[Federal Register Volume 85, Number 33 (Wednesday, February 19, 2020)]
[Notices]
[Pages 9489-9493]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03178]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88176; File No. SR-CBOE-2020-007]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Fee Schedule Regarding the Automated Improvement Mechanism (AIM) 
and Solicitation Auction Mechanism (SAM)

February 12, 2020.
    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 January 30, 2020, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to amend its Fees Schedule. The text of the proposed rule change is 
provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its fees schedule in connection with 
the fees related to orders and auction responses executed in the 
Automated Improvement Mechanism (``AIM'') and Solicitation Auction 
Mechanism (``SAM'') Auctions.\3\
---------------------------------------------------------------------------

    \3\ The Exchange initially filed the proposed fee changes on 
December 2, 2019 (SR-CBOE-2019-112). On January 30, 2020, 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.

[[Page 9490]]

Based on publicly available information, no single options exchange has 
more than 19% of the market share.\4\ Thus, in such a low-concentrated 
and highly competitive market, no single options 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 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. In response to the competitive 
environment, the Exchange offers specific rates and credits in its fees 
schedule, like that of other options exchanges' fees schedules, which 
the Exchange believes provide incentive to Trading Permit Holders 
(``TPHs'') to increase order flow of certain qualifying orders.
---------------------------------------------------------------------------

    \4\ See Cboe Global Markets U.S. Options Market Volume Summary 
(January 30, 2020), available at https://markets.cboe.com/us/options/market_statistics/.
---------------------------------------------------------------------------

    AIM and SAM include functionality in which a Trading Permit Holder 
(``TPH'') (an ``Initiating TPH'') may electronically submit for 
execution an order it represents as agent on behalf of a customer,\5\ 
broker dealer, or any other person or entity (``Agency Order'') against 
any other order it represents as agent, as well as against principal 
interest in AIM only, (an ``Initiating Order'') provided it submits the 
Agency Order for electronic execution into the AIM or SAM Auctions.\6\ 
The Exchange may designate any class of options traded on Cboe Options 
as eligible for AIM or SAM. The Exchange notes that all Users, other 
than the Initiating TPH, may submit responses to an Auction (``AIM 
Responses'').\7\ AIM and SAM Auctions take into account AIM Responses 
to the applicable Auction as well as contra interest resting on the 
Cboe Options Book at the conclusion of the Auction (``unrelated 
orders''), regardless of whether such unrelated orders were already 
present on the Book when the Agency Order was received by the Exchange 
or were received after the Exchange commenced the applicable Auction. 
If contracts remain from one or more unrelated orders at the time the 
Auction ends, they are considered for participation in the AIM or SAM 
order allocation process.
---------------------------------------------------------------------------

    \5\ The term ``customer'' means a Public Customer or a broker-
dealer. The term ``Public Customer'' means a person that is not a 
broker-dealer. See Rule 1.1.
    \6\ See Rule 5.37 (AIM); Rule 5.39 (SAM); Rule 5.38 (Complex 
AIM); Rule 5.40 (Complex SAM); Rule 5.73 (FLEX AIM); and Rule 5.74 
(FLEX SAM).
    \7\ For purposes of this filing and the proposed fee, the term 
``AIM Response'' will include responses submitted to AIM and SAM 
Auctions.
---------------------------------------------------------------------------

