[Federal Register Volume 88, Number 53 (Monday, March 20, 2023)]
[Notices]
[Pages 16691-16697]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05544]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97137; File No. SR-CBOE-2023-013]


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

March 14, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 28, 2023, Cboe Exchange, Inc. (``Exchange'' or ``Cboe 
Options'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes 
to update the Cboe Data Services, LLC 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://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the fees set forth in the Cboe Data 
Services, LLC (``CDS'') Fee Schedule.\3\ The Exchange proposes to (i) 
relocate the fees in the CDS Fees Schedule to the Exchange's Fees 
Schedule (ii) harmonize various definitions to align with the 
definitions used by the Exchange's affiliates, and (iii) modify its 
fees relating to the distribution of the BBO data feed.\4\
---------------------------------------------------------------------------

    \3\ The Exchange initially filed the proposed fee changes on 
January 3, 2023 (SR-CBOE-2023-001). On February 28, 2023, the 
Exchange withdrew that filing and submitted this proposal.
    \4\ The BBO Data Feed is a real-time data feed that includes the 
following information: (i) outstanding quotes and standing orders at 
the best available price level on each side of the market; (ii) 
executed trades time, size, and price; (iii) totals of customer 
versus non-customer contracts at the best bid and offer (``BBO''); 
(iv) all-or-none contingency orders priced better than or equal to 
the BBO; (v) expected opening price and expected opening size; (vi) 
end-of-day summaries by product, including open, high, low, and 
closing price during the trading session; (vi) recap messages any 
time there is a change in the open, high, low or last sale price of 
a listed option; (vii) COB information; and (viii) product IDs and 
codes for all listed options contracts. The quote and last sale data 
contained in the BBO data feed is identical to the data sent to the 
Options Price Reporting Authority (``OPRA'') for redistribution to 
the public.
---------------------------------------------------------------------------

Relocation of CDS Fees
    The Exchange first proposes to consolidate the Cboe Data Services, 
LLC (CDS) Fee Schedule and the Cboe Options Fees Schedule. 
Historically, the CDS Fee Schedule set forth fees relating to real-time 
Cboe Options market data products and has been maintained separately 
from the Cboe Options Fees Schedule. The Exchange proposes to eliminate 
the CDS Fee Schedule in its entirety and relocate the fees under the 
CDS Fees Schedule to the Cboe Options Fees Schedule. The Exchange 
believes this provides a more streamlined fee schedule for Cboe Options 
fees and allows TPHs to more readily and easily find all fees 
applicable to Cboe Options. The Exchange notes that no substantive 
changes are being made with the relocation of the CDS fees other than 
those discussed further below. The Exchange lastly notes that each of 
its affiliated options exchanges also reflect

[[Page 16692]]

their respective fees for their respective real-time exchange market 
data products in the respective exchange's fees schedule (instead of 
being maintained separately), including the Exchange's affiliate Cboe 
C2 Exchange, Inc., (``C2 Options''), which relocated its CDS fees 
schedule into the C2 Options Exchange Fees Schedule in 2018.\5\ The 
Exchange also believes the proposed change more accurately reflects the 
Exchange's role as it relates to its market data products as CDS is 
merely an affiliate that is the Cboe contracting entity for all U.S. 
equities and options market data products, but the data products 
themselves are made available by the Exchange.
---------------------------------------------------------------------------

    \5\ See BZX Options Exchange Fees Schedule EDGX Options Exchange 
Fees Schedule and C2 Options Exchange Fees Schedule. See also 
Securities Exchange Act Release No. 83409 (June 12, 20118), 83 FR 
28302 (June 18, 2018) (SR-C2-2018-012).
---------------------------------------------------------------------------

Definitions

    In order to provide consistent rules and terminology amongst the 
Exchange and its affiliated options exchanges, C2 Options, Cboe BZX 
Exchange, Inc. (``BZX Options'') and Cboe EDGX Exchange, Inc. (``EDGX 
Options'') (collectively, ``Affiliates'') the Exchange is proposing to 
amend various definitions and product names to harmonize with such 
terms used by its affiliates BZX Options and EDGX Options, 
specifically.\6\ As such, the proposed rule change deletes a defined 
term, adds certain defined terms, and makes certain non-substantive 
changes to existing definitions, as further described in the table 
below. The proposed rule change makes these changes throughout the 
market data fee language to conform to the proposed defined terms and 
the Exchange uses the proposed updated terms herein.
---------------------------------------------------------------------------

    \6\ C2 Options will be submitting a similar filing to harmonize 
its definitions and products names to align with those of BZX 
Options and EDGX Options as well.

