 31, 2019. See Cboe Options Fees Schedule, Footnote 
11. Open-outcry facilitation for Sector Indexes will continue to be 
waived through December 31, 2019.
---------------------------------------------------------------------------

Stock-Option Orders
    By way of background, stock-option orders are complex instruments 
that constitute the purchase or sale of a stated number of units of an 
underlying stock or a security convertible into the underlying stock 
coupled with the purchase or sale of an option contract(s) on the 
opposite side of the market and execute in the same manner as complex 
orders. Currently, the stock portions of stock-option strategy orders 
are electronically communicated by the Exchange to a designated broker-
dealer, who then manage the execution of such stock portions. In 
connection with this functionality, the Exchange assesses a stock 
handling fee of $0.0010 per share for the processing and routing by the 
Exchange of the stock portion of stock-option strategy orders executed 
through those mechanisms. A maximum of $50.00 per order is currently 
assessed under this fee. The Exchange notes that it largely passes 
through to TPHs the fees assessed to the Exchange by the designated 
broker-dealer that manages the execution of the stock portions of 
stock-option strategy orders. The Exchange also notes that the 
designated broker-dealer that manages the execution of the stock 
portions of stock-option strategy orders apply the $50 cap on a per 
execution basis, instead of a per order basis (meaning the Exchange may 
end up subsidizing certain orders depending on how they were 
filled).\16\ Now that the Exchange is migrating to a new billing 
system, the Exchange wishes to modify how the cap is applied in the 
billing system. Particularly, the Exchange proposes to similarly cap 
the stock option fee on a per execution basis instead of a per order 
basis, which will more closely align to how the Exchange's designated 
broker-dealer applies the cap. The Exchange notes another Exchange 
similarly caps its stock option handling fee at $50 per trade (instead 
of order).\17\
---------------------------------------------------------------------------

    \16\ For example, take an order that involves 60,000 shares of a 
stock and is filled via two executions of 30,000 shares each. Under 
the current per order cap, the Exchange can only assess $50.00 as 
the fees for the original order is $60 which exceeds the cap (i.e., 
$0.0010 x 60,000 shares). The Exchange's designated broker-dealer 
meanwhile bills the exchange for each execution, resulting in $60 to 
the exchange (i.e., $0.0010 x 30,000 x 2). Under the proposed cap, 
the Exchange would be able to pass through the full $60 charge as 
neither execution of 30,000 contracts hit the $50 per execution cap.
    \17\ See NASDAQ ISE Options Pricing Schedule, Section 4.12.
---------------------------------------------------------------------------

Inactive Nominee Stats Change (``Swap'') Fee
    Next the Exchange proposes to amend the Inactive Nominee Status 
Change fees. Particularly, under the Fees Schedule, a fee is assessed 
each time an inactive nominee swaps places with a nominee on a Trading 
Permit. The amount of such fee varies depending on what time the 
request for the swap occurs. Specifically, the Exchange assesses a fee 
of $55 if the request is submitted prior to 4:00 p.m. CT on the day 
prior to the effective date of the change; $110 if the request is 
submitted after 4:00 p.m. CT on the day prior to the effective date of 
the change and $220 if the request is submitted after 8:00 a.m. CT on 
the effective date of change. The Exchange recently proposed to waive 
these fees for the period of October 1-October 4, 2019 as the 
Exchange's Trading Permit structure was being modified in connection 
with migration.\18\ In order to simplify the fee structure and billing 
process for these permit changes going forward, the Exchange proposes 
to eliminate both the current waiver and fee structure and in its place 
assess a flat fee of $100, regardless of when the request for such 
change was submitted. The proposed change would therefore apply to all 
TPHs uniformly.
---------------------------------------------------------------------------

    \18\ See SR-CBOE-2019-080.
---------------------------------------------------------------------------

Subcabinet Trades
    Currently, Footnote 32 of the Fees Schedule provides that the 
Exchange will assess no transaction fees or surcharges for subcabinet 
trades (i.e., limit orders with a price of at least $0 but less than $1 
per options contract, per current Exchange Rule 6.54, Interpretation 
and Policy .03.) \19\ Additionally, the footnote provides that 
subcabinet trades will not count towards any volume thresholds or 
volume threshold calculations. To harmonize and simplify the Exchange's 
billing, the Exchange proposes to treat subcabinet trades (now called 
``sub-penny cabinet orders'') \20\ the same as cabinet trades (now 
called penny

