[Federal Register Volume 80, Number 63 (Thursday, April 2, 2015)]
[Notices]
[Pages 17791-17795]
[FR Doc No: 2015-07519]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74598; File No. SR-BATS-2015-24]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the Fees for the BATS One Market Data Product

March 27, 2015.
    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 17, 2015, BATS Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the Exchange. The
Exchange has designated the proposed rule change as one establishing or
changing a member due, fee, or other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 7 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange filed a proposal to amend the market data section of
its fee schedule to: (i) Establish a Digital Media Enterprise Fee for
the BATS One Feed; and (ii) make a non-substantive change to the
description of the BATS One Feed Enterprise fee.
    The text of the proposed rule change is available at the Exchange's
Web site at www.batstrading.com, at the principal office of the
Exchange, 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 parts 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 the market data section of its fee
schedule to: (i) Establish a Digital Media Enterprise Fee for the BATS
One Feed; and (ii) make a non-substantive change to the description of
the BATS One Feed Enterprise fee.\5\
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    \5\ The Exchange notes that the date of the fee schedule was
amended to March 17, 2015 in a previously filed proposed rule
change. See SR-BATS-2015-23 (filed March 17, 2015).
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    The Commission recently approved a proposed rule change by the
Exchange to establish a new market data product called the BATS One
Feed \6\ as well as published proposed rule changes to establish
related fees.\7\ The BATS One Feed is a data feed that disseminates, on
a real-time basis, the aggregate best bid and offer (``BBO'') of all
displayed orders for securities traded on BZX and its affiliated
exchanges \8\ and for which the BATS Exchanges report quotes under the
Consolidated Tape Association (``CTA'') Plan or the Nasdaq/UTP Plan.\9\
The BATS One Feed also contains the individual last sale information
for the BATS Exchanges (collectively with the aggregate BBO, the ``BATS
One Summary Feed''). In addition, the BATS One Feed contains optional
functionality which enables recipients to receive aggregated two-sided
quotations from the BATS Exchanges for up to five (5) price levels
(``BATS One Premium Feed'').
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    \6\ See Securities Exchange Act Release No. 73918 (December 23,
2014), 79 FR 78920 (December 31, 2014) (File Nos. SR-EDGX-2014-25;
SR-EDGA-2014-25; SR-BATS-2014-055; SR-BYX-2014-030) (Notice of
Amendments No. 2 and Order Granting Accelerated Approval to Proposed
Rule Changes, as Modified by Amendments Nos. 1 and 2, to Establish a
New Market Data Product called the BATS One Feed) (``BATS One
Approval Order'').
    \7\ See Securities Exchange Act Release Nos. 74282 (February 17,
2015), 80 FR 9487 (February 23, 2015) (SR-EDGX-2015-09); 74283
(February 18, 2015), 80 FR 9809 (February 24, 2015) (SR-EDGA-2015-
09); 74284 (February 18, 2015), 80 FR 9792 (February 24, 2015) (SR-
BYX-2015-09); and 74285 (February 18, 2015), 80 FR 9828 (February
24, 2015) (SR-BATS-2015-11) (``BATS One Fee Proposals'').
    \8\ BZX's affiliated exchanges are EDGA Exchange, Inc.
(``EDGA''), EDGX Exchange, Inc. (``EDGX''), and BATS Y-Exchange,
Inc. (``BYX'', together with EDGX, EDGA, and BZX, the ``BATS
Exchanges''). On January 23, 2014, BATS Global Markets, Inc.
(``BGMI''), the former parent company of the Exchange and BYX,
completed its business combination with Direct Edge Holdings LLC,
the parent company of EDGA and EDGX. See Securities Exchange Act
Release No. 71375 (January 23, 2014), 79 FR 4771 (January 29, 2014)
(SR-BATS-2013-059; SR-BYX-2013-039). Upon completion of the business
combination, DE Holdings and BGMI each became intermediate holding
companies, held under a single new holding company. The new holding
company, formerly named ``BATS Global Markets Holdings, Inc.,''
changed its name to ``BATS Global Markets, Inc.'' and BGMI changed
its name to ``BATS Global Markets Holdings, Inc.''
    \9\ The Exchange understands that each of the BATS Exchanges
will separately file substantially similar proposed rule changes
with the Commission to implement fees for the BATS One Feed.
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BATS One Digital Media Enterprise Fee
    The Exchange proposes to amend its fee schedule to establish a
Digital Media Enterprise Fee of $15,000 per month for

