[Federal Register Volume 88, Number 44 (Tuesday, March 7, 2023)]
[Notices]
[Pages 14224-14230]
[FR Doc No: 2023-04579]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97014; File No. SR-CboeEDGX-2023-013]

Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Adopt a New Data Product Called the Cboe One Options Feed

March 1, 2023.
    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 February 27, 2023, Cboe EDGX Exchange, Inc. (``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
adopt a new data product called the Cboe One Options Feed. 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://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 establish a new market data product called
the Cboe One Options Feed.\3\ The Exchange also proposes to amend
Exchange Rule 21.15(b) to add a description of the Cboe One Options
Feed under new subparagraph (7). As described more fully below, the
Cboe One Options Feed is a data feed that that will offer top of book
quotations and execution information based on options orders entered
into the Exchange System and its affiliated options exchanges Cboe
Exchange, Inc. (``Cboe Options''), Cboe C2 Exchange, Inc. (``C2
Options''), and Cboe BZX Exchange, Inc. (``BZX Options'')
(collectively, the ``Affiliates'' and collectively with the Exchange,
the ``Cboe Options Exchanges'') and for which the Cboe Options
Exchanges report quotes under the OPRA Plan.\4\
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    \3\ The Exchange previously submitted the proposed rule change
on January 30, 2023 (SR-CboeEDGX-2023-007). See Securities Exchange
Act Release No. 96889 (February 13, 2023), 88 FR 10394, (February
17, 2023) (SR-CboeEDGX-2023-007). The Exchange is withdrawing SR-
CboeEDGX-2023-007 and submitting this filing to make clarifying,
non-substantive changes to more clearly reflect the obligations
under the OPRA Plan, which the Exchange believes will avoid
potential confusion, as well as address the comments raised by
another exchange group in a comment letter received on February 23,
2023. See Letter from Greg Ferrari, Vice President, U.S. Options,
Nasdaq Stock Market LLC, Nasdaq PHLX LLC, Nasdaq BX, Inc., Nasdaq
ISE, LLC, Nasdaq GEMX, LLC, and Nasdaq MRX, LLC markets
(collectively ``Nasdaq''), to Vanessa Countryman, Secretary
Commission, dated February 23, 2023.
    \4\ The Exchange understands that each of the Cboe Options
Exchanges will separately file substantially similar proposed rule
changes to implement Cboe One Options Feed and its related fees.
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    Currently, the Exchange offers EDGX Options Top feed, which is an
uncompressed data feed that offers top-of-book quotations and last sale
information based on options orders entered into the Exchange's System.
The EDGX Options Top feed benefits investors by facilitating their
prompt access to real-time top-of-book information contained in EDGX
Options Top. The Exchange notes that EDGX Options Top is ideal for
market participants requiring both quote and trade data. The Exchange's
Affiliates also offer similar top-of-book data.\5\ Particularly, each
of the Exchange's Affiliates offer top-of-book quotation and last sale
information based on their own quotation and trading activity that is
substantially similar to the information provided by the Exchange
through the EDGX Options Top feed. Further, the quote and last sale
data contained in the Exchange's Affiliates top feeds is identical to
the data sent to OPRA for redistribution to the public.
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    \5\ See Cboe Data Services, LLC Fee Schedule, C2 Options
Exchange Fees Schedule, Cboe Data Services, LLC Fees, and BZX Rule
21.15.
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    The Exchange now proposes to adopt a market data product that will
provide top-of-book quotation and last sale information based on the
quotation and trading activity on the Exchange and each of its
Affiliates, which the Exchange believes will offer a comprehensive and
highly representative view of US options pricing to market
participants. More specifically, the proposed Cboe One Options Feed
will contain the aggregate best bid and offer (``BBO'') of all
displayed orders for options traded on the Exchange and its Affiliates,
as well as individual last sale information and volume, for options
traded on the Exchange, which includes the price, time of execution and
individual Cboe options exchange on which the trade was executed. The
Cboe One Options Feed will also consist of Symbol Summary,\6\ Market
Status,\7\ Trading

Status,\8\ and Trade Break \9\ messages for the Exchange and each of
its Affiliates.
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    \6\ The Symbol Summary message will include the total executed
volume across all Cboe Options Exchanges.
    \7\ The Market Status message is disseminated to reflect a
change in the status of one of the Cboe Options Exchanges. For
example, the Market Status message will indicate whether one of the
Cboe Options Exchanges is experiencing a systems issue or disruption
and quotation or trade information from that market is not currently
being disseminated via the Cboe One Options Feed as part of the
aggregated BBO. The Market Status message will also indicate when a
Cboe Options Exchange is no longer experiencing a systems issue or
disruption to properly reflect the status of the aggregated BBO.
    \8\ The Trade Break message will indicate when an execution on a
Cboe Options Exchange is broken in accordance with the individual
Cboe Options Exchange's rules (e.g., Cboe Options Rule 6.5, C2
Option Rule 6.5, BZX Options Rule 20.6, EDGX Options Rule 20.6).
    \9\ The Trading Status message will indicate the current trading
status of an option contract on each individual Cboe Options
Exchange. A Trading Status message will also be sent whenever a
security's trading status changes. For example, a Trading Status
message will be sent when a symbol is open for trading or when a
symbol is subject to a trading halt or when it resumes trading.
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    The Exchange notes that the Exchange and its affiliated equities
exchanges Cboe BYX Exchange, Inc. (``BYX''), Cboe BZX Exchange, Inc.
(``BZX Equities''), and Cboe EDGA Exchange, Inc. (``EDGA'') already
offer a similar data product, the Cboe One Summary Feed, which contains
the aggregate best bid and offer of all displayed orders for securities
traded on the Exchange and each of the Exchange's affiliated equities
exchanges as well as last sale information for each of the Exchange and
the Exchange's affiliated equities exchanges.\10\ The Cboe One Summary
Feed also consists of Symbol Summary, Market Status, Trading Status,
and Trade Break messages for each of its affiliated equities exchanges.
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    \10\ See BZX Rule 11.22(j), BYX Rule 11.22(i), EDGA Rule 13.8(b)
and EDGX Rule 13.8(b).
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    Particularly, the Cboe One Options Feed will offer market
participants with a new option for receiving Cboe market data that
provides a consolidated view of activity on all Cboe options exchanges.
The Exchange proposes to offer the Cboe One Options Feed voluntarily in
response to demand from market participants (e.g., retail brokerage
firms) that are interested in receiving the aggregate top of book
quotation and last sale information from the Cboe Options Exchanges as
part of a single data feed. Specifically, Cboe One Options Feed can be
used by industry professionals and retail investors looking for a cost
effective, easy-to-administer, high quality market data product with
the characteristics of the Cboe One Options Feed. For example, today an
entity can subscribe to various market data products offered by single
exchanges and distribute or resell that data, either separately or in
the aggregate, to their customers as part of their own market data
offerings.\11\ Distributors and vendors may incur administrative costs
when consolidating and augmenting the data to meet their customer's
need. Consequently, distributors and/or vendors may simply choose to
not take the data from each of the Cboe Options Exchanges because of
the effort and cost required to aggregate data from separate feeds into
their existing products. The Exchange believes those same distributors
and/or vendors may be interested in distributing the Cboe One Options
Feed so that they may easily incorporate aggregated or summarized Cboe
Options Exchange data into their own products without themselves
incurring the costs of the repackaging and aggregating the data it
would receive by subscribing to each market data product offered by the
individual Cboe Options Exchanges. The Exchange therefore believes that
the Cboe One Options Feed would provide high-quality, comprehensive
last sale and top-of-book data for the Cboe Options Exchanges in a
unified view and respond to demand for such a product.
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    \11\ For purposes of this filing, a ``vendor'', which is a type
of distributor, will refer to any entity that receives an exchange
market data product directly from the exchange or indirectly from
another entity (for example, from an extranet) and then resells that
data to a third-party customer (e.g., a data provider that resells
exchange market data to a retail brokerage firm). The term
``distributor'' herein, will refer to any entity that receives an
exchange market data product, directly from the exchange or
indirectly from another entity (e.g., from a data vendor) and then
distributes to individual internal or external end-users (e.g., a
retail brokerage firm who distributes exchange data to its
individual employees and/or customers). An example of a vendor's
``third-party customer'' or ``customer'' is an institutional broker
dealer or a retail broker dealer, who then may in turn distribute
the data to their customers who are individual internal or external
end-users.
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    The Exchange also notes that it has taken into consideration its
affiliated relationship with its Affiliates in its design of Cboe One
Options Feed to assure distributors and/or vendors would be able to
resell and offer a similar product on the same terms as the Exchange,
both from a perspective of latency and cost.
    With respect to latency, the path for distribution by the Exchange
of Cboe One Options Feed would not be faster than the path for
distribution by a vendor that independently created a Cboe One Options
Feed-like product could distribute its own product. As such, the
proposed Cboe One Options data feed is a data product that a vendor
could create and sell without being in a disadvantaged position
relative to the Exchange. In recognition that the Exchange is the
source of its own market data and is affiliated with Cboe Options, BZX
Options and C2 Options, the Exchange represents that the source of the
market data it would use to create the proposed Cboe One Options Feed
is available to vendors. Specifically, the Exchange would use the
following data feeds to create the proposed Cboe One Options Feed, each
of which is available to other vendors: the EDGX Options Top, Cboe
Options Top Data, the C2 Options Top Data, and the BZX Options Top
Feeds. The Cboe Options Exchanges will continue to make available these
individual underlying feeds, and thus, the source of the market data it
would use to create the proposed Cboe One Options feed is the same as
the source available to other vendors.
    In order to create the Cboe One Options Feed, the Exchange will
receive the individual data feeds from each Cboe Options Exchange and,
in turn, aggregate and summarize that data to create the Cboe One
Options Feed. This is the same process any entity would undergo should
it create a market data product similar to the Cboe One Options Feed to
distribute to its customers. In addition, the servers of most vendors
could be located in the same facilities as the Exchange, and,
therefore, should receive the individual data feed from each Cboe
Options Exchange at the same time the Exchange would for it to create
the Cboe One Options Feed.\12\ Therefore, a vendor that is located in
the same facilities as the Exchange could obtain the underlying data
feeds from the Cboe Options Exchanges on the same latency basis as the
system that would be performing the aggregation and consolidation of
the proposed Cboe One Options Feed and provide the same type of product
to its customers with the same latency they could achieve by purchasing
the Cboe One Options Feed from the Exchange. As such, the Exchange
would not have any unfair advantage over vendors with respect to
obtaining data from the individual Cboe Options Exchanges. In fact, the
technology supporting the Cboe One Options Feed would similarly need to
obtain the Exchange's data feed as well and even this connection would
be on a level playing field with a vendor located at the same facility
as the Exchange. The Exchange has designed the Cboe One Options data
feed so that it would not have a competitive advantage over a vendor
with respect to

