[Federal Register Volume 86, Number 10 (Friday, January 15, 2021)]
[Notices]
[Pages 4161-4163]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00822]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90897; File No. SR-CboeBZX-2020-094]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
its Options and Equities Fees Schedules To Adopt a Provision Relating 
to Billing Errors and Fee Disputes

January 11, 2021.
    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 December 31, 2020, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Exchange 
filed the proposal as a ``non-controversial'' proposed rule change 
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its options and equities fees 
schedules to adopt a provision relating to billing errors and fee 
disputes.
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its options and equities fees 
schedules to adopt a provision relating to billing errors and fee 
disputes. Particularly, the Exchange proposes to provide that after 
three calendar months, all fees and rebates assessed by the Exchange 
would be considered final. More specifically, the Exchange would adopt 
language in the fees schedules that would provide that all fees and 
rebates assessed prior to the three full calendar months before the 
month in which the Exchange becomes aware of a billing error shall be 
considered final. Particularly, the Exchange will resolve an error by 
crediting or debiting Members and Non-Members based on the fees or 
rebates that should have been applied in the three full calendar months 
preceding the month in which the Exchange became aware of the error, 
including to all impacted transactions that occurred during those 
months.\5\ The Exchange will apply the three month look back regardless 
of whether the error was discovered by the Exchange or by a Member or 
Non-Member that submitted a fee dispute to the Exchange. The Exchange 
also proposes to provide all disputes concerning fees and rebates 
assessed by the Exchange would have to be submitted to the Exchange in 
writing and accompanied by supporting documentation.
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    \5\ For example, if the Exchange becomes aware of a transaction 
fee billing error on January 4, 2021, the Exchange will resolve the 
error by crediting or debiting Members based on the fees or rebates 
that should have been applied to any impacted transactions during 
October, November and December 2020. The Exchange notes that because 
it bills in arrears, the Exchange would be able to correct the error 
in advance of issuing the January 2021 invoice and therefore, 
transactions impacted through the date of discovery (in this 
example, January 4, 2021) and thereafter, would be billed correctly.
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    The purpose of the proposed change is to encourage Members and Non-
Members to promptly review their Exchange invoices so that any disputed 
charges can be addressed in a timely manner. The Exchange notes that it 
provides Members with both daily and monthly fee reports and thus 
believes they should be aware of any potential billing errors within 
three months. Requiring that Members and Non-Members submit disputes in 
writing and provide supporting documentation encourages them to 
promptly review their invoices so that any disputed charges can be 
addressed in a timely

[[Page 4162]]

manner while the information and data underlying those charges (e.g., 
applicable fees and order information) is still easily and readily 
available. This practice will avoid issues that may arise when Members 
or Non-Members do not dispute an invoice in a timely manner and will 
conserve Exchange resources that would have to be expended to resolve 
untimely billing disputes. As such, the proposed rule change would 
alleviate administrative burdens related to billing disputes, which 
could divert staff resources away from the Exchange's regulatory and 
business purposes. The proposed rule change to provide all fees and 
rebates are final after three calendar months also provides both the 
Exchange and Members and Non-Members finality and the ability to close 
their books after a known period of time.
    The Exchange notes that a number of exchanges have explicitly 
stated that they consider all fees to be final after a similar period 
of time.\6\ Additionally, several other exchanges have adopted similar 
provisions in their rules that provide for a process for Members and 
Non-Members to submit fee disputes.\7\ The proposed billing policy will 
apply to all charges and rebates reflected in the Exchange's fees 
schedules.
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    \6\ See e.g. Securities Exchange Act Release No. 87650 (December 
3, 2019), 84 FR 67304 (December 9, 2019) (SR-NYSECHX-2019-024); 
Securities Exchange Act Release No. 84430 (October 16, 2018), 83 FR 
53347 (October 22, 2018) (SR-NYSENAT-2018-23); and Securities 
Exchange Act Release No. 79060 (October 6, 2016), 81 FR 70716 
(October 13, 2016) (SR-ISEGemini-2016-11).
    \7\ See e.g. MEMX LLC, Rule 15.3, IEX Rule 15.120, Nasdaq Rule 
Equity 7, Section 70, Nasdaq BX Rule Equity 7, Section 111, and 
Nasdaq PHLX Rule Equity 7, Section 2.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\8\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \9\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \10\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
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    With respect to the proposed billing procedure, the Exchange 
believes that the requirement to submit all billing disputes in 
writing, and with supporting documentation is reasonable because the 
Exchange provides Members with ample tools to monitor and account for 
various charges incurred in a given month. Additionally, the Exchange 
notes that most Members and Non-Members that pay exchange fees are 
sophisticated entities, so it is appropriate to expect them to promptly 
review their invoices for errors and to be capable of identifying such 
errors.
    The proposed provision also promotes the protection of investors 
and the public interest by providing a clear and concise mechanism for 
Members and Non-Members to dispute fees and for the Exchange to review 
such disputes in a timely manner. Moreover, the proposed billing 
dispute language, which will lower the Exchange's administrative 
burden, is similar to billing dispute language of other exchanges.\11\ 
In addition, the proposed billing procedure is fair, equitable, and not 
unfairly discriminatory because it will apply equally to all Members 
(and Non-Members that pay Exchange fees).
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    \11\ See supra note 7.
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    The Exchange also believes that providing that all fees and rebates 
are final after three months (i.e., resolving billing errors only for 
the three full calendar months preceding the month in which the 
Exchange became aware of the error), is reasonable as both the Exchange 
and Members and Non-Members have an interest in knowing when its fee 
assessments are final and when reliance can be placed on those 
assessments. Indeed, without some deadline on billing errors, the 
Exchange and Members and Non-Members would never be able to close their 
books with any confidence. Furthermore, as noted above, a number of 
Exchanges similarly consider their fees final after a similar period of 
time.\12\ The proposed change is also equitable, and not unfairly 
discriminatory because it will apply equally to all Members (and Non-
Members that pay Exchange fees) and apply in cases where either the 
Member (or Non-Member) discovers the error or the Exchange discovers 
the error.
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    \12\ See supra note 6.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. With respect to the billing 
procedure and billing error policy, the proposed rule change would 
establish a clear process that would apply equally to all Members. 
Additionally, the proposed rule change is similar to rules of other 
exchanges. The Exchange does not believe such proposed changes would 
impair the ability of Members or competing order execution venues to 
maintain their competitive standing in the financial markets. Moreover, 
because the proposed changes would apply equally to all Members, the 
proposal does not impose any burden on competition.

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

    No comments were solicited or received on the proposed rule change.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) \14\ thereunder.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing,

[[Page 4163]]

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-CboeBZX-2020-094 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CboeBZX-2020-094. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CboeBZX-2020-094 and should 
be submitted on or before February 5, 2021.
    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-00822 Filed 1-14-21; 8:45 am]
BILLING CODE 8011-01-P


