Document ID: SEC-2019-0496-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe EDGX Exchange, Inc.
Posted Date: 2019-04-17T04:00Z

[Federal Register Volume 84, Number 74 (Wednesday, April 17, 2019)]
[Notices]
[Pages 16114-16115]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07629]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85606; File No. SR-CboeEDGX-2019-015]

Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating To Amending the Fee Schedule Applicable to Members and Non-
Members of the Exchange Pursuant to EDGX Rules 15.1(a) and (c)

April 11, 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 March 29, 2019, Cboe EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission 
(``Commission'') a 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') is filing 
with the Securities and Exchange Commission (``Commission'') a proposed 
rule change to amend the fee schedule applicable to Members and non-
Members \3\ of the Exchange pursuant to EDGX Rules 15.1(a) and (c). The 
text of the proposed rule change is attached as Exhibit 5 [sic].
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    \3\ A Member is defined as ``any registered broker or dealer 
that has been admitted to membership in the Exchange.'' See Exchange 
Rule 1.5(n).
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    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/options/regulation/rule_filings/edgx/), 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 its fee schedule applicable to its 
equities trading platform (``EDGX Equities'') to introduce a ``Non-
Displayed Add Volume Tier'' under Footnote 1, effective April 1, 2019.
Non-Displayed Add Volume Tier
    Currently, with respect to the Exchange's equities trading 
platform, the Exchange determines the liquidity adding rebate that it 
will provide to Members using the Exchange's tiered pricing structure. 
The EDGX Equities fee schedule currently contains eight Add Volume 
Tiers that provide enhanced rebates, ranging from of $0.0025 to $0.0033 
per share, for displayed orders that add liquidity (i.e., yielding fee 
codes B,\4\ V,\5\ Y,\6\ 3 \7\ and 4.\8\) The Exchange proposes to adopt 
a new Add Volume Tier under Footnote 1 that applies to non-displayed 
orders that add liquidity (i.e., orders that yield fee codes DM \9\, HA 
\10\, MM \11\, and RP \12\) called the Non-Displayed Add Volume Tier. 
As proposed, under the Non-Displayed Volume Tier, a Member would 
receive a rebate of $0.0026 per share if that Member adds an ADV \13\ 
greater or equal to 0.08% of the TCV \14\ as Non-Displayed orders that 
yield fee cods DM,

[[Page 16115]]

HA, HI,\15\ MM or RP. The Exchange believes the proposed new tier will 
encourage Members to increase their liquidity on the exchange. The 
Exchange further notes that other Exchanges have similar non-displayed 
add volume tiers.\16\
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    \4\ ``B'' is associated with displayed orders that add liquidity 
on EDGX for Tape B.
    \5\ ``V'' is associated with displayed orders that add liquidity 
on EDGX for Tape A.
    \6\ ``Y'' is associated with displayed orders that add liquidity 
on EDGX for Tape C.
    \7\ ``3'' is associated with displayed orders that add liquidity 
on EDGX for Tape A or C during the post-market or pre-market trading 
sessions.
    \8\ ``4'' is associated with displayed orders that add liquidity 
on EDGX for Tape B during the post-market or pre-market trading 
sessions.
    \9\ ``DM'' is associated with non-displayed orders that add 
liquidity using MidPoint Discretionary order within discretionary 
range.
    \10\ ``HA'' is associated with non-displayed orders that add 
liquidity.
    \11\ ``MM'' is associated with non-displayed orders that add 
liquidity using Mid-Point Peg.
    \12\ ``RP'' is associated with non-displayed orders that add 
liquidity using Supplemental Peg.
    \13\ ``ADV'' means average daily volume calculated as the number 
of shares added to, removed from, or routed by, the Exchange, or any 
combination or subset thereof, per day. ADV is calculated on a 
monthly basis.
    \14\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply.
    \15\ Fee code HI is appended to non-displayed orders that 
receive price improvement and add liquidity. Id.
    \16\ See e.g., Cboe BZX U.S. Equities Exchange Fee Schedule, 
Footnote 1.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act,\17\ in general, and furthers the 
requirements of Section 6(b)(4),\18\ in particular, as it is designed 
to provide for the equitable allocation of reasonable dues, fees and 
other charges among its [sic]
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    \17\ 15 U.S.C. 78f.
    \18\ 15 U.S.C. 78f(b)(4).
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    In particular, the Exchange notes that volume-based rebates such as 
those currently maintained on the Exchange have been widely adopted by 
options exchanges and are equitable because they are open to all 
Members on an equal basis and provide additional benefits or discounts 
that are reasonably related to (i) the value of an exchange's market 
quality; (ii) associated with higher levels of market activity, such as 
higher levels of liquidity provision and/or growth patterns; and (iii) 
introduction of higher volumes of orders into the price and volume 
discovery processes. The Exchange believes the proposal to introduce a 
new Non-Displayed Add Volume Tier under footnote 1 is reasonable 
because it provides Members an additional opportunity to receive an 
enhanced rate for orders that add liquidity and is a reasonable means 
to encourage Members to increase their liquidity on the Exchange. 
Deepening the Exchange's liquidity pool benefits investors by 
encouraging more price competition and providing additional 
opportunities to trade. The Exchange further believes the proposed 
threshold is commensurate with the proposed enhanced rebate and that it 
will encourage members to add increased liquidity to EDGX each month. 
The Exchange also notes that others Exchange [sic] have similar add 
volume tiers for non-displayed orders.\19\ Lastly, the Exchange 
believes that the proposed Non-Displayed Add Volume Tier is not 
unfairly discriminatory as it applies uniformly to all Members.
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    \19\ See Cboe BZX U.S. Equities Exchange Fee Schedule, Footnote 
1.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. Rather, the 
proposed change is designed to enhance competition by attracting 
additional liquidity and increasing the competitiveness of the 
Exchange. The proposed rebate tier would apply to all members uniformly 
based. The Exchange 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. The 
proposed rule change reflects a competitive pricing structure designed 
to encourage market participants to direct their order flow to the 
Exchange.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \20\ and paragraph (f) of Rule 19b-4 \21\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CboeEDGX-2019-015 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-CboeEDGX-2019-015. 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-CboeEDGX-2019-015 and should be 
submitted on or before May 8, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Secretary.
[FR Doc. 2019-07629 Filed 4-16-19; 8:45 am]
 BILLING CODE 8011-01-P