[[Page 63705]]

cabinet orders).\21\ That is, the Exchange proposes to eliminate 
Footnote 32 in its entirety, which would result in normal transaction 
fees and surcharges applying to sub-penny cabinet trades and for such 
trades to be counted towards any volume thresholds or volume threshold 
calculations, as cabinet trades are today. The Exchange would also 
clarify in the Marketing Fee notes section that the Marketing Fee would 
not apply to sub-penny cabinet trades (which is the case today), as 
such exception also currently applies to cabinet trades.\22\ The [sic] 
believes it's appropriate to treat subcabinet trades the same as 
cabinet trades for billing purposes as both orders are similar in that 
they are trades in listed options on the Exchange that are either 
worthless or inactive or not actively traded. Additionally, the 
Exchange believes the proposed change would have a de minimis impact as 
historically there have been very few sub-penny cabinet trades.
---------------------------------------------------------------------------

    \19\ The Exchange notes it inadvertently failed to update the 
Fees Schedule when Rule 6.54.03 was renumbered to 6.54.02. The 
Exchange also notes that it recently submitted a rule filing to 
relocate rules relating to both cabinet and subcabinet orders, 
effective October 7, 2019. See SR-CBOE-2019-58.
    \20\ See Cboe Options Rule 5.85(h)(2). A sub-penny cabinet is a 
limit order with a price less than $0.01 per contact. Bids and 
offers for opening transactions for sub-penny cabinet orders are 
only permitted to accommodate closing transactions.
    \21\ See Cboe Options Rule 5.12(h)(1). [sic] A penny cabinet is 
a limit order with a price of $0.01 per contract.
    \22\ See Cboe Options Fees Schedule, Footnote 6. The Exchange 
notes that it is relocating the language in current Footnote 6 which 
governs the Marketing Fee program to the notes section of the 
Marketing Fee table in an effort to consolidate the Fees Schedule 
and make it easier to follow. The proposed clarification relating to 
the exclusion of sub-penny cabinet trades from the Marketing Fee 
program is therefore reflected in the new notes section and is not 
marked in Footnote 6. The Exchange also proposes to reference 
``penny cabinet trades'' in the notes section instead of referencing 
``accommodation liquidations (cabinet trades)'' as it does currently 
in Footnote 6. The Exchange notes the proposed reference is not a 
substantive change, but rather conforms terminology to the 
Exchange's rules.
---------------------------------------------------------------------------

Exchange System Disruption
    Footnote 36 of the Fees Schedule currently provides that under the 
Volume Incentive Program (``VIP''),\23\ the Exchange provides that in 
the event of a Cboe Options System outage or other interruption of 
electronic trading on Cboe Options, the Exchange will adjust the 
national customer volume in all underlying symbols excluding Underlying 
Symbol List A, Sector Indexes, MXEA, MXEF, MNX, NDX, DJX and XSP 
(``National Customer Volume'') for the duration of the outage. In 
connection with the migration, the Exchange wishes to conform how it 
handles system disruptions to the way they are handled on its affiliate 
exchanges, Cboe BZX and Cboe EDGX.\24\ Particularly, the Exchange 
proposes to provide that in the event of a Cboe Options System outage 
or other interruption of electronic trading on Cboe Options that lasts 
longer than 60 minutes, the Exchange will adjust the national volume in 
all underlying symbols excluding Underlying Symbol List A (34), Sector 
Indexes (47), MXEA, MXEF, DJX and XSP for the entire trading day 
(instead of the duration of the outage). The Exchange also notes that 
currently, the Fees Schedule only explicitly addresses how it handles 
exchange outages and interruptions for VIP and is silent as to if and 
how it would adjust national volume in other incentive programs.\25\ In 
order to clarify that the Exchange will apply the same approach to any 
affected incentive program, the Exchange proposes to eliminate the 
reference to exchange outages/interruptions in Footnote 36 and adopt in 
its place new Footnote 6.\26\ Particularly, Footnote 6 will address how 
the Exchange handles outages/interruptions for all incentive programs 
that utilize national volume in determining certain tiers and 
thresholds, including VIP, as described above.
---------------------------------------------------------------------------