----------------------------------------------------------------------------------------------------------------
                                                                                               Description of
           Defined term                        Provision              Current CDS location         change
----------------------------------------------------------------------------------------------------------------
Customer..........................  A ``Customer'' is any person,    Section I............  Deletes defined term
                                     company or other entity that,                           to align terms with
                                     pursuant to a market data                               BZX Options and
                                     agreement with CDS, is                                  EDGX Options. The
                                     entitled to receive data,                               concept of
                                     either directly from CDS or                             ``Customer'' is
                                     through an authorized                                   also better
                                     redistributor (i.e., a                                  captured through
                                     Customer or an extranet                                 the proposed new
                                     service provider), whether                              term
                                     that data is distributed                                ``Distributor''.
                                     externally or used internally.
                                     A third-party vendor of an
                                     Approved Third-Party Device,
                                     as defined in the CDS Fee
                                     Schedule, is not a Customer
                                     unless it has a market data
                                     agreement in place with CDS. A
                                     Floor Broker User, as defined
                                     in the CDS Fee Schedule, is
                                     not a Customer unless it has a
                                     market data agreement in place
                                     with CDS.
Distributor.......................  A Distributor of an Exchange     N/A..................  Codifies definition
                                     Market Data product is any                              of ``Distributor''
                                     entity that receives the                                in Footnote 49 of
                                     Exchange Market Data product                            the Cboe Options
                                     directly from the Exchange or                           Fees Schedule.
                                     indirectly through another                              Definition is
                                     entity and then distributes it                          identical to the
                                     internally or externally to a                           definition used by
                                     third party.                                            BZX Options and
                                                                                             EDGX Options and
                                                                                             substantially
                                                                                             similar to the
                                                                                             language in the
                                                                                             first sentence of
                                                                                             the definition of
                                                                                             ``Customer'' in the
                                                                                             CDS Fees Schedule.
Internal Distributor..............  An Internal Distributor of an    N/A..................  Codifies definition
                                     Exchange Market Data product                            of ``Internal
                                     is a Distributor that receives                          Distributor'' in
                                     the Exchange Market Data                                Footnote 49 of the
                                     product and then distributes                            Cboe Options Fees
                                     that data to one or more Users                          Schedule.
                                     within the Distributor's own                            Definition is
                                     entity.                                                 identical to the
                                                                                             definition used by
                                                                                             BZX Options and
                                                                                             EDGX Options.
External Distributor..............  An External Distributor of an    N/A..................  Codifies definition
                                     Exchange Market Data product                            of ``External
                                     is a Distributor that receives                          Distributor'' in
                                     the Exchange Market Data                                Footnote 49 of the
                                     product and then distributes                            Cboe Options Fees
                                     that data to a third party or                           Schedule.
                                     one or more Users outside the                           Definition is
                                     Distributor's own entity.                               identical to the
                                                                                             definition used by
                                                                                             BZX Options and
                                                                                             EDGX Options.
User..............................  A User of an Exchange Market     N/A..................  Codifies definition
                                     Data product is a natural                               of ``User'' in
                                     person, a proprietorship,                               Footnote 49 of the
                                     corporation, partnership, or                            Cboe Options Fees
                                     entity, or device (computer or                          Schedule.
                                     other automated service), that                          Definition is
                                     is entitled to receive                                  identical to one
                                     Exchange data.                                          used by BZX Options
                                                                                             and EDGX Options.

[[Page 16693]]