the speed of access to those underlying data feeds. Likewise, the Cboe
One Options data feed would not have a speed advantage vis-[agrave]-vis
vendors located in the same data center as the Exchange with respect to
access to its customers, whether those customers are also located in
the same data center or not.
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    \12\ The Exchange notes that it does not own the facilities in
which its servers are located but is aware that there are vendors
that currently locate their servers in the same facilities as the
Exchange and on an equal basis as the Exchange. The Exchange is not
aware of any reasons why vendors would not be able to locate their
servers on an equal basis as the Exchange on an on-going basis.
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    With regard to cost, the Exchange will file a separate rule filing
with the Commission to establish fees for Cboe One Options Feed, which
would be designed to ensure that vendors could compete with the
Exchange by creating a similar product as the Cboe One Options Feed.
The pricing the Exchange would charge for the Cboe One Options Feed
would not be lower than the cost to a vendor (or distributor) to obtain
the underlying Cboe Options Exchanges' top-of-book data feeds. The
pricing the Exchange would charge for the Cboe One Options Feed
compared to the cost of the individual data feeds from the Cboe Options
Exchanges would enable a vendor to receive the underlying data feeds
and offer a similar product on a competitive basis and with no greater
latency than the Exchange. The Distribution and User (Professional and
Non-Professional) fees that the Exchange intends to propose for the
Cboe One Options Feed would be equal to the combined fees for
subscribing to each individual data feed. Additionally, the Exchange
also intends to propose a separate ``Data Consolidation Fee'', which
would reflect the value of the aggregation and consolidation function
the Exchange performs in creating the Cboe One Options Feed. The
intended proposed pricing would therefore enable a vendor to create a
competing product based on the individual data feeds and charge its
customer a fee that it believes reflects the value of the aggregation
and consolidation function that is competitive with Cboe One Options
Feed pricing. For these reasons, the Exchange believes that vendors
could readily offer a product similar to the Cboe One Options Feed on a
competitive basis at a similar cost.
Implementation
    The Exchange will announce when it intends to make available the
Cboe One Options feed, subject to the effectiveness of the proposed
rule change and the effectiveness of a rule filing to establish the
fees (via a separate rule filing).\13\
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    \13\ The Exchange also represents that should it wish to modify
the proposed Cboe One Options Feed data product in the future, it
will submit a proposed rule change as required under the Act.
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2. Statutory Basis
    The Exchange believes that the proposed Cboe One Options Feed is
consistent with Section 6(b) of the Act,\14\ in general, and furthers
the objectives of Section 6(b)(5) of the Act,\15\ in particular, in
that it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and to protect investors and the public
interest, and that it is not designed to permit unfair discrimination
among customers, brokers, or dealers. The Exchange also believes this
proposal is consistent with Section 6(b)(5) of the Act because it
protects investors and the public interest and promotes just and
equitable principles of trade by providing investors with new options
for receiving market data as requested by market participants and
Section 6(b)(8) of the Act, which requires that the rules of an
exchange not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.\16\
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    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ 15 U.S.C. 78f(b)(8).
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    The Exchange also believes that the proposed rule change is
consistent with Section 11(A) of the Act \17\ in that it supports (i)
fair competition among brokers and dealers, among exchange markets, and
between exchange markets and markets other than exchange markets and
(ii) the availability to brokers, dealers, and investors of information
with respect to quotations for and transactions in securities.
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    \17\ 15 U.S.C. 78k-1.
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    In adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility to
offer new and unique market data to consumers of such data. It was
believed that this authority would expand the amount of data available
to users and consumers of such data and also spur innovation and
competition for the provision of market data. The Exchange believes
that the proposed Cboe One Options Feed would further broaden the
availability of U.S. option market data to investors consistent with
the principles of Regulation NMS. Particularly, the Exchange believes
the proposed Cboe One Options Feed promotes transparency by
disseminating the Cboe Options Exchanges' market data more widely
through additional distribution channels, which will enable investors
to better monitor trading activity on the Cboe Options Exchanges, and
thereby serve the public interest. The Exchange is providing additional
distribution channels because it believes market participants may be
more inclined to purchase a combined data feed and redistribute it.
Particularly, the Exchange believes that market participants would
welcome a market data product that would provide high-quality,
comprehensive top-of-book and last sale data for the Cboe Options
Exchanges in a unified view (i.e., the Cboe One Options Feed).
    The Exchange also notes that it operates in a highly competitive
environment. Indeed, there are currently 16 registered options
exchanges that trade options. Based on publicly available information,
no single options exchange has more than 18% of the market share.\18\
The Exchange believes top-of-book quotation and transaction data is
highly competitive as national securities exchanges compete vigorously
with each other to provide efficient, reliable, and low-cost data to a
wide range of investors and market participants. While there is not
currently an aggregated top-of-book data product offered at competitor
options exchanges, the quote and last sale data contained in the
proposed Cboe One Options Feed is identical to data already provided in
the Exchange's and its Affiliate's individual top-of-book data products
as well as to the data sent to OPRA for redistribution to the
public.\19\ Accordingly, Exchange top-of-book data is therefore widely
available today from a number of different sources.
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    \18\ See Cboe Global Markets U.S. Options Market Month-to-Date
Volume Summary (January 9, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
    \19\ The Exchange notes that it and its Affiliates, make
available their respective top-of-book data and last sale data that
is included in each exchange's top-of-book data feed no earlier than
the time at which the Exchange sends that data to OPRA.
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    Moreover, exchange top-of-book data is distributed and purchased on
a voluntary basis, in that neither the Exchange nor market data
distributors or vendors are required by any rule or regulation to make
this data available. Accordingly, distributors and vendors can
discontinue use at any time and for any reason, including due to an
assessment of the reasonableness of fees charged. Further, the Exchange
is not required to make any proprietary data products available or to
offer any specific pricing alternatives to any customers. Moreover,
persons (including broker-dealers) who subscribe to any exchange
proprietary data feed must also have equivalent access to consolidated
Options

