[Federal Register Volume 88, Number 46 (Thursday, March 9, 2023)]
[Notices]
[Pages 14657-14662]
[FR Doc No: 2023-04787]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97042; File No. SR-CboeEDGX-2023-016]

Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule

March 3, 2023.
    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 March 1, 2023, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
amend its Fee 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://markets.cboe.com/us/options/regulation/rule_filings/edgx/) [sic], at the Exchange's Office of the Secretary,
and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set

forth in sections A, B, and C below, of the most significant aspects of
such statements.

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

1. Purpose
    The Exchange proposes to amend its Fee Schedule applicable to its
equities trading platform (``EDGX Equities'') as follows: (1) by
modifying and eliminating certain Growth Tiers; (2) by modifying and
eliminating certain Non-Displayed Add Volume Tiers; (3) by modifying
the criteria of Retail Growth Tier 3; and (4) by introducing new fee
code DX and modifying the description of existing fee code DQ. The
Exchange proposes to implement these changes effective March 1, 2023.
    The Exchange first notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of 16 registered equities exchanges, as well as a
number of alternative trading systems and other off-exchange venues
that do not have similar self-regulatory responsibilities under the
Securities Exchange Act of 1934 (the ``Act''), to which market
participants may direct their order flow. Based on publicly available
information,\3\ no single registered equities exchange has more than
15% of the market share. Thus, in such a low-concentrated and highly
competitive market, no single equities exchange possesses significant
pricing power in the execution of order flow. The Exchange in
particular operates a ``Maker-Taker'' model whereby it pays rebates to
members that add liquidity and assesses fees to those that remove
liquidity. The Exchange's Fee Schedule sets forth the standard rebates
and rates applied per share for orders that provide and remove
liquidity, respectively. Currently, for orders in securities priced at
or above $1.00, the Exchange provides a standard rebate of $0.00160 per
share for orders that add liquidity and assesses a fee of $0.0030 per
share for orders that remove liquidity. For orders in securities priced
below $1.00, the Exchange provides a standard rebate of $0.00009 per
share for orders that add liquidity and assesses a fee of 0.30% of the
total dollar value for orders that remove liquidity. Additionally, in
response to the competitive environment, the Exchange also offers
tiered pricing which provides Members opportunities to qualify for
higher rebates or reduced fees where certain volume criteria and
thresholds are met. Tiered pricing provides an incremental incentive
for Members to strive for higher tier levels, which provides
increasingly higher benefits or discounts for satisfying increasingly
more stringent criteria.
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    \3\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, Month-to-Date (February 22, 2023), available at https://www.cboe.com/us/equities/market_statistics/.
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Growth Tiers
    Under footnote 1 of the Fee Schedule, the Exchange currently offers
various Add/Remove Volume Tiers. In particular, the Exchange offers
five Growth Tiers that each provide an enhanced rebate for Members'
qualifying orders yielding fee codes B,\4\ V,\5\ Y,\6\ 3,\7\ and 4,\8\
where a Member reaches certain add volume-based criteria, including
``growing'' its volume over a certain baseline month. First, the
Exchange is proposing to discontinue Growth Tiers 1-3, as no Members
have satisfied the criteria within the past six months and the Exchange
no longer wishes to, nor is required to, maintain such tiers. More
specifically, the proposed change removes these tiers as the Exchange
would rather redirect future resources and funding into other programs
and tiers intended to incentivize increased order flow.
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    \4\ Fee code B is appended to orders adding liquidity to EDGX in
Tape B securities.
    \5\ Fee code V is appended to orders adding liquidity to EDGX in
Tape A securities.
    \6\ Fee code Y is appended to orders adding liquidity to EDGX in
Tape C securities.
    \7\ Fee code 3 is appended to orders adding liquidity to EDGX in
the pre and post market in Tapes A or C securities.
    \8\ Fee code 4 is appended to orders adding liquidity to EDGX in
the pre and post market in Tape B securities.
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    Second, the Exchange proposes to modify the criteria of Growth Tier
4 and Growth Tier 5, in addition to renumbering the tiers following the
discontinuation of Growth Tiers 1-3. Currently, Growth Tier 4 (proposed
Growth Tier 1) is as follows:
     Growth Tier 4 provides a rebate of $0.0034 per share to
qualifying orders (i.e., orders yielding fee codes B, V, Y, 3, or 4)
where (1) MPID adds a Step-Up ADAV \9\ from October 2021 >= 0.12% of
the TCV \10\ or MPID adds a Step-Up ADAV from October 2021 >=
16,000,000; and (2) MPID adds an ADV >= 0.30% of TCV or MPID adds an
ADV >= 35,000,000.
