[Federal Register Volume 86, Number 54 (Tuesday, March 23, 2021)]
[Notices]
[Pages 15513-15518]
[FR Doc No: 2021-05915]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91341; File No. SR-CboeEDGX-2021-015]

Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Fee Schedule To Expand the Existing Financial Product
Distribution Program To Provide for a Derived Data Platform Service

March 17, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 4, 2021, Cboe EDGX Exchange, Inc. (``Exchange'' or ``EDGX'')
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 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. (``EDGX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (the ``Commission'') a
proposed rule change to amend the Fee Schedule to expand the existing
Financial Product Distribution Program (the ``Program'') to provide for
a Derived Data Platform Service. Additionally, the proposal seeks to
enhance the Program to provide for the distribution of data derived
from the Cboe Aggregated Market (``Cboe One'') \3\ Summary Feed. The
text of the proposed rule change is provided in Exhibit 5.
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    \3\ See Exchange Rule 13.8(b).
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    The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to implement a pricing
structure that would reduce fees charged to Distributors of ``Derived
Data'', as defined below, through a Derived Data Platform Service.
Additionally, the proposal seeks to enhance the Program to permit the
distribution of data derived from Cboe One Summary through the existing
White Label Service, Application Programming Interface (``API'')
Service, and the proposed Platform Service.\4\
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    \4\ The Exchange initially filed the proposed fee changes
January 4, 2021 (SR-CboeEDGX-2021-003). On March 4, 2021, the
Exchange withdrew that filing and submitted this proposal.
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Background
    Under the current Program, a Distributor may subscribe to one of
two Derived Data Service options, White Label Service or API Service.
As discussed in further detail below, the Exchange proposes to
introduce a third Derived Data Service option called the Platform
Service. Furthermore, the Exchange seeks to offer Cboe One Summary \5\
data under the White Label Service, API Service, and the proposed

Platform Service. EDGX Top \6\ data is currently the only Exchange data
offered under the White Label and API Service options. Under the
Program, regardless of the Service option selected by a Distributor,
the Distributors receive the same real-time Exchange data (e.g., EDGX
Top) as all other subscribers of such Exchange data. From the Exchange
data, a Distributor may create ``Derived Data'', which is pricing data
or other data that (i) is created in whole or in part from Exchange
data, (ii) is not an index or financial product, and (iii) cannot be
readily reverse[hyphen]engineered to recreate Exchange data or used to
create other data that is a reasonable facsimile or substitute for
Exchange data. Derived Data may be created by Distributors for a number
of different purposes, as determined by the Distributor. Possible uses
include the display of information or data, or the creation of
derivative instruments, such as swaps,\7\ swaptions,\8\ or contracts
for difference.\9\ The specific use of Exchange data is determined by
the Distributor, as applicable fees do not depend on the purpose for
placing the Derived Data under the Program. However, the Distributor
must select the appropriate Service option under the Program applicable
to its distribution of the Derived Data.
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    \5\ Cboe One Summary is a proprietary data product that provides
the top of book quotations and execution information for all listed
equity securities traded across the Exchange and its affiliated U.S.
equities exchanges (the ``Cboe equity exchanges'').
    \6\ EDGX Top is an uncompressed data feed that offers top of
book quotations and execution information based on equity orders
entered into the System.
    \7\ A swap is a derivative contract in which two parties agree
to exchange financial instruments.
    \8\ A swaption, or swap option, is an option to enter into a
swap at a specified time.
    \9\ A contract for difference is an agreement to exchange the
difference between the current value of an asset and its future
value. If the price increases, the seller pays the buyer the amount
of the increase. If the price decreases, the buyer pays the seller
the amount of the decrease.
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    Generally, the recipient of an Exchange data product that
distributes that data outside of its own firm is subject to External
Distribution \10\ fees. Such External Distribution fees vary based on
the type of Exchange data product the recipient is subscribed to (e.g.,
EDGX Top, Cboe One Summary, etc.).\11\ Specifically, the External
Distribution Fees payable by the recipient of EDGX Top are as follows:
Distribution Fee $2,500/month; Professional User Fee $4.00/month; and
Non-Professional User Fee $0.10/month.\12\ The External Distribution
Fees payable the recipient of Cboe One Summary are as follows:
Distribution Fee ($5,000/month), Professional User Fee ($10/month), and
Non-Professional User Fee ($0.25/month). Additionally, subscribers of
Cboe One Summary are subject to the Data Consolidation Fee.\13\
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    \10\ External Distribution occurs when a Distributor that
receives an Exchange Market Data product distributes that data to a
third-party or one or more users outside the Distributor's own
entity.