    \23\ Under VIP, the Exchange credits each TPH the per contract 
amount set forth in the VIP table for Public Customer (origin code 
``C'') orders transmitted by TPHs (with certain exceptions) and 
executed electronically on the Exchange, provided the TPH meets 
certain volume thresholds, in which volume for Professional 
Customers and Voluntary Professionals (``Professional Customers'') 
(origin code ``W''), Broker-Dealers (origin code ``B''), and Joint 
Back-Offices (``JBO'') (origin code ``J'') orders are counted toward 
reaching such thresholds. Specifically, the percentage thresholds 
are calculated per month based on the percentage of national 
customer volume in all underlying symbols entered and executed, 
excluding those in Underlying Symbol List A, Sector Indexes, MXEA, 
MXEF, MNX, NDX, DJX and XSP.
    \24\ See Cboe EDGX Options Fees Schedule and Cboe BZX Options 
Fees Schedule. which provide volume is excluded from certain 
calculations on any day that the Exchange's system experiences a 
disruption that lasts more than 60 minutes during regular trading 
hours.
    \25\ The Exchange notes that since the Fees Schedule never 
explicitly specified how the Exchange would adjust national volume 
in the event of an outage, no adjustments would have been made to 
any calculations for any program other than VIP.
    \26\ The language under current Footnote 6 is relocating to the 
Marketing Fee Program table as discussed above. The Exchange 
proposes to therefore reuse Footnote 6 and adopt new language 
relating to system outages.
---------------------------------------------------------------------------

Large Trade Discount
    Next the Exchange proposes to amend the Customer Large Trade 
Discount Program and a non-customer Large Trade Discount Program. By 
way of background, the Customer Large Trade Discount Program caps fees 
for customer orders of a certain size in VIX, SPX/SPXW, XSP, other 
index options and ETF and ETN options. The Large Trade Discount Program 
similarly caps fess for non-customer orders of a certain size in VIX 
options. Both programs provide that for an order to be eligible to 
qualify for the discount, the order in its entirety must be executed in 
either Global Trading Hours GTH or RTH, but not both. The Exchange 
notes that upon migration, the Book used during RTH will be the same 
Book used during GTH (as compared to today where the Exchange maintains 
separate Books for each session). As such it is possible for an order 
to now be executed over both sessions and still otherwise qualify for 
the caps under the programs. The Exchange therefore proposes to 
eliminate the language in the notes section of both tables providing 
that orders must be entirely executed in one session or another, but 
not both.
AIM Contra Fee
    Currently, Footnote 18 of the Fees Schedule provides that the AIM 
Contra Execution Fee applies to all orders (excluding facilitation 
orders, per footnote 11) in all products, except Sector Indexes and 
Underlying Symbol List A, executed in AIM, SAM FLEX AIM and FLEX SAM 
auctions, that were initially entered as the contra party to an Agency/
Primary Order. Footnote 18 also provides that instead of the applicable 
standard transaction fee, the AIM Contra Fee will apply to AIM Contra 
executions except if the applicable standard transaction fee is lower 
than $.07 per contract,\27\ in which case the applicable standard 
transaction fee will apply. To simplify the billing process, the 
Exchange proposes to eliminate this exception (i.e., the $0.07 per 
contract AIM Contra Execution Fee will always apply to all orders 
(excluding facilitation orders) in all products, except Sector Indexes 
and Underlying Symbol List A, executed in AIM, SAM FLEX AIM and FLEX 
SAM auctions, that were initially entered as the contra party to an 
Agency/Primary Order).
---------------------------------------------------------------------------

    \27\ The Exchange notes that when the Exchange increased the AIM 
Contra fee from $0.05 per contract to $0.07 per contract, it 
inadvertently failed to update the increased amount in Footnote 18.
---------------------------------------------------------------------------

