[Federal Register Volume 87, Number 90 (Tuesday, May 10, 2022)]
[Notices]
[Pages 28061-28063]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-09959]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94848; File No. SR-CBOE-2022-022]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Update 
Its Fees Schedule in Connection With the Launch of the Curb Trading 
Hours Session

May 4, 2022.
    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 April 25, 2022, 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.
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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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to update its Fees Schedule in connection with the launch of the Curb 
Trading Hours Session. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fees Schedule in connection with 
its plans to launch the Curb Trading Hours (``Curb'') session, 
effective April 25, 2022.
    By way of background, the Exchange currently offers two trading 
sessions, the Regular Trading Hours session (``RTH'') \3\ and the 
Global Trading Hours session (``GTH'').\4\ Beginning Monday, April 25, 
2022, the Exchange will operate an additional trading session following 
RTH called the ``Curb Trading Hours'' or ``Curb'' session. The Curb 
session will provide an extra forty-five-minute electronic only session 
for trading between 4:15 p.m. and 5:00 p.m. ET for designated classes, 
which will be added Monday through Friday. Currently, only SPX 
(including SPXW) and VIX options will be available for trading on the 
Exchange during the Curb session. FLEX Options with the same underlying 
index will also be deemed eligible for trading during the Curb session. 
Transactions effected during the Curb session will have the same trade 
date as the immediately preceding RTH session (i.e., the day on which 
the transactions were effected), whereas transactions effected during a 
GTH session have a different trade date than the immediately preceding 
RTH session (i.e., the trading day following the RTH session that 
immediately preceded it).
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    \3\ RTH for transactions in equity options (including options on 
individual stocks, ETFs, ETNs, and other securities) are the normal 
business days and hours set forth in the rules of the primary market 
currently trading the securities underlying the options, except for 
options on ETFs, ETNs, Index Portfolio Shares, Index Portfolio 
Receipts, and Trust Issued Receipts the Exchange designates to 
remain open for trading beyond 4:00 p.m. Eastern Time (ET) but in no 
case later than 4:15 p.m. ET. RTH for transactions in index options 
are from 9:30 a.m. to 4:15 p.m. ET, subject to certain exceptions.
    \4\ The GTH session currently begins at 8:15 p.m. (previous day) 
and goes until 9:15 a.m. ET on Monday through Friday.
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    In connection with the launch of the Curb session, the Exchange 
proposes to update its Fees Schedule to reflect and incorporate 
references to the Curb session and make clear which fees, surcharges 
and programs also apply during Curb. Specifically, the fees (including 
surcharges) \5\ and programs \6\ applicable during RTH for SPX, SPXW 
and VIX will apply in the same manner during Curb. To make clear that 
such fees, surcharges and programs also apply during Curb, the Exchange 
proposes to adopt and append Footnote 42 to all applicable fees, 
surcharges and programs.\7\ Footnote 42 would also make clear that Curb 
is a separate trading session from RTH and GTH for VIX, SPX and SPW and 
commences at 3:15PM CST and terminates at 4:00PM CST,\8\ and is 
conducted on an all-electronic trading model with no open outcry 
capability.
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    \5\ See Cboe Options Fees Schedule, Rate Table--Underlying 
Symbol List A (including all surcharges), Electronic Trading Permit 
Fees, Trade Processing Services fee and Regulatory Fees.
    \6\ See Cboe Options Fees Schedule, SPX/SPXW and SPESG Liquidity 
Provider Sliding Scale, Cboe Options Clearing Trading Permit Holder 
Proprietary Products Sliding Scale, Cboe Options Clearing Trading 
Permit Holder VIX Sliding Scale, Select Customer Options Reduction 
(``SCORe'') Program, Customer Large Trade Discount, Large Trade 
Discount, Trading Permit Holder Transaction Fee Policies and Rebate 
Programs, and Frequent Trader Program.
    \7\ Only applicable RTH fees, surcharges and programs will apply 
during Curb. For example, since Curb will operate as an all-
electronic trading session, no floor related fees such as floor 
brokerage fees will apply during Curb.
    \8\ The Exchange notes that although its rulebook references 
time in Eastern Time, its Fees Schedule uses Central Standard Time 
(``CST'').
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    The Exchange also proposes to update the notes sections of certain 
tables in the Fees Schedule to incorporate references to the Curb 
session. First, the Exchange

[[Page 28062]]