 
Non-Professional User.............  A ``Non-Professional User'' is   Sections I and III...  Relocates definition
                                     a natural person or qualifying                          to Footnote 49 of
                                     trust that uses Data only for                           the Cboe Options
                                     personal purposes and not for                           Fees Schedule and
                                     any commercial purpose and,                             updates the rule
                                     for a natural person who works                          reference to
                                     in the United States, is not:                           ``Section 201(11)''
                                     (i) registered or qualified in                          of the Investment
                                     any capacity with the                                   Advisors Act of
                                     Securities and Exchange                                 1940 to ``Section
                                     Commission, the Commodities                             202(a)(11)''.
                                     Futures Trading Commission,
                                     any state securities agency,
                                     any securities exchange or
                                     association, or any
                                     commodities or futures
                                     contract market or
                                     association; (ii) engaged as
                                     an ``investment adviser'' as
                                     that term is defined in
                                     Section 201(11) of the
                                     Investment Advisors Act of
                                     1940 (whether or not
                                     registered or qualified under
                                     that Act); or (iii) employed
                                     by a bank or other
                                     organization exempt from
                                     registration under federal or
                                     state securities laws to
                                     perform functions that would
                                     require registration or
                                     qualification if such
                                     functions were performed for
                                     an organization not so exempt;
                                     or, for a natural person who
                                     works outside of the United
                                     States, does not perform the
                                     same functions as would
                                     disqualify such person as a
                                     Non-Professional User if he or
                                     she worked in the United
                                     States.
Professional User.................  A Professional User of an        Sections I and III...  Relocates definition
                                     Exchange Market Data product                            to Footnote 49 of
                                     is any natural person                                   the Cboe Options
                                     recipient of an Exchange                                Fees Schedule.
                                     Market Data product who is not
                                     a Non-Professional User.
Display Only Service..............  A ``Display Only Service''       Section I............  Relocates definition
                                     allows a natural person end-                            to Footnote 49 of
                                     user to view and manipulate                             the Cboe Options
                                     data using the Distributor's                            Fees Schedule.
                                     computerized service, but not
                                     to save, copy, export or
                                     transfer the data or any
                                     results of the manipulation to
                                     any other computer hardware,
                                     software or media, except for
                                     printing it to paper or other
                                     non-magnetic media.
Device............................  A ``Device'' means any           Section I under        Relocates definition
                                     computer, workstation or other   ``Display Only User    to Footnote 49 of
                                     item of equipment, fixed or      Fees''.                the Cboe Options
                                     portable, that receives,                                Fees Schedule.
                                     accesses and/or displays data
                                     in visual, audible or other
                                     form.
Approved Third-Party Device.......  An ``Approved Third-Party        Section I under        Relocates definition
                                     Device'' means any computer,     ``Floor Broker User    to Footnote 49 of
                                     workstation or other item of     Fees''.                the Cboe Options
                                     equipment, fixed or portable,                           Fees Schedule.
                                     that receives, accesses and/or
                                     displays data in visual,
                                     audible or other form that has
                                     been provided by a third-party
                                     and that has been approved, by
                                     Cboe Options, for use on the
                                     Cboe Options trading floor.
Floor Broker User.................  A ``Floor Broker User'' is a     Section I under        Relocates definition
                                     person or entity registered      ``Floor Broker User    to Footnote 49 of
                                     with Cboe Options as a floor     Fees''.                the Cboe Options
                                     broker pursuant to Cboe                                 Fees Schedule.
                                     Options Rules.
----------------------------------------------------------------------------------------------------------------

    The Exchange also proposes to rename the following market data 
products and use the proposed names herein, in order to align with the 
naming convention used by the Exchange's affiliates, BZX Options and 
EDGX Options, for similar data products.\7\
---------------------------------------------------------------------------

    \7\ See BZX Options Exchange Fees Schedule, Market Data Fees and 
EDGX Options Exchange Fees Schedule, Market Data Fees.

------------------------------------------------------------------------
               Current name                         Proposed name
------------------------------------------------------------------------
BBO Data Feed.............................  Cboe Options Top.
Book Depth Data Feed......................  Cboe Options Depth.
Complex Order Book (COB) Data Feed........  Cboe Complex Order Book
                                             (COB).
FLEX Options Data Feed....................  Cboe Options FLEX Options.
------------------------------------------------------------------------

    The Exchange believes the proposed changes to eliminate, modify and 
adopt the terms discussed above will add additionally transparency to 
the Fees Schedule and will protect investors, as the changes provide 
more clarity within the rule and more harmonized rule language across 
the Fees Schedules of the Cboe affiliated options exchanges. Further, 
the Exchange notes that the changes are non-substantive changes or 
provide additional detail in the rule regarding current market 
participants that purchase or use the Exchange's market data products. 
None of these differences impact the manner in which any of the terms 
and corresponding fees apply, including how the Exchange would have 
otherwise characterized a Distributor or User (Professional or Non-
Professional).
Cboe Options Top Fee Changes
    The Exchange next proposes to modify the current monthly Data Fee 
for Cboe Options Top. Currently, the Exchange assesses a ``Data Fee'' 
of $9,000 per month for internal use and external redistribution of the 
Cboe Options Top Data Feed. A Distributor receiving the Cboe Options 
Top Data Feed from another entity or directly from the Exchange is 
assessed the Data Fee by the Exchange and is entitled to use the Data 
internally and/or distribute it externally. The Exchange now proposes 
to adopt separate fees for internal and external distribution. 
Specifically, the Exchange proposes to maintain the current monthly fee 
of $9,000 for internal distribution but adopt a lower fee of $5,000 per 
month for external distribution.
    The Exchange next proposes to modify its current User Fees. The 
Exchange currently charges a ``User Fee'' of $50 per month per Device 
or user ID for use of the data in the Cboe Options Top Data Feed by 
``Display Only Service'' users. The current User fee is payable only 
for ``external'' Display Only Service users who receive Cboe Options 
Top.\8\ Internal Distributors may currently distribute Cboe Options Top 
Data to an unlimited number of