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    \9\ ADAV means average daily added volume calculated as the
number of shares added per day ADAV is calculated on a monthly
basis. Step-Up ADAV means ADAV in the relevant baseline month
subtracted from current ADAV.
    \10\ TCV means total consolidated volume calculated as the
volume reported by all exchanges and trade reporting facilities to a
consolidated transaction reporting plan for the month for which the
fees apply.
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    Now, the Exchange proposes to add a third prong of criteria. The
proposed criteria for current Growth Tier 4 (proposed Growth Tier 1) is
as follows:
     Proposed Growth Tier 1 provides a rebate of $0.0034 per
share to qualifying orders (i.e., orders yielding fee codes B, V, Y, 3,
or 4) where (1) MPID adds a Step-Up ADAV from October 2021 >= 0.12% of
the TCV or MPID adds a Step-Up ADAV from October 2021 >= 16,000,000;
and (2) MPID adds an ADV >= 0.30% of TCV or MPID adds an ADV >=
35,000,000; and (3) MPID adds an ADAV >= 0.30% of TCV with displayed
orders that yield fee codes B, V, or Y.
    The proposed modification to proposed Growth Tier 1 is designed to
encourage MPIDs to grow their volume in displayed liquidity with orders
yielding fee codes B, V, or Y.
    In addition, the Exchange also proposes to modify the criteria of
current Growth Tier 5 (proposed Growth Tier 2). Currently, Growth Tier
5 is as follows:
     Growth Tier 5 provides a rebate of $0.0034 per share to
qualifying orders (i.e., orders yielding fee codes B, V, Y, 3, or 4)
where (1) Member adds a Step-Up ADAV from October 2022 >= 0.15% of the
TCV or Member adds a Step-Up ADAV from October 2022 >= 15,000,000; and
(2) Member has a total remove ADV >= 0.45% of TCV or Member has a total
remove ADV >= 45,000,000.
    Now, the Exchange proposes to add a third prong of criteria. The
proposed criteria for current Growth Tier 5 (proposed Growth Tier 2) is
as follows:
     Proposed Growth Tier 2 provides a rebate of $0.0034 per
share to qualifying orders (i.e., orders yielding fee codes B, V, Y, 3,
or 4) where (1) Member adds a Step-Up ADAV from October 2022 >= 0.15%
of the TCV or Member adds a Step-Up ADAV from October 2022 >=
15,000,000; (2) Member has a total remove ADV >= 0.45% of TCV or Member
has a total remove ADV >= 45,000,000; and (3) Member adds a Retail
Step-Up ADV (i.e., yielding fee codes ZA \11\ or ZO \12\) from August
2022 >= 0.10% of TCV.
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    \11\ Fee code ZA is appended to Retail Orders that add
liquidity.
    \12\ Fee code ZO is appended to Retail orders that adds
liquidity during the pre- and post-market.
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    The proposed modification to proposed Growth Tier 2 is intended to
incentivize Members to grow retail volume on the Exchange.

Non-Displayed Add Volume Tiers
    In addition to the Growth Tiers offered under footnote 1, the
Exchange also offers Non-Displayed Add Volume Tiers that each provide
an enhanced rebate for Members' qualifying orders yielding fee codes
DM,\13\ HA,\14\ MM,\15\ and RP,\16\ where a Member reaches certain
volume-based criteria offered in each tier. The Exchange now proposes
to discontinue the use of Non-Displayed Step-Up Volume Tiers 1 and 2,
as no Members have satisfied the criteria within the past six months
and the Exchange no longer wishes to, nor is required to, maintain such
tiers. More specifically, the proposed change removes these tiers as
the Exchange would rather redirect future resources and funding into
other programs and tiers intended to incentivize increased order flow.
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    \13\ Fee code DM is appended to orders that add liquidity using
MidPoint Discretionary Order within discretionary range.
    \14\ Fee code HA is appended to non-displayed orders that add
liquidity.
    \15\ Fee code MM is appended to non-displayed orders that add
liquidity using Mid-Point Peg.
    \16\ Fee code RP is appended to non-displayed orders that add
liquidity using Supplemental Peg.