    The Exchange notes that it recently updated its rules in connection 
with the AIM and SAM Auctions to permit all Users to respond to such 
Auctions; AIM responses were previously restricted to Market-Makers 
with an appointment in the applicable class and TPHs representing 
orders at the top of the Book, and SAM responses were previously 
available to all TPHs, except responses could not be submitted for the 
account of an away market-maker.\8\ Because AIM Responses were limited 
to certain market participants, the Exchange did not impose separate 
fees on Auction responders (as it did for the Auction Agency and Contra 
orders). As a result, the Exchange now proposes to adopt fee codes for 
certain AIM Responses (the ``AIM Response'' fee as proposed in the fees 
schedule, which is consistent with other AIM-specific headings and fee 
codes in the fees schedule that also encompass orders in SAM). 
Specifically, the Exchange proposes to add: (1) Fee code ``NB'', which 
would be appended to non-Customer, non-Market-Maker AIM Responses in 
penny classes and assessed a fee of $0.50 per contract; and (2) and fee 
code ``NC'', which would be appended to Non-Customer, Non-Market-Maker 
AIM Responses in non-penny classes and assessed a fee of $1.05. Non-
Customer, non-Market-Maker orders include: Clearing Trading Permit 
Holder (``F'' Capacity Code); non-Trading Permit Holder Affiliate 
(``L'' Capacity Code); Broker-Dealer (``B'' Capacity Code); Non-Trading 
Permit Holder Market-Maker (``N'' Capacity Code); Join Back-Office 
(``J'' Capacity Code); and Professional (``U'' Capacity Code) orders. 
The Exchange also proposes to add footnote 20, which clarifies that the 
AIM Responder fee applies to AIM Responses of the aforementioned 
capacities in all products, except Sector Indexes \9\ and Underlying 
Symbol List A,\10\ executed in AIM, SAM, FLEX AIM, and FLEX SAM 
Auctions. The Exchange notes that the same FLEX AIM and FLEX SAM 
responses will be assessed the same fee, which is consistent with the 
structure of the Exchange's current fees for AIM Agency/Primary and AIM 
Contra orders, which apply uniformly to qualifying orders in AIM, SAM, 
FLEX AIM, and FLEX SAM.\11\ The Exchange further notes that excluding 
orders in Sector Indexes and Underlying Symbol List A from the proposed 
AIM Response fee is also consistent with the same exclusions under the 
structure of the Exchange's fees for AIM Agency/Primary and AIM Contra 
orders.\12\ These specific sets of proprietary products are also 
commonly excluded from a variety of fee programs, qualification 
calculations and transaction fees, including the Volume Incentive 
Program (``VIP''), the Marketing Fee, and the Clearing Trading Permit 
Holder Fee Cap (``Fee Cap'').\13\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 87072 (September 24, 
2019), 84 FR 51673 (September 30, 2019) (SR-CBOE-2019-045); and 
Securities Exchange Act Release No. 87192 (October 1, 2019), 84 FR 
53525 (October 7, 2019) (SR-CBOE-2019-063).
    \9\ See Cboe Exchange, Inc. Fees Schedule, footnote 47.
    \10\ See Cboe Exchange, Inc. Fees Schedule, footnote 34.
    \11\ See Cboe Exchange, Inc. Fees Schedule, footnotes 18 and 19.
    \12\ Also like the structure of the Exchange's fees for AIM 
Agency/Primary and AIM Contra orders, the applicable standard 
transaction fees will continue to apply to AIM Response orders in 
Sector Indexes and Underlying Symbol List A. The Exchange notes this 
in proposed footnote 20.
    \13\ See Cboe Exchange, Inc. Fees Schedule, ``Volume Incentive 
Program'' table and footnote 36, ``Marketing Fee'' table, and 
``Clearing Trading Permit Holder Fee Cap'' table and footnote 11, 
respectively.
---------------------------------------------------------------------------

    Additionally, in light of the proposed fee, the Exchange also 
proposes to exclude non-Customer, non-Market-Maker AIM Responses from 
the Complex Surcharge, described in footnote 35. The Complex Surcharge 
is assessed per contract per side for non-customer complex order 
executions that remove liquidity from the Complex Order Book (``COB'') 
and auction responses in the Complex Order Auction (``COA'') and AIM in 
all classes except Sector Indexes and Underlying Symbol List A.
    The Exchange also proposes to adopt Break-Up Credits, applicable to 
Customer Agency orders when traded against a qualifying AIM response 
(yielding fee code NB or NC, as proposed). Specifically, the Exchange 
proposes a Break-Up Credit of $0.25 per contract with respect to a 
Customer Agency order in a Penny Pilot Class and a Break-Up Credit of 
$0.60 per contract with respect to a Customer Agency order in a Non-
Penny Pilot Class.
    The proposed AIM Responder fees for non-Customer, non-Market-Maker 
AIM Responses, which covers the market participants recently permitted 
to respond to Auctions, are designed as an additional incentive for 
Market-Makers to increase their responses to AIM and SAM Auctions. 
Prior to opening up the Auctions to all market participants, Market-
Makers were naturally

[[Page 9491]]

incentivized to respond to Auctions as they were the exclusive (or 
among the exclusive) market participants permitted to submit responses. 
Therefore, the Exchange believes the proposed AIM Responder fees for 
non-Customer, non-Market-Maker responses will encourage Market-Makers 
to continue to respond to Auctions and compete to provide price 
improvement in a competitive auction process, thus contributing to a 
deeper, more liquid auction process with additional execution 
opportunities which benefits all market participants. Likewise, the 
Exchange believes the proposed Break-Up Credits will encourage Customer 
order flow to Auctions. Increased Customer order flow benefits all 
market participants because it continues to attract liquidity to the 
Exchange by providing more trading opportunities. This attracts Market-
Makers and other liquidity providers, thus, facilitating price 
improvement in the auction process, signaling additional corresponding 
increase in order flow from other market participants, and, as a 
result, contributing towards a robust, well-balanced market ecosystem.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act,\14\ in general, and furthers the 
requirements of Section 6(b)(4),\15\ in particular, as it is designed 
to provide for the equitable allocation of reasonable dues, fees and 
other charges among its facilities and does not unfairly discriminate 
between customers, issuers, brokers or dealers. As stated 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 fee changes reflect a competitive pricing 
structure designed to incentivize market participants to direct their 
order flow to the Exchange's price improvement Auctions, which the 
Exchange believes would enhance market quality to the benefit of all 
TPHs.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that its proposed adoption of fees for non-
Customer, non-Market-Maker responses and Break-Up Credits for Customer 
Agency orders is consistent with Section 6(b)(4) of the Act in that the 
proposal is reasonable, equitable and not unfairly discriminatory. 
Also, as noted above, the Exchange operates in highly competitive 
market. The Exchange is only one of several options venues to which 
market participants may direct their order flow, and it represents a 
small percentage of the overall market. The Exchange believes that the 
proposed fees are reasonable, equitable, and not unfairly 
discriminatory in that competing options exchanges,\16\ including the 
Exchange's affiliated options exchanges,\17\ offer substantially the 
same fees and credits in connection with similar price improvement 
auctions, as the Exchange now proposes.
---------------------------------------------------------------------------

    \16\ See MIAX Options Fee Schedule, Section 1(a)(v), ``MIAX 
Price Improvement Mechanism (``PRIME'') Fees, which assesses a fee 
of $0.50 (Penny Classes) and $0.99 (non-Penny Classes) for PRIME 
responses, and offers a break-up credit of $0.25 (Penny Classes) and 
$0.60 (non-Penny Classes) for PRIME Agency orders; see also NYSE 
American Options Fee Schedule, Section I(G), ``CUBE Auction Fees and 
Credits'', which assesses a fee of $0.50 (Penny Classes) and $0.99 
(non-Penny Classes) for CUBE (its Customer Best Execution Auction) 
responses, and offers a break-up credit of $0.25 (Penny Classes) and 
$0.60 (non-Penny Classes) for PRIME Agency orders, and an Initiating 
Participant Credit (akin to an Agency Order) of $0.30 (Penny Pilot) 
and $0.70 (non-Penny Pilot).
    \17\ See EDGX Options Exchange Fee Schedule, ``Fee Codes and 
Associated Fees'', fee code BD is appended to AIM Responder Penny 
Pilot orders and is assessed a fee of $0.50 per share, and fee code 
BE is appended to AIM Responder Non-Penny Pilot orders and is 
assessed a fee of $1.05 per share; and ``AIM Break-Up Credits'', 
which offers a credit of $0.25 for AIM Agency Orders in Penny Pilot 
securities and $0.60 for such orders in non-Penny Pilot securities.
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable to assess a fee for 
non-Customer, non-Market-Maker AIM Responses because it is reasonably 
designed to incentivize Market-Makers to continue to respond, and 
potentially increase their responses, to AIM and SAM Auctions in light 
of the recent opening of the Auctions to other market participants not 
previously permitted to respond to such Auctions. The Exchange believes 
that encouraging increased Market-Maker order flow will increase 
liquidity and Auction execution and price improvement opportunities to 
the benefit of all participants. Deepening the Exchange's liquidity 
pool and offering additional opportunities enables all investors to 
enjoy cost savings, supporting the quality of price discovery, 
promoting market transparency and improving investor protection. The 
Exchange believes excluding non-Customer, non-Market-Maker AIM Reponses 
from the Complex Surcharge is reasonable as such market participants 
will not be assessed the extra surcharge. The Exchange also notes that 
auction responses in COA and AIM are currently capped at $0.50 per 
contract for non-customer complex orders in Penny classes (which 
includes the applicable transaction fee, Complex Surcharge and 
Marketing Fee (if applicable)).\18\ As such, given the proposed fee for 
AIM Responses is $0.50 per contract, the Complex Surcharge would, in 
effect, not be assessed for non-customer, non-Market-Maker complex 
orders in Penny classes. The Exchange also notes that other types of 
orders are currently excluded from the Complex Surcharge.\19\ 
Similarly, the Exchange believes that applying a Break-Up Credit to 
Customer Agency orders is a reasonable means to encourage Customer 
order flow to Exchange Auctions. As stated, increased Customer order 
flow provides continued liquidity to the Exchange, in that it provides 
additional transaction opportunities which attract Market-Makers and 
other liquidity providers (by means of both unrelated orders and 
responses in connection with the Auctions), thus facilitating price 
improvement and signals an increase in additional order flow from other 
market participants. In turn, these increases benefit all market 
participants by contributing towards a robust and well-balanced market 
ecosystem.
---------------------------------------------------------------------------

    \18\ See Cboe Options Fees Schedule, Footnote 35.
    \19\ See e.g. Cboe Options Fees Schedule, Footnote 35. Stock-
option orders are currently excluded from the Complex Surcharge.
---------------------------------------------------------------------------

    The Exchange also believes that the proposed fees in connection 
with AIM Responses and Customer Agency orders does not represent a 
significant departure from the fees and credits rebates currently 
offered under the fees schedule for these market participants. For 
example, under the existing fees schedule orders with F and L Capacity 
Codes are assessed a fee of $0.43 per contract in Penny Classes and 
$0.70 per contract in non-Penny Classes, while orders with B, N, U, or 
J Capacity Codes are assessed a fee of $0.47 per contract in Penny 
Classes and $0.75 per contract in non-Penny Classes. Additionally, 
under the existing ``Volume Incentive Program'', Customer orders may 
receive credits ranging from $0.09 to $0.24 per contract executed in 
AIM.
    The Exchange also believes that the proposed fees are equitable and 
not unfairly discriminatory because the proposed fee for AIM Responses 
will apply equally to all non-Customer, non-Market-Maker responses, 
i.e. all such TPHs will be assessed the same amount. Similarly, the 
exclusion of AIM Responses from the Complex Surcharge is equitable and 
not unfairly discriminatory as it applies equally to all non-Customer, 
non-Market-Maker responses.

[[Page 9492]]

    The Exchange also believes that continuing to not assess a fee 
applicable to Market-Maker responses other than the applicable standard 
transaction fee is equitable and not unfairly discriminatory because 
Market-Makers are already subject to certain other transaction fees not 
otherwise applicable to other market participants. In particular, in 
addition to Market-Maker-specific standard transaction fees,\20\ 
Market-Makers are also currently assessed a marketing fee of $0.25 in 
Penny Pilot classes and $0.70 in all other classes on certain 
transactions resulting from customer orders,\21\ including qualifying 
orders submitted as AIM Responses. Further, Market-Makers, unlike other 
market participants, take on a number of obligations, including quoting 
obligations that other market participants do not have, as well as 
added market making and regulatory requirements, which normally do not 
apply to other market participants. For example, Market-Makers have 
obligations to maintain continuous markets, engage in a course of 
dealings reasonably calculated to contribute to the maintenance of a 
fair and orderly market, and to not make bids or offers or enter into 
transactions that are inconsistent with a course of dealing. 
Additionally, the Exchange notes that Market-Makers (with an 
appointment in the applicable class) may not submit solicited orders 
into an AIM Auction; \22\ this restriction does not apply to Firm 
orders. As stated, the Exchange also recognizes that Market-Makers are 
the primary liquidity providers in the options markets, and 
particularly, during AIM auctions. Thus, the Exchange believes Market-
Makers provide the most accurate prices reflective of the true state of 
the market and are primarily responsible for encouraging more 
aggressive quoting and superior price improvement during an AIM 
Auction. As a result, the Exchange believes it is important to continue 
to incent Market-Makers to actively participate in such auctions by 
means of continuing to assess no fee other than the current applicable 
standard transaction fees for Market-Maker AIM Response orders. 
Increased Market-Maker liquidity also increases trading opportunities 
and signals to other participants to increase their order flow, which 
benefits all market participants.
---------------------------------------------------------------------------

    \20\ See Cboe Options Fees Schedule, ``SPX Liquidity Provider 
Sliding Scale'' table; ``Liquidity Provider Sliding Scale'' table; 
and ``Liquidity Provider Sliding Scale Adjustment Table''.
    \21\ That is, Market-Maker orders that execute against customer 
orders.
    \22\ This is also true for SAM Auctions. See Rule 5.39.
---------------------------------------------------------------------------