[[Page 16694]]

internal users and Devices within the Distributor at no further cost. 
The Exchange proposes to eliminate the current Cboe Options Top User 
fee and in its place adopt Professional and Non-Professional User fees 
for Cboe Options Top that would apply to both Internal and External 
Distributors for all Professional and Non-Professional Users. The 
Exchange proposes to charge Cboe Options Top Distributors a monthly fee 
of $15.50 per Professional User and a monthly fee of $0.30 per Non-
Professional User.\9\
---------------------------------------------------------------------------

    \8\ Pursuant to the Cboe Global Markets North American Data 
Policies, Distributors must report the number of authorized external 
devices that receive Cboe Options Top data during a calendar month 
within 15 days after such month in the manner and format specified 
by the Exchange from time to time to determine applicable fees.
    \9\ Distributors that receive Cboe Options Top Data will be 
required to count every Professional User and Non-Professional User 
to which they provide the data feed.
---------------------------------------------------------------------------

    Next, the Exchange proposes to eliminate a fee waiver for Customers 
of Cboe Options Top Data. In particular, the CDS Fee Schedule currently 
provides that the monthly data fee of $9,000 per month for the Cboe 
Options Depth feed \10\ is waived for Cboe Options Top Data Customers. 
The Exchange proposes to eliminate the fee waiver for Cboe Options 
Depth for External Distributors of Cboe Options Top (i.e., the monthly 
$9,000 data fee for Book Depth Data will only continue to be waived for 
Internal Distributors of Cboe Options Top Data).
---------------------------------------------------------------------------

    \10\ The Cboe Options Depth feed is a real-time, low latency 
data feed that includes all data contained in the Cboe Options Top 
feed (as described above) plus outstanding quotes and standing 
orders for an additional four price levels on each side of the 
market, with aggregate size (``Book Depth''). The data in the Cboe 
Options Depth feed is refreshed periodically during the trading 
session.
---------------------------------------------------------------------------

    The Exchange lastly proposes to establish a $300,000 per month 
Enterprise Fee that will permit a Distributor to purchase a monthly 
(and optional) Enterprise license to receive the Cboe Options Top Data 
for distribution to an unlimited number of Professional and Non-
Professional Users. The Enterprise Fee is an alternative to 
Professional and Non-Professional User fees and will permit a 
Distributor to pay a flat fee to receive the data for an unlimited 
number of Professional and Non-Professional Users, which the Exchange 
proposes to make clear in the Fee Schedule. Like User fees, the 
Enterprise Fee would be assessed in addition to the Distribution Fees. 
The Enterprise Fee may provide an opportunity to reduce fees. For 
example, if a Distributor has 20,000 Professional Users who each 
receive Cboe Options Top at $15.50 per month (as proposed), then that 
Distributor will pay $310,000 per month in Professional Users fees. If 
the Distributor instead were to purchase the proposed Enterprise 
license, it would alternatively pay a flat fee of $300,000 for an 
unlimited number of Professional and Non-Professional Users. A 
Distributor must pay a separate Enterprise Fee for each entity that 
controls the display of Cboe Options Top if it wishes for such Users to 
be covered by the Enterprise Fee rather than by per User fees.\11\ A 
Distributor that pays the Enterprise Fee will not have to report its 
number of such Users on a monthly basis. Rather, every six months, the 
recipient firm must provide the Exchange with a count of the total 
number of Professional and Non-Professional Users of Cboe Options Top 
Data.\12\ The Exchange notes that the purchase of an Enterprise license 
is voluntary, and a firm may elect to instead use the per User 
structure and benefit from the proposed per User Fees described above. 
For example, a firm that does not have a sufficient number of Users to 
benefit from purchase of the license need not do so.
---------------------------------------------------------------------------

    \11\ For example, if a Distributor that distributes Cboe Options 
Top to Retail Brokerage Firm A and Retail Brokerage Firm B and 
wishes to have the Users under each firm covered by an Enterprise 
license, the Distributor would be subject to two Enterprise Fees.
    \12\ See Cboe Global Markets North American Data Policies.
---------------------------------------------------------------------------

