[Federal Register Volume 85, Number 189 (Tuesday, September 29, 2020)]
[Notices]
[Pages 61039-61043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21406]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89970; File No. SR-CboeEDGX-2020-045]


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

September 23, 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 September 11, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') is filing 
with the Securities and Exchange Commission (``Commission'') a proposed 
rule change to amend the fee schedule. The text of the proposed rule 
change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its fee schedule applicable to its 
equities trading platform (``EDGX Equities'') by: (1) Amending certain 
standard rates; (2) adding a new fee code; (3) updating the Non-
Displayed Add Volume Tiers; and (4) including a Remove Volume Tier.\3\
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    \3\ The Exchange initially filed the proposed fee changes on 
September 1, 2020 (SR-CboeEDGX-2020-044). On September 11, 2020, the 
Exchange withdrew that filing and submitted this proposal.
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    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,\4\ no single registered 
equities exchange has more than 18% 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 provide liquidity and assesses 
fees to those that remove liquidity. The Exchange's fee schedule sets 
forth the standard rebates and rates applied per share for orders that 
provide and remove liquidity, respectively. Currently, for orders 
priced 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. For orders priced 
below $1.00, the Exchange a standard rebate of $0.00003 per share for 
orders that add liquidity and assesses a fee of 0.30% of Dollar Value 
for orders that remove liquidity. Additionally, in response to the 
competitive environment, the Exchange also offers tiered pricing which 
provides Members opportunities to qualify for higher rebates or reduced 
fees where certain volume criteria and thresholds are met. Tiered 
pricing provides an

[[Page 61040]]