    Likewise, the Exchange believes that providing a Break-Up Credit 
for Customer Agency orders is equitable and not unfairly discriminatory 
because the proposed Break-Up Credit will apply equally to all Customer 
Agency orders that execute in an Auction against qualifying responses. 
The Exchange notes that while Customer Agency orders will receive the 
Break-Up Credit, as opposed to other Agency orders, the Exchange 
believes that this application of the credit is equitable and not 
unfairly discriminatory because, as stated above, Customer order flow 
enhances liquidity on the Exchange, in turn providing more trading 
opportunities and attracting other market participants, thus, 
facilitating tighter spreads, increased order flow and trading 
opportunities to the benefit of all market participants. Moreover, the 
options industry has a long history of providing preferential pricing 
to Customers, and the Exchange's current fees schedule currently does 
so in many places, as do the fees structures of multiple other 
exchanges.\23\
---------------------------------------------------------------------------

    \23\ See MIAX Options Fee Schedule, Section 1(a)(v), ``MIAX 
Price Improvement Mechanism (``PRIME'') Fees, and NYSE American 
Options Fee Schedule, Section I(G), ``CUBE Auction Fees and 
Credits'', each of which assesses a lower transaction fee for 
customer orders than that of other market participants for 
executions in their respective auctions.
---------------------------------------------------------------------------

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 intramarket or intermarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act. 
Rather, as discussed above, the Exchange believes that the proposed 
change would encourage the submission of additional liquidity to price 
improvement auctions of a public exchange, thereby promoting market 
depth, price discovery and transparency and enhancing order execution 
and price improvement opportunities for all TPHs. As a result, the 
Exchange believes that the proposed change furthers the Commission's 
goal in adopting Regulation NMS of fostering competition among orders, 
which promotes ``more efficient pricing of individual stocks for all 
types of orders, large and small.'' \24\
---------------------------------------------------------------------------

    \24\ Securities Exchange Act Release No. 51808, 70 FR 37495, 
37498-99 (June 29, 2005) (S7-10-04) (Final Rule).
---------------------------------------------------------------------------

    The Exchange does not believe that the proposed rule change will 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed changes will apply uniformly to all non-Customer, non-Market-
Maker responses and to all Customer Agency orders, respectively. As 
described above, different market participants have different 
circumstances, such as the fact that Market-Makers have marketing fees 
(which apply to qualifying transactions in AIM auctions) and other 
Market-Maker-specific transaction fees, as well as quoting obligations 
and restrictions within an AIM Auction that other market participants 
do not have. Market-Makers have also recently lost their exclusive 
Auction response incentive. Additionally, the Exchange notes the fact 
that preferential pricing to Customers is a long-standing options 
industry practice. The proposed fee changes serve to enhance Market-
Maker and Customer order flow to the Exchange's Auctions, which, as a 
result, facilitates increased liquidity and execution opportunities to 
the benefit of all market participants. In addition to this, the 
Exchange notes that it currently assesses similar fees for certain non-
Customer, non-Market-Maker orders and similar credits for certain 
Customer orders.
    The Exchange also does not believe that the proposed fees will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the Act because, as noted above, 
competing options exchanges,\25\ including the Exchange's affiliated 
options exchange,\26\ currently have substantially similar fees in 
place in connection with similar price improvement auctions. 
Additionally, and as previously discussed, the Exchange operates in a 
highly competitive market. TPHs have numerous alternative venues that 
they may participate on and direct their order flow, including 15 other 
options exchanges, many of which offer substantially similar price 
improvement auctions. Based on publicly available information, no 
single options exchange has more than 19% of the market share.\27\ 
Therefore, no exchange possesses significant pricing power in the 
execution of option order flow. Indeed, participants can readily choose 
to send their orders to other exchange, and, additionally off-exchange 
venues, if they deem fee levels at those other venues to be more 
favorable. Moreover, the Commission has repeatedly expressed its 
preference for competition over regulatory intervention in

[[Page 9493]]

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.'' \28\ 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'. . . .''.\29\ 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.
---------------------------------------------------------------------------

    \25\ See supra note 13.
    \26\ See supra note 14.
    \27\ See supra note 3.
    \28\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \29\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
---------------------------------------------------------------------------

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 \30\ and paragraph (f) of Rule 19b-4 \31\ 
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.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78s(b)(3)(A).
    \31\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include 
File Number SR-CBOE-2020-007 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-CBOE-2020-007. 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-CBOE-2020-007 and should be submitted on 
or before March 11, 2020.
---------------------------------------------------------------------------

    \32\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-03178 Filed 2-18-20; 8:45 am]
BILLING CODE 8011-01-P