the BATS One Summary Feed and $25,000 per month for the BATS One
Premium Feed. As an alternative to User fees,\10\ a recipient firm may
purchase a monthly Digital Media Enterprise license to receive the BATS
One Feed from an External Distributor \11\ to distribute to an
unlimited number of Professional and Non-Professional Users \12\ for
viewing via television, Web sites, and mobile devices for informational
and non-trading purposes only without having to account for the extent
of access to the data or the report the number of Users to the
Exchange. The Digital Media Enterprise Fee would be in addition to the
Data Consolidation Fee.\13\
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    \10\ The Exchange assesses a monthly fee for Professional Users
of $10.00 per User for receipt of the BATS One Summary Feed or
$15.00 per User who elects to also receive the BATS One Premium
Feed. Non-Professional Users are assessed a monthly fee of $0.25 per
user for the BATS One Summary Feed or $0.50 per user for the BATS
One Premium Feed. External Distributors must count every
Professional User and Non-Professional User to which they provide
BATS One Feed data. See BATS One Fee Proposals, supra note 7.
    \11\ As defined in the Exchange's fee schedule, an External
Distributor of an Exchange Market Data product is a Distributor that
receives the Exchange Market Data product and then distributes that
data to a third party or one or more Users outside the Distributor's
own entity.
    \12\ As defined in the Exchange's fee schedule, a User of an
Exchange Market Data product is a natural person, a proprietorship,
corporation, partnership, or entity, or device (computer or other
automated service), that is entitled to receive Exchange data. A
Non-Professional User of an Exchange Market Data product is a
natural person who is not: (i) Registered or qualified in any
capacity with the Commission, the Commodity Futures Trading
Commission, any state securities agency, any securities exchange or
association, or any commodities or futures contract market or
association; (ii) engaged as an ``investment adviser'' as that term
is defined in Section 201(11) of the Investment Advisers Act of 1940
(whether or not registered or qualified under that Act); or (iii)
employed by a bank or other organization exempt from registration
under federal or state securities laws to perform functions that
would require registration or qualification if such functions were
performed for an organization not so exempt. A Professional User of
an Exchange Market Data product is any User other than a Non-
Professional User.
    \13\ The Data Consolidation Fee is $1,000 per month and is
designed to reflect the value of the aggregation and consolidation
function the Exchange performs in creating the BATS One Feed. See
BATS One Fee Proposals, supra note 7.
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Non-Substantive Change to the Description of the BATS One Enterprise
Fee
    The Exchange proposes a non-substantive change to the description
of the BATS One Enterprise fee. The fee schedule currently states that,
``[a]s an alternative to User fees, a recipient firm may purchase a
monthly Enterprise Fee to receive the BATS One Feed from an External
Distributor for an unlimited number of Professional and Non-
Professional Users.'' The Exchange proposes to amend this sentence in
two ways. The first amendment is to state that a recipient firm may
purchase a monthly Enterprise license, rather than Enterprise fee, as
the term ``license'' is a more accurate description. The second is to
specify that the recipient firm purchasing a monthly enterprise license
does so to distribute the BATS One Feed to an unlimited number of
Professional and Non-Professional Users.
2. Statutory Basis
BATS One Digital Media Enterprise Fee
    The Exchange believes that the proposed Digital Media Enterprise
Fee for the BATS One Feed is consistent with Section 6(b) of the
Act,\14\ in general, and Section 6(b)(4) of the Act,\15\ in particular,
in that it provides for an equitable allocation of reasonable fees
among recipients of the data and is not designed to permit unfair
discrimination among customers, brokers, or dealers. The Exchange also
believes that the proposed rule change is consistent with Section 11(A)
of the Act \16\ 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. Furthermore, the
proposed rule change is consistent with Rule 603 of Regulation NMS,\17\
which provides that any national securities exchange that distributes
information with respect to quotations for or transactions in an NMS
stock do so on terms that are not unreasonably discriminatory. In
adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility to
offer new and unique market data products to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation and competition for the
provision of market data.
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    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(4).
    \16\ 15 U.S.C. 78k-1.
    \17\ See 17 CFR 242.603.
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    In addition, the proposed fee is equitable and not unfairly
discriminatory because it will apply uniformly to market data vendors,
television broadcasters, Web site and mobile service providers. The
Exchange believes it is reasonable to establish a lower cost fee
structure that is designed to facilitate broader media distribution of
the BATS One Data Feed for informational purposes because it will
benefit investors generally.
    In establishing the Digital Media Enterprise Fee, the Exchange
recognizes that there is demand for a more seamless and easier-to-
administer data distribution mode that takes into account the expanded
variety of media and communication devices that investors utilize
today. The Exchange believes the Digital Media Enterprise Fee will be
easy to administer because data recipients that purchase it would not
be required to differentiate between Professional and Non-Professional
Users, account for the extent of access to the data, or report the
number of Users. This is a significant reduction on a recipient firm's
administrative burdens and is a significant value to investors. For
example, a television broadcaster could display the BATS One Feed data
during market-related programming and on its Web site or allow viewers
to view the data via their mobile devices, creating a more seamless
distribution model that will allow investors more choice in how they
receive and view market data, all without having to account for and/or
measure who accesses the data and how often they do so.
    The proposed Digital Media Enterprise Fee is equitable and
reasonable because it will also enable recipient firms to more widely
distribute data from the BATS One Feed to investors for informational
purposes at a lower cost than is available today. For example, a
recipient firm may purchase an Enterprise license in the amount of
$50,000 per month for the BATS One Summary Feed and $100,000 per month
for the BATS One Premium Feed to receive the BATS One Feed from an
External Distributor for an unlimited number of Professional and Non-
Professional Users, which is greater than the Digital Media Enterprise
fee proposed herein. The Exchange also believes the amount of the
Digital Enterprise [sic] is reasonable as compared to the existing
Enterprise fees discussed above because the distribution of BATS One
Feed data is limited to television, Web sites, and mobile devices for
informational purposes only, while distribution of the BATS One Feed
data pursuant to an Enterprise license contains no such limitation. The
Exchange also believes that the proposed Digital Media Enterprise fee
is equitable and reasonable because it is less than similar fees
charged by other exchanges.\18\
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    \18\ The Nasdaq Stock Market offers proprietary data products
for distribution over the internet and television under alternative
fee schedules that are subject to maximum fee of $50,000 per month.
See Nasdaq Rule 7039(b). The NYSE charges a Digit Media Enterprise
fee of $40,000 per month for the NYSE Trade Digital Media product.
See Securities Exchange Act Release No. 69272 (April 2, 2013), 78 FR
20983 (April 8, 2013) (SR-NYSE-2013-23).

