[Federal Register Volume 84, Number 225 (Thursday, November 21, 2019)]
[Notices]
[Pages 64368-64370]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25215]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87546; File No. SR-CBOE-2019-105]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule
November 15, 2019.
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 November 1, 2019, 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
[[Page 64369]]
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 the
Substance of the Proposed Rule Change
Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend its 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
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 migrated its trading platform to the same
system used by the Cboe Affiliated Exchanges, on October 7, 2019 (the
``migration''). As a result of the migration, the Exchange adopted a
new connectivity infrastructure, including new physical ports and
corresponding fees.\3\ The Exchange proposes to waive physical port
fees for connections to PULSe, effective November 1, 2019.
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\3\ The Exchange notes that effective October 7, 2019, market
participants will no longer have connectivity to the old Exchange
architecture.
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By way of background, a physical port is utilized by a Trading
Permit Holder (``TPH'') or non-TPH to connect to the Exchange at the
data centers where the Exchange's servers are located. Prior to
migration, the Exchange utilized Network Access Ports for these
physical connections to the Exchange and assessed fees based on the
gigabit size of the port. Specifically, TPHs and non-TPHs could elect
to connect to Cboe Options' trading system via either a 1 gigabit per
second (``Gb'') Network Access Port or a 10 Gb Network Access Port. The
Exchange assessed a monthly fee of $1,500 per port for 1 Gb Network
Access Ports and a monthly fee of $5,000 per port for 10 Gb Network
Access Ports for access to Cboe Options primary system. Network Access
Ports could also be used to send orders to PULSe. Upon migration, the
TPHs and non-TPHs had the option to alternatively elect to connect to
Cboe Options via new latency equalized Physical Ports. Through January
31, 2020 however, Cboe Options market participants will still have the
ability to connect to Cboe Options' trading system via the current
Network Access Ports. For the month of October 2019, TPHs and non-TPHs
would be assessed (1) $1,500 per 1 Gb port, regardless if it was a
legacy Network Access Port or new Physical Port and (2) $5,000 per 10
Gb port, regardless if it was a legacy Network Access Port or Physical
Port.\4\ As of November 1, 2019, the monthly fee per 1 Gb Network
Access Port and Physical Port is $1,500 and the monthly fee per 10 Gb
Network Access Port and Physical Port is $7,000.
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\4\ If a TPH replaced a legacy Network Access Port with a new C1
latency equalized Physical Port in October 2019, the TPH was not
billed an additional fee for the new C1 platform physical connection
for October.
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The Exchange notes that although the new latency equalized Physical
Ports became available on October 7, 2019, the new Physical Ports
cannot currently be utilized to send orders to PULSe. Accordingly,
users who wish to route orders to PULSe via the Exchange's physical
ports must maintain and use a legacy Network Access Fee Port and cannot
use any of the new Physical Ports for such purpose. As such, the
Exchange proposes to provide that fees for one Network Access Port that
is used only to access PULSe will be waived per TPH or non-TPH. As
such, the Exchange proposes to provide that fees for one Network Access
Port that is used only to access PULSe will be waived per TPH or non-
TPH. The Exchange notes that whether a user requires a 1 Gb Network
Access Port or 10 Gb Network Access Port for this particular purpose
may depend on their own connectivity architecture (i.e., some
participants may not be able to route orders to PULSe over a 1 Gb,
whereas others may not be able to route over a 10 Gb). Accordingly, the
Exchange will waive fees for either a 1 Gb or 10 Gb Network Access
Port. Such ports will be configured to only allow routing of orders to
PULSe, regardless of size, and notes further that for this particular
purpose, a 10 Gb port does not have an advantage over a 1 Gb port.
The Exchange lastly proposes to eliminate now obsolete language in
the Physical Connectivity Fees table. Particularly, the Exchange
proposes to eliminate the Monthly Fees column for fees through October
31, 2019 and eliminate the reference to ``Effective November 1, 2019''
in the title of the column with for fees effective November 1, 2019.
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.\5\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \6\ 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,\7\ 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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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
\7\ 15 U.S.C. 78f(b)(4).
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The Exchange believes the proposed waiver is reasonable as users
subject to the proposed waiver would not have to pay a fee for one
Network Access Port used only to access PULSe. As noted above, the
recently adopted latency equalized Physical Ports that TPHs and
[[Page 64370]]
non-TPHs may purchase to connect to the Exchange's trading system, do
not support the routing of orders to PULSe. As such, TPHs that wish to
route orders to PULSe via physical ports must maintain a legacy Network
Access Port. Due to this limitation, the Exchange believe it's
reasonable to waive fees for one Network Access Port that is used only
to access PULSe. As noted above, the Exchange believes it's appropriate
to waive either one 1 Gb Network Access Port or one 10 Gb Network
Access Port, as for this particular purpose, there is no latency
advantages to maintain a 10 Gb versus 1 Gb port and because users' own
architecture may require one size over the other. The Exchange believes
the proposed waiver is equitable and not unfairly discriminatory as it
applies to any TPH or non-TPH that must maintain a Network Access Port
for the sole purpose of accessing PULSe.
Lastly, the Exchange believes eliminating obsolete language in the
Fees Schedule pertaining to fees assessed in a prior month maintains
clarity in the Fees Schedule and alleviates potential 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 because the proposed changes
applies uniformly to all similarly situated market participants. The
Exchange believes that the proposed rule change will not cause an
unnecessary burden on intermarket competition because it only applies
to trading on 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 \8\ and paragraph (f) of Rule 19b-4 \9\
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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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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-2019-105 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-2019-105. 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 such 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-2019-105, and should be submitted
on or before December 12, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-25215 Filed 11-20-19; 8:45 am]
BILLING CODE 8011-01-P