[Federal Register Volume 85, Number 118 (Thursday, June 18, 2020)]
[Notices]
[Pages 36899-36903]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13124]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89064; File No. SR-CboeEDGX-2020-025]


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

June 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 June 2, 2020, Cboe EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \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 EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') is filing 
with the Securities and Exchange Commission (``Commission'') a proposed 
rule change to amend the fee schedule applicable to Members and non-
Members \3\ of the Exchange pursuant to EDGX Rules 15.1(a) and (c). The 
text of the proposed rule change is provided in Exhibit 5.
---------------------------------------------------------------------------

    \3\ A Member is defined as ``any registered broker or dealer 
that has been admitted to membership in the Exchange.'' See Exchange 
Rule 1.5(n).
---------------------------------------------------------------------------

    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

[[Page 36900]]

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 in connection with 
its Add Volume Tiers.\4\
---------------------------------------------------------------------------

    \4\ The Exchange initially filed the proposed fee changes on 
June 1, 2020 (SR-CboeEDGX-2020-024). On June 2, 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 13 registered equities exchanges, as well as a 
number of alternative trading systems and other off-exchange venues 
that do not have similar self-regulatory responsibilities under the 
Exchange Act, to which market participants may direct their order flow. 
Based on publicly available information,\5\ no single registered 
equities exchange has more than 17% of the market share. Thus, in such 
a low-concentrated and highly competitive market, no single equities 
exchange possesses significant pricing power in the execution of order 
flow. The Exchange in particular operates a ``Maker-Taker'' model 
whereby it pays credits to members that add liquidity and assesses fees 
to those that remove liquidity. The Exchange's Fees Schedule sets forth 
the standard rebates and rates applied per share for orders that 
provide and remove liquidity, respectively. Particularly, for 
securities at or above $1.00, the Exchange provides a standard rebate 
of $0.0017 per share for orders that add liquidity and assesses a fee 
of $0.0027 per share for orders that remove liquidity, and for 
securities below $1.00, the Exchange provides a standard rebate of 
$0.00003 per share for orders that add liquidity and assesses a 
standard fee of 30% of dollar value per share for orders that remove 
liquidity. 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. In 
response to the competitive environment, the Exchange also offers 
tiered pricing which provides Members opportunities to qualify for 
higher rebates or reduced fees where certain volume criteria and 
thresholds are met. Tiered pricing provides incremental incentives for 
Members to strive for higher or different tier levels by offering 
increasingly higher discounts or enhanced benefits for satisfying 
increasingly more stringent criteria or different criteria. Pursuant to 
footnote 1 of the Fees Schedule, the Exchange currently offers Add 
Volume Tiers (tiers 1 through 4, plus five various additional tiers) 
that provide Members an opportunity to receive an enhanced rebate from 
the standard fee assessment for liquidity adding orders that yield fee 
codes ``B'',\6\ ``V'',\7\ ``Y'',\8\ ``3'',\9\ and ``4''.\10\ The Add 
Volume Tiers currently offer nine different tiers that vary in levels 
of criteria difficulty and incentive opportunities in which Members may 
qualify for enhanced rebates for such orders. For example, Tier 4 
currently provides an enhanced rebate of $0.0029 for qualifying, 
liquidity adding orders (i.e. yielding fee codes B, V, Y, 3, or 4) for 
Members who have an ADV \11\ of greater than or equal to 0.70% of the 
TCV.\12\
---------------------------------------------------------------------------

    \5\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (May 27, 2020), available at https://markets.cboe.com/us/equities/market_statistics/.
    \6\ Appended to orders that add liquidity to EDGX (Tape B) and 
offered a rebate of $0.0017 per share.
    \7\ Appended to orders that add liquidity to EDGX (Tape A) and 
offered a rebate of $0.0017 per share.
    \8\ Appended to orders that add liquidity to EDGX (Tape C) and 
offered a rebate of $0.0017 per share.
    \9\ Appended to orders that add liquidity to EDGX pre and post 
market (Tape A or C) and offered a rebate of $0.0017 per share.
    \10\ Appended to orders that add liquidity to EDGX pre and post 
market (Tape B) and offered a rebate of $0.0017 per share.
    \11\ ``ADV'' means average daily volume calculated as the number 
of shares added to, removed from, or routed by, the Exchange, or any 
combination or subset thereof, per day. ADV is calculated on a 
monthly basis.
    \12\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply.
---------------------------------------------------------------------------