incremental incentive for Members to strive for higher tier levels, 
which provides increasingly higher benefits or discounts for satisfying 
increasingly more stringent criteria.
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    \4\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, Month-to-Date (August 24, 2020), available at https://markets.cboe.com/us/equities/market_statistics/.
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Proposed Amendment to Standard Rebate for Securities Under $1.00
    As stated above, the Exchange currently offers a standard rebate of 
$0.00003 for orders in securities below $1.00 that add liquidity. The 
Exchange proposes to amend this standard rate by providing a standard 
rebate of $0.00009 for orders that add liquidity in securities priced 
under $1.00 and reflects this change in the Fee Codes and Associated 
Fee where applicable (i.e., corresponding to fee codes 3, 4, B, V, and 
Y). The Exchange notes that the proposed standard rate is in line with, 
yet also competitive with, rates assessed by other equities exchanges 
on orders in securities priced below $1.00.\5\ The Exchange notes, too, 
that its affiliated exchange, Cboe BZX Exchange, Inc. (``BZX 
Equities''), is simultaneously submitting a fee change to amend its 
same current standard rate for orders that add liquidity in securities 
under $1.00 in the same manner.
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    \5\ See NYSE Price List 2020, ``Transactions in stocks with a 
per share stock price less than $1.00'', which either does not 
assess a charge or assesses a charge of 0.3% for various orders in 
securities priced below $1.00; and Nasdaq Pricing, ``Rebates and 
Fees, Shares Executed Below $1.00'', which assesses no change for 
orders to add liquidity in securities priced below $1.00 and 
assesses a charge of 0.30% of total dollar volume for orders to 
remove liquidity in securities priced below $1.00.
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Proposed New Fee Code
    The Exchange proposed to add a new type of fee code in the Fee Code 
and Associated Fees table in the Fee Schedule. Specifically, the 
proposed fee code ``ZM'' is appended to Retail \6\ Day or Regular Hours 
Only (``RHO'') \7\ Orders that remove liquidity on arrival and are 
assessed no fee. Currently, such orders in securities priced at or 
above $1.00 are assessed the standard fee of $0.0027 to remove 
liquidity and such orders in securities priced below $1.00 are assessed 
the standard fee of 0.30% of Dollar Value to remove liquidity.
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    \6\ 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.
    \7\ ``Day'' is an instruction the User may attach to an order 
stating that an order to buy or sell which, if not executed, expires 
at the end of Regular Trading Hours. Any Day Order entered into the 
System before the opening for business on the Exchange, or after the 
closing of Regular Trading Hours, will be rejected. See EDGX Rule 
11.6(q)(2). ``Regular Hours Only (``RHO'') is an instruction a User 
may attach to an order designating it for execution only during 
Regular Trading Hours, which includes the Opening Process and Re-
Opening Process following a halt suspension or pause. See EDGX Rule 
11.6(q)(6).
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Proposed Updates to the Non-Displayed Add Volume Tiers
    Currently, the Exchange provides for three Non-Displayed Add Volume 
Tiers under footnote 1 of the Fee Schedule. These tiers offer enhanced 
rebates on Members' orders yielding fee codes ``DM'' \8\, ``HA'' \9\, 
``MM'' \10\ and ``RP'' \11\ where a Member reaches certain required 
volume-based criteria offered in each tier. Specifically, the Non-
Displayed Add Volume Tiers are as follows:
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    \8\ Appended to orders that add liquidity using MidPoint 
Discretionary order within discretionary range and are provided a 
rebate of $0.00100.
    \9\ Appended to non-displayed orders that add liquidity and are 
provided a rebate of $0.00100.
    \10\ Appended to non-displayed orders that add liquidity using 
Mid-Point Peg and are provided a rebate of $0.00100.
    \11\ Appended to non-displayed orders that add liquidity using 
Supplemental Peg and are provided a rebate of $0.00100.
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     Tier 1 provides an enhanced rebate of $0.0015 for a 
Member's qualifying orders (i.e., yielding fee codes DM, HA, MM and RP) 
where a Member adds an ADV \12\ greater than or equal to 1,000,000 
shares as Non-Displayed orders that yield fee codes DM, HA, HI, MM or 
RP.
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    \12\ ``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.
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     Tier 2 provides an enhanced rebate of $0.0022 for a 
Member's qualifying orders where a Member adds an ADV greater than or 
equal to 2,500,000 shares as Non-Displayed orders that yield fee codes 
DM, HA, HI, MM or RP.
     Tier 3 provides an enhanced rebate of $0.0025 for a 
Member's qualifying orders where a Member adds an ADV greater than or 
equal to 7,000,000 shares as Non-Displayed orders that yield fee codes 
DM, HA, HI, MM or RP.
    The Exchange proposes to update the criteria in each of the Non-
Displayed Add Volume Tiers as follows below. The Exchange notes that 
the enhanced rebates currently provided in each tier remain the same.
     To meet the proposed criteria in Tier 1, a Member must 
have an ADAV greater than or equal to 0.01% of TCV for Non-Displayed 
orders that yield fee codes DM, HA, HI, MM or RP.
     To meet the proposed criteria in Tier 2, a Member must 
have an ADAV greater than or equal to 0.02% of TCV for Non-Displayed 
orders that yield fee codes DM, HA, HI, MM or RP.
     To meet the proposed criteria in Tier 3, a Member must 
have an ADAV greater than or equal to 0.05% of TCV for Non-Displayed 
orders that yield fee codes DM, HA, HI, MM or RP.
    The Exchange notes that the proposed rule change also updates the 
language in each Tier to state ``where a Member has an ADAV'', which 
essentially states the same requirement as ``adds an ADV'', but is more 
appropriately aligned with the defined terms in the Fee Schedule.\13\ 
Further, the Exchange does not believe that amending the current volume 
over a baseline number of shares criteria to, instead, be a percentage 
volume over TCV poses any significant increase or decrease in 
difficulty in reaching the Non-Displayed Add Volume Tiers, but only 
changes the format of the Non-Displayed Add Volume Tier criteria to be 
consistent with the format of the criteria in the other volume-based 
tiers offered under the Fee Schedule.\14\
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    \13\ See supra note 12; and see infra note 20.
    \14\ See EDGX Equities Fee Schedule, ``Add Volume Tiers'', 
``Tape B Volume Tier'', and ``Retail Volume Tier''.
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Proposed Remove Volume Tier
    The Exchange proposes to add a new Remove Volume Tier under 
footnote 1 of the Fee Schedule.\15\ The proposed Remove Volume Tier 
offers a reduced remove fee of $0.0026 in securities at or above $1.00 
and 0.28% of total dollar value for orders in securities below $1.00 
\16\ for orders yielding fee code ``BB'' \17\, ``N'' \18\ and ``W'' 
\19\ where a Member has an ADAV \20\ greater than or equal to 0.25% TCV 
\21\ with displayed orders that yield fee codes B, V or Y. The proposed 
Remove Volume Tier is designed to incentivize Members to increase their 
orders that add displayed