proposes to make clear in the tables of the Clearing Trading Permit 
Holder Proprietary Products Sliding Scale and Clearing Trading Permit 
Holder VIX Sliding Scale that volume in Curb, in addition to GTH and 
RTH, will all be aggregated for purposes of calculating the volume 
thresholds. The Exchange also proposes to add a reference to the Curb 
session in the Frequent Trader Program making clear that Customers can 
obtain unique Frequent Trader IDs which can be appended by executing 
agents to orders submitted to the Exchange during Curb, in addition to 
RTH and GTH. The Exchange lastly proposes to update the notes section 
of the Electronic Trading Permit Fees table to make clear that Market-
Maker Electronic Access Permits, Electronic Access Permits, and 
Clearing TPH Permits all entitle the holder to access the Exchange in 
the respective capacity during Curb, in addition to RTH and GTH.
    The Exchange also proposes to make clarifying updates to the Fees 
Schedule as it relates to fees assessed during GTH. First, the Exchange 
proposes to update Footnote 37 of the Fees Schedule, which currently 
provides that GTH is a separate trading session from RTH for VIX, SPX 
and SPW and also that GTH commences at 7:15 p.m. CST and terminates at 
8:15AM CST and is conducted on an all-electronic trading model with no 
open outcry capability. Specifically, the Exchange proposes to update 
Footnote 37 to clarify that GTH is a separate trading session from both 
RTH and Curb trading sessions. The Exchange also proposes to modify the 
way Footnote 37 is appended to various fees, surcharges and programs. 
Currently anywhere that Footnote 37 is appended, the Exchange also 
states ``(Also applies to GTH)'' immediately preceding the appended 
Footnote 37 reference. The Exchange proposes to eliminate this language 
in order to streamline the Fees Schedule and make it easier to read. 
The Exchange does not believe this language is necessary or needed to 
understand when a fee, surcharge or program applies during GTH since 
the Exchange will still maintain all appended references to Footnote 37 
itself. However, to alleviate any potential confusion, the Exchange 
also proposes to add the language ``[a]pplies during Global Trading 
Hours (``GTH'')'' to the Footnote 37 Description.
    The Exchange next proposes to append Footnote 37 to the SPX/SPXW 
and SPESG Liquidity Provider Sliding Scale, SCORe Program, and Frequent 
Trader Program tables as it was inadvertently not added to the headers 
of those tables previously, notwithstanding its application during GTH 
as well as RTH. Lastly, the Exchange proposes to update the header 
relating to AIM Agency/Primary and AIM Contra fees included in the Rate 
Table--Underlying Symbol List A. Particularly, the header currently 
provides that such fees apply to ``VIX Only'' and in ``SPX (incl[uding] 
SPXW in GTH Only''. The Exchange notes that previously AIM was only 
activated for SPX and SPXW during GTH (and not RTH). The Exchange notes 
however, that currently SPX and SPXW are currently eligible to 
participate in AIM during either session, and will also be eligible to 
participate in AIM during Curb. As such, the Exchange proposes to 
eliminate this reference and provide instead that the rates (which 
currently are the same as non-AIM rates) apply to VIX and SPX 
(including SPXW), as well as append Footnotes 37 and 42 to clarify the 
applicability to each trading session.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\9\ in general, and 
furthers the objectives of Section 6(b)(4),\10\ 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) \11\ 
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.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ 15 U.S.C. 78f.(b)(5).
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    First, the Exchange believes that the proposed rule change is 
reasonable, equitable and not unfairly discriminatory because all 
applicable fees, surcharges and programs that apply to SPX, SPWX and 
VIX during RTH will also apply during Curb, which although is a 
separate trading session from RTH, merely provides an additional 45 
minutes of trading in these products during which transactions effected 
will have the same trade date as the immediately preceding RTH session. 
The Exchange believes proposed Footnote 42 will add clarity and 
transparency to the Fees Schedule by providing details around the Curb 
session as well as making clear that the fees, surcharges, and programs 
listed in the Fees Schedule apply to Curb just as they apply to RTH. 
The proposed updates related to Footnote 37 are also meant to 
streamline the Fees Schedule, make it easier to read and alleviate 
potential confusion as to the applicability of certain fees and 
programs.
    The Exchange believes that the proposed rule change is equitable 
and not unfairly discriminatory because current fees, surcharges and 
programs currently applicable during RTH for SPX, SPXW and VIX will 
apply in the same manner during Curb. Also, the fee amounts for each 
separate type of market participant will continue to be assessed 
equally for each product to all such market participants (i.e. all 
Broker-Dealer orders will be assessed the same amount, all Joint Back-
Office orders will be assessed the same amount, etc.). The Exchange 
lastly notes that the newly adopted Curb session will apply equally to 
all market participants, in that, all market participants may choose to 
trade during Curb.

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

    The Exchange believes the proposed amendments to its Fee Schedule 
will not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. 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 
apply uniformly to all market participants that choose to participate 
in the new Curb session. As discussed, all fees, surcharges and 
programs applicable during RTH will also apply in the same manner 
during the Curb session.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed rule changes apply only to products exclusively listed on the 
Exchange. Additionally, the Exchange notes it operates in a highly 
competitive market. In addition to Cboe Options, TPHs have numerous 
alternative venues that they may

[[Page 28063]]

participate on and direct their order flow, including 15 other options 
exchanges, as well as off-exchange venues, where competitive products 
are available for trading. Based on publicly available information, no 
single options exchange has more than 16% of the market share of 
executed volume of options trades.\12\ Therefore, no exchange possesses 
significant pricing power in the execution of option order flow. 
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.'' \13\ 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'. . ..''.\14\ 
Accordingly, the Exchange does not believe its proposed changes to the 
incentive programs impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.
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    \12\ See Cboe Global Markets, U.S. Options Market Volume Summary 
by Month (April 21, 2022), available at http://markets.cboe.com/us/options/market_share/.
    \13\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \14\ NetCoalition v. SEC, 615 F.3d 525, 539 (DC Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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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 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 \15\ and paragraph (f) of Rule 19b-4 \16\ 
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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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CBOE-2022-022 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-2022-022. 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-2022-022 and should be submitted on 
or before May 31, 2022.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-09959 Filed 5-9-22; 8:45 am]
BILLING CODE 8011-01-P