Information \20\ from OPRA for the same classes or series of options
that are included in the proprietary data feed, and proprietary data
feeds cannot be used to meet that particular requirement.\21\ As such,
all proprietary data feeds are optional.
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    \20\ ``Consolidated Options Information'' means consolidated
Last Sale Reports combined with either consolidated Quotation
Information or the BBO furnished by OPRA. Access to consolidated
Options Information is deemed ``equivalent'' if both kinds of
information are equally accessible on the same terminal or work
station. See Limited Liability Company Agreement of Options Price
Reporting Authority, LLC (``OPRA Plan''), Section 5.2(c)(iii). The
Exchange notes that this requirement under the OPRA Plan is also
reiterated under the Cboe Global Markets Global Data Agreement and
Cboe Global Markets North American Data Policies, which subscribers
to any exchange proprietary product must sign and are subject to,
respectively. Additionally, the Exchange's Data Order Form (used for
requesting the Exchange's market data products) requires
confirmation that the requesting market participant receives data
from OPRA.
    \21\ Id.
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    Similar to exchanges' individual top-of-book data feeds, the
proposed Cboe One Options Feed would be distributed and purchased on a
voluntary basis, in that neither the Exchange, its Affiliates, nor
market data distributors or vendors are required by any rule or
regulation to make this data feed available. Accordingly, distributors
and vendors can discontinue use at any time and for any reason,
including due to an assessment of the reasonableness of fees charged.
The Exchange believes that the proposed Cboe One Options Feed will
offer an alternative to subscribing to the Cboe Options Exchanges four
individual top-of-book data feeds. Also, as noted above, there is a
history of offering similar consolidated data products in the equities
industry. Indeed, the Exchange's affiliated equities exchanges offer
the Cboe One Summary Feed, which is a substantially similar data
product which contains the aggregate BBO of all displayed orders for
securities (instead of options) traded on the Cboe's equities
exchanges, along with last sale information.\22\ The Cboe One Summary
Feed also consists of Symbol Summary, Market Status, Trading Status,
and Trade Break messages.\23\
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    \22\ See BZX Rule 11.22(j), BYX Rule 11.22(i), EDGA Rule 13.8(b)
and EDGX Rule 13.8(b).
    \23\ Id.
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    The Exchange believes the proposal would not permit unfair
discrimination because the product will be available to all market data
distributors and vendors on an equivalent basis. Any distributor or
vendor that wishes to instead purchase one or more of the individual
data feeds offered by the Cboe Options Exchanges separately will still
be able to do so. Further, the Exchange and its Affiliates will
continue to make the data contained in the proposed Cboe One Options
Feed available no earlier than the time at which the exchanges send
that data to OPRA.
    In addition, the Exchange does not believe that the proposal would
permit unfair discrimination among customers, brokers, or dealers and
thus is consistent with the Act because the Exchange will be offering
the product on terms that a vendor could offer a competing product.
Specifically, the proposed data feed merely represents an aggregation
and consolidation of data contained in existing, previously filed
individual market data products of the Cboe Options Exchanges. As such,
a vendor could similarly obtain the underlying data feeds and perform a
similar aggregation and consolidation function to create the same data
product as being proposed with the same latency and cost as the
Exchange.
    The Exchange has taken into consideration its affiliated
relationship with Cboe Options, BZX Options and C2 Options in its
design of the Cboe One Options Feed to assure that distributors and/or
vendors would be able to offer a similar product on the same terms as
the Exchange, both from the perspective of latency and cost. As
discussed above, the Exchange proposes to offer the Cboe One Options
Feed voluntarily in response to demand from market participants such as
retail brokerage firms that are interested in receiving and
distributing the top-of-book quotation and last sale information from
the Cboe Options Exchanges as part of a single data feed. Specifically,
Cboe One Options Feed can be used by industry professionals and retail
investors looking for a cost effective, easy-to-administer, high
quality market data product with the characteristics of the Cboe One
Options Feed. The Cboe One Options Feed would help protect a free and
open market by providing market participants additional choices in
receiving this type of market data, thus promoting competition and
innovation.
    With respect to latency, the path for distribution by the Exchange
of Cboe One Options Feed would not be faster than the path for
distribution a vendor that independently created a Cboe One Options
Feed-like product could distribute its own product. As such, the
proposed Cboe One Options data feed is a data product that a vendor
could create and sell without being in a disadvantaged position
relative to the Exchange. In recognition that the Exchange is the
source of its own market data and is affiliated with Cboe Options, BZX
Options and C2 Options, the Exchange represents that the source of the
market data it would use to create the proposed Cboe One Options Feed
is available to other vendors. Specifically, the Exchange would use the
following data feeds to create the proposed Cboe One Options Feed, each
of which is available to other vendors: the EDGX Options Top, Cboe
Options Top Data, the C2 Options Top Data, and the BZX Options Top
Feeds. The Cboe Options Exchanges will continue to make available these
individual underlying feeds, and thus, the source of the market data it
would use to create the proposed Cboe One Options feed is the same as
the source available to other vendors.
    In order to create the Cboe One Options Feed, the Exchange will
receive the individual data feeds from each Cboe Options Exchange and,
in turn, aggregate and summarize that data to create the Cboe One
Options Feed. This is the same process any vendor would undergo should
it create a market data product similar to the Cboe One Options Feed to
distribute to its customers. In addition, the servers of most vendors
could be located in the same facilities as the Exchange, and,
therefore, should receive the individual data feed from each Cboe
Options Exchange at the same time the Exchange would for it to create
the Cboe One Options Feed. Therefore, a vendor that is located in the
same facilities as the Exchange could obtain the underlying data feeds
from the Cboe Options Exchanges on the same latency basis as the system
that would be performing the aggregation and consolidation of the
proposed Cboe One Options Feed and provide the same type of product to
its customers with the same latency they could achieve by purchasing
the Cboe One Options Feed from the Exchange. As such, the Exchange
would not have any unfair advantage over vendors with respect to
obtaining data from the individual Cboe Options Exchanges. In fact, the
technology supporting the Cboe One Options Feed would similarly need to
obtain the Exchange's data feed as well and even this connection would
be on a level playing field with a vendor located at the same facility
as the Exchange. The Exchange has designed the Cboe One Options data
feed so that it would not have a competitive advantage over a vendor
with respect to the speed of access to those underlying data feeds.
Likewise, the Cboe One Options data feed would not have a speed
advantage vis-[agrave]-vis vendors located in the same data center as
the Exchange with respect to access to customers, whether those
customers are also located in the same data center or not.