    Moreover, the Exchange notes that the competition for Retail Order 
flow is particularly intense, especially as it relates to exchange 
versus off-exchange venues, as prominent retail brokerages tend to 
route a majority of their limit orders to off-exchange venues.\13\ This 
competition is particularly acute for non-marketable Retail Orders, 
i.e., Retail Orders that provide liquidity, and even more fiercely for 
non-marketable Retail Orders that provide displayed liquidity on an 
exchange. Accordingly, competitive forces compel the Exchange to use 
exchange transaction fees and credits, particularly as they relate to 
competing for Retail Order flow, because market participants can 
readily trade on competing venues if they deem pricing levels at those 
other venues to be more favorable. Pursuant to footnote 3 of the Fees 
Schedule, the Exchange currently offers Retail Volume Tiers which 
provide Members an opportunity to receive an enhanced rebate from the 
standard fee assessment for Retail Orders \14\ that add liquidity 
(i.e., yielding fee code ``ZA'' \15\). Currently, the Retail Volume 
Tiers offer two levels of criteria difficulty and incentive 
opportunities in which Members may qualify for enhanced rebates for 
Retail Orders.
---------------------------------------------------------------------------

    \13\ See Securities Exchange Release No. 86375 (July 15, 2019), 
84 FR 34960 (SR-CboeEDGX-2019-045).
    \14\ See EDGX Rule 11.21(a)(1). A ``Retail Order'' is an agency 
or riskless principal order that meets the criteria of FINRA Rule 
5320.03 that originates from a natural person and is submitted to 
the Exchange by a Retail Member Organization, provided that no 
change is made to the terms of the order with respect to price or 
side of market and the order does not originate from a trading 
algorithm or any other computerized methodology. See EDGX Rule 
11.21(a)(2). Retail Orders are submitted by a ``Retail Member 
Organization'' or ``RMO'', which is a member (or a division thereof) 
that has been approved by the Exchange to submit such orders.
    \15\ Appended to Retail Orders that add liquidity to EDGX and 
offered a rebate of $0.0032 per share.
---------------------------------------------------------------------------

    The tier structures described above are designed to encourage 
Members to increase their order flow (adding and removing or Retail) in 
order to receive an enhanced rebate on their liquidity adding orders, 
and the Exchange now proposes to amend Add Volume Tier 4, as well as 
add an additional Add Volume Tier (Growth Tier 3) in footnote 1 and an 
additional Retail Volume Tier (Retail Volume Tier 3) in footnote 3 of 
the Fees Schedule.
    First, the proposed rule change amends Add Volume Tier 4 (as

[[Page 36901]]

described in the example above) so that a Member may receive the 
current enhanced rebate of $0.0029 for qualifying, liquidity adding 
orders if that Member has an ADV that is greater than or equal to 0.65% 
of the TCV. The proposed criteria change is designed to incentivize 
Members to continue to submit order flow to the Exchange in order to 
receive an enhanced rebate on their liquidity adding orders, by making 
Tier 4 criteria easier to achieve. Instead of meeting a 0.70% ADV 
threshold of the TCV, the proposed change eases the threshold five 
basis points to 0.65% of the TCV. As a result of the proposed ease in 
criteria, Members will be further incentivized to submit order flow to 
receive the enhanced rebate provided under Tier 4 for their qualifying 
orders. The Exchange notes that Tier 4, as amended, will continue to be 
available to all Members and is competitively achievable for all 
Members that submit an overall ADV as the requisite threshold of TCV 
(both adding and removing order flow), in that, all firms that submit 
the requisite order flow will continue to be able to compete to meet 
the tier.
    Second, the Exchange proposes to add Growth Tier 3 to the Add 
Volume Tiers and Retail Volume Tier 3 to the Retail Volume Tiers. 
Pursuant to both additional proposed tiers, Members will be able to 
receive an enhanced rebate if they have a Retail Step-Up Add (i.e., 
yielding fee code ZA \16\) TCV \17\ from May 2020 that is greater or 
equal to 0.10%. A Member that meets such criteria will receive an 
enhanced rebate of $0.0027 on qualifying orders (B, V, Y, 3, and 4) 
pursuant to proposed Growth Tier 3 and/or an enhanced rebate of $0.0037 
on qualifying orders (ZA) pursuant to proposed Retail Volume Tier 3. 
The proposed criteria under the additional tiers is designed to 
encourage growth in retail order flow (i.e., Members must increase 
their relative liquidity each month over a predetermined baseline (in 
this case the month being May 2020)). The Exchange notes that the 
proposed tier is available to all Retail Member Organizations 
(``RMOs'') and is competitively achievable for all RMOs that submit 
liquidity adding retail order flow, in that, all firms that submit the 
requisite liquidity adding retail order flow could compete to meet the 
tier.
---------------------------------------------------------------------------