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    The Exchange has taken into consideration its affiliated
relationship with BYX, EDGA, and EDGX in proposing the Digital Media
Enterprise fee to assure that vendors would be able to offer a similar
product on the same terms as the Exchange from a cost perspective.
While the BATS Exchanges are the exclusive distributors of the
individual data feeds from which certain data elements may be taken to
create the BATS One Feed, they are not the exclusive distributors of
the aggregated and consolidated information that comprises the BATS One
Feed. As discussed in in the BATS One Fee Proposal,\19\ any entity may
separately purchase the individual underlying products, and if they so
choose, perform a similar aggregation and consolidation function that
the Exchange performs in creating the BATS One Feed, and offer a data
feed with the same information included in the BATS One Feed to sell
and distribute it to its clients with no greater cost than the
Exchange.
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    \19\ See BATS One Fee Proposals, supra note 7.
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    To enable such competition, the Exchange is offering the Digital
Media Enterprise license for the BATS One Feed on terms that a
subscriber of the underlying feeds could offer a competing product if
it so chooses. The BATS One Feed is comprised of data included in EDGX
Depth, EDGA Depth, BYX Depth, and BZX Depth.\20\ Currently, an External
Distributor could create a competing product to the BATS One Premium
Feed \21\ by purchasing each of these depth of book products from the
individual BATS Exchanges and then performing its own aggregation and
consolidation functions. The combined External Distributor fees for
these individual data feeds of the BATS Exchanges is $12,500 per
month.\22\ An External Distributor that seeks to create a competing
product to the BATS One Summary Feed could instead subscribe to the
following data feeds: EDGX Top, EDGX Last Sale, EDGA Top, EDGA Last
Sale, BZX Top, BZX Last Sale, BYX Top, and BYX Last Sale,\23\ and then
perform their own aggregation and consolidation function. The combined
External Distributor fees for these individual data feeds of the BATS
Exchanges is $5,000 per month.\24\ The Exchange proposes to charge a
Digital Media Enterprise Fee ($15,000 per month for the BATS One
Summary Feed and $25,000 per month for the BATS One Premium Feed, plus
the $1,000 per month Data Consolidation fee) that exceeds the combined
External Distributor fees for each of the individual feeds listed above
to ensure that vendors could compete with the Exchange by creating the
same product as the BATS One Feed to sell to their clients at no
greater cost than the Exchange.
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    \20\ See EDGA Rule 13.8, EDGX Rule 13.8, BZX Rule 11.22(a) and
(c), and BYX Rule 11.22 (a) and (c) for a description of the depth
of book feeds offered by each of the BATS Exchanges.
    \21\ Like the Exchange, an External Distributor would also be
able to create a competing product to the BATS One Summary Feed from
the data received via EDGX Depth, EDGA Depth, BYX Depth, and BZX
Depth, without having to separately purchase the top and last sale
feeds from each of the BATS Exchanges.
    \22\ The monthly External Distributor fee is $2,500 per month
for EDGX Depth, $2,500 per month for EDGA Depth, $2,500 for BYX
Depth, and $5,000 for BZX Depth.
    \23\ See supra note 6. See also BATS Rule 11.22(d) and (g).
    \24\ The monthly External Distributor fee is $1,250 per month
for EDGX Top and EDGX Last Sale (as proposed herein), free for EDGA
Top and EDGA Last Sale, $1,250 for BYX Top and BYX Last Sale, and
$2,500 for BZX Top and BZX Last Sale. See BATS One Fee Proposals,
supra note 7.
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    The decision of the United States Court of Appeals for the District
of Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010), upheld the Commission's reliance upon the existence of
competitive market mechanisms to set reasonable and equitably allocated
fees for proprietary market data.
    In fact, the legislative history indicates that the Congress
intended that the market system `evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are removed'
and that the SEC wield its regulatory power `in those situations where
competition may not be sufficient,' such as in the creation of a
`consolidated transactional reporting system.'
    Id. at 535 (quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted
in 1975 U.S.C.C.A.N. 323). The court agreed with the Commission's
conclusion that ``Congress intended that `competitive forces should
dictate the services and practices that constitute the U.S. national
market system for trading equity securities.' '' \25\
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    \25\ NetCoalition, 615 F.3d at 535.
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    As explained below in the Exchange's Statement on Burden on
Competition, the Exchange believes that there is substantial evidence
of competition in the marketplace for data and that the Commission can
rely upon such evidence in concluding that the fees established in this
filing are the product of competition and therefore satisfy the
relevant statutory standards.\26\ In addition, the existence of
alternatives to the BATS One Feed, including real-time consolidated
data, free delayed consolidated data, and proprietary last sale data
from other sources, as described below, further ensures that the
Exchange cannot set unreasonable fees, or fees that are unreasonably
discriminatory, when vendors and users can elect such alternatives.
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    \26\ Section 916 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (the ``Dodd-Frank Act'') amended
paragraph (A) of Section 19(b)(3) of the Act, 15 U.S.C. 78s(b)(3),
to make clear that all exchange fees for market data may be filed by
exchanges on an immediately effective basis.
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    As the NetCoalition decision noted, the Commission is not required
to undertake a cost-of-service or ratemaking approach, and the Exchange
incorporates by reference into this proposed rule change its
affiliate's [sic] analysis of this topic in another rule filing.\27\
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    \27\ See Securities Exchange Act Release No. 63291 (Nov. 9,
2010), 75 FR 70311 (November 17, 2010) (SR-NYSEArca-2010-97).
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    For these reasons, the Exchange believes that the proposed fees are
reasonable, equitable, and not unfairly discriminatory.
Non-Substantive Change to the Description of the BATS One Enterprise
Fee
    The Exchange believes that the proposed change to the BATS One
Enterprise Fee is consistent with Section 6(b) of the Act,\28\ in
general, and Section 6(b)(4) of the Act,\29\ in particular, in that it
provides for an equitable allocation of reasonable fees among
recipients of the data and is not designed to permit unfair
discrimination among customers, brokers, or dealers. The proposal to
amend the description of the Enterprise fee within the fee schedule is
equitable and reasonable because the changes are designed to clarify
the fee schedule and avoid potential investor confusion. The proposed
changes do not amend the amount or application of the BATS One
Enterprise fee. The proposed changes are also non-discriminatory as
they would apply to all recipient firms uniformly [sic].
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    \28\ 15 U.S.C. 78f.
    \29\ 15 U.S.C. 78f(b)(4).
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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
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.