    With regard to cost, the Exchange will file a separate rule filing
with the Commission to establish fees for Cboe One Options Feed, which
would be designed to ensure that vendors could compete with the
Exchange by creating a similar product as the Cboe One Options Feed to
offer and resell. The pricing the Exchange would charge for the Cboe
One Options Feed would not be lower than the cost to a vendor (or
distributor) to obtain the underlying Cboe Options Exchanges' top-of-
book data feeds. The pricing the Exchange would charge clients for the
Cboe One Options Feed compared to the cost of the individual data feeds
from the Cboe Options Exchanges would enable a vendor to receive the
underlying data feeds and offer a similar product on a competitive
basis and with no greater latency than the Exchange. The Distribution
and User (Professional and Non-Professional) fees that the Exchange
intends to propose for the Cboe One Options Feed would be equal to the
combined fees for subscribing to each individual data feed.\24\ The
Exchange also intends to propose a separate ``Data Consolidation Fee'',
which would reflect the value of the aggregation and consolidation
function the Exchange performs in creating the Cboe One Options Feed.
The intended proposed fees would therefore enable a vendor to create a
product based on the individual data feeds and charge its clients a fee
that it believes reflects the value of the aggregation and
consolidation function that is competitive with Cboe One Options Feed
pricing. For these reasons, the Exchange believes that vendors could
readily offer a product similar to the Cboe One Options Feed on a
competitive basis at a similar cost.
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    \24\ For example, the combined external distribution fee for the
individual data feeds of the Cboe Options Exchanges is $10,000 per
month (i.e., the monthly external distribution fee is $5,000 per
month for the Cboe Options Top, $2,500 per month for C2 Options Top
$2,000 per month for BZX Options Top, and $500 for EDGX Options
Top). The monthly Professional User fee for the individual data
feeds of the Cboe Options Exchanges is $30.50 per Professional User
(i.e., the monthly Professional User fee is $15.50 per Professional
User for the Cboe Options Top, $5 per Professional User for C2
Options Top; $5 per Professional User for BZX Options Top, and $5
per Professional User for EDGX Options Top). The combined monthly
Non-Professional User fee for the individual data feeds of the Cboe
Options Exchanges is $0.60 per Non-Professional User (i.e., the
monthly Non-Professional User fee is $0.30 per Non-Professional User
for Cboe Options Top, $0.10 per Non-Professional User for C2 Options
Top, $0.10 per Non-Professional User for BZX Options Top, and $0.10
per Non-Professional User for EDGX Options Top).
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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 Exchange and its
affiliates, along with other exchanges already offer the similar
underlying data products, the Exchange's proposed Cboe One Options Feed
will enhance competition. This proposed new data feed provides
investors with new options for receiving market data, which was a
primary goal of the market data amendments adopted by Regulation
NMS.\25\ As the Cboe Options Exchanges are consistently one of the top
exchange operators by market share for U.S. options trading the data
included within the Cboe One Options Feed will provide investors a new
option for obtaining a broad market view, consistent with the primary
goal of the market data amendments adopted by Regulation NMS.
---------------------------------------------------------------------------

    \25\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, at 37503 (June 29, 2005) (Regulation NMS
Adopting Release).
---------------------------------------------------------------------------

    The Exchange believes the Cboe One Options Feed will further
enhance competition by providing distributors and vendors with a data
feed that allows them to more quickly and efficiently integrate into
their existing products. For example, today, vendors may subscribe to
various market data products offered by single exchanges and resell
that data, either separately or in the aggregate, to their customers as
part of their own market data offerings. Distributors and vendors may
incur administrative costs when consolidating and augmenting the data
to meet their customer's need. Consequently, many distributors and/or
vendors will simply choose to not take the data from each of the Cboe
Options Exchanges because of the effort and cost required to aggregate
data from separate feeds into their existing products. Those same
distributors and/or vendors may therefore be interested in the Cboe One
Options Feed as they may easily incorporate aggregated or summarized
Cboe Options Exchanges' data into their own products without themselves
incurring the costs of the repackaging and aggregating the data it
would receive by purchasing each market data product offered by the
individual Cboe Options Exchanges separately. The Exchange therefore
believes that by providing market data that encompasses combined data
from affiliated exchanges, the Exchange enables vendors with the
ability to compete in the provision of similar content with other
vendors, where they may not have done so previously if they were
required to purchase the top-of-book feeds from each individual Cboe
options exchanges separately.
    Although the Exchange considers the acceptance of the Cboe One
Options Feed by distributors and vendors as important to the success of
the product, depending on their needs, such distributors and vendors
may choose not to subscribe to the Cboe One Options Feed and may rather
receive the Cboe Options Exchanges' individual market data products and
incorporate them into their specific market data products. The Cboe One
Options Feed simply provides another option for distributors and
vendors to choose from when selecting a product that meets their market
data needs.
Exchange Not the Exclusive Distributor of Cboe One Options Feed
    Although the Cboe Options Exchanges are the exclusive distributors
of the individual data feeds from which certain data elements would be
taken to create the Cboe One Options Feed, the Exchange would not be
the exclusive distributor of the aggregated and consolidated
information that would compose the proposed Cboe One Options Feed. As
discussed above, distributors and/or vendors would be able, if they
chose, to create a data feed with the same information as the Cboe One
Options Feed and distribute it to their clients on a level-playing
field with respect to latency and cost as compared to the Exchange's
proposed Cboe One Options Feed. The pricing the Exchange would charge
for the Cboe One Options Feed would not be lower than the cost to a
distributor or vendor to obtain the underlying data feeds. In addition,
the pricing the Exchange would charge clients for the Cboe One Options
Feed compared to the cost of the individual data feeds from the Cboe
Options Exchanges would enable a distributor and/or vendor to receive
the underlying data feeds and offer a similar product on a competitive
basis and with no greater latency than the Exchange.
Latency
    The Cboe One Options Feed is also not intended to compete with
similar products offered by distributors. Rather, it is intended to
assist them in incorporating aggregated and summarized data from the
Cboe Options Exchanges into their own market data products that are
provided to their customers. Therefore, distributors will receive the
data, who will, in turn, make available Cboe One Options Feed to their
end users, either separately or as

incorporated into the various market data products they provide. As
stated above distributors may prefer a product like the Cboe One
Options Feed so that they may easily incorporate aggregated or
summarized Cboe Options Exchange data into their own products without
themselves incurring the administrative costs of repackaging and
aggregating the data it would receive by subscribing to each market
data product offered by the individual Cboe Options Exchanges.
    Notwithstanding the above, the Exchange believes that vendors may
create a product similar to Cboe One Options Feed based on the market
data products offered by the individual Cboe Options Exchanges with no
greater latency than the Exchange. As discussed above, in order to
create the Cboe One Options Feed, the Exchange will receive the
individual data feeds from each Cboe Options Exchange and, in turn,
aggregate and summarize that data to create the Cboe One Options Feed.
This is the same process a vendor would undergo should it create a
market data product similar to the Cboe One Options Feed to distribute
to its customers. In addition, the servers of most vendors could be
located in the same facilities as the Exchange, and, therefore, should
receive the individual data feed from each Cboe Options Exchange at the
same time the Exchange would for it to create the Cboe One Options
Feed.
    The Exchange has designed the Cboe One Options data feed so that it
would not have a competitive advantage over a vendor with respect to
the speed of access to those underlying data feeds. Likewise, the Cboe
One Options data feed would not have a speed advantage vis-[agrave]-vis
vendors located in the same data center as the Exchange with respect to
access to their customers, whether those end users are also located in
the same data center or not. Therefore, the Exchange believes that it
will not incur any potential latency advantage that will result in any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
Cost
    With regard to cost, the Exchange will file a separate rule filing
with the Commission to establish fees for Cboe One Options Feed that
would be designed to ensure that vendors could compete with the
Exchange by creating a similar product as the Cboe One Options Feed.
The pricing the Exchange would charge clients for the Cboe One Options
Feed compared to the cost of the individual data feeds from the Cboe
Options Exchanges would enable a vendor to receive the underlying data
feeds and offer a similar product on a competitive basis and with no
greater latency than the Exchange. The Distribution and User
(Professional and Non-Professional) fees that the Exchange proposes for
the Cboe One Options Feed will be equal to the combined fees for
subscribing to each individual data feed. Moreover, as discussed, the
Exchange intends to propose a separate ``Data Consolidation Fee'',
which would reflect the value of the aggregation and consolidation
function the Exchange performs in creating the Cboe One Options Feed.
Therefore, vendors would be enabled to create a competing product based
on the individual data feeds and charge their clients a fee that they
believes reflects the value of the aggregation and consolidation
function that is competitive with Cboe One Options Feed pricing. For
these reasons, the Exchange believes that vendors could readily offer a
product similar to the Cboe One Options Feed on a competitive basis at
a similar cost.