    \16\ Appended to Retail Orders that add liquidity to EDGX and 
offered a rebate of $0.0032 per share.
    \17\ ``Step-Up Add TCV'' means ADAV as a percentage of TCV in 
the relevant baseline month subtracted from current ADAV as a 
percentage of TCV. ``ADAV'' means ADAV means average daily added 
volume calculated as the number of shares added per day. ADAV is 
calculated on a monthly basis.
---------------------------------------------------------------------------

    The Exchange believes the proposed opportunity to receive an 
enhanced rebate on qualifying orders for (1) liquidity adding and 
removing orders and (2) Retail Orders incentivizes an increase in 
overall order flow to the Book. It provides liquidity adding Members on 
the Exchange a further incentive to contribute to a deeper, more liquid 
market, and liquidity executing Members on the Exchange a further 
incentive to increase transactions and take execution opportunities 
provided by such increased liquidity, together providing for overall 
enhanced price discovery and price improvement opportunities on the 
Exchange. As such, this benefits all Members by contributing towards a 
robust and well-balanced market ecosystem.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\18\ in general, and 
furthers the objectives of Section 6(b)(4),\19\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and issuers and other persons 
using its facilities. The Exchange also believes that the proposed rule 
change is consistent with the objectives of Section 6(b)(5) \20\ 
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, and, particularly, is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f.
    \19\ 15 U.S.C. 78f(b)(4).
    \20\ 15 U.S.C. 78f.(b)(5).
---------------------------------------------------------------------------

    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.
    In particular, the Exchange believes the proposed tiers are 
reasonable because they either amend an existing opportunity to make it 
easier to reach or provide an additional opportunity for Members to 
receive an enhanced rebate on qualifying orders by means of liquidity 
adding orders and removing or Retail Orders. The Exchange notes that 
relative volume-based incentives and discounts have been widely adopted 
by exchanges,\21\ including the Exchange,\22\ and are reasonable, 
equitable and non-discriminatory because they are open to all members 
on an equal basis and provide additional benefits or discounts that are 
reasonably related to (i) the value to an exchange's market quality and 
(ii) associated higher levels of market activity, such as higher levels 
of liquidity provision and/or growth patterns. Additionally, as noted 
above, the Exchange operates in a highly competitive market. The 
Exchange is only one of several equity venues to which market 
participants may direct their order flow, and it represents a small 
percentage of the overall market. It is also only one of several maker-
taker exchanges. Competing equity exchanges offer similar tiered 
pricing structures to that of the Exchange, including schedules of 
rebates and fees that apply based upon members achieving certain volume 
and/or growth thresholds. These competing pricing schedules, moreover, 
are presently comparable to those that the Exchange provides, including 
the pricing of comparable tiers.\23\
---------------------------------------------------------------------------

    \21\ See e.g., Nasdaq PSX Price List, Rebate to Add Displayed 
Liquidity (Per Share Executed), which provides rebates to members 
for adding displayed liquidity over certain thresholds of TCV 
ranging between $0.0020 and $0.0026; Cboe BZX U.S. Equities Exchange 
Fee Schedule, Footnote 1, Add Volume Tiers, which provides similar 
incentives for liquidity adding orders and offers rebates ranging 
between $0.0018 and $0.0032; Nasdaq Price List, Rebate to Add 
Displayed Designated Retail Liquidity, which offer rebates of 
$0.00325 and $0.0033 for Add Displayed Designated Retail Liquidity.
    \22\ See generally, Cboe EDGX U.S. Equities Exchange Fee 
Schedule, Footnote 1, Add Volume Tiers, which provides incentives 
for ADV/ADAV order flow as a percentage of TCV and for criteria 
based on certain other threshold components (i.e. Step-Up Add TCV, 
average OCV, and AIM and Customer orders); and Footnote 3, Retail 
Volume Tiers, which provides incentives for Retail Step-Up Add TCV 
and Retail Order ADV as a percentage of TCV.
    \23\ See supra note 20.
---------------------------------------------------------------------------

    The Exchange believes the proposed modification to ease the 
criteria under Add Volume Tier 4, by decreasing the threshold of ADV to 
TCV is a reasonable means to further incentivize Members to increase 
their total order flow to the Exchange by encouraging those

[[Page 36902]]

Members who could not previously achieve Tier 4 to strive, instead, for 
the proposed lower ADV percentage of the TCV to receive the same 
rebate. Likewise, the Exchange believes that the proposed criteria for 
the new Growth Tier 3 and Retail Volume Tier 3 is a reasonable means to 
encourage Members to grow their overall liquidity adding Retail Orders 
as it provides an additional opportunity for Members to receive an 
enhanced rebate on various qualifying orders (B,V,Y, 3, and 4 under 
Growth Tier 3 and ZA under Retail Volume Tier 3) based on increases in 
their add retail volume by a modest amount since May 2020. Moreover, 
the Exchange believes the proposed tiers are reasonable because they 
are designed to encourage overall order flow, that is, both adding and 
removing orders as a result of proposed Add Volume Tier 4 and Retail 
Orders as a result of proposed Growth Tier 3 and Retail Volume Tier 3. 
Indeed, the Exchange notes that greater add volume order flow provides 
for deeper, more liquid markets and execution opportunities, and 
greater remove volume order flow increases transactions on the 
Exchange, which incentivizes liquidity providers to submit additional 
liquidity and execution opportunities, thus, providing an overall 
increase in price discovery and transparency on the Exchange. Also, an 
increase in Retail Order flow, which generally are submitted in smaller 
sizes, tends to attract Market-Makers, as smaller size orders are 
easier to hedge. Increased Market-Maker activity facilitates tighter 
spreads, signaling additional corresponding increase in order flow from 
other market participants, which contributes towards a robust, well-
balanced market ecosystem. Increased overall order flow benefits all 
investors by deepening the Exchange's liquidity pool, potentially 
providing even greater execution incentives and opportunities, offering 
additional flexibility for all investors to enjoy cost savings, 
supporting the quality of price discovery, promoting market 
transparency and improving investor protection.
    Further, the Exchange believes that the proposed rule changes are 
reasonable as they do not represent a significant departure from the 
current criteria or enhanced rebates currently offered in the Fees 
Schedule. The proposed criteria under Add Volume Tier 4 remains in line 
with the incremental increases in ADV as a percentage of TCV from Tier 
1 through Tier 3 (where Tier 1 provides for 20%, Tier 2 for 30%, and 
Tier 3 for 40%). Also, the proposed criteria in Growth Tier 3 poses an 
incremental increase in difficulty from Growth Tier 2 (which may be met 
if a Member adds an ADV greater than or equal to 0.20% of the TCV, and 
has a Step-Up Add TCV from March 2019 of greater than or equal to 
0.10%) as the sum of Retail Orders as a Step-Up component present a 
more narrow, thus more difficult, type of order flow that must meet 
threshold in total. As such, the Exchange believes the enhanced rebate 
of $0.0027 offered under proposed Growth Tier 3, over the $0.0026 
enhanced rebate offered under Growth Tier 2, is a reasonable increase. 
Likewise the proposed criteria under Retail Tier 3 is of comparable 
difficulty to the criteria under Retail Tier 2 (which may be met if a 
Member adds a Retail Order ADV greater than or equal to 0.50% of the 
TCV) therefore it is reasonable to offer the same enhanced rebate of 
$0.0037 across the two tiers.
    The Exchange believes that the proposal represents an equitable 
allocation of rebates and is not unfairly discriminatory because all 
Members will continue to be eligible for Add Volume Tier 4, as amended, 
and all RMOs will be eligible for Growth Tier 3 and Retail Volume Tier 
3. The proposed tiers are designed as an incentive to any and all 
Members or RMOs, as applicable, interested in meeting the tier criteria 
to submit additional adding and removing, or Retail, order flow to the 
Exchange. Each will have the opportunity to submit the requisite order 
flow and will receive the applicable enhanced rebate if the tier 
criteria is met. The Exchange additionally notes that while the 
proposed Growth and Retail Volume tiers are applicable only to RMOs, 
the Exchange does not believe this application is discriminatory as the 
Exchange offers similar rebates to non-RMO order flow.\24\
---------------------------------------------------------------------------