    \11\ External Distribution fees are listed in the Exchange's Fee
Schedule by Exchange Market Data product. For example, the External
Distribution Fees payable by the recipient of EDGX Top are as
follows: Distribution Fee $2,500/month; Professional User Fee $4.00/
month; and Non-Professional User Fee $0.10/month. As an alternative
to User fees, a Distributor may purchase a monthly Enterprise
license or Digital Media Enterprise license in addition to the
Distribution and User Fees.
    \12\ As an alternative to User fees, a Distributor may purchase
a monthly Enterprise license or Digital Media Enterprise license in
addition to the Distribution and User Fees.
    \13\ The Data Consolidation Fee is generally $1,000/month. An
External Distributor that meets the criteria for the Small Retail
Broker Distribution Program is charged a fee of $350/month instead
of the normal $1,000/month Data Consolidation Fee.
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    The Exchange currently offers a White Label Service and an API
Service that allow Distributors to benefit from certain discounted
External Distribution Fees and User Fees for EDGX Top data. Instead of
the regular fee for External Distribution of Exchange data,
Distributors of Derived Data under both the White Label Service and API
Service are charged a tiered External Subscriber Fee based on the
number of External Subscribers that receive Derived Data from the
Distributor.\14\ Additionally, Distributors are charged a Professional
User \15\ Fee based on the number of Professional Users of the Derived
Data, which is the same as the Professional User Fee for EDGX Top data
provided under the External Distribution Fees. Non-Professional Users
of Derived Data are not subject to a fee under either the White Label
Service or the API Service.
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    \14\ The tiered External Subscriber Fee for EDGX Top Derived
Data White Label Service ranges from $200 to $300 per month and per
External Subscriber; thus, the External Subscriber fee is
significantly less than the $2,500/month Distribution. The tiered
External Subscriber Fee for EDGX Top Derived Data API Service ranges
from $1,500 up to $2,500 per month and per External Subscriber;
thus, the External Subscriber fee may be less than the $2,500/month
Distribution Fee.
    \15\ A ``Professional User'' of an Exchange Market Data product
is any User other than a Non-Professional User. A ``Non-Professional
User'' of an Exchange Market Data product is a natural person or
qualifying trust that uses Data only for personal purposes and not
for any commercial purpose and, for a natural person who works in
the United States, is not: (i) Registered or qualified in any
capacity with the Securities and Exchange Commission, the
Commodities 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 202(a)(11)
of the Investment Advisors 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; or, for a natural person who works
outside of the United States, does not perform the same functions as
would disqualify such person as a Non-Professional User if he or she
worked in the United States.
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    The White Label Service is a type of hosted display solution in
which a Distributor hosts, maintains, and controls a website or
platform on behalf of a third-party entity. The service allows
Distributors to make Derived Data available on a platform that is
branded with a third-party brand, or co-branded with a third-party and
a Distributor, while the Distributor maintains control of the
applications data, entitlements and display. Alternatively, the API
Service is a type of data feed distribution in which a Distributor
delivers an API or similar distribution mechanism to a third-party
entity for use within one or more platforms. The API Service allows
Distributors to provide Derived Data to a third-party entity for use
within one or more downstream platforms that are operated and
maintained by the third-party entity. The Distributor maintains control
of the entitlements, but does not maintain technical control of the
usage or the display.
Derived Data Platform Service
    Now, the Exchange is proposing to implement a third service under
the Program, the Platform Service. Under the Platform Service, a
Distributor could receive either EDGX Top, or as discussed in further
detail below, Cboe One Summary data. The Exchange data provided to
Distributors under the Platform Service would be identical to Exchange
data provided to Distributors under both the White Label and API
Services. In contrast to the White Label and API Services, the Platform
Service would allow a Distributor to provide derivative products
directly to users that are hosted within their infrastructure rather
than to third-party entities who in turn provide derivative products to
their end users. The Platform Service would be strictly limited to
derivative products based in whole or in part on Exchange data where
only user remote access is permitted.