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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \26\ and Rule 19b-4(f)(6) \27\ thereunder.
Because the foregoing proposed rule change does not: (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A) of the Act \28\ and Rule 19b-4(f)(6) \29\
thereunder.
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    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 17 CFR 240.19b-4(f)(6).
    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \30\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\31\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the Exchange
can launch the proposed Cboe One Options Feed on March 1, 2023, which
is the date the original filing (SR-CboeEDGX-2023-007) would have been
operative. The Commission notes that Nasdaq in its comment letter
believed that ``the Cboe One Feed Proposal should clearly explain the
obligations of the OPRA Plan by specifically noting that any person who
subscribes to the Cboe One Feed must have equivalent access to OPRA and
remove the misleading language identified'' by Nasdaq.\32\ Nasdaq
further requested that marketing materials for the Cboe One Options
Feed clearly indicate this requirement to ensure compliance with the
OPRA Plan.\33\ The Commission believes that the Exchange has addressed
the concerns raised by Nasdaq by removing the language Nasdaq found
misleading and clarifying the obligations under the OPRA Plan.
Specifically, the Exchange has represented that any person, including
broker-dealers, who subscribe to the Cboe One Options Feed must also
have equivalent access to consolidated Options Information from OPRA
for the same classes or series of options that are included in the
proprietary data feed, and proprietary data feeds cannot be used to
meet that particular requirement.\34\ The Commission notes that no
other substantive changes from the Exchange's original filing are being
made with this filing. Therefore, the Commission believes that waving
the 30-day operative delay is consistent with the protection of
investors and the public interest. Accordingly, the Commission
designates the proposed

rule change to be operative on March 1, 2023.\35\
---------------------------------------------------------------------------

    \30\ 17 CFR 240.19b-4(f)(6).
    \31\ 17 CFR 240.19b-4(f)(6)(iii).
    \32\ See Letter from Greg Ferrari, Vice President, U.S. Options,
Nasdaq, supra note 3, at 2. Nasdaq submitted a comment letter to
CBOE-2023-009, which was the companion filing to CboeEDGX-2023-007,
adopting the Cboe One Options Feed.
    \33\ Id. at 2-3.
    \34\ See supra notes 20-21 and accompanying text. As discussed
above, the Exchange has also represented that the requirement under
the OPRA Plan is included in the Cboe Global Markets Global Data
Agreement and Cboe Global Markets North American Data Policies,
which subscribers to any exchange proprietary product must sign and
are subject to, respectively. Additionally, the Exchange has
represented that its Data Order Form (used for requesting the
Exchange's market data products) requires confirmation that the
requesting market participant receives data from OPRA. See supra
note 20.
    \35\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    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.

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-2023-013 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-2023-013. 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-2023-013 and should be
submitted on or before March 28, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
---------------------------------------------------------------------------

    \36\ 17 CFR 200.30-3(a)(12), (59).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-04579 Filed 3-6-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 86, Number 121 (Monday, June 28, 2021)]
[Notices]
[Pages 34066-34069]
[FR Doc No: 2021-13664]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34309; 812-15212]

 Capital Southwest Corporation

June 22, 2021.
AGENCY: Securities and Exchange Commission.

ACTION: Notice.

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    Notice of an application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') for an exemption from
sections 23(a), 23(b) and 63 of the Act, an pursuant sections 57(a)(4)
and 57(i) of the Act and rule 17d-1 under the Act permitting certain
joint transactions otherwise prohibited by section 57(a)(4) of the Act,
and pursuant section 23(c)(3) of the Act for an exemption from section
23(c) of the Act.

SUMMARY OF THE APPLICATION: Capital Southwest Corporation (``Company''
or ``Applicant''), requests an order (``Order'') to permit it to (i)
issue restricted shares of its common stock (``Restricted Stock'')
under the terms of its 2021 Employee Restricted Stock Award Plan (the
``2021 Plan'') as part of the compensation package for certain of its
employees in the 2021 Plan, and (ii) withhold shares of the Company's
common stock or purchase shares of the Company's common stock from the
participants to satisfy tax withholding obligations relating to the
vesting of Restricted Stock pursuant to the 2021 Plan.

APPLICANT: Capital Southwest Corporation

FILING DATES: The application was filed on March 29, 2021, and amended
on May 17, 2021 and on June 14, 2021.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by emailing the Commission's
Secretary at<EMAIL_ADDRESS>and serving applicants with a
copy of the request by email. Hearing requests should be received by
the Commission by 5:30 p.m. on July 16, 2021, and should be accompanied
by proof of service on the applicants, in the form of an affidavit, or,
for lawyers, a certificate of service. Pursuant to rule 0-5 under the
Act, hearing requests should state the nature of the writer's interest,
any facts bearing upon the desirability of a hearing on the matter, the
reason for the request, and the issues contested. Persons who wish to
be notified of a hearing may request notification by emailing the
Commission's Secretary at<EMAIL_ADDRESS>
ADDRESSES: The Commission<EMAIL_ADDRESS>Applicants:
<EMAIL_ADDRESS>afc2dcceddc1caddefcccedfc6dbcec3dcc0dadbc7d8cadcdb81ccc0c2.

FOR FURTHER INFORMATION CONTACT: Asen Parachkevov, Senior Counsel, at
(202) 551-6908 or Lisa Reid Ragen, Branch Chief, at<PHONE_NUMBER>

(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's website by searching for the file number, or for an
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling<PHONE_NUMBER>.

Applicant's Representations

    1. The Company, a Texas corporation, is an internally managed, non-
diversified, closed-end investment company that has elected to be
regulated as a business development company (``BDC'') under the Act.\1\
The Company's investment objective is to produce attractive risk-
adjusted returns by generating current income from its debt investments
and capital appreciation from its equity and equity related
investments.
---------------------------------------------------------------------------

    \1\ Capital Southwest was incorporated in Texas in 1961. On
March 30, 1988 Capital Southwest elected to be regulated as a BDC.
Section 2(a)(48) of the Act defines a BDC to be any closed-end
investment company that operates for the purpose of making
investments in securities described in sections 55(a)(1) through
55(a)(3) of the Act and makes available significant managerial
assistance with respect to the issuers of such securities.
---------------------------------------------------------------------------

    2. Shares of the Company's common stock are traded on the NASDAQ
Global Select Market under the symbol ``CSWC.'' As of March 31, 2021,
there were 23,344,836 and 21,005,324 shares of the Company's common
stock issued and outstanding, respectively. As of March 31, 2021, the
Company had an aggregate of 21 employees.
    3. The Company currently has a seven-member board of directors (the
``Board''), of whom one is an ``interested person'' of the Company
within the meaning of section 2(a)(19) of the Act and six are not
interested persons (the ``Non-interested Directors''). The Company has
six directors who are neither officers nor employees of the Company.
    4. The Company believes that its successful performance depends on
its ability to offer fair compensation packages to its professionals
that are competitive with those offered by other investment management
businesses. The Company believes the highly specialized nature of its
business, the competitiveness of its market and the small size of its
employee base relative to its assets and revenue make such retentions
even more critical for the Company, and that the ability to offer
equity-based compensation to its professionals is vital to the
Company's future growth and success.
    5. The Commission previously issued certain exemptive orders (the
``Prior Orders''), which, among other things, (i) permit the Company to
issue restricted shares of its common stock under the terms of the
Company's 2010 Restricted Stock Award Plan (the ``2010 Plan'') as part
of the compensation packages for certain of its employees and certain
employees of its wholly-owned subsidiaries, and (ii) allow the Company
to withhold shares of the Company's common stock or purchase shares of
the Company's common stock from the Participants (as defined in the
2010 Plan) to satisfy tax withholding obligations relating to the
vesting of Restricted Stock (as defined in the 2010 Plan) pursuant to
the 2010 Plan.\2\
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    \2\ ``Prior Orders'' refers to the exemptive order issued by the
Commission on October 26, 2010 (see Capital Southwest Corporation,
Investment Company Act Release Nos. 29450 (notice) (September 29,
2010) and 29491 (order) (October 26, 2010)) and as amended by the
exemptive order issued by the Commission on August 22, 2017 (see
Capital Southwest Corporation, Investment Company Act Release Nos.
32742 (notice) (July 25, 2017) and 32787 (order) (August 22, 2017)).
---------------------------------------------------------------------------