HAL to SUM
    As part of the migration, the Exchange is harmonizing its rules in 
connection with routing services, including the Hybrid Agency Liaison 
(``HAL'') and HAL on the Open (``HALO'') system, to that of the Cboe 
Affiliated Exchanges. As part of the harmonization, the Exchange has 
proposed to rename HAL and HALO to ``Step-Up Mechanism'' (or ``SUM''). 
As such, the Exchange proposes to replace all references to the Hal 
Agency Liaison, HAL, HAL on the Open or HALO, to ``Step-Up Mechanism'' 
or ``SUM'', as appropriate. The Exchange believes the proposed

[[Page 63706]]

change will provide consistency between the Exchange Rule Book and Fees 
Schedule and alleviate potential confusion.
MNX and NDX
    The Exchange next proposes to amend the Fees Schedule to remove 
references to MNX and NDX. The Exchange notes that it no longer lists 
MNX and NDX options and as such proposes to eliminate such references 
from the Fees Schedule, which will avoid potential confusion and 
provide clarity in the rules. The Exchange also proposes to modify how 
the percentage thresholds of National Customer Volume under VIP are 
calculate with respect to MNX and NDX. Currently, MNX and NDX are 
excluded from the National Customer Volume percentage thresholds, along 
with the Exchange's other proprietary products. As the Exchange no 
longer lists MNX and NDX, it believes it's appropriate to start 
including MNX and NDX volume in the percentage thresholds of National 
Customer Volume, as it does with volume from all other non-proprietary 
products.
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.\28\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \29\ 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,\30\ which requires that Exchange rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its Trading Permit Holders and other persons using 
its facilities.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78f(b).
    \29\ 15 U.S.C. 78f(b)(5).
    \30\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    First, the Exchange believes that a number of its proposed changes 
alleviate potential confusion and result in a Fees Schedule that is 
clearer and easier to follow, thereby removing impediments to and 
perfecting the mechanism of a free and open market and a national 
market system, and, in general, protecting investors and the public 
interest. Particularly, the Exchange believes its proposal to 
reorganize and consolidate its rate tables, along with its proposed 
non-substantive, clarifying changes to the rate tables described above, 
will result in a more transparent, simplified and easier to read Fees 
Schedule. The Exchange also believes the proposal to adopt fee codes is 
reasonable and equitable because the Exchange believes such fee codes 
provides further clarity in the Fees Schedule and the fee codes do not 
amend any fees or rebates that apply to trading activity on the 
Exchange. Rather, the proposed fee codes allow TPHs to more easily 
validate the bills that they receive from the Exchange, thus 
alleviating potential confusion.
    The Exchange believes its proposal to (i) replace references to 
origin codes with capacity and capacity codes and (ii) replace 
references to ``Hybrid Agency Liaison'', ``HAL'' ``HAL on the Open'' 
and ``HALO'' with ``Step-Up Mechanism'' and ``SUM'' also provides 
clarity in the Fees Schedule. Particularly, as noted above, the 
Exchange is codifying in its rules the available capacity codes and 
replacing references to ``Hybrid Agency Liaison'', ``HAL'' ``HAL on the 
Open'' and ``HALO'' with ``Step-Up Mechanism'' and ``SUM''. The 
proposed changes therefore maintains consistency between its Rulebook 
and its Fees Schedule. Similarly, the Exchange believes it reduces 
potential confusion to eliminate references to ``CFLEX'' as the 
Exchange is transitioning its FLEX trading from the CFLEX platform to 
the same system all other trading will occur on. Removing references to 
MNX and NDX from the Fees Schedule also eliminates confusion as the 
Exchange no longer lists these products. The proposal to include MNX 
and NDX volume in the percentage thresholds under VIP is also 
reasonable, equitable and not unfairly discriminatory as the proposed 
change applies to all TPHs and because MNX and NDX are no longer 
proprietary products traded on the Exchange and should therefore be 
treated the same as other non-proprietary products.
    The Exchange believes its proposed fees relating to linkage are 
reasonable as the proposed fees continue to take into account routing 
costs and are in line with amounts assessed by other exchanges, 
including its Affiliated Exchanges.\31\ Moreover, the Exchange notes 
that all linkage costs are staying the same with the exception of 
orders routed to ARCA, BZX, C2, ISE GEMX, Emerald, Pearl and NOMX. The 
Exchange believes the proposed fees for orders routed to ARCA, BZX, C2, 
ISE GEMX, Emerald, Pearl and NOMX are reasonable as the fees are either 
the same as, or in some instances even lower than, fees assessed by 
other Exchanges when routed to these exchanges.\32\ Moreover, the 
Exchange highlights that routing through the Exchange is voluntary and 
also notes that it operates in a highly competitive market in which 
market participants can readily direct order flow to competing venues 
or providers of routing services if they deem fee levels to be 
excessive. The Exchange also believes the proposed change is reasonable 
as it simplifies billing for these orders. Furthermore, two of the 
Exchange's affiliated exchanges similarly assess linkage fees expressed 
as a single fee for orders routed to these exchanges and that the 
proposed fees are lower than those fees.\33\ The Exchange believes its 
proposal to eliminate the exception that the Exchange will not pass 
through or otherwise charge customer orders (of any size) routed to 
other exchanges that were originally transmitted to the Exchange from 
the trading floor through an Exchange-sponsored terminal (e.g., PULSe 
Workstation) is reasonable as the Exchange is not required to maintain 
such an exception. Indeed, the Exchange is not aware of other Exchanges 
with a trading floor that maintain a similar exception to routing fees. 
The Exchange also expects the impact of the proposed change to be 
relatively small. The Exchange believes the proposed changes to linkage 
fees are equitable and not unfairly discriminatory because the proposed 
changes apply equally to all TPHs who chose to use the Exchange to 
route orders to other exchanges. TPHs that do not favor the proposed 
pricing can readily direct order flow directly to