    As discussed above, distributors of EDGX Top may normally be
subject to External Distribution and User Fees. Under the proposed
Platform Service, Distributors would be liable for the normally
applicable External Distribution and User Fees listed above except for
the Non-Professional User fee.\16\ The Non-Professional User Fee would
be eliminated when participating in the Platform Service, thereby
reducing costs for Distributors that

provide access to such data directly to retail investors. The External
Subscriber and User fees associated with the White Label Service and
API Service are charged solely to the Distributor. At the Distributor's
discretion, it may pass through the External Subscriber and User Fees
to External Subscribers who provide Derived Data to their end users. If
External Subscriber and User Fees and fee reductions are passed through
to an External Subscriber by the Distributor, the External Subscriber
can benefit from the External Distribution Fee once a Distributor
reaches a higher scale, and also from the waiver of the Non-
Professional User Fees. Therefore, the White Label Service and API
Service may provide benefits to both External Subscribers as well as
Distributors as Distributors increase their distribution scale. The
Platform Service extends the Non-Professional User Fee waiver to
Distributors of Derived Data who offer a Platform Service to their own
end users, allowing Distributors to benefit consistently across
services.
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    \16\ The Non-Professional User Fee for external distribution of
EDGX Top is $0.10/month.
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    Like the existing White Label Service and API Service, the proposed
Platform Service would be entirely optional, in that it would only
apply to Distributors that opt to use Derived Data to create a Platform
Service, as described herein. It would not impact or raise the cost of
any other Exchange product, nor would it affect the cost of Exchange
data, except in instances where Derived Data is made available on a
Platform Service. A Distributor that provides a Platform Service for
Exchange data that is not Derived Data or distributes Derived Data
through a platform other than a White Label Service, API Service, or
Platform Service would be liable for the fees normally applicable for
the distribution of Exchange data.
Cboe One Summary
    In addition to the above, the Exchange is proposing to adopt fees
for the distribution of data derived from Cboe One Summary under the
existing White Label Service and API Service, as well as the proposed
Platform Service. Specifically, the Exchange is now proposing a fee
amendment to allow Distributors that participate in the Program to
create Derived Data from Cboe One Summary in addition to EDGX Top.
Therefore, Distributors of Derived Data created from Cboe One Summary
could display information or data or create derivative instruments
based on top of book information across the four Cboe equity exchanges
rather than just EDGX. The Exchange believes that the proposal will
enhance the Program as the inclusion of Cboe One Summary will allow
Distributors to create Derived Data that is based on a more
comprehensive view of the U.S. equities market.
    As noted above, Distributors of Cboe One Summary data may be
subject to the normal External Distribution Fees, User Fees, and the
Data Consolidation Fee. As proposed, a Distributor that provides
Derived Data from Cboe One Summary externally would be liable for the
proposed fees discussed below instead of the fees normally applicable
for the External Distribution of Cboe One Summary. Existing fees for
EDGX Top Derived Data within a White Label Service or API Service are
comprised of a tiered fee based on the number of External Subscribers,
a monthly fee for each Professional User, and include no fee for Non-
Professional Users. Alternatively, the proposed fees for the Platform
Service are comprised of the normal External Distribution and
Professional User Fees applicable for the distribution of EDGX Top
except that they would not be subject to the Non-Professional Users
fees normally applicable. The Exchange proposes to adopt a similar fee
structure for Cboe One Summary Derived Data for the White Label
Service, the API Service, and the Platform Service discussed above with
the addition of the Data Consolidation Fee that would be applicable to
each Service option.