BATS One Digital Media Enterprise Fee
    The BATS One Feed Digital Media Enterprise fee will enhance
competition because it provides investors with an alternative option
for receiving market data and competes directly with similar market
data products currently offered by the NYSE and Nasdaq.\30\ The
Exchange notes that there is already actual competition for products
similar to the BATS One Feed. The NYSE offers BQT which provides BBO
and last sale information for the NYSE, NYSE Arca Equities, Inc. and
NYSE MKT LLC.\31\ Nasdaq offers Nasdaq Basic, a filed market data
product, and through its affiliate, offers NLS Plus which provides a
unified view of last sale information similar to the BATS One Feed.\32\
The existence of these competing data products demonstrates that there
is ample, existing competition for products such as the BATS One Feed
and the fees associated by such products is constrained by competition.
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    \30\ See Nasdaq Basic, http://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic (last visited May 29, 2014) (data feed
offering the BBO and Last Sale information for all U.S. exchange-
listed securities based on liquidity within the Nasdaq market
center, as well as trades reported to the FINRA/Nasdaq Trade
Reporting Facility (``TRF'')); Nasdaq NLS Plus, http://www.nasdaqtrader.com/Trader.aspx?id=NLSplus (last visited July 8,
2014) (data feed providing last sale data as well as consolidated
volume from the following Nasdaq OMX markets for U.S. exchange-
listed securities: Nasdaq, FINRA/Nasdaq TRF, Nasdaq OMX BX, and
Nasdaq OMX PSX); Securities Exchange Act Release No. 73553 (November
6, 2014), 79 FR 67491 (November 13, 2014) (SR-NYSE-2014-40) (Notice
of Amendment No. 1 and Order Granting Accelerated Approval to a
Proposed Rule Change, as Modified by Amendment No.1, To Establish
the NYSE Best Quote & Trades (``BQT'') Data Feed); http://www.nyxdata.com/Data-Products/NYSE-Best-Quote-and-Trades (last
visited May 27, 2014) (data feed providing unified view of BBO and
last sale information for the NYSE, NYSE Arca, and NYSE MKT).
    \31\ Id.
    \32\ Id.
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    In establishing the proposed fees, the Exchange considered the
competitiveness of the market for proprietary data and all of the
implications of that competition. The Exchange believes that it has
considered all relevant factors in order to establish fair, reasonable,
and not unreasonably discriminatory fees and an equitable allocation of
fees among all Users. The existence of alternatives to the BATS One
Feed, including the existing underlying feeds, consolidated data, and
proprietary data from other sources, ensures that the Exchange cannot
set unreasonable fees, or fees that are unreasonably discriminatory,
when vendors and subscribers can elect these alternatives or choose not
to purchase a specific proprietary data product if its cost to purchase
is not justified by the returns any particular vendor or subscriber
would achieve through the purchase.
    Finally, although the BATS Exchanges are the exclusive distributors
of the individual data feeds from which certain data elements would be
taken to create the BATS One Feed, the Exchange is not the exclusive
distributor of the aggregated and consolidated information that would
compose the BATS One Feed. The Exchange has taken into consideration
its affiliated relationship with BYX, EDGA, and EDGX in its design of
the BATS One Feed to assure that vendors would be able to offer a
similar product on the same terms as the Exchange from a cost
perspective. While the BATS Exchanges are the exclusive distributors of
the individual data feeds from which certain data elements may be taken
to create the BATS One Feed, they are not the exclusive distributors of
the aggregated and consolidated information that comprises the BATS One
Feed. As discussed in in [sic] the BATS One Fee Proposal,\33\ any
entity may separately purchase the individual underlying products, and
if they so choose, perform a similar aggregation and consolidation
function that the Exchange performs in creating the BATS One Feed, and
offer a data feed with the same information included in the BATS One
Feed to sell and distribute it to its clients with no greater cost than
the Exchange.
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    \33\ See BATS One Fee Proposals, supra note 7.
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    To enable such competition, the amount of the proposed Digital
Media Enterprise license compared to the cost of the individual data
feeds from the BATS Exchanges would enable a vendor to receive the
underlying data feeds and offer a similar product on a competitive
basis and with no greater cost than the Exchange. The amount of the
proposed Digital Media Enterprise license, coupled with the Data
Consolidation Fee, is not lower than the cost to a vendor of receiving
the underlying data feeds to create a competing product. Therefore, the
amount of the proposed Digital Media Enterprise license the Exchange
would charge clients for the BATS One Feed compared to the cost of the
individual data feeds from the BATS Exchanges would enable a vendor to
receive the underlying data feeds and offer a similar product on a
competitive basis and with no greater cost than the Exchange.
Non-Substantive Change to the Description of the BATS One Enterprise
Fee
    The proposal to amend the description of the Enterprise fee within
the fee schedule will not have any impact on completion [sic]. The
proposed changes are designed to clarify the fee schedule and avoid
potential investor confusion and do not amend the amount or application
of the BATS One Enterprise fee.

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

    The Exchange has neither solicited nor received written 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 \34\ and paragraph (f) of Rule 19b-4
thereunder.\35\ 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.
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    \34\ 15 U.S.C. 78s(b)(3)(A).
    \35\ 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_ADDRESS>Please include
File Number SR-BATS-2015-24 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BATS-2015-24. 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 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 Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street NE., Washington, DC 20549-1090, on
official business days between the hours of 10:00 a.m. and 3:00 p.m.
Copies of such filing also will be available for inspection and copying
at the principal office of the Exchange. All comments received will be
posted without change; 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-BATS-2015-24, and should be submitted on
or before April 23, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-07519 Filed 4-1-15; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 112 (Wednesday, June 11, 2014)]
[Notices]
[Pages 33548-33549]
[FR Doc No: 2014-13593]

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ENVIRONMENTAL PROTECTION AGENCY

[FRL-9909-32-Region 2]

Notice of Availability of Draft NPDES General Permit for Small
Municipal Separate Storm Sewer Systems in the Commonwealth of Puerto
Rico and Federal Facilities Within the Commonwealth of Puerto Rico

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of Draft NPDES General Permit.

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SUMMARY: The Director of the Caribbean Environmental Protection
Division (CEPD), Environmental Protection Agency--Region 2 (EPA), is
issuing this Notice of a Draft National Pollutant Discharge Elimination
System (NPDES) general permit, PRR040000/PRR04000F, for discharges from
small municipal separate storm sewer systems (small MS4) from urbanized
areas within the Commonwealth of Puerto Rico to waters of the United
States. This draft NPDES general permit establishes Notice of Intent
(NOI) requirements, standards, prohibitions and management practices
for discharges of storm water from small MS4s urbanized areas. A prior
Notice of Availability of a draft general permit was issued by EPA in
November 2005. EPA has substantially modified the draft general permit
and is issuing a new draft general permit pursuant to 40 CFR part 124.

DATES: Public comments must be received on or before August 11, 2014.
Within the comment period, interested persons may request a public
hearing pursuant to 40 CFR part 124 concerning the proposed permit.
Requests for a public hearing must be sent or delivered in writing to
the same address as provided below for public comments prior to the
close of the comment period. Requests for a public hearing must state
the nature of the issues proposed to be raised in the hearing. Pursuant
to 40 CFR part 124, EPA shall hold a public hearing if it finds, on the
basis of requests, a significant degree of public interest in a public
hearing on the proposed permit. If EPA decides to hold a public
hearing, a public notice of the date, time and place of the hearing
will be made at least 30 days prior to the hearing.