[[Page 61041]]

volume on the Exchange in order to receive a reduced fee on their 
qualifying, liquidity removing orders.
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    \15\ As a result of the new Remove Volume Tier, it also updates 
the title of footnote 1 to ``Add/Remove Volume Tiers''.
    \16\ As a result, the Exchange proposes to update the statement 
under General Notes in the Fee Schedule to state that ``unless 
otherwise indicated, variable rates provided by tiers apply only to 
executions in securities priced at or above $1.00.
    \17\ Appended to orders that remove liquidity from EDGX (Tape B) 
and is assessed a standard fee of $0.00270.
    \18\ Appended to orders that remove liquidity from EDGX (Tape C) 
and is assessed a standard fee of $0.00270.
    \19\ Appended to orders that remove liquidity from BZX (Tape A) 
and is assessed a standard fee of $0.00270.
    \20\ ``ADAV'' means average daily added volume calculated as the 
number of shares added per day. ADAV is calculated on a monthly 
basis.
    \21\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan for the month for which the 
fees apply.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\22\ in general, and 
furthers the objectives of Section 6(b)(4),\23\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members, issuers and other persons 
using its facilities. 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 changes 
reflect 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.
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    \22\ 15 U.S.C. 78f.
    \23\ 15 U.S.C. 78f(b)(4).
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    Regarding the proposed change to the standard rates, the Exchange 
believes that amending the standard rate for orders that add volume in 
securities priced below $1.00 is reasonable because, as stated above, 
in order to operate in the highly competitive equities markets, the 
Exchange and its competing exchanges seek to offer similar pricing 
structures, including assessing comparable standard fees for orders in 
securities priced below $1.00. Thus, the Exchange believes the proposed 
standard rate change is reasonable as it is generally aligned with and 
competitive with the amounts assessed for the orders in securities 
below $1.00 on other equities exchanges. The Exchange also believes 
that amending this standard rate amount represents an equitable 
allocation of fees and is not unfairly discriminatory because they will 
continue to automatically apply to all Members' orders that add 
liquidity in securities less than $1.00 uniformly.
    Regarding the proposed new fee code ZM appended to Retail Day/RHO 
Orders that remove liquidity on arrival, 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.\24\ 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.
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    \24\ See Securities Exchange Release No. 86375 (July 15, 2019), 
84 FR 34960 (SR-CboeEDGX-2019-045).
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    The Exchange believes that its proposed change to adopt fee code 
ZM, which will assess no fee for Retail Day/RHO Orders that remove upon 
arrival is reasonable, equitable and not unfairly discriminatory. 
Specifically, the Exchange believes the proposal is reasonable as 
market participants will not be subject to a fee for the execution of 
such orders. This is consistent with, and competitive with, fees 
assessed for retail order flow on other equities exchanges, which 
provide pricing incentives to retail orders in the form of lower fees 
and/or higher rebates.\25\ The Exchange notes too that it currently 
offers a rebate of $0.0032 per share for Retail Orders that add 
liquidity (i.e., yielding fee code ``ZA'') as compared to the standard 
rebate of $0.0017 for liquidity adding orders, as well as Retail Volume 
Tiers which provide various enhanced rebates specifically for Members' 
Retail Order flow. The Exchange believes that adopting no charge on 
orders yielding fee code ZM is reasonable in that it is reasonably 
designed to incentivize an increase in removing Retail Order flow. 
Retail Orders are generally submitted in smaller sizes and tend to 
attract Market-Makers, as smaller size orders are easier to hedge, and 
Retail Order flow that removes liquidity additionally signals to 
liquidity providers to increase their overall provision of liquidity in 
the markets. Increased Market-Maker activity facilitates tighter 
spreads and an increase in overall liquidity provider activity provides 
for deeper, more robust levels of liquidity, both of which signal 
additional corresponding increase in order flow from other market 
participants, contributing towards a robust, well-balanced market 
ecosystem. Indeed, increased overall order flow benefits all investors 
by continuing to deepen 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. The Exchange notes 
that, like all other fee codes, ZM and the accompanying free charge 
will be automatically and uniformly applied to all Members' qualifying 
orders. The Exchange additionally notes that while the proposed fee 
code and assessment of no fee is applicable only to Retail Orders, the 
Exchange does not believe this application is discriminatory as the 
Exchange offers similar rebates or reduced rates to non-Retail Order 
flow.\26\
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    \25\ See 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; and NYSE Price List, 
``Fees and Credits Applicable to Executions in the Retail Liquidity 
Program'', which offers various reduced fees, including the 
assessment of no charges, for various types of retail order volume, 
and ``Transaction Fees and Credits For Tape B and C Securities'', 
which provides a rebate of $0.0030 per share specifically for retail 
orders.
    \26\ See generally, EDGX Equities Fee Schedule, Fee Codes and 
Associated Fees; see also ``Add Volume Tiers'' and ``Tape B Volume 
Tier'', both of which provide various enhanced rebates for non-
Retail Order flow.
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    The Exchange believes that the proposed Remove Volume Tier is 
reasonable because it provides an additional opportunity through a new 
tier for Members to receive a discounted rate by means of liquidity 
adding orders and that the proposed changes to the Non-Displayed 
Liquidity Tiers are reasonable because they merely update the format of 
the tiers' criteria to be consistent with other volume-based tiers 
currently offered by the Exchange, thus maintaining existing 
opportunities for Members to receive a discounted rate by means of non-
displayed liquidity adding orders.\27\ The Exchange notes that relative 
volume-based incentives and discounts have been widely adopted by 
exchanges, including the Exchange, 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 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, 
including schedules of rebates and fees that apply based upon members 
achieving certain volume and/or growth thresholds, as well as assess 
similar fees or rebates for similar types of orders, to that of the 
Exchange. These competing pricing schedules, including those of the 
Exchange's affiliated equities