    As proposed, Distributors would be charged the following fees for a
White Label Service for Cboe One Summary Derived Data: (1) $1,000 per
month for each External Subscriber if the Distributor makes Derived
Data available to 1-5 External Subscribers; (2) $750 per month for each
External Subscriber if the Distributor makes Derived Data available to
6-10 External Subscribers; and (3) $500 per month for each External
Subscriber if the Distributor makes Derived Data available to 11 or
more External Subscribers. For example, a Distributor providing White
Label Derived Data based on Cboe One Summary to six External
Subscribers would be charged a monthly fee of $4,500 (i.e., 6 External
Subscribers x $750 each). Additionally, the Exchange would continue to
charge a monthly Professional User fee of $10 per month for each
Professional User, and would charge the Data Consolidation Fee. The
Exchange proposes no Non-Professional User fee for the distribution of
Cboe One Summary Derived Data under the White Label Service, which is
consistent with the fee structure for the distribution of EDGX Top
Derived Data under the White Label Service.
    Alternatively, Distributors would be charged the following fees for
an API Service for Cboe One Summary Derived Data: (1) $5,000 per month
for each External Subscriber if the Distributor makes Derived Data
available to 1-5 External Subscribers; (2) $4,000 per month for each
External Subscriber if the Distributor makes Derived Data available to
6-20 External Subscribers; and (3) $3,000 per month for each External
Subscriber if the Distributor makes Derived Data available to 11 or
more External Subscribers. For example, a Distributor providing API
Service Derived Data based on Cboe One Summary to six External
Subscribers would be charged a monthly fee of $24,000 (i.e., 6 External
Subscribers x $4,000 each). Additionally, the Exchange would continue
to charge a monthly Professional User fee of $10 per month for each
Professional User, and would charge the Data Consolidation Fee. The
Exchange proposes no Non-Professional User fee for the distribution of
Cboe One Summary Derived Data under the API Service, which is
consistent with the fee structure for the distribution of EDGX Top
Derived Data under the API Service.
    Lastly, the Exchange proposes to adopt fees for the proposed
Platform Service for Cboe One Summary data in addition to the proposed
fees for EDGX Top discussed above. Like the proposed fee for EDGX Top
Derived Data, Distributors of Cboe One Summary Derived Data would be
liable for the fees normally applicable for the external distribution
of Cboe One Summary, except for the Non-Professional User fee, and the
Data Consolidation Fee. Therefore, under the Platform Service,
Distributors of Cboe One Summary Derived Data would be liable for the
External Distribution Fee ($5,000/month) and Professional User Fee
($10/month) and the Data Consolidation Fee.
Corresponding Amendments to Fee Schedule
    Based on the proposed amendments discussed above, the Exchange
proposes several clarifying modifications to the Fee Schedule. First,
the Exchange proposes to add a definition of ``Platform Service'' to
the Market Data Fees definitions section of the Fee Schedule. The
definition would provide that ``a Platform Service is a type of hosted
display solution in which a Distributor provides derivative products to
Platform Service Data Users within their infrastructure. The service
allows Distributors to make Derived Data available as part of a
platform, providing users remote access to derivative products based in
whole or in part on Exchange data.''

    The Exchange also proposes to amend explanatory asterisks provided
under the Program in the Fee Schedule. Specifically, the Exchange
proposes to amend the paragraph following the first asterisk to
reference the proposed Platform Service in addition to the existing
references to the White Label Service and API Service. Additionally,
the Exchange proposes to add references to Cboe One Summary after all
references to EDGX Top in the paragraph following the first asterisk.
The Exchange also proposes to add additional examples to asterisks two
and three so as to explain the application of fees for Derived Data
from Cboe One Summary. Lastly, the Exchange proposes to add an
additional asterisk to state that Cboe One Summary data would be
subject to the Data Consolidation fee set forth in the Fee Schedule.
These proposed changes would provide clarity in the Fee Schedule based
on the addition of the Platform Service and Cboe One Summary proposed
herein.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\17\ in general, and
furthers the objectives of Section 6(b)(4),\18\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its members and other recipients of
Exchange data.
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    \17\ 15 U.S.C. 78f.
    \18\ 15 U.S.C. 78f(b)(4).
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    The Exchange also believes that the proposed rule change is
consistent with Section 11(A) of the Act.\19\ Specifically, the
proposed rule change 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. In addition, the
proposed rule change is consistent with Rule 603 of Regulation NMS,\20\
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.
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    \19\ 15 U.S.C. 78k-1.
    \20\ See 17 CFR 242.603.
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    In adopting Regulation NMS, the Commission granted SROs and broker-
dealers increased authority and flexibility to offer new and unique
market data 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. The
Exchange believes that the proposed fee change would further broaden
the availability of U.S. equity market data to investors, consistent
with the principles of Regulation NMS.
    The Exchange operates in a highly competitive environment. Indeed,
there are 16 registered national securities exchanges that trade U.S.
equities and have the capability to offer associated top of book market
data products to their customers. 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.'' \21\ The proposed fee change is a result of the
competitive environment, as the Exchange seeks to amend its fees to
attract additional subscribers for its proprietary top of book data
offerings through the introduction of a Derived Data Platform Service
and the expansion of top of book data offerings to include Cboe One
Summary under the Program.
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    \21\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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    As discussed above, the proposed Platform Service would eliminate
the Non-Professional User Fee to Distributors that is normally applied
for the External Distribution of Exchange data. The Exchange believes
that it is reasonable to introduce reduced fees for the use of Derived
Data on Platform Services as the proposed fee reduction would
facilitate cost effective access to market information that is used
primarily to create and display certain derivative instruments rather
than to display the underlying U.S. equity securities. The proposed
Platform Service fees are constrained by competition, and it is this
competition that is driving the proposed fee change. Indeed, the
Program is designed to allow the Exchange to compete more effectively
for market data distributors that purchase market information to offer
Derived Data to investors.
    Similarly, the Exchange believes that it is reasonable to enhance
the Program by expanding Exchange data offered under the Program to
include Cboe One Summary as doing so will allow Distributors to create
Derived Data that is based on a more comprehensive view of the U.S.
equities market. Because Exchange data in this context is primarily
purchased for the creation of Derived Data encompassing certain
derivative instruments, Distributors do not require a consolidated view
of the market across multiple exchanges, and will generally purchase
such data from a single or select few exchange(s) for their purposes.
As noted above, Cboe One Summary includes top of book quotation and
transaction data across all four Cboe equity exchanges, which would
allow Distributors to create more meaningful Derived Data than that
available from a single exchange's market data at a potentially reduced
price.
    The existence of alternatives to the Program ensures that the
Exchange cannot set unreasonable or unfairly discriminatory fees, as
subscribers are free to elect such alternatives. That is, the Exchange
competes with other exchanges that provide similar top of book and/or
consolidated top of book products and pricing programs for Derived
Data.\22\ Expanding the availability of diverse competitive products
actually promotes additional competition as it ensures that alternative
products from different sources are readily available to Distributors
and the broader market. The Exchange therefore believes that the
introduction of pricing programs and the expansion of Exchange data are
not only constrained by competition but also ensure continued
competition that acts as a constraint on the pricing of services
provided by other national securities exchanges. If a competing
exchange were to charge less for a similar product than the Exchange
charges under the proposed fee structure, prospective subscribers may
choose not subscribe to, or cease subscribing to, the Program. The
Exchange believes that lowering the cost of accessing Derived Data may
make the Exchange's market information more attractive, and encourage
additional Distributors to subscribe to Exchange market data instead of
competitor products. The Exchange anticipates up to 10 Distributors to
participate in the proposed Platform Service, and up to three
Distributors to create Derived Data from Cboe One Summary. Distributors
can discontinue use at any time and for any reason, including due to an
assessment of the reasonableness of fees charged. Further, firms have a
wide

variety of alternative market data products from which to choose, such
as similar proprietary data products offered by other national
securities exchanges,\23\ including those that choose to offer
discounted fees for the distribution of Derived Data in an effort to
compete for this business.
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    \22\ See generally, the Nasdaq Basic fees at http://www.nasdaqtrader.com/TraderB.aspx?id=MDDPricingALLN.
    \23\ Id.
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    The proposed rule change would provide an optional fee structure
for Distributors to use Exchange data to make Derived Data available to
Non-Professional Users via a Platform Service at a reduced fee. As
proposed, if a Distributor uses a Platform Service to distribute
Derived Data, the Distributor would be charged the normal applicable
External Distribution Fees and User Fees excluding the Non-Professional
User Fee. The Exchange believes that it is equitable and not unfairly
discriminatory to charge a fee for Professional Users but no fee for
Non-Professional Users. Non-Professional Users are already subject to a
heavily discounted fee for EDGX Top market data relative to
Professional Users. Differential fees for Professional and Non-
Professional Users are widely used by the Exchange and other exchanges
for their proprietary market data as this reduces costs for retail
investors and makes market data more broadly available. The Exchange
believes that eliminating fees for Non-Professional Users that access
Derived Data from Distributors pursuant to the Program is consistent
with longstanding precedent indicating that it is consistent with the
Act to provide reasonable incentives to retail investors that rely on
the public markets for their investment needs.\24\ Further, the
proposed fee would only apply to Distributors that elect to participate
in the Program by distributing Derived Data through a Platform Service.
Exchange market data is distributed and purchased on a voluntary basis,
in that neither the Exchange nor market data distributors are required
by any rule or regulation to make this data available. Distributors of
Exchange data are not required to participate in the proposed Program,
which is merely an alternative option being proposed by the Exchange to
potentially lower costs for market data that is Derived Data. As
previously explained, the Exchange currently offers discounted fees for
Distributors that distribute Derived Data on a White Label Service or
an API Service through both a tiered External Distribution Fee and
eliminated Non-Professional User Fee. Distributors of Exchange data
that do not participate in either the White Label Service or API
Service are subject to the normal External Distribution Fees, which
include a Distribution Fee, Professional User Fee, and Non-Professional
User Fee. Expanding the universe of customers that can benefit from
discounted fees for distributing Derived Data would serve to further
increase the accessibility of the Exchange's market data products.
Although the proposed pricing for the Platform Service differs from the
pricing currently in place for the White Label and API Service
Programs, it mirrors the normal External Distribution Fee for EDGX Top
and Cboe One Summary except that there would be no fee for Non-
Professional Users. The White Label Service provides a fully controlled
solution to display Derived Data as it is ultimately designed and
managed by the Distributor, but made available to end users on behalf
of an External Subscriber. Alternatively, the API Service offers
External Subscribers the use of Derived Data in one or more of their
own customized and managed applications which are then made available
to their end users as needed. The Exchange believes that the proposed
pricing reflects the relative benefits provided to Distributors that
offer their own Platform Service that allows Users remote access to
derivative products via a hosted display solution directly within the
Distributors fully managed infrastructure rather than through an
External Subscriber.
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    \24\ As discussed previously, the Exchange does not fees to Non-
Professional Users pursuant to the White Label Service and API
Service. See Securities Exchange Act No. 84002 (August 30, 2018) 83
FR 45149 (September 5, 2018) (SR-CboeEDGX-2018-065) (Proposed fee
amendment for White Label Service). See also Securities Exchange Act
No. 87306 (October 15, 2019) 84 FR 56258 (October 21, 2019) (SR-
CboeEDGX-2019-087) (Proposed fee amendment for API Service).
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    The proposed rule change would also provide Distributors the option
to create Derived Data from Cboe One Summary, and benefit from reduced
fees for that product under the Financial Product Distribution Program,
in addition to the currently available EDGX Top. The proposed fees
would only apply to Distributors that elect to create Derived Data from
Cboe One Summary. Similar to the fee structure for EDGX Top under the
Program, no fee would be assessed for Non-Professional Users of Derived
Data from Cboe One Summary. For the same reasons discussed above, the
Exchange believes it is equitable and not unfairly discriminatory to
charge a fee for Professional Users but no fee for Non-Professional
Users. Further, the proposed fee would only apply to Distributors that
elect to participate in the Program by distributing Derived Data from
Cboe One Summary. Exchange market data is distributed and purchased on
a voluntary basis, in that neither the Exchange nor market data
distributors are required by any rule or regulation to make this data
available. Although the proposed pricing for Cboe One Summary differs
from the pricing currently in place for EDGX Top, the Exchange also
believes that its pricing reflects the relative benefits provided to
Distributors that provide Derived Data based on market information from
all four Cboe equities exchanges. For example, the proposed fee for one
to five External Subscribers of Derived Data based on Cboe One Summary
using the API Service is equal to the aggregate standard External
Distribution Fee across the Cboe equities exchange Top feeds, and is
also equal to the standard External Distribution Fee for Cboe One
Summary (i.e., $5,000 per External Subscriber) on the Exchange. The
proposed fee under the White Label Service is less than the proposed
fee for API Service as the Derived Data is used by External Subscribers
on a fully controlled and managed basis, and thus reflects the relative
benefits for use of the Derived Data. Further, the proposed fee for
Cboe One Summary under the proposed Platform Service is identical to
the standard External Distribution fee for Cboe One Summary with the
exception that there would be no fee associated with Non-Professional
Users.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
operates in a highly competitive environment, and its ability to price
these data products is constrained by competition among exchanges that
offer similar data products, and pricing options, to their customers.
Top of book data is broadly disseminated by competing U.S. equities
exchanges. There are therefore a number of alternative products
available to market participants and investors. In this competitive
environment potential subscribers are free to choose which competing
product to purchase to satisfy their need for market information.
Often, the choice comes down to price, as broker-dealers or vendors
look to purchase the lowest priced top of book data product, or
quality, as market participants seek to purchase data that represents
significant market liquidity. In order to better compete for this
segment of the market, the Exchange is proposing to reduce fees charged
to Distributors that distribute

Derived Data through an Exchange approved Platform and enhance the
existing program to offer Distributors the option to create Derived
Data based on Cboe One Summary. The Exchange believes that this would
facilitate greater access to Exchange data, ultimately benefiting
investors that are provided access to such data.
    The Exchange believes that the proposed fees do not put any market
participants at a relative disadvantage compared to other market
participants. The proposed fees would apply equally to external
distributors of EDGX Top or Cboe One Summary that make Derived Data
available through one of the three Service options offered by the
Exchange under the Program. The continued difference in fees under the
Program as compared to the normal External Distribution fees for both
EDGX Top and Cboe One Summary are appropriate given that External
Subscribers and Users receive Derived Data, which by definition cannot
be readily reverse[hyphen]engineered to recreate EDGX Top or Cboe One
Summary data or used to create other data that is a reasonable
facsimile or substitute for EDGX Top or Cboe One Summary. The Exchange
therefore believes that the proposed fees neither favor nor penalize
one or more categories of market participants in a manner that would
impose an undue burden on competition. The proposed Platform Service
fees would apply to data derived from EDGX Top and Cboe One Summary,
which are subject to competition from exchanges that offer similar
products, including but not limited to those that choose to provide
similar pricing options for Derived Data. A number of national
securities exchanges, including the Exchange, its affiliated Cboe U.S.
equities exchanges, and the Nasdaq Stock Market, LLC (``Nasdaq'') offer
pricing discounts for Derived Data today. These pricing programs reduce
the cost of accessing top of book market information that is used,
among other things, to create derivative instruments rather than to
trade U.S. equity securities. Specifically, the Nasdaq Derived Data
Enterprise license covers the Distributor of the Derived Data to their
own users, while the Exchange's current Derived Data programs currently
do not cover the Distributor of the Derived Data. In order to better
compete for this segment of the market, the Exchange is proposing to
expand the Program to include a Derived Data Platform Service, which
would allow the Distributors of Derived Data to benefit from discounted
pricing when providing the Derived Data to their own end users.
Additionally, the Exchange is proposing to enhance the Program by
providing a fee structure for Cboe One Summary, which would allow
Distributors to create Derived Data that is based on a more
comprehensive view of the U.S. equities market. The Exchange does not
believe that the proposal would cause any unnecessary or inappropriate
burden on intermarket competition as other exchanges and data vendors
are free to lower their prices to better compete with the Exchange's
offering. The Exchange believes that the proposed rule change is pro-
competitive as it seeks to offer pricing incentives to customers to
better position the Exchange as it competes to attract additional
market data subscribers.

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 \25\ and paragraph (f) of Rule 19b-4 \26\
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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    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 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-CboeEDGX-2021-015 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-2021-015. 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; 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-CboeEDGX-2021-015 and should
be submitted on or before April 13, 2021.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-05915 Filed 3-22-21; 8:45 am]
BILLING CODE 8011-01-P