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.\13\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \14\ 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 
Section 6(b)(4) of the Act,\15\ which requires that Exchange rules 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its Trading Permit Holders and other persons using 
its facilities.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange first notes that it operates in a highly competitive 
environment. Indeed, there are currently 16 registered options 
exchanges that trade options. Based on publicly available information, 
no single options exchange has more than 17% of the market share.\16\ 
The Exchange believes top-of-book quotation and transaction data is 
highly competitive as national securities exchanges compete vigorously 
with each other to provide efficient, reliable, and low-cost data to a 
wide range of investors and market participants. Indeed, there are 
several competing products offered by other national securities 
exchanges today, not counting products offered by the Exchange's 
affiliates, and each of the Exchange's affiliated U.S. options 
exchanges also offers similar top-of-book data.\17\ Each of those 
exchanges offer top-of-book quotation and last sale information based 
on their own quotation and trading activity that is substantially 
similar to the information provided by the Exchange through the Cboe 
Options Top Feed. Further, the quote and last sale data contained in 
the Cboe Options Data Feed is identical to the data sent to OPRA for 
redistribution to the public, including data relating to the Exchange's 
proprietary and exclusively listed products.\18\ Accordingly, Exchange 
top-of-book data is widely available today from a number of different 
sources.
---------------------------------------------------------------------------

    \16\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (February 24, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
    \17\ See e.g., NYSE Arca Options Proprietary Market Data Fees 
Schedule, MIAX Options Exchange, Fee Schedule, Section 6 (Market 
Data Fees), Nasdaq PHLX Options 7 Pricing Schedule, Section 10 
(Proprietary Data Feed Fees) and C2 Options Exchange Fees Schedule, 
Cboe Data Services, LLC Fees.
    \18\ The Exchange notes that it makes available the BBO data and 
last sale data that is included in the Cboe Options Top Data Feed no 
earlier than the time at which the Exchange sends that data to OPRA.
---------------------------------------------------------------------------

    Moreover, the Cboe Options Top Data Feed is distributed and 
purchased on a voluntary basis, in that neither the Exchange nor market 
data distributors are required by any rule or regulation to make this 
data available. Accordingly, Distributors and Users can discontinue use 
at any time and for any reason, including due to an assessment of the 
reasonableness of fees charged. As described above, market participants 
have a wide variety of alternative market data products from which to 
choose, such as similar proprietary data products offered by other 
exchanges and consolidated data. Further, the Exchange is not required 
to make any proprietary data products available or to

[[Page 16695]]

offer any specific pricing alternatives to any customers. Moreover, 
persons (including broker-dealers) who subscribe to any exchange 
proprietary data feed must also have equivalent access to consolidated 
Options Information \19\ from OPRA for the same classes or series of 
options that are included in the proprietary data feed (including for 
exclusively listed products), and proprietary data feeds cannot be used 
to meet that particular requirement.\20\ As such, all proprietary data 
feeds are optional.
---------------------------------------------------------------------------

    \19\ ``Consolidated Options Information'' means consolidated 
Last Sale Reports combined with either consolidated Quotation 
Information or the BBO furnished by OPRA. Access to consolidated 
Options Information is deemed ``equivalent'' if both kinds of 
information are equally accessible on the same terminal or work 
station. See Limited Liability Company Agreement of Options Price 
Reporting Authority, LLC (``OPRA Plan''), Section 5.2(c)(iii). The 
Exchange notes that this requirement under the OPRA Plan is also 
reiterated under the Cboe Global Markets Global Data Agreement and 
Cboe Global Markets North American Data Policies, which subscribers 
to any exchange proprietary product must sign and are subject to, 
respectively. Additionally, the Exchange's Data Order Form (used for 
requesting the Exchange's market data products) requires 
confirmation that the requesting market participant receives data 
from OPRA.
    \20\ Id.
---------------------------------------------------------------------------

    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. Particularly, 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.'' \21\ Making 
similar data products available to market participants fosters 
competition in the marketplace, and constrains the ability of exchanges 
to charge supracompetitive fees. In the event that a market participant 
views one exchange's data product as more or less attractive than the 
competition they can and do switch between similar products. The 
proposed fees are a result of the competitive environment, as the 
Exchange seeks to adopt fees to attract purchasers of Cboe Options Top 
Data.
---------------------------------------------------------------------------

    \21\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    The Exchange believes the proposed External Distribution fee is 
reasