[Federal Register Volume 85, Number 137 (Thursday, July 16, 2020)]
[Notices]
[Pages 43284-43287]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15309]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89285; File No. SR-CBOE-2020-062]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the Silexx Trading Platform Fees Schedule
July 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 July 1, 2020, Cboe Exchange, Inc. (the ``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.
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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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend the Silexx trading platform (``Silexx'' or the ``platform'')
Fees Schedule. 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to amend the Silexx Fees Schedule to
(1) waive certain fees for FLEX and Cboe Silexx, (2) introduce a new
``CAT File'' fee and (3) eliminate obsolete references to an expired
upgrade opportunity, effective July 1, 2020.
By way of background, the Silexx platform consists of a ``front-
end'' order entry and management trading platform (also referred to as
the ``Silexx terminal'') for listed stocks and options that supports
both simple and complex orders,\3\ and a ``back-end'' platform which
provides a connection to the infrastructure network. From the Silexx
platform (i.e., the collective front-end and back-end platform), a
Silexx user
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has the capability to send option orders to U.S. options exchanges,
send stock orders to U.S. stock exchanges (and other trading centers),
input parameters to control the size, timing, and other variables of
their trades, and also includes access to real-time options and stock
market data, as well as access to certain historical data. The Silexx
platform is designed so that a user may enter orders into the platform
to send to an executing broker (including Trading Permit Holders
(``TPHs'')) of its choice with connectivity to the platform, which
broker will then send the orders to Cboe Options (if the broker is a
TPH) or other U.S. exchanges (and trading centers) in accordance with
the user's instructions. With the exception of Silexx FLEX and Cboe
Silexx, users cannot directly route orders through any of the current
versions of Silexx to an exchange or trading center nor is the platform
integrated into or directly connected to Cboe Option's System. The
Exchange recently made available additional versions of the Silexx
platform, Silexx FLEX and Cboe Silexx, which do support the trading of
FLEX and non-FLEX Options, respectively, and allows authorized Users
with direct access to the Exchange. The Silexx front-end and back-end
platforms are a software application that are installed locally on a
user's desktop. Silexx grants users licenses to use the platform, and a
firm or individual does not need to be a TPH to license the platform.
Use of Silexx is completely optional.
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\3\ The platform also permits users to submit orders for
commodity futures, commodity options and other non-security products
to be sent to designated contract markets, futures commission
merchants, introducing brokers or other applicable destinations of
the users' choice.
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Additional Functionality Fee Waiver
The Exchange first proposes to waive the following fees for
additional functionality users may purchase for FLEX and Cboe Silexx:
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Additional functionality for Functionality
platforms description Fee
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Crossing...................... Availability of $300/month/login
crossing order ticket. ID.
Port.......................... Provides access to an $100/month/login
executing broker with ID.
connectivity to the
Silexx platform for
routing.
Staged Orders, Drop Copies, Ability to receive $250/month/FIX
and Order Routing staged orders, Connection.
Functionality for FIX receive ``drop
Connections (sessions). copies'' of order
fill messages, and
route orders to
executing brokers.
Staged Orders, Drop Copies, Ability to receive $500/month/FIX
and Order Routing staged orders, Connection.
Functionality for FIX receive ``drop
Connections (sessions) Using copies'' of order
Third-Party FIX Router. fill messages, and
route orders to
executing brokers
through a third-party
FIX router.
Equity Order Reports (paid by Daily transmission of $250/month/
the trading firm). equity order reports. trading firm.
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Particularly, the above additional functionality permits users to
add features in accordance with their use of the Silexx platform. The
Exchange offers each type of additional functionality as a convenience
and use of each type of additional functionality is discretionary and
not compulsory. More specifically, the crossing functionality provides
users who choose to regularly cross orders with access to additional
crossing order tickets. The port fee applies to connections from users
to executing brokers, which provides users with access to an executing
broker with connectivity to the Silexx platform for routing. Financial
Information eXchange (``FIX'') is an industry-standard, non-proprietary
API that permits market participants to connect to exchanges. FIX
connectivity provides users with the ability to receive ``drop copy''
order fill messages from their executing brokers. These fill messages
allow customers to update positions, risk calculations, and streamline
back-office functions. Additionally, FIX connections can be updated to
permit the platform to receive orders sent from another system and then
route these orders through the platform for execution (staged orders)
as well as provide users with the ability to route orders in various
ways to executing brokers (such as designation of a market to which the
broker is to route an order received from the platform and use of a
broker's ``smart router'' functionality). Some users have connections
to third-party FIX routers, who currently normalize the format of
messages of their client. To the extent a FIX router has a connection
to the Silexx platform, users that also have connections to these
routers may elect to receive staged orders, drop copies, and order
routing functionality through a fix router. Additionally, the Silexx
platform permits users to elect to receive daily transmission of equity
order reports related to order users submit through the platform. As
noted above, the Exchange recently adopted Silexx FLEX and Cboe Silexx.
The Exchange wishes to waive the fees for these additional types of
functionality \4\ as an incentive to market participants to start or
continue using these new Silexx platforms as trading tools on their
trading desks.
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\4\ The Exchange is not waiving Additional Functionality fees
for API, PULSe Routing Network via Silexx or Market Data.
Particularly, the API functionality is not applicable or available
for Silexx Flex or Cboe Silexx and the PULSe Network via Silexx fee
is already only applicable to non-Silexx (and non-PULSe)
workstations. The Exchange lastly does not wish to waive fees for
market data.
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CAT File Fee
The Exchange next wishes to adopt a fee for CAT Files.
Particularly, Silexx intends to make Consolidated Audit Trail
(``CAT'')-formatted files available to Silexx users for orders
processed by the user via Silexx applications. Users may also elect to
have Silexx, which is a CAT Reporter Agent, submit these files to CAT
on their behalf. Similar to the fee assessed for Equity Order
Reports,\5\ the Exchange proposes to adopt a monthly fee of $250 per
CAT Industry Member ID (``IMID''),\6\ payable by the trading firm for
CAT Files. The Exchange also proposes to waive this fee for Silexx FLEX
and Cboe Silexx.
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\5\ The Equity Order Reports fee is assessed to Silexx users
that elect to receive daily transmission of Order Audit Trail System
(``OATS'') reports for its orders submitted through their Silexx
platform.
\6\ CAT uses the IMID to determine the firm for which data is
submitted and to facilitate event linkages within a firm and between
venues.
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The Exchange lastly proposes to eliminate obsolete language in the
``Silexx Platform Version'' table. Particularly, the notes section
provides that: ``All users of Basic may be upgraded to Pro at no
additional cost through May 31, 2020''. As that date has passed, and
the free upgrade is no longer available, the Exchange proposes to
delete that language in its entirety to avoid potential confusion.
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.\7\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section
[[Page 43286]]
6(b)(5) \8\ 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,\9\ 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.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ 15 U.S.C. 78f(b)(4).
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In particular, the Exchange believes the proposed rule change to
waive certain additional functionality fees for Silexx FLEX and Cboe
Silexx is reasonable because users using the functionality for these
newer platforms would not be subject to such fees. The Exchange
believes not assessing these fees for Silexx FLEX and Cboe Silexx also
serves as an incentive to market participants to start using these
recently adopted Silexx platforms as additional trading tools on their
trading desks. Moreover, the Exchange notes that Silexx FLEX and Cboe
Silexx are available to all market participants at no cost.\10\ The
proposal is equitable and not unfairly discriminatory as it applies to
all users of Silexx FLEX and Cboe Silexx uniformly. Additionally, the
Exchange notes that use of each version of the platform, including each
type of additional functionality, is discretionary and not compulsory.
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\10\ See Silexx Fees Schedule, Silexx Platform Version Table.
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The Exchange believes the proposed monthly fee for CAT Files is
reasonable as it is the same rate for other similar reports (i.e.,
Equity Order Reports). Additionally, the Exchange believes the proposed
fee is reasonable as the Exchange believes it is substantially lower
than the cost assessed by third-party vendors for similar CAT files.
The proposal is equitable and not unfairly discriminatory as it applies
to all users other than Silexx FLEX and Cboe Silexx. As discussed
above, the Exchange believes waiving additional functionality fees,
including the proposed fee for CAT files, for Silexx FLEX and Cboe
Silexx is reasonable, equitable and not unfairly discriminatory as such
platforms are new and the Exchange wishes to incentivize their use to
market participants. Finally, the Exchange notes receipt of the CAT
files is completely voluntary and not compulsory.
Lastly, the Exchange believes its proposal to eliminate language
regarding an outdated free upgrade alleviates potential confusion and
maintains clarity in the fees schedule, 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
Cboe Options does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed rule change will not impose any burden on intramarket
competition because the proposed rule changes apply to all similarly
situated users of Silexx uniformly. The Exchange notes that each
additional type of Silexx functionality, including the new CAT Files,
are available to all market participants, and users have discretion to
determine which, if any, types of functionality and reports to
purchase.
The Exchange does not believe that the proposed rule changes will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed change applies only to Cboe Options. To the extent that the
proposed changes make Cboe Options a more attractive marketplace for
market participants at other exchanges, such market participants are
welcome to become Cboe Options market participants.
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 \11\ and paragraph (f) of Rule 19b-4 \12\
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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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 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-CBOE-2020-062 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-2020-062. 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
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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-2020-062 and should be
submitted on or before August 6, 2020.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-15309 Filed 7-15-20; 8:45 am]
BILLING CODE 8011-01-P