[[Page 63707]]

those other exchanges or through competing venues or providers of 
routing services.
---------------------------------------------------------------------------

    \31\ See e.g., See Cboe BZX Options Exchange Fee Schedule and 
Cboe EDGX Options Exchange Fee Schedule. See also NYSE Arca Options 
Fees and Charges, Routing Fees.
    \32\ See Cboe BZX Options Exchange Fee Schedule and Cboe EDGX 
Options Exchange Fee Schedule, which both assess for Routed Customer 
Orders to ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX $0.85 
per contract for penny classes and $1.25 per contract for non-penny 
classes (yielding fee codes RQ and RR, respectively). See also MIAX 
Options Fees Schedule which assess for Routed Customer Orders to 
ARCA, BZX, C2, ISE, GEMX, Emerald, Pearl and NOMX $0.65 per contract 
for penny classes and $1.00 per contract for non-penny classes.
    \33\ See Cboe BZX Options Exchange Fee Schedule and Cboe EDGX 
Options Exchange Fee Schedule.
---------------------------------------------------------------------------

    The Exchange believes the proposal to apply the Execution Surcharge 
to orders in both the RTH and GTH session is reasonable because the 
amount of the surcharge will be the same for both the RTH and GTH 
session. Additionally, post-migration, the Exchange will use the same 
Book for GTH and RTH, as compared to today where each session has a 
separate Book, and the Exchange therefore believes it's reasonable to 
assess the fee to both sessions. Moreover, the Exchange believes the 
proposed change is reasonable, equitable and not unfairly 
discriminatory as other execution surcharges, such as the execution 
surcharge for SPXW, also applies to orders in both RTH and GTH. The 
Exchange believes the proposed change is equitable and not unfairly 
discriminatory as it applies uniformly to all TPHs.
    The Exchange believes the amendment to Footnote 21 regarding the 
exception to the SPX and SPXW Execution Surcharges is reasonable as it 
will result in market participants at times not being required to pay 
these surcharges for SPX and/or SPXW transactions in the circumstances 
described. Particularly, the Exchange notes that it had adopted the 
exception in recognition that while liquidity is important to open all 
series on the Exchange, given the potential impact on the exercise 
settlement value determined for expiring volatility index derivatives, 
it was important to encourage a fair and orderly opening of the series 
that expire in the month used to calculate the final settlement value 
of expiring VIX derivatives. As discussed, the Exchange currently only 
applies such exception to constituent options series as only the 
expiration month used to calculate the final settlement is known prior 
to opening. Upon migration however, the Exchange (and TPHs) will know 
which series will actually be used to calculate the exercise or final 
settlement value prior to the opening. Accordingly, the Exchange does 
not believe the exception should continue to be broadly applied to all 
constituent options series, since only a subset of such series are used 
in the settlement value calculation and since such subset will now be 
known prior to opening. As such, the Exchange believes the proposed 
rule change is reasonable, equitable and not unfairly discriminatory 
and also notes it applies uniformly to all TPHs.
    The Exchange believes it's reasonable to eliminate the CFLEX AIM 
Response fee as TPHs will no longer be subject to a fee for FLEX AIM 
responses. Moreover, as discussed, CFLEX AIM will no longer operate on 
a separate trading system upon migration. AIM (and SAM) for FLEX orders 
will operate on the same system as AIM (and SAM) for all other orders 
and the Exchange therefore believes it's reasonable to assess the same 
fees for FLEX and non-FLEX AIM and SAM orders. The Exchange believes 
the proposed change is equitable and not unfairly discriminatory 
because it applies uniformly to all TPHs.
    The Exchange believes it's reasonable to limit its waiver of 
facilitation fees for orders executed in open-outcry only because the 
Exchange is not required to maintain a facilitation fee waiver for any 