[[Page 61042]]

exchanges,\28\ are presently comparable to those that the Exchange 
provides, including the pricing of comparable criteria and reduced 
fees.
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    \27\ See supra note 14.
    \28\ See EDGA Equities Fee Schedule, footnote 7, ``Add/Remove 
Volume Tiers'', of which the Remove Volume Tiers offers an enhanced 
rebate of $0.0022 or $0.0028 for reaching a certain threshold of ADV 
over TCV; BYX Equities Fee Schedule, footnote 1, ``Add/Remove Volume 
Tiers'', of which the Remove Volume Tiers offer enhanced rebates 
between $0.0015 and $0.0018 for various criteria (Step-Up volume, 
ADAV of a set number of shares, ADV as a percentage of TCV, etc.); 
and BZX Equities Fee Schedule, footnote 1, ``Add Volume Tiers'', 
Non-Displayed Add Volume Tiers, which provide for substantially 
similar enhanced rebates and non-displayed volume based criteria.
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    Moreover, the Exchange believes the Remove Volume Tier is a 
reasonable means to incentivize Members to continue to provide 
liquidity adding, displayed volume to the Exchange by offering them a 
different, additional opportunity than that of the current Add Volume 
Tiers--to receive a reduced fee on their liquidity removing orders by 
meeting the proposed criteria in submitting additional add volume order 
flow. In addition to this, the Exchange has recently observed that 
trading in subdollar names has grown significantly; nearly tripling 
since the beginning of 2020, and that competing equities exchanges have 
begun offering pricing incentives for subdollar orders.\29\ Therefore, 
the Exchange believes that it is reasonable and equitable to provide 
the proposed reduced fee under the new Remove Volume Tier for 
qualifying subdollar orders. Also, as noted above, the Exchange's 
affiliated equities exchanges already have similar Remove Volume Tiers 
in place, which offer similar rebates for achieving comparable 
criteria, in addition to their Add Volume Tiers.\30\
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    \29\ See NYSE Price List, ``Fees and Credits applicable to 
Designated Market Makers (``DMMs'')'', which provides, among various 
credits for orders in securities at or above $1.00, additional 
credit of $0.0004 for DMMs adding liquidity in securities under 
$1.00; see also Securities Exchange Release No. 89607 (August 18, 
2020), 85 FR 52179 (August 24, 2020) (SR-NYSEArca-2020-75), which 
recently adopted in its fee schedule a step up tier for ETP Holders 
adding liquidity in Round Lots and Odd Lots in Tapes A, B and C 
securities with a per share price below $1.00 and amended the base 
rate for adding and removing liquidity in Round Lots and Odd Lots in 
Tapes A, B and C securities with a per share price below $1.00.
    \30\ See supra note 28.
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    In addition to this, the Exchange believes the proposed Non-
Displayed Volume Tiers are reasonable in that the proposed changes to 
the tiers' criteria is designed to be more consistent with the format 
of the criteria (i.e., percentage of volume based on TCV) currently 
offered under the other volume-based tiers in the Fee Schedule.\31\ 
Also, as noted above, the Exchange's affiliated equities exchange, BZX 
Equities, currently has Non-Displayed Volume Tiers in place, which 
offer substantially similar enhanced rebates and criteria based on 
volume over TCV for its members.\32\
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    \31\ See supra note 14.
    \32\ See supra note 28.
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    Overall, the Exchange believes that the proposed tiers, each based 
on a Member's liquidity adding orders, will benefit all market 
participants by incentivizing continuous liquidity and thus, deeper 
more liquid markets as well as increased execution opportunities. 
Particularly, the proposed Remove Volume Tier is designed to 
incentivize continuous displayed liquidity, which signals other market 
participants to take the additional execution opportunities provided by 
such liquidity, while the proposed Non-Displayed Add Volume Tiers 
remains designed to incentivize non-displayed liquidity, which further 
contributes to a deeper, more liquid market and provide even more 
execution opportunities for active market participants at improved 
prices. This overall increase in activity deepens the Exchange's 
liquidity pool, offers additional cost savings, supports the quality of 
price discovery, promotes market transparency and improves market 
quality, for all investors.
    The Exchange believes that the proposal represents an equitable 
allocation of fees and rebates and is not unfairly discriminatory 
because all Members are eligible for the proposed Remove Volume Tier 
and Non-Displayed Add Volume Tiers and would have the opportunity to 
meet the tiers' criteria and would receive the proposed fee if such 
criteria is met. Without having a view of activity on other markets and 
off-exchange venues, the Exchange has no way of knowing whether this 
proposed rule change would definitely result in any Members qualifying 
for the proposed tiers. While the Exchange has no way of predicting 
with certainty how the proposed tier will impact Member activity, the 
Exchange anticipates that approximately eight Members will be able to 
compete for and reach the proposed Remove Volume Tier. The Exchange 
also notes that while the proposed changes to the criteria in the Non-
Displayed Add Volume Tiers do not significantly increase or decrease 
the level of criteria difficulty, thus do not significantly affect 
Members' current ability to compete for and reach the proposed tiers, 
approximately three additional Members will be able to compete for and 
reach these tiers, as amended. The Exchange anticipates that the tiers 
will include various liquidity providing Member types, such as 
traditional Market Makers, and wholesale or consolidator firms that 
mainly make markets for retail orders, each providing distinct types of 
order flow to the Exchange to the benefit of all market participants. 
The Exchange also notes that proposed tiers will not adversely impact 
any Member's pricing or ability to qualify for other reduced fee or 
enhanced rebate tiers. Should a Member not meet the proposed criteria 
under any of the proposed tiers, the Member will merely not receive 
that corresponding reduced fee. Furthermore, the proposed reduced fee 
in the Remove Volume Tier would uniformly apply to all Members that 
meet the required criteria under the proposed tier. The Exchange again 
notes that the enhanced rebates offered under the Non-Displayed Add 
Volume Tiers remain the same.