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    The Exchange also proposes to amend the criteria of current Non-
Displayed Step-Up Volume Tier 3, in addition to renumbering this tier
following the discontinuation of Non-Displayed Step-Up Volume Tiers 1
and 2. Currently, the criteria for Non-Displayed Step-Up Volume Tier 3
(proposed Non-Displayed Step-Up Volume Tier 1) is as follows:
     Non-Displayed Step-Up Volume Tier 3 provides a rebate of
$0.0026 per share to qualifying orders (i.e., orders yielding fee code
DM, HA, MM, or RP) where (1) Members adds a Step-Up ADAV from October
2022 >= 0.15% of the TCV or Member adds a Step-Up ADAV from October
2022 >= 15,000,000; and (2) Member has a total remove ADV >= 0.45% of
TCV or Member has a total remove ADV >= 45,000,000.
    Now, the Exchange proposes to add a third prong of criteria. The
proposed criteria for proposed Non-Displayed Step-Up Volume Tier 1 is
as follows:
     Non-Displayed Step-Up Volume Tier 1 provides a rebate of
$0.0026 per share to qualifying orders (i.e., orders yielding fee code
DM, HA, MM, or RP) where (1) Members adds a Step-Up ADAV from October
2022 >= 0.15% of the TCV or Member adds a Step-Up ADAV from October
2022 >= 15,000,000; (2) Member has a total remove ADV >= 0.45% of TCV
or Member has a total remove ADV >= 45,000,000; and (3) Member adds a
Retail Step-Up ADV (i.e., yielding fee codes ZA or ZO) from August 2022
>= 0.10% of TCV.
    The proposed modification to proposed Non-Displayed Step-Up Volume
Tier 1 is intended to incentivize Members to add non-displayed retail
volume on the Exchange.
Retail Volume Tiers
    Pursuant to footnote 2 of the Fee Schedule, the Exchange offers
Retail Volume Tiers which provide Retail Member Organizations
(``RMOs'') \17\ an opportunity to receive an enhanced rebate from the
standard rebate for Retail Orders \18\ that add liquidity (i.e.,
yielding fee code ZA or ZO). Currently, the Retail Volume Tiers offer
three Retail Growth Tiers, where a Member is eligible for an enhanced
rebate for qualifying orders (i.e., yielding fee code ZA or ZO) meeting
certain add volume-based criteria, including ``growing'' its volume
over a certain baseline month. The Exchange now proposes to amend the
criteria of Retail Growth Tier 3. Currently, the criteria for Retail
Growth Tier 3 is as follows:
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    \17\ See EDGX Rule 11.21(a)(1). A ``Retail Member Organization''
or ``RMO'' is a Member (or a division thereof) that has been
approved by the Exchange under this Rule to submit Retail Orders.
    \18\ See EDGX Rule 11.21(a)(2). A ``Retail Order'' is an agency
or riskless principal order that meets the criteria of FINRA Rule
5320.03 that originates from a natural person and is submitted to
the Exchange by a Retail Member Organization, provided that no
change is made to the terms of the order with respect to price or
side of market and the order does not originate from a trading
algorithm or any other computerized methodology.
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     Retail Growth Tier 3 provides a rebate of $0.0037 per
share to qualifying orders (i.e., orders yielding fee code ZA or ZO)
where (1) Member adds a Step-Up ADAV from October 2022 >= 0.15% of the
TCV or Member adds a Step-Up ADAV from October 2022 >= 15,000,000; and
(2) Member has a total remove ADV >= 0.45% of TCV or Member has a total
remove ADV >= 45,000,000.
    Now, the Exchange proposes to add a third prong of criteria.
Proposed Retail Growth Tier 3 is as follows:
     Retail Growth Tier 3 provides a rebate of $0.0037 per
share to qualifying orders (i.e., orders yielding fee code ZA or ZO)
where (1) Member adds a Step-Up ADAV from October 2022 >= 0.15% of the
TCV or Member adds a Step-Up ADAV from October 2022 >= 15,000,000; (2)
Member has a total remove ADV >= 0.45% of TCV or Member has a total
remove ADV >= 45,000,000; and (3) Members adds a Retail Step-Up ADV
(i.e., yielding fee code ZA or ZO) from August 2022 >= 0.10% of TCV.
    The proposed modification to Retail Growth Tier 3 is intended to
incentivize RMOs to add retail volume on the Exchange.
    Further, the Growth Tiers, Non-Displayed Add Volume Tiers, and
Retail Volume Tiers are intended to provide Members an opportunity to
receive an enhanced rebate by increasing their order flow to the
Exchange, which further contributes to a deeper, more liquid market and
provides even more execution opportunities for active market
participants. Incentivizing an increase in liquidity adding or removing
volume, through enhanced rebate opportunities, encourages liquidity
adding Members on the Exchange to contribute to a deeper, more liquid
market, and liquidity executing Members on the Exchange to increase
transactions and take execution opportunities provided by such
increased liquidity, together providing for overall enhanced price
discovery and price improvement opportunities on the Exchange. As such,
increased overall order flow benefits all Members by contributing
towards a robust and well-balanced market ecosystem.
Fee Codes DQ and DX
    The Exchange currently offers fee code DQ, which is appended to
Midpoint Discretionary Orders (``MDOs'') \19\ using the Quote Depletion
Protection (``QDP'') \20\ order instruction. QDP is designed to provide
enhanced protections to MDOs by tracking significant executions that
constitute the best bid or offer on the EDGX Book \21\ and enabling
Users to avoid potentially unfavorable executions by preventing MDOs
entered with the optional QDP instruction from exercising discretion to
trade at more aggressive prices when QDP has been triggered.\22\
Currently, MDOs entered with the QDP instruction are appended fee code
DQ and assessed a flat fee of $0.00040 per share in securities at or
above $1.00 and 0.30% of dollar value for securities priced below
$1.00. The Exchange now proposes to amend fee code DQ to be appended to
MDOs entered with a QDP instruction that add liquidity to the Exchange.
There would be no change to the fee associated with fee code DQ. The
Exchange now proposes to introduce fee code DX, which would be appended
to MDOs with a QDP instruction that remove liquidity from the Exchange.
Orders appended with fee code DX

would be assessed a fee of $0.00060 per share in securities at or above
$1.00 and 0.30% of dollar value for securities priced below $1.00.
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    \19\ See Exchange Rule 11.8(g).
    \20\ See Exchange Rule 11.8(g)(10).
    \21\ See Exchange Rule 1.5(d).
    \22\ See Securities Exchange Act Release No. 89007 (June 4,
2020), 85 FR 35454 (June 10, 2020) (SR-CboeEDGX-2020-010) (``Notice
of Filing of Amendment No. 1 and Order Granting Accelerated Approval
of a Proposed Rule Change, as Modified by Amendment No. 1, to Amend
the Rule Relating to MidPoint Discretionary Orders to Allow Optional
Offset or Quote Depletion Protection Instructions'').
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\23\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \24\ 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 the Section 6(b)(5) \25\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \26\
as it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its Members and other persons using
its facilities.
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    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(5).
    \25\ Id.
    \26\ 15 U.S.C. 78f(b)(4).
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    As described above, the Exchange operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. The Exchange believes that
its proposal to modify proposed Growth Tiers 1 and 2, proposed Non-
Displayed Step-Up Volume Tier 1, and Retail Growth Tier 3 reflects a
competitive pricing structure designed to incentivize market
participants to direct their order flow to the Exchange, which the
Exchange believes would enhance market quality to the benefit of all
Members. Additionally, the Exchange notes that relative volume-based
incentives and discounts have been widely adopted by exchanges,\27\
including the Exchange,\28\ and are reasonable, equitable and non-
discriminatory because they are open to all Members on an equal basis
and provide additional benefits or discounts that are reasonably
related to (i) the value to an exchange's market quality and (ii)
associated higher levels of market activity, such as higher levels of
liquidity provision and/or growth patterns. Competing equity exchanges
offer similar tiered pricing structures, including schedules of rebates
and fees that apply based upon members achieving certain volume and/or
growth thresholds, as well as assess similar fees or rebates for
similar types of orders, to that of the Exchange.
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    \27\ See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove
Volume Tiers.
    \28\ See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/
Remove Volume Tiers.
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    In particular, the Exchange believes the proposed modifications to
the criteria of proposed Growth Tiers 1 and 2, proposed Non-Displayed
Step-Up Volume Tier 1, and Retail Growth Tier 3 are reasonable because
they will be available to all Members and provide all Members with an
additional opportunity to receive an enhanced rebate. The Exchange
further believes the proposed modifications to proposed Growth Tiers 1
and 2, proposed Non-Displayed Step-Up Volume Tier 1, and Retail Growth
Tier 3 will provide a reasonable means to encourage liquidity adding
displayed orders, liquidity adding non-displayed orders, and retail
orders, respectively, in Members' order flow to the Exchange and to
incentivize Members to continue to provide liquidity adding volume to
the Exchange by offering them an additional opportunity to receive an
enhanced rebate on qualifying orders. An overall increase in activity
would deepen the Exchange's liquidity pool, offers additional cost
savings, support the quality of price discovery, promote market
transparency and improve market quality, for all investors.
    The Exchange believes that the proposed changes to proposed Growth
Tiers 1 and 2, proposed Non-Displayed Step-Up Volume Tier 1, and Retail
Growth Tier 3 are reasonable as they do not represent a significant
departure from the criteria currently offered in the Fee Schedule. The
Exchange also believes that the proposal represents an equitable
allocation of fees and rebates and is not unfairly discriminatory
because all Members will be eligible for the proposed new tiers and
have the opportunity to meet the tiers' criteria and receive the
corresponding enhanced rebate if such criteria is met. Without having a
view of activity on other markets and off-exchange venues, the Exchange
has no way of knowing whether this proposed rule change would
definitely result in any Members qualifying the new proposed tiers.
While the Exchange has no way of predicting with certainty how the
proposed changes will impact Member activity, based on the prior months
volume, the Exchange anticipates that at least one Member will be able
to satisfy the criteria proposed under proposed Growth Tiers 1 and 2,
proposed Non-Displayed Step-Up Volume Tier 1, and Retail Growth Tier 3.
The Exchange also notes that proposed changes will not adversely impact
any Member's ability to qualify for enhanced rebates offered under
other tiers. Should a Member not meet the proposed new criteria, the
Member will merely not receive that corresponding enhanced rebate.
    The Exchange believes the proposed addition of fee code DX and the
revised applicability of fee code DQ are reasonable as the Exchange
offers many other fee codes that are specifically designed for orders
that add liquidity to the Exchange or remove liquidity from the
Exchange.\29\ While the fee assessed for orders appended with fee code
DX will be slightly higher than the fee assessed for orders appended
with fee code DQ, the Exchange believes that promoting liquidity-adding
MDOs containing a QDP instruction represents an equitable allocation of
fees and rebates and is not unfairly discriminatory because the fees
will apply to all Members who add or remove liquidity utilizing an MDO
with a QDP instruction, equally. Furthermore, the Exchange believes
that assessing a lower fee under fee code DQ will promote a reasonable
means to encourage liquidity adding volume to the Exchange for MDOs
utilizing a QDP instruction. While Members are assessed a small fee to
utilize MDOs with a QDP instruction, the Exchange believes that
promoting liquidity adding activity would help deepen the Exchange's
liquidity pool, support the quality of price discovery, and improve
market quality, for all investors.
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    \29\ See e.g., EDGX Equities Fee Schedule, Fee Codes 3 and 6.
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    Finally, the Exchange believes that the proposed rule change to
eliminate Growth Tiers 1-3 and Non-Displayed Step-Up Volume Tiers 1 and
2 is reasonable because the Exchange is not required to maintain these
tiers or provide Members an opportunity to receive enhanced rebates.
The Exchange believes the proposal to eliminate these tiers is also
equitable and not unfairly discriminatory because it applies to all
Members (i.e., the tiers will not be available for any Member). The
Exchange notes that no Members have satisfied the criteria of Growth
Tiers 1-3 and Non-Displayed Step-Up Volume Tiers 1-2 in any of the past
six months.

The Exchange also notes that the proposed rule change to remove these
tiers merely results in Members not receiving an enhanced rebate,
which, as noted above, the Exchange is not required to offer or
maintain. Furthermore, the proposed rule change to eliminate Growth
Tiers 1-3 and Non-Displayed Step-Up Volume Tiers 1-2 enables the
Exchange to redirect resources and funding into other programs and
tiers intended to incentivize increased order flow.

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. Rather, as discussed above,
the Exchange believes that the proposed changes would encourage the
submission of additional order flow to a public exchange, thereby
promoting market depth, execution incentives and enhanced execution
opportunities, as well as price discovery and transparency for all
Members. As a result, the Exchange believes that the proposed changes
further the Commission's goal in adopting Regulation NMS of fostering
competition among orders, which promotes ``more efficient pricing of
individual stocks for all types of orders, large and small.''
    The Exchange believes the proposed rule changes do not impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Particularly, the proposed
changes to proposed Growth Tiers 1 and 2, proposed Non-Displayed Step-
Up Volume Tier 1, and Retail Growth Tier 3 will apply to all Members
equally in that all Members are eligible for each of the Tiers, have a
reasonable opportunity to meet the Tiers' criteria and will receive the
enhanced rebate on their qualifying orders if such criteria is met. The
Exchange does not believe the proposed changes burdens competition, but
rather, enhances competition as it is intended to increase the
competitiveness of EDGX by amending an existing pricing incentive and
adopting pricing incentives in order to attract order flow and
incentivize participants to increase their participation on the
Exchange, providing for additional execution opportunities for market
participants and improved price transparency. Greater overall order
flow, trading opportunities, and pricing transparency benefits all
market participants on the Exchange by enhancing market quality and
continuing to encourage Members to send orders, thereby contributing
towards a robust and well-balanced market ecosystem. Finally, the
Exchange does not believe the proposed rule change to eliminate Growth
Tiers 1-3 and Non-Displayed Step-Up Volume Tiers 1-2 will impose any
burden on intramarket competition because it applies to all Members
uniformly, as in, the tiers will not longer be available to any Member.
    The Exchange does not believe the proposal to introduce the DX fee
code does not impose a burden on intramarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act. The
proposed fees associated with fee code DX would apply to all Members
equally in that all Members would be subject to the same flat fee for
the execution of an MDO with a QDP instruction that removes liquidity
from the Exchange. Although MDOs entered with the QDP instruction would
be subject to the pricing described in this proposed rule change, the
Exchange does not believe that pricing would impose any significant
burden on intramarket competition as this fee would be applied in the
same manner to the execution of any MDO entered with a QDP instruction
that removes liquidity from the Exchange. Both MDO and the associated
QDP instruction are available to all Members on an equal and non-
discriminatory basis. As a result, any Member can decide to use (or not
use) the QDP instruction based on the benefits provided by that
instruction in potentially avoiding unfavorable executions, and the
associated charge that the Exchange proposes to introduce. As
discussed, any firm that chooses to use the QDP instruction with an MDO
that removes liquidity would be charged the same flat fee for the
execution of orders that are entered with this instruction. The
proposal to modify fee code DQ to apply only to MDO orders using the
QDP instruction that add liquidity to the Exchange similarly does not
impose a burden on intramarket competition in that the applicability of
the fee code will apply equally to all Members in that all Members
would be subject to the same flat fee for the execution of an MDO with
a QDP instruction that adds liquidity to the Exchange and the Exchange
does not propose a change to the existing fee.
    Next, the Exchange believes the proposed rule changes does not
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. As previously
discussed, the Exchange operates in a highly competitive market.
Members have numerous alternative venues that they may participate on
and direct their order flow, including other equities exchanges, off-
exchange venues, and alternative trading systems. Additionally, the
Exchange represents a small percentage of the overall market. Based on
publicly available information, no single equities exchange has more
than 15% of the market share.\30\ Therefore, no exchange possesses
significant pricing power in the execution of order flow. Indeed,
participants can readily choose to send their orders to other exchange
and off-exchange venues if they deem fee levels at those other venues
to be more favorable. Moreover, the Commission has repeatedly expressed
its preference for competition over regulatory intervention in
determining prices, products, and services in the securities markets.
Specifically, in Regulation NMS, the Commission highlighted the
importance of market forces in determining prices and SRO revenues and,
also, recognized that current regulation of the market system ``has
been remarkably successful in promoting market competition in its
broader forms that are most important to investors and listed
companies.'' \31\ The fact that this market is competitive has also
long been recognized by the courts. In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .''.\32\ Accordingly, the Exchange does not believe its
proposed fee change imposes any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
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    \30\ Supra note 8 [sic].
    \31\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
    \32\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).

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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 \33\ and paragraph (f) of Rule 19b-4 \34\
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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    \33\ 15 U.S.C. 78s(b)(3)(A).
    \34\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-CboeEDGX-2023-016 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-2023-016. 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. 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-2023-016, and
should be submitted on or before March 30, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
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    \35\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-04787 Filed 3-8-23; 8:45 am]
BILLING CODE 8011-01-P