transactions and notes that TPHs will still be eligible to receive the 
waiver for open-outcry transactions. Additionally, as noted above there 
have historically been very few electronic facilitation orders which 
were eligible for the current waiver, as compared to open-outcry 
facilitations which tend to be much more common. The Exchange therefore 
also believes the impact of the proposed change is de minimis. The 
Exchange believes the proposed change is equitable and not unfairly 
discriminatory because the proposed change applies uniformly to all 
TPHs and treats all electronic facilitation orders equally.
    The Exchange believes its proposed change relating to how it caps 
the stock-option order fee is reasonable because the Exchange is 
capping the transactions the same way the Exchange's designated broker-
dealer that manages the execution of the stock portions of stock-option 
strategy orders caps (and bills the Exchange) for these orders. 
Specifically, the Exchange will merely no longer be subsidizing certain 
stock-option order transactions and the modified cap which will more 
closely align to how the Exchange's designated broker-dealer applies 
the cap. The Exchange believes the proposed change is also reasonable 
as it will not result in the Exchange collecting fees beyond what the 
Exchange itself is billed for by its designated broker-dealer. The 
Exchange notes another Exchange similarly caps its stock option 
handling fee at $50 per trade (instead of order).\34\ The Exchange 
believes the proposed change is equitable and not unfairly 
discriminatory as it will be applied to all TPHs uniformly.
---------------------------------------------------------------------------

    \34\ See NASDAQ ISE Options Pricing Schedule, Section 4.12.
---------------------------------------------------------------------------

    The Exchange believes the proposed change to the inactive nominee 
swap fee is reasonable because the fee is similar to the fees that were 
previously assessed for certain swaps. As discussed above, TPHs were 
previously subject to an inactive nominee swap fee of $55, $110 or 
$220, depending on the time they submitted their request for a swap. 
The Exchange believes the proposed change provides for a simplified fee 
and billing structure (i.e., maintaining a single fee vs multiple fees 
based on time submissions). The proposed change is equitable and not 
unfairly discriminatory as it would apply to any TPH that is swapping 
inactive nominees on a Trading Permit uniformly.
    The Exchange believes its proposed change relating to subcabinet 
trades (now referred to as ``sub-penny cabinet trades'') is reasonable 
as the proposed change results in sub-penny cabinet trades being 
treated the same as cabinet trades (now called ``penny-cabinet 
trades''). The believes it's appropriate to treat sub-penny and penny 
cabinet trades the same as cabinet trades for billing purposes as both 
orders are similar in that they are trades in listed options on the 
Exchange that are either worthless or inactive or not actively traded 
and are both reported and processed like all other open outcry trades. 
The Exchange also believes the proposed change is reasonable, equitable 
and not unfairly discriminatory because it applies equally to all TPHs 
and because the Exchange believes the proposed change would have a de 
minimis impact as historically there have been very few sub-penny 
cabinet trades.
    The Exchange believes its proposal to amend how it calculates 
national volume in the event of a system outage or trading interruption 
is reasonable as it conforms to the way the [sic] handles such outages 
on its affiliate exchanges, Cboe BZX and Cboe EDGX.\35\ The Exchange 
also notes that it may not be possible in all instances to adjust 
national volume numbers for the period of the outage only. The Exchange 
believes the proposed change also adds clarity to the Fees Schedule, as 
the Fees Schedule is currently silent as to how it calculates certain 
thresholds based on national volume for programs other than VIP. The 
proposed change therefore makes clear how different incentive programs 
are impacted in the event of a system outage or electronic trading