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

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition 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.''
    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 equally in that all Members are eligible 
for the proposed Remove Volume Tier and the proposed Non-Displayed Add 
Volume Tiers, have a reasonable opportunity to meet the tiers' criteria 
and will all receive the proposed fee if such criteria is met. 
Additionally, the proposed tiers are designed to attract additional 
order flow to the Exchange. The Exchange believes that the additional 
and updated tier criteria would incentivize market participants to 
direct liquidity adding order flow to the Exchange, bringing with it 
improved price transparency. Greater overall order

[[Page 61043]]

flow and pricing transparency benefits all market participants on the 
Exchange by 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. Further, the proposed standard rebate 
for orders that add liquidity in securities below $1.00 and the 
proposed no charge for orders yielding fee code ZM will apply uniformly 
and automatically to all such Members' respective orders, as all other 
standard rates and fee codes apply today to qualifying orders. In 
addition to this, and as indicated above, the Exchange does not believe 
that not assessing a fee for Retail Orders yielding fee code ZM imposes 
any burden on intramarket competition as the Exchange offers many 
similar rebate opportunities for non-Retail Orders in it Fee 
Schedule.\33\
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    \33\ See supra note 26.
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    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 18% of the market share. Therefore, no exchange possesses 
significant pricing power in the execution of order flow. Indeed, 
participants can readily choose to send their orders to other 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.'' The fact that this market is competitive has also long 
been recognized by the courts. In NetCoalition v. Securities and 
Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one 
disputes that competition for order flow is `fierce.' . . . As the SEC 
explained, `[i]n the U.S. national market system, buyers and sellers of 
securities, and the broker-dealers that act as their order-routing 
agents, have a wide range of choices of where to route orders for 
execution'; [and] `no exchange can afford to take its market share 
percentages for granted' because `no exchange possesses a monopoly, 
regulatory or otherwise, in the execution of order flow from broker 
dealers'. . . .'' Accordingly, the Exchange does not believe its 
proposed fee change imposes any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \34\ and paragraph (f) of Rule 19b-4 \35\ 
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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    \34\ 15 U.S.C. 78s(b)(3)(A).
    \35\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CboeEDGX-2020-045 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-2020-045. 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-2020-045, and should be 
submitted on or before October 20, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-21406 Filed 9-28-20; 8:45 am]
BILLING CODE 8011-01-P