    \24\ Such as the nine other Add Volume Tiers and the Tape B 
Volume Tier which provide opportunities to all Members to submit the 
requisite order flow to receive an enhanced rebate.
---------------------------------------------------------------------------

    Without having a view of activity on other markets and off-exchange 
venues, the Exchange has no way of knowing whether this proposed rule 
change would definitely result in any Members qualifying for the 
proposed tiers. While the Exchange has no way of predicting with 
certainty how the proposed tiers will impact Member activity, the 
Exchange anticipates that at least two Members will be able to compete 
for and reach each of the proposed tiers. The Exchange anticipates that 
multiple Member types will compete to reach the proposed tiers, broker-
dealers and liquidity providers, each providing distinct types of order 
flow to the Exchange to the benefit of all market participants. The 
Exchange also notes that the proposed tiers will not adversely impact 
any Member's pricing or their ability to qualify for other rebate 
tiers. Rather, should a Member not meet the proposed criteria for a 
proposed tier, the Member will merely not receive the corresponding 
enhanced rebate. Furthermore, the proposed fees would uniformly apply 
to all Members that meet the required criteria per each respective tier 
(Add Volume Tier 4, Growth Tier 3, and/or Retail Volume Tier 3).

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 order flow to a 
public exchange, thereby promoting market depth, execution incentives 
and enhanced execution opportunities, as well as price discovery and 
transparency for all Members. As a result, the Exchange believes that 
the proposed 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.'' \25\
---------------------------------------------------------------------------

    \25\ Securities Exchange Act Release No. 51808, 70 FR 37495, 
37498-99 (June 29, 2005) (S7-10-04) (Final Rule).
---------------------------------------------------------------------------

    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 proposed 
change applies to all Members or RMOs, as applicable, equally in that 
all Members or RMOs, as applicable, are eligible for the proposed 
tiers, have a reasonable opportunity to meet the tiers' criteria and 
will all receive the proposed rebates if such criteria is met. As 
indicated above, the Exchange does not believe that offering RMOs, 
specifically, opportunities to meet certain tier criteria for enhanced 
rebates imposes a burden on intramarket competition as the Exchange 
offers many similar rebate opportunities for non-RMOs.\26\ Overall, the 
proposed change is designed to attract additional order flow to the 
Exchange. The Exchange believes that the modified tier

[[Page 36903]]

criteria would incentivize market participants to direct liquidity 
removing order flow to the Exchange and, as a result, increase 
execution opportunities, which would further incentivize the provision 
of liquidity and continued order flow and improve price transparency on 
the Exchange. Greater overall order flow and pricing transparency 
benefits all market participants on the Exchange by generally providing 
more trading opportunities, enhancing market quality, and continuing to 
encourage Members to send orders, thereby contributing towards a robust 
and well-balanced market ecosystem, which benefits all market 
participants.
---------------------------------------------------------------------------

    \26\ See supra note 23.
---------------------------------------------------------------------------

    Next, the Exchange 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 that they may participate on 
and direct their order flow, including 12 other equities exchanges and 
off-exchange venues and alternative trading systems. Additionally, the 
Exchange represents a small percentage of the overall market. Based on 
publicly available information, no single equities exchange has more 
than 17% of the market share.\27\ Therefore, no exchange possesses 
significant pricing power in the execution of order flow. Indeed, 
participants can readily choose to send their orders to other exchange 
and off-exchange venues if they deem fee levels at those other venues 
to be more favorable. Moreover, the Commission has repeatedly expressed 
its preference for competition over regulatory intervention in 
determining prices, products, and services in the securities markets. 
Specifically, in Regulation NMS, the Commission highlighted the 
importance of market forces in determining prices and SRO revenues and, 
also, recognized that current regulation of the market system ``has 
been remarkably successful in promoting market competition in its 
broader forms that are most important to investors and listed 
companies.'' \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.
---------------------------------------------------------------------------

    \27\ See supra note 4.
    \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 has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited written comments from Members or other interested 
parties.

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-CboeEDGX-2020-025 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-2020-025. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-CboeEDGX-2020-025, and should be 
submitted on or before July 9, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\32\
---------------------------------------------------------------------------

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

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-13124 Filed 6-17-20; 8:45 am]
BILLING CODE 8011-01-P