ADDRESSES: Submit your comments by one of the following methods:
    1. Mail: Multimedia Permits and Compliance Branch, US EPA Region 2,
City View Plaza II, Suite 7000, 48 Road 165 Km 1.2, Guaynabo, Puerto
Rico 00968-8069.
    2. Email<EMAIL_ADDRESS>    The draft permit is based on an administrative record available for
public review at EPA--Region 2, Caribbean Environmental Protection
Division, City View Plaza II, Suite 7000, 48 Road 165 Km 1.2, Guaynabo,
Puerto Rico 00968-8069. A reasonable fee may be charged for copying
requests. However, the draft general permit and fact sheet are
available at EPA's Web site: www.epa.gov/region02/water/permits.html.

FOR FURTHER INFORMATION CONTACT: Additional information concerning the
draft permit may be obtained between the hours of 8:30 a.m. and 4:30
p.m. Monday through Friday excluding holidays from: Sergio Bosques,
Caribbean Environmental Protection Division, US EPA Region 2, City View
Plaza II, Suite 7000, 48 Road 165 Km 1.2, Guaynabo, Puerto Rico 00968-
8069; telephone:<PHONE_NUMBER>; or email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: EPA is proposing to reissue the draft NPDES
general permit for the discharge of stormwater from small MS4s to
waters within the Commonwealth of Puerto Rico. The permit describes
three distinct small MS4s. These are the conventional cities and towns;
Non-Conventional state, federal and other publicly owned systems; and
Non-Conventional transportation systems.
    The conditions in the draft permit are established pursuant to
Clean Water Act (CWA) Part 402(p)(3)(iii) to ensure that pollutant
discharges from small municipal separate storm sewer systems (small
MS4s) are reduced to the maximum extent practicable (MEP), protect
water quality, and satisfy the appropriate water quality requirements
of the CWA. The term small municipal separate storm sewer system is
available in 40 CFR part 122.26(b). In addition, this term also
includes systems similar to separate storm sewer systems and flood
management conveyances in municipalities such as military bases, large
hospital or prison complexes, highways, and flood control pump
stations, and other thoroughfares. The term does not include separate
storm sewers in very discrete areas, such as individual buildings. For
example, an armory located in an urbanized area would not be considered
a regulated small MS4.
    The draft general permit sets forth the requirements for the small
MS4 to ``reduce the discharge of pollutants to the maximum extent
practicable, including management practices, control techniques, and
system, design and engineering methods'' (See Section 402(p)(3)(B)(iii)
of the CWA). MEP is the statutory standard that establishes the level
of pollutant reductions that MS4 operators must achieve. EPA believes
that implementation of best management practices (BMPs) designed to
control storm water runoff from the MS4 is generally the most
appropriate approach for reducing pollutants to satisfy the MEP
standard. Pursuant to 40 CFR 122.44(k), the draft permit contains BMPs,
including development and implementation of a comprehensive stormwater
management program (SWMP) as the mechanism to achieve the required
pollutant reductions.

    Section 402(p)(3)(B)(iii) of CWA also authorizes EPA to include in
an MS4 permit ``such other provisions as [EPA] determine[s] appropriate
for control of . . . pollutants.'' This provision forms a basis for
imposing water quality-based effluent limitations (WQBELs), consistent
with the authority in Section 301(b)(1)(C) of the CWA. See Defenders of
Wildlife v. Browner, 191 F.3d 1159, 1166-67 (9th Cir. 1999); 64 FR
68722, 68753, 68788 (Dec. 8, 1999). Accordingly, the draft permit
contains the water quality-based effluent limitations, expressed in
terms of BMPs, which EPA has determined are necessary and appropriate
under the CWA.
    EPA issued a final general permit to address stormwater discharges
from small MS4s on November 6, 2006. The 2006 general permit required
small MS4s to develop and implement a SWMP designed to control
pollutants to the maximum extent practicable and protect water quality.
This draft permit builds on the requirements of the previous general
permit.
    EPA views the MEP standard in the CWA as an iterative process. MEP
should continually adapt to current conditions and BMP effectiveness.
Compliance with the requirements of this general permit will meet the
MEP standard. The iterative process of MEP consists of a municipality
developing a program consistent with specific permit requirements,
implementing the program, evaluating the effectiveness of the BMPs
included as part of the program, then revising those parts of the
program that are not effective at controlling pollutants, then
implementing the revisions, and evaluating again. The changes contained
in the draft general permit reflect the iterative process of MEP.
Accordingly, the draft general permit contains more specific tasks and
details than the 2006 general permit.
    EPA has explained in the draft general permit fact sheet a summary
of permit conditions. The draft general permit and fact sheet are
available at EPA's Web site: www.epa.gov/region02/water/permits.html.

Other Legal Requirements

A. Endangered Species Act (ESA)

    The provisions related to the ESA have been enhanced from those in
the 2006 draft permit. EPA will be requesting concurrence from the
appropriate Federal services (U.S. Fish and Wildlife Service and
National Marine Fisheries Service) in connection with the 2014 draft
and has renewed this request for the new Draft Permit.

B. Executive Order 12866

    EPA has determined that this general permit is not a ``significant
regulatory action'' under the terms of Executive Order 12866 and is
therefore not subject to OMB review.

C. Paperwork Reduction Act

    The information collection requirements of this permit were
previously approved by the Office of Management and Budget (OMB) under
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.,
and assigned OMB control number 2040-0004.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq.,
requires that EPA prepare a regulatory flexibility analysis for rules
subject to the requirements of 5 U.S.C. 553(b) that have a significant
impact on a substantial number of small entities. However, general
NPDES permits are not ``rules'' subject to the requirements of 5 U.S.C.
553(b) and are therefore not subject to the RFA.

E. Unfunded Mandates Reform Act

    Section 201 of the Unfunded Mandates Reform Act (UMRA), Public Law
104-4, generally requires Federal agencies to assess the effects of
their ``regulatory actions'' (defined to be the same as ``rules''
subject to the RFA) on tribal, state, and local governments and the
private sector. However, general NPDES permits are not ``rules''
subject to the requirements of 5 U.S.C. 553(b) and are therefore not
subject to the RFA or the UMRA.

    Authority: This action is being taken under the Clean Water Act,
33 U.S.C. 1251 et seq.