    6. The Company states that the right to grant restricted stock
awards under the 2010 Plan will terminate on July 18, 2021 and that in
connection with the termination of the 2010 Plan, the Board approved
the 2021 Plan as part of the compensation packages for certain of its
employees, the terms of which are, in all material respects, identical
to the 2010 Plan. The Company states that the relief that Applicant is
requesting under the Order would provide the same relief with respect
to the 2021 Plan as previously provided by the Commission in the Prior
Orders with respect to the 2010 plan. The Order would supersede the
Prior Orders, with the result that the Company will no longer rely on
the Prior Orders if the Order is granted.
    7. The 2021 Plan will authorize the issuance of shares of
Restricted Stock by the Company to certain of its employees. The
Company states that the Restricted Stock will be subject to
restrictions on transferability and other restrictions as required by
the Compensation Committee of the Board, which will be comprised solely
of ``non-employee directors'' within the meaning of rule 16b-3 under
the Securities Exchange Act of 1934 (the ``Exchange Act''), each of
whom also is not an ``interested person'' of the Company within the
meaning of section 2(a)(19) of the Act. The Company states that except
to the extent restricted under the terms of the 2021 Plan, a
Participant (as defined in the 2021 Plan) who is granted Restricted
Stock will have all the rights of any other shareholder, including the
right to vote the Restricted Stock and the right to receive dividends.
The Company states that during the restriction period (i.e., prior to
the lapse of the applicable forfeiture restrictions), the Restricted
Stock generally may not be sold, transferred, pledged, hypothecated,
margined or otherwise encumbered by the Participant. The Company states
that except as the Board otherwise determines, upon termination of a
Participant's employment during the applicable restriction period,
Restricted Stock for which forfeiture restrictions have not lapsed at
the time of such termination shall be forfeited.
    8. The Company states that the value of Restricted Stock generally
will be taxable to the recipient as ordinary income in the years in
which the restrictions on the shares lapse and that such value will be
the fair market value of the shares on the dates the restrictions
lapse. The Company states that the 2021 Plan authorizes the Company to
withhold common stock (in whole or in part) from any award of
restricted shares granted at the time the Restricted Stock is taxed in
satisfaction of a Participant's tax obligations.
    9. The Company states that maximum amount of Restricted Stock that
may be issued and outstanding will not at the time of issuance of any
Restricted Stock exceed 10% of the Company's outstanding voting
securities.\3\ In addition, the Company states that no Participant may
be granted more than 25% of the shares reserved for issuance under the
2021 Plan.
---------------------------------------------------------------------------

    \3\ For purposes of calculating compliance with this limit,
Capital Southwest counts as Restricted Stock all shares of its
common stock that are issued pursuant to the 2021 Plan, less any
shares that are forfeited back to Capital Southwest and cancelled as
a result of forfeiture restrictions not lapsing.
---------------------------------------------------------------------------

    10. The Company states that each issuance of Restricted Stock under
the 2021 Plan will be approved by the required majority, as defined in
section 57(o) of the Act,\4\ of the Company's directors on the basis
that the issuance is in the best interests of the Company and its
shareholders. The Company states that the date on which the required
majority approves an issuance of Restricted Stock will be deemed the
date on which the subject Restricted Stock is granted.
---------------------------------------------------------------------------

    \4\ Section 57(o) of the Act provides that the term ``required
majority,'' when used with respect to the approval of a proposed
transaction, plan, or arrangement, means both a majority of a BDC's
directors or general partners who have no financial interest in such
transaction, plan, or arrangement and a majority of such directors
or general partners who are not interested persons of such company.
---------------------------------------------------------------------------

    11. The Company states that the 2021 Plan was approved by the Board
as a whole, including the required majority as defined in section 57(o)
of the Act, on

March 26, 2021. The Company states that if the Commission issues the
Order, the 2021 Plan will become effective upon receipt of the approval
of the Company's shareholders.

Applicant's Legal Analysis

Sections 23(a) and (b), Section 63

    1. Under section 63 of the Act, the provisions of section 23(a) of
the Act generally prohibiting a registered closed-end investment
company from issuing securities for services or for property other than
cash or securities are made applicable to BDCs. This provision would
prohibit the issuance of Restricted Stock as a part of the 2021 Plan.
    2. Section 23(b) generally prohibits a registered closed-end
management investment company from selling its common stock at a price
below its current net asset value (``NAV''). Section 63(2) makes
section 23(b) applicable to BDCs unless certain conditions are met.
Because Restricted Stock that would be granted under the 2021 Plan
would not meet the terms of section 63(2), sections 23(b) and 63
prohibit the issuance of the Restricted Stock.
    3. Section 6(c) provides, in part, that the Commission may, by
order upon application, conditionally or unconditionally exempt any
person, security, or transaction, or any class or classes of persons,
securities or transactions, from any provision of the Act, if and to
the extent that the exemption is necessary or appropriate in the public
interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
    4. The Company requests an order pursuant to section 6(c) of the
Act granting an exemption from the provisions of sections 23(a) and (b)
and section 63 of the Act. The Company states that the concerns
underlying those sections include: (a) Preferential treatment of
investment company insiders and the use of options and other rights by
insiders to obtain control of the investment company; (b) complication
of the investment company's structure that makes it difficult to
determine the value of the company's shares; and (c) dilution of
shareholders' equity in the investment company. The Company states that
the 2021 Plan does not raise concerns about preferential treatment of
the Company's insiders because the 2021 Plan is a bona fide
compensation plan of the type common among corporations generally. In
addition, section 61(a)(3)(B) of the Act permits a BDC to issue to its
officers, directors and employees, pursuant to an executive
compensation plan, warrants, options and rights to purchase the BDC's
voting securities, subject to certain requirements. The Company states
that, for reasons that are unclear, section 61 and its legislative
history do not address the issuance by a BDC of restricted stock as
incentive compensation. The Company states, however, that the issuance
of Restricted Stock is substantially similar, for purposes of investor
protection under the Act, to the issuance of warrants, options, and
rights as contemplated by section 61 of the Act. The Company also
asserts that the 2021 Plan would not become a means for insiders to
obtain control of the Company because the number of shares of the
Company issuable under the 2021 Plan would be limited as set forth in
the application.
    5. The Company further states that the 2021 Plan will not unduly
complicate the Company's structure because equity-based compensation
arrangements are widely used among corporations and commonly known to
investors. The Company notes that the 2021 Plan will be submitted to
its shareholders for their approval. The Company represents that a
concise, ``plain English'' description of the 2021 Plan, including its
potential dilutive effect, will be provided in the proxy materials that
will be submitted to the Company's shareholders. The Company also
states that it will comply with the proxy disclosure requirements in
Item 10 of Schedule 14A under the Exchange Act. The Company further
notes that the 2021 Plan will be disclosed to investors in accordance
with the requirements of the Form N-2 registration statement for
closed-end investment companies, and pursuant to the standards and
guidelines adopted by the Financial Accounting Standards Board for
operating companies. In addition, the Company will comply with the
disclosure requirements for executive compensation plans applicable to
BDCs.\5\ The Company thus concludes that the 2021 Plan will be
adequately disclosed to investors and appropriately reflected in the
market value of the Company's shares.
---------------------------------------------------------------------------

    \5\ See Executive Compensation and Related Party Disclosure,
Securities Act Release No. 8655 (Jan. 27, 2006) (proposed rule);
Executive Compensation and Related Party Disclosure, Securities Act
Release No. 8732A (Aug. 29, 2006) (final rule and proposed rule), as
amended by Executive Compensation Disclosure, Securities Act Release
No. 8765 (Dec. 22, 2006) (adopted as interim final rules with
request for comments).
---------------------------------------------------------------------------

    6. The Company acknowledges that, while awards granted under the
2021 Plan would have a dilutive effect on the shareholders' equity in
the Company, that effect would be outweighed by the anticipated
benefits of the 2021 Plan to the Company and its shareholders. The
Company asserts that it needs the flexibility to provide the requested
equity-based employee compensation in order to be able to compete
effectively with other financial services firms for talented
professionals. These professionals, the Company suggests, in turn are
likely to increase the Company's performance and shareholder value. The
Company also asserts that equity-based compensation will help align the
interests of the Company's employees with those of its shareholders. In
addition, the Company states that its shareholders will be further
protected by the conditions to the requested order that assure
continuing oversight of the operation of the 2021 Plan by the Company's
Board.