[[Page 63708]]

interruption. The proposed rule change also applies uniformly to all 
TPHs.
---------------------------------------------------------------------------

    \35\ See Cboe EDGX Options Fees Schedule and Cboe BZX Options 
Fees Schedule. [sic] which provide volume is excluded from certain 
calculations on any day that the Exchange's system experiences a 
disruption that lasts more than 60 minutes during regular trading 
hours.
---------------------------------------------------------------------------

    The Exchange also believes its amendment to the Customer Large 
Trade Discount Large Trade Discount Programs are reasonable, equitable 
and not unfairly discriminatory. As discussed, the Book used during RTH 
will be the same Book used during GTH upon migration (as compared to 
today where each session has a separate Book). As such it will be 
possible for an order to be executed over both sessions upon migration 
and the Exchange therefore believes it's reasonable to eliminate 
requirement that orders must be entirely executed in one session or 
another, but not both. The Exchange believes the proposed change is 
also reasonable as orders that may not have otherwise been eligible for 
the discounts in the past because to [sic] this requirement may now be 
eligible. The proposed rule change also applies uniformly to all TPHs.
    The Exchange believes its proposal to eliminate the exception to 
the AIM Contra Fee is reasonable, equitable and not unfairly 
discriminatory because TPHs will still not be paying more than the 
current AIM Contra Fee ($0.07) for AIM Contra orders that are subject 
to the AIM Contra Fee pursuant to Footnote 18. The proposed change also 
results in a simplified billing process and the Exchange notes that it 
is not requirement to maintain the current exception to the AIM Contra 
Fee. The Exchange believes the proposed change is equitable and not 
unfairly discriminatory as it will be applied to all TPHs uniformly.
    In sum, the Exchange believes the proposed changes described above 
incorporate updates to the Fees Schedule in connection with the 
migration of the Exchange's trading system and new billing system, 
conform certain billing practices to practices on the Exchange's 
affiliated exchanges, simplify billing practices and add clarity to the 
Fees Schedule. For the reasons discussed above, the Exchange believes 
the proposed changes are reasonable, equitable and unfairly 
discriminatory will apply uniformly to similarly situated TPHs. 
Finally, the Exchange believes that the proposed fee schedule will be 
easier to read for investors and will eliminate potential investor 
confusion, thereby removing impediments to and perfecting the mechanism 
of a free and open market and a national market system, and, in 
general, protecting investors and the public interest.

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. Specifically, the Exchange 
does not believe that the proposed change will impose any burden on 
intramarket competitions that is not necessary or appropriate in 
furtherance of the purposes of the Act because the proposed changes 
will be applied equally to all similarly situated TPHs. The Exchange 
also 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 change continues to reflect a 
competitive pricing structure designed to incentivize market 
participants to direct their order flow to the Exchange, which the 
Exchange believes enhances market quality to the benefit of all TPHs.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
also notes that the proposed rule changes are precipitated by its 
upcoming migration of the Exchange's migration of its trading platform 
and billing system and not intended to address competitive issues. 
Rather, the proposed changes are generally being made in connection 
with changes resulting from migration and/or are designed to simplify 
the Exchange's billing processes post-migration.

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 \36\ and paragraph (f) of Rule 19b-4 \37\ 
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.
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78s(b)(3)(A).
    \37\ 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 rule-comments@sec.gov. Please include 
File Number SR-CBOE-2019-106 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-CBOE-2019-106. 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-CBOE-2019-106 and

[[Page 63709]]

should be submitted on or before December 9, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\38\
---------------------------------------------------------------------------

    \38\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-24862 Filed 11-15-19; 8:45 am]
 BILLING CODE 8011-01-P