    Dated: April 9, 2014.
Jos[eacute] C. Font,
Director, Caribbean Environmental Protection Division.
[FR Doc. 2014-13593 Filed 6-10-14; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 88, Number 34 (Tuesday, February 21, 2023)]
[Notices]
[Pages 10563-10567]
[FR Doc No: 2023-03474]

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

[Release No. 34-96911; File No. SR-CboeBZX-2023-007]

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

February 14, 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 February 2, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') 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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX Options'')
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/equities/regulation/rule_filings/bzx/), 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 to (1) reduce the
standard fee for Customer and Firm/BD/JBO orders that remove liquidity
in Penny Securities; (2) update the Market Maker Penny Add Volume
Tiers; (3) update the criteria for the Customer, Firm, Broker Dealer
and Joint Back Office Penny Take Volume Tiers; and (4) delete the NBBO
Setter Tiers. The Exchange proposes to implement these changes
effective February 1, 2023.\3\
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    \3\ The Exchange initially filed the proposed fee changes on
February 1, 2023 (SR-CboeBZX-2023-006). On February 2, 2023 the
Exchange withdrew that filing and submitted this filing.
---------------------------------------------------------------------------

    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 options venues to which market participants
may direct their order flow. Based on publicly available information,
no single options exchange has more than 17% of the market share and
currently the Exchange represents only approximately 5% of the market
share.\4\ Thus, in such a low-concentrated and highly competitive
market, no single options exchange, including the Exchange, possesses
significant pricing power in the execution of option order flow. The
Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow or discontinue to reduce use of certain categories of
products, in response to fee changes. Accordingly, competitive forces
constrain the Exchange's transaction fees, and market participants can
readily trade on competing venues if they deem pricing levels at those
other venues to be more favorable.
---------------------------------------------------------------------------

    \4\ See Cboe Global Markets U.S. Options Market Monthly Volume
Summary (January 30, 2023), available at https://www.cboe.com/us/options/market_statistics/.
---------------------------------------------------------------------------

    The Exchange's Fees Schedule sets forth standard rebates and rates
applied per contract. For example, the Exchange assesses a standard fee
of $0.50 per contract for Customer and Firm/BD/JBO orders that remove
liquidity in Penny Securities. The Fee Codes and Associated Fees
section of the Fees Schedule also provide for certain fee codes
associated with certain order types and market participants that
provide for various other fees or rebates. Additionally, the Fee
Schedule offers tiered pricing which provides Members \5\ opportunities
to qualify for higher rebates or reduced fees where certain volume
criteria and thresholds are met. In response to the competitive
environment, the Exchange also offers tiered pricing, which provides
Members with 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.
---------------------------------------------------------------------------

    \5\ See Exchange Rule 1.5(n).

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    First, the Exchange proposes to reduce the standard fee for
Customer and Firm/BD/JBO orders (i.e., yield fee codes PC and PD,
respectively) that remove liquidity in Penny Securities from $0.50 to
$0.48.\6\
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    \6\ In connection with the proposed fee changes, the Exchange
also proposes to update the corresponding listed fee of $0.50 for
fee codes PC and PD in the Fee Codes and Associated Fees table to
the proposed new rate of $0.48.
---------------------------------------------------------------------------

    Second, the Exchange proposes to update the Market Maker Penny Add
Volume Tiers (i.e., applicable to orders yielding fee code PM) set
forth in footnote 6. The Exchange currently provides opportunities for
rebates per contract to add liquidity in Penny Securities as follows:

----------------------------------------------------------------------------------------------------------------
                                         Rebate per
                 Tier                    contract to                       Required criteria
                                             add
----------------------------------------------------------------------------------------------------------------
Tier 1...............................         ($0.33)  Member has an ADAV \7\ in Market Maker orders >=0.10% of
                                                        average OCV.\8\
Tier 2...............................          (0.40)  Member has an ADAV in Market Maker orders >=0.20% of
                                                        average OCV.
Tier 3...............................          (0.41)  Member has an ADAV in Market Maker orders >=0.30% of
                                                        average OCV.
Tier 4...............................          (0.42)  (1) Member has a Step-Up ADAV in Market Maker orders from
                                                        March 2021 >=0.15% of average SPY/IWM/QQQ OCV; and
                                                       (2) Member is an LMM in at least 85 LMM Securities on BZX
                                                        Equities.
Tier 5...............................          (0.42)  Member has an ADAV in Market Maker orders >=0.45% of
                                                        average OCV.
Tier 6...............................          (0.44)  (1) Member has a Step-Up ADAV in Market Maker orders from
                                                        March 2021 >=0.25% of average SPY/IWM/QQQ OCV; and
                                                       (2) Member is an LMM in at least 85 LMM Securities on BZX
                                                        Equities.
Tier 7...............................          (0.46)  Member has an ADAV in Market Maker orders >=0.75% of
                                                        average OCV.
Tier 8...............................          (0.48)  Member has an ADAV in Market Maker orders >=1.50% of
                                                        average OCV.
----------------------------------------------------------------------------------------------------------------

    The Exchange proposes to amend these tiers as follows: \9\
---------------------------------------------------------------------------

    \7\ ``ADAV'' means average daily added volume calculated as the
number of contracts added.
    \8\ ``OCC Customer Volume'' or ``OCV'' means the total equity
and ETF options volume that clears in the Customer range at the
Options Clearing Corporation (``OCC'') for the month for which the
fees apply, excluding volume on any day that the Exchange
experiences an Exchange System Disruption and on any day with a
scheduled early market close.
    \9\ The Exchange proposes to amend these tiers as described in
the table in Footnote 6 and amend the amounts of the rebates in the
Standard Rates table.
---------------------------------------------------------------------------

     modify Tier 1 to reduce the rebate from $0.33 to $0.31 per
contract to add liquidity and require the Member to have an ADAV in
Market Makers greater than or equal to 0.15%, increased from 0.10%, of
average OCV to qualify for the rebate;
     modify Tier 2 to reduce the rebate from $0.40 to $0.38 per
contract to add liquidity and require the Member to have an ADAV in
Market Maker orders greater than or equal to 0.25%, increased from
0.20%, of average OCV to qualify for the rebate;
     modify Tier 3 to reduce the rebate from $0.41 to $0.39 per
contract to add liquidity and require the Member to have an ADAV in
Market Makers orders greater than or equal to 0.40%, increased from
0.30%, of average OCV to qualify for the rebate;
     delete current Tiers 4 through 8;
     add new Tier 4 to provide an enhanced rebate of $0.40 per
contract to add liquidity if a Member has (1) an ADAV in Market Makers
orders greater than or equal to 0.45% of average OCV and (2) a Step-Up
ADRV \10\ in Customer orders greater than or equal to 0.05% of OCV from
December 2022;
---------------------------------------------------------------------------