Section 57(a)(4), Rule 17d-1

    7. Section 57(a) proscribes certain transactions between a BDC and
persons related to the BDC in the manner described in section 57(b)
(``57(b) persons''), absent a Commission order. Section 57(a)(4)
generally prohibits a 57(b) person from effecting a transaction in
which the BDC is a joint participant absent such an order. Rule 17d-1,
made applicable to BDCs by section 57(i), proscribes participation in a
``joint enterprise or other joint arrangement or profit-sharing plan,''
which includes a stock option or purchase plan. Employees and directors
of a BDC are 57(b) persons. Thus, the issuance of shares of Restricted
Stock could be deemed to involve a joint transaction involving a BDC
and a 57(b) person in contravention of section 57(a)(4). Rule 17d-1(b)
provides that, in considering relief pursuant to the rule, the
Commission will consider (i) whether the participation of the company
in a joint enterprise is consistent with the Act's policies and
purposes and (ii) the extent to which that participation is on a basis
different from or less advantageous than that of other participants.
    8. The Company requests an order pursuant to sections 57(a)(4) and
57(i) of the Act and under rule 17d-1 to permit the Company to issue
Restricted Stock under the 2021 Plan. The Company states that the 2021
Plan, although benefiting the Participants and The Company in different
ways, is in the interests of the Company's shareholders because the
2021 Plan will help align the interests of the Company's employees and
officers with those of its shareholders, which will encourage conduct
on the part of those employees and officers designed to produce a
better return for the Company's shareholders.

Additionally, section 57(j)(1) of the Act expressly permits any
director, officer or employee of a BDC to acquire warrants, options and
rights to purchase voting securities of such BDC, and the securities
issued upon the exercise or conversion thereof, pursuant to an
executive compensation plan which meets the requirements of section
61(a)(3)(B) of the Act. Applicant submits that the issuance of
Restricted Stock pursuant to the 2021 Plan poses no greater risk to
stockholders than the issuances permitted by section 57(j)(1) of the
Act.

Section 23(c)

    9. Section 23(c) of the Act, which is made applicable to BDCs by
section 63 of the Act, generally prohibits a BDC from purchasing any
securities of which it is the issuer except in the open market pursuant
to tenders, or under other circumstances as the Commission may permit
to ensure that the purchases are made in a manner or on a basis that
does not unfairly discriminate against any holders of the class or
classes of securities to be purchased. Applicant states that the
withholding or purchase of shares of Restricted Stock and common stock
in payment of applicable withholding tax obligations or of common stock
in payment for the exercise price of a stock option might be deemed to
be purchases by the Company of its own securities within the meaning of
section 23(c) and therefore prohibited by the Act.
    10. Section 23(c)(3) of the Act permits a BDC to purchase
securities of which it is the issuer in circumstances in which the
repurchase is made in a manner or on a basis that does not unfairly
discriminate against any holders of the class or classes of securities
to be purchased. Applicant believes that the requested relief meets the
standards of section 23(c)(3).
    11. Applicant submits that these purchases will be made in a manner
that does not unfairly discriminate against Applicant's stockholders
because all purchases of Applicant's stock will be at the closing price
of the common stock on the Nasdaq Global Market (or any primary
exchange on which its shares of common stock may be traded in the
future) on the relevant date (i.e., the public market price on the date
of grant of Restricted Stock). Applicant submits that because all
transactions with respect to the 2021 Plan will take place at the
public market price for the Applicant's common stock, these
transactions will not be significantly different than could be achieved
by any stockholder selling in a market transaction. Applicant
represents that no transactions will be conducted pursuant to the
requested order on days where there are no reported market transactions
involving Applicant's shares.
    12. Applicant represents that the withholding provisions in the
2021 Plan do not raise concerns about preferential treatment of
Applicant's insiders because the 2021 Plan is a bona fide compensation
plan of the type that is common among corporations generally.
Furthermore, the vesting schedule is determined at the time of the
initial grant of the Restricted Stock. Applicant represents that all
purchases may be made only as permitted by the 2021 Plan, which will be
approved by the Applicant's stockholders prior to any application of
the relief. Applicant believes that granting the requested relief would
be consistent with the policies underlying the provisions of the Act
permitting the use of equity compensation as well as prior exemptive
relief granted by the Commission under section 23(c) of the Act.

Applicant's Conditions

    Applicant agrees that the order granting the requested relief will
be subject to the following conditions:
    1. The 2021 Plan will be authorized by the Company's shareholders.
    2. Each issuance of Restricted Stock to officers and employees will
be approved by the required majority, as defined in section 57(o) of
the Act, of the Company's directors on the basis that such grant is in
the best interests of the Company and its shareholders.
    3. The amount of voting securities that would result from the
exercise of all of the Company's outstanding warrants, options, and
rights, together with any Restricted Stock issued and outstanding
pursuant to the 2021 Plan and any other compensation plans of the
Company, at the time of issuance shall not exceed 25% of the
outstanding voting securities of the Company, except that if the amount
of voting securities that would result from the exercise of all of the
Company's outstanding warrants, options, and rights issued to the
Company's directors, officers, and employees, together with any
Restricted Stock issued pursuant to the 2021 Plan and any other
compensation plans of the Company, would exceed 15% of the outstanding
voting securities of the Company, then the total amount of voting
securities that would result from the exercise of all outstanding
warrants, options, and rights, together with any Restricted Stock
issued pursuant to the 2021 Plan and any other compensation plans of
the Company, at the time of issuance shall not exceed 20% of the
outstanding voting securities of the Company.
    4. The amount of Restricted Stock issued and outstanding will not
at the time of issuance of any Restricted Stock exceed 10% of the
Company's outstanding voting securities.
    5. The Board will review the 2021 Plan at least annually. In
addition, the Board will review periodically the potential impact that
the issuance of Restricted Stock under the 2021 Plan could have on the
Company's earnings and NAV per share, such review to take place prior
to any decisions to grant Restricted Stock under the 2021 Plan, but in
no event less frequently than annually. Adequate procedures and records
will be maintained to permit such review. The Board will be authorized
to take appropriate steps to ensure that the issuance of Restricted
Stock under the 2021 Plan will be in the best interests of the
Company's shareholders. This authority will include the authority to
prevent or limit the granting of additional Restricted Stock under the
2021 Plan. All records maintained pursuant to this condition will be
subject to examination by the Commission and its staff.

    For the Commission, by the Division of Investment Management,
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13664 Filed 6-25-21; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 193 (Friday, October 6, 2017)]
[Notices]
[Pages 46815-46816]
[FR Doc No: 2017-21628]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Internal Agency Docket No. FEMA-4336-DR; Docket ID FEMA-2017-0001]

Puerto Rico; Amendment No. 4 to Notice of a Major Disaster
Declaration

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

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SUMMARY: This notice amends the notice of a major disaster declaration
for the Commonwealth of Puerto Rico (FEMA-4336-DR), dated September 10,
2017, and related determinations.

DATES: This amendment was issued September 26, 2017.

FOR FURTHER INFORMATION CONTACT: Dean Webster, Office of Response and
Recovery, Federal Emergency Management Agency, 500 C Street SW.,
Washington, DC 20472,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration
for the Commonwealth of Puerto Rico is hereby amended to include the
following areas among those areas determined to have been adversely
affected by the event declared a major disaster by the President in his
declaration of September 10, 2017.

    The municipalities of Dorado, Fajardo, and Toa Baja for
Individual Assistance.
    The municipalities of Cata[ntilde]o, Luquillo, and Vega Baja for
Individual Assistance (already designated for Public Assistance).
    The municipalities of Dorado, Guarabo, and Naguabo for Public
Assistance.