    \10\ ``ADRV'' means average daily removed volume calculated as
the number of contracts removed.
---------------------------------------------------------------------------

     add new Tier 5 to provide an enhanced rebate of $0.43 per
contract to add liquidity if a Member has an ADAV in Market Maker
orders greater than or equal to 0.60% of average OCV; and
     add new Tier 6 to provide an enhanced rebate of $0.44 per
contract to add liquidity if a Member has (1) an ADAV in Market Maker
orders greater than or equal to 0.75% of average OCV and (2) an ADRV in
Customer orders greater than or equal to 0.50% of average OCV.
    Third, the Exchange proposes to update the criteria required to
qualify for the Customer, Firm, Broker Dealer and Joint Back Office
Penny Take Volume Tiers (i.e., applicable to orders yielding fee codes
PC and PD) set forth in Footnote 14. Currently, the Exchange offers an
additional rebate of (1) $0.01 per contract to remove liquidity if a
Member has a Step-Up ADRV in (a) Customer orders from March 2021
greater than or equal to 35,000 contracts and (b) Firm/BD/JBO orders
from March 2021 greater than or equal to 10,000 contracts (Tier 1); and
(2) $0.02 per contract to remove liquidity if a Member has a Step-Up
ADRV in (a) Customer orders from March 2021 greater than or equal to
70,000 contracts and (b) Firm/BD/JBO orders from March 2021 greater
than or equal to 20,000 contracts (Tier 2). The proposed rule change
updates the criteria to qualify for the Tier 1 additional rebate of
$0.01 and for the Tier 2 additional rebate of $0.02 to require a Member
to have an ADRV in Customer orders greater than or equal to 0.30% or
0.50%, respectively, of average OCV. Additionally, the proposed rule
change reframes the rebates as reduced fees. Members that achieve Tier
1 will pay a reduced fee of $0.47 (rather than the standard rate of
$0.48), which is equivalent to a rebate of $0.01, and Members that
achieve Tier 2 will pay a reduced fee of $0.46 (rather than the
standard rate of $0.48), which is equivalent to a rebate of $0.02. This
is merely a change in terminology.\11\
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    \11\ Because the proposed rule change reframes these rebates as
reduced fees, the proposed rule change also adds the amounts of the
reduced fees ($0.47 and $0.46) to the Standard Rates table in
addition to updating the amounts in the table in Footnote 14.
---------------------------------------------------------------------------

    Fourth, the proposed rule change deletes the NBBO Setter Tiers
applicable to fee codes PM and PN that establish a new national best
bid and offer (``NBBO''). Currently, the Exchange provides
opportunities for additional rebates per contract to add liquidity of
$0.01 and $0.02 if a Member has an ADAV in Firm/Market Maker/Away MM
orders that establish a new NBBO greater than or equal to 0.25% or
0.45%, respectively of average OCV. The Exchange no longer wishes to
maintain this rebate and proposes to eliminate the NBBO Setting Tiers
from its Fee Schedule (and eliminate corresponding references to
footnote 4 in the Fee Codes and Associated Fees table). The Exchange
would rather redirect future resources and funding into other programs
and tiers intended to incentivize increased order flow.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of

Section 6(b) of the Act.\12\ Specifically, the Exchange believes the
proposed rule change is consistent with the Section 6(b)(5) \13\
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) \14\ requirement that the rules of an exchange not be designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ Id.
---------------------------------------------------------------------------

    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 proposed rule change
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, competing exchanges offer similar tiered pricing
structures, including schedules of rebates and fees that apply based
upon similarly situated 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.
    The Exchange believes the proposed rule change to reduce the
standard fee for Customer and Firm/BD/JBO orders that remove liquidity
in Penny Securities is reasonable because it is a modest decrease in
this transaction rate for these orders and continue to be in line with
the standard fee for orders of other market participants that remove
liquidity in Penny Securities on the Exchange.\15\ Additionally, the
reduced fee is in line with (and in fact lower than in some cases) fees
assessed for similar transactions at other exchanges.\16\ The Exchange
believes the proposed change is equitable and not unfairly
discriminatory because it applies uniformly to all Members and, as
previously noted, the reduced fee is in line with the standard fee for
orders submitted for other market participants that remove liquidity in
Penny Securities on the Exchange.
---------------------------------------------------------------------------

    \15\ As set forth in the Fee Schedule, the standard fee for
orders that remove liquidity in Penny Securities is between $0.47
and $0.50 for Professional, Market Maker, and Away MM orders.
    \16\ See, e.g., NYSE Arca Fee Schedule, Transaction Fee for
Electronic Executions--Per Contract, which provides that Firms and
Broker Dealers that remove liquidity are assessed $0.50 per contract
in Penny Issues and Customers that remove liquidity are assessed
$0.49 per contract. See also Cboe EDGX Options Fees Schedule, which
provides Away Market Makers, Broker Dealers, JBOs, and Professionals
that remove liquidity are assessed $0.48 per contract in Penny
Program Securities.
---------------------------------------------------------------------------

    The Exchange believes the proposed reduced rebates offered under
the revised Market Maker Penny Add Volume Tiers are reasonable because
Members are still eligible to receive rebates for meeting the
corresponding criteria, albeit at lower amounts then before. While the
Market Maker Penny Add Volume Tiers, as proposed, will provide lower
rebates than those currently offered (ranging from $0.31 to $0.44
rather than $0.33 to $0.48) and while the proposed changes to the
criteria under the proposed tiers may make them more difficult to
attain, the Exchange still believes that the changes are reasonable as
the tiers, even as amended, will continue to incentivize Members to
send additional Market Maker orders to the Exchange. An overall
increase in add activity may provide for deeper, more liquid markets
and execution opportunities at improved prices, which ultimately offers
additional cost savings, supports the quality of price discovery,
promotes market transparency and improves market quality for all
investors. Moreover, the Exchange is not required to maintain these
tiers nor provide rebates. The Exchange believes the proposed changes
to the rebates offered under these tiers still remain commensurate with
the corresponding criteria under the respective tiers.
    The Exchange believes the proposed change is also equitable and not
unfairly discriminatory because it applies uniformly to all Members,
who will have the opportunity to meet the tiers' criteria and receive
the corresponding enhanced rebate for each tier 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 these
proposed changes would definitely result in any Members qualifying for
the proposed rebates. While the Exchange has no way of predicting with
certainty how the proposed changes will impact Member activity, based
on trading activity from the prior months, the Exchange anticipates
that up to two Members will achieve Tier 1, up to two Members will
achieve Tier 2, up to three Members will achieve Tier 3, up to two
Members will achieve Tier 4, up to one Member will achieve Tier 5, and
up to one Member will achieve Tier 6. Additionally, all Members are
able to increase their Market Maker order flow to attempt to achieve
these 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 rule change to modify the
criteria required to qualify for the Customer, Firm, Broker Dealer and
Joint Back Office Penny Take Volume Tiers is reasonable because the
proposed cri. The Exchange proposes no changes to the amounts of the
rebates (which the Exchange proposes to reframe as reduced fees), and
the Exchange believes the proposed criteria remain commensurate with
the corresponding reduced fees. The Exchange believes the revised
criteria will continue to encourage Members to send additional
Customer, Firm, Broker Dealer and JBO orders to the Exchange. Greater
remove volume order flow may increase transactions on the Exchange,
which the Exchange believes incentivizes liquidity providers to submit
additional liquidity and execution opportunities. An overall increase
in activity deepens the Exchange's liquidity pool, offers additional
cost savings, supports the quality of price discovery, promotes market
transparency and improves market quality for all investors.
    The Exchange believes the proposed change is also equitable and not
unfairly discriminatory because it applies uniformly to all Members,
who will have the opportunity to meet the tiers' criteria and receive
the corresponding enhanced rebate for each tier 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 these
proposed changes would definitely result in any Members qualifying for
the proposed rebates. While the Exchange has no way of predicting with
certainty how the proposed changes will impact Member activity, based
on trading activity from the prior months, the Exchange anticipates
that up to three Members will achieve Tier 1 and up to one Member will
achieve Tier 2. Additionally, all Members are able to increase their
Customer/Firm/BD/JBO order flow to attempt to achieve these tiers.
Should a Member not meet the proposed new criteria, the Member will
merely not receive that corresponding enhanced rebate.

    The Exchange believes eliminating the NBBO Setter Tiers under
Footnote 4 is reasonable because the Exchange is not required to
maintain this program or provide additional rebates. Members may still
have other opportunities to obtain enhanced rebates for orders in Penny
Securities, such as via the Penny Add Volume Tiers (via Footnotes 1, 2
and 6 of the Fee Schedule). The Exchange believes that eliminating the
NBBO Setter Tiers is equitable and not unfairly discriminatory because
it applies uniformly to all Members. The Exchange also notes no Member
has achieved either of these tiers in the last two months and no longer
wishes to maintain this program. Further, the Exchange notes that the
proposed changes will not adversely impact any Member's ability to
otherwise qualify for reduced fees or enhanced rebates offered under
other programs in the Fee Schedule.

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. The Exchange believes the
proposed rule change does not impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Particularly, the Exchange believes the proposal
to reduce the standard fee for Customer and Firm/BD/JBO orders that
remove liquidity in Penny Securities will not impose any burden on
intramarket competition because it will apply uniformly to all Members.
All Members that submit orders yielding fee codes PD and PC will pay
this same reduced fee.
    The Exchange believes the proposals to amend the Market Maker Penny
Add Volume Tiers and the Customer, Firm, Broker Dealer and Joint Back
Office Penny Take Volume Tiers also not impose any burden on
intramarket competition, as they will also apply to all Members. All
Members will continue to have an opportunity to receive rebates under
various tiers in both programs. Market Maker Volume Add Tiers 1 through
6 are generally designed to increase the competitiveness of BZX and
incentivize participants to increase their order flow on the Exchange,
providing for additional execution opportunities for market
participants and improved price transparency. An overall increase in
add activity may provide for deeper, more liquid markets and execution
opportunities at improved prices. Customer Volume Take Tiers 1 and 2
are generally designed to attract customer order flow. Greater remove
volume order flow may increase transactions on the Exchange, which the
Exchange believes incentivizes liquidity providers to submit additional
liquidity and execution opportunities. An overall increase in activity
deepens the Exchange's liquidity pool, offers additional cost savings,
supports the quality of price discovery, promotes market transparency
and improves market quality for all investors. Furthermore, greater
overall order flow, trading opportunities, and pricing transparency
benefit 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.
    Additionally, the Exchange believes the proposal to eliminate the
NBBO Setter Tiers will not impose any burden on intramarket competition
because it will no longer be available to any Members. No Member has
qualified for either tier in the last two months, and Members may still
have other opportunities to obtain enhanced rebates for orders in Penny
Securities, such as via the Penny Add Volume Tiers (via Footnotes 1, 2
and 6 of the Fee Schedule).
    The Exchange does not believe that the proposed changes represent a
significant departure from pricing currently offered by the Exchange or
pricing offered by other options exchanges. Members may opt to disfavor
the Exchange's pricing if they believe that alternatives offer them
better value. Accordingly, the Exchange does not believe that the
proposed changes will impair the ability of Members or competing venues
to maintain their competitive standing in the financial markets.
    The Exchange also believes the proposed rule change 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 they may participate on and
direct their order flow, including 15 other options exchanges.
Additionally, the Exchange represents a small percentage of the overall
market. Based on publicly available information, no single options
exchange has more than 17% of the market share. Therefore, no exchange
possesses significant pricing power in the execution of order flow.
Indeed, participants can readily choose to send their orders to other
exchanges 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.'' 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'. . . .''. 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.

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)(ii) of the Act \17\ and Rule 19b-4(f)(2) \18\ thereunder.
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    \17\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \18\ 17 CFR 240.19b-4(f)(2).
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    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 shall 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-CboeBZX-2023-007 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-CboeBZX-2023-007. 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-CboeBZX-2023-007 and should be submitted
on or before March 14, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-03474 Filed 2-17-23; 8:45 am]
BILLING CODE 8011-01-P