The following Catalog of Federal Domestic Assistance Numbers (CFDA)
are to be used for reporting and drawing funds: 97.030, Community
Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling;
97.033, Disaster Legal Services; 97.034, Disaster Unemployment
Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048,
Disaster Housing Assistance to Individuals and Households In
Presidentially Declared Disaster Areas; 97.049, Presidentially
Declared Disaster Assistance--Disaster Housing Operations for
Individuals and Households; 97.050 Presidentially Declared Disaster
Assistance to Individuals and Households--Other Needs; 97.036,
Disaster Grants--Public Assistance (Presidentially Declared
Disasters); 97.039, Hazard Mitigation Grant.

Brock Long,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2017-21628 Filed 10-5-17; 8:45 am]
BILLING CODE 9111-23-P


[Federal Register: December 6, 2007 (Volume 72, Number 234)]
[Notices]
[Page 68922-68924]
[DOCID:fr06de07-100]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56864; File No. SR-FICC-2007-06]

Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing of Proposed Rule Change To Modify the Hearing
Procedures Afforded to Members and Applicants for Membership and
Harmonize Them With Similar Rules of Its Affiliates

November 29, 2007.
    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 April 30, 2007, the Fixed Income Clearing Corporation (``FICC'')
filed with the Securities and Exchange Commission (``Commission'') and
on July 24, 2007, amended \3\ the proposed rule change described in
Items I, II, and III below, which items have been prepared primarily by
FICC. The Commission is publishing this notice to solicit comments on
the proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The amendment corrected a typographical error in the
proposed rule text.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The proposed rule change seeks (1) to modify the rules of FICC's
Government Securities Division (``GSD'') and Mortgage-Backed Securities
Division (``MBSD'') (GSD and MBSD are collectively referred to as the
``Divisions''), including the EPN rules of MBSD, regarding hearing
procedures afforded to members and applicants for membership and (2)
where practicable or beneficial, to harmonize them with similar rules
of FICC's affiliates, The Depository Trust Company (``DTC'') and the
National Securities Clearing Corporation (``NSCC'').

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FICC 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. FICC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.\4\
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    \4\ The Commission has modified the text of the summaries
prepared by FICC.
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A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Minor Rule Violation Plan
    In 1984, the Commission adopted amendments to Rule 19d-1(c) under
the Act \5\ that allow self-regulatory organizations to adopt with
Commission approval plans for the disposition of minor violations of
rules.\6\
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    \5\ 17 CFR 240.19d-1(c).
    \6\ Securities Exchange Act Release No. 21013 (June 1, 1984), 49
FR 23828 (June 8, 1984) File No. S7-983A].
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    Currently under each Division's rules, a member or applicant
subject to disciplinary action has a right to a hearing before a panel
comprised of members of FICC's Board of Directors regardless of the
severity of the action for which the member or applicant is being
disciplined.\7\ Because some rule violations are not sufficiently
serious to merit Board review, FICC is proposing to adopt a Minor Rule
Violation Plan within the meaning of Rule 19d-1(c)(2) of the Act for
those rule violations FICC deems minor. Consistent with Rule 19d-
1(c)(2) of the Act, FICC would designate those rule violations for
which a fine may be assessed in an amount not to exceed $5,000 as minor
rule violations. If a member were to dispute a fine imposed by FICC by
filing a written request for hearing and a written statement, FICC
management would have the authority to waive the fine. FICC management
would notify the Board of Directors (or a Committee authorized by the
Board of Directors) of its determination to waive the fine and would
provide the reasons for the waiver. The Board or Committee could in its
discretion decide to reinstate any fine waived by FICC management. If
FICC management were not to waive the fine, the member could appeal the
decision to a panel comprised of FICC officers (``Minor Rule Violation
Panel'').
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    \7\ MBSD Article V, Rule 7 (``Appeals''); EPN Article X, Rule 7
(``Appeals''); and GSD Rule 37 (``Hearing Procedures'').
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2. Hearings for All Other Violations and Minor Rule Violation Appeals
    For matters involving (i) an alleged violation of a GSD or MBSD
rule for which a fine in an amount of over $5,000 is assessed, (ii)
applicants for membership, or (iii) other disciplinary actions to which
the Minor Rule Violation Plan would not apply or for appeals from a
Minor Rule Violation

Panel decision adverse to a member or applicant, the member or
applicant would be entitled to a hearing before a panel comprised of
three individuals of the FICC Board of Directors (or their designees)
appointed by the Chairman of the FICC Board. Decisions of the panel
would be final; however, the full Board of Directors would retain the
right to modify any sanction or reverse any decision of the Board panel
that was adverse to the member or applicant.
    Currently with respect to hearings, a member or applicant is
afforded the opportunity to be heard and may be represented by counsel
if desired. A record is kept of the hearing, and at the discretion of
the Board panel, the associated cost may be charged in whole or part to
the member or applicant in the event that the decision is adverse to
the member or applicant. The member or applicant is advised of the
Board panel's decision within ten business days after the conclusion of
the hearing. These procedures would also apply with respect to the
Minor Rule Violation Plan.
3. Administrative Changes: Uniformity of Time Frames
    The proposed rule changes seek to implement uniform time periods
for the Divisions governing actions a member or applicant would be
required to take in order to request a hearing. The deadlines a member
or applicant must adhere to in order to request a hearing currently
vary between the Divisions. Under the proposed rule change, a member or
applicant would have five business days, or two business days in the
case of a summary action taken against the member or applicant pursuant
to Rule 21 or 22,\8\ from the date on which FICC first informs it of a
sanction or a denial of membership in which to request a hearing.
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    \8\ Examples of a summary action are a suspension of a member or
restriction of a member's access to services as described in Rule
21, Section 1 (``Restrictions on Access to Services'').
---------------------------------------------------------------------------

    Within seven business days, or three business days in the case of a
summary action taken against the member or applicant, after filing a
request for a hearing with FICC, the member or applicant would be
required to submit to FICC a clear and concise written statement
setting forth the action or proposed action of FICC with respect to
which the hearing is requested, the basis for objection to such action,
whether the member or applicant intends to attend the hearing, and
whether the member or applicant chooses to be represented by counsel at
the hearing. These proposed time frames would be consistent with time
frames being proposed by DTC and NSCC.
4. Technical Changes
    MBSD Article V, Rule 3 (``Fines and Other Sanctions'') would be
amended in accordance with the proposed changes to the hearing
procedures of MBSD.
    In addition, minor technical changes would be made to the rules of
both Divisions where necessary to implement the proposed changes set
forth above.
5. Implementation of the Proposed Changes
    The proposed changes will be implemented upon approval of this
proposed filing by the Commission. Members will be advised of the
implementation through an FICC Important Notice.
    FICC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act \9\ and the rules and
regulations thereunder because the adoption of a Minor Rule Violation
Plan furthers the statutory objective of providing a fair procedure for
disciplining members and will provide FICC with the ability to impose
meaningful sanctions for those rule violations that do not necessarily
rise to a level meriting a full disciplinary proceeding. Accordingly,
the proposed rule change promotes the prompt and accurate clearance and
settlement of securities transactions.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78q-1.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FICC does not believe that the proposed rule change will have any
impact or impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments relating to the proposed rule change have not been
solicited or received. FICC will notify the Commission of any written
comments received by FICC.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period: (i) As the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
    (A) By order approve such proposed rule change or
    (B) Institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
) or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-FICC-2007-06 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FICC-2007-06. This file
number should be included on the subject line if e-mail 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 Web site (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 inspection and
copying in the Commission's Public Reference Section, 100 F Street,
NE., Washington, DC 20549, on official business days between the hours
of 10 a.m. and 3 p.m. Copies of such filings also will be available for
inspection and copying at the principal office of FICC and on FICC's
Web site at http://www.dtcc.com/downloads/legal/rule_filings/2007/ficc/2007-06.pdf.
 All comments received will be posted without change;

the Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
FICC-

2007-06 and should be submitted on or before December 21, 2007.

    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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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-23592 Filed 12-5-07; 8:45 am]

BILLING CODE 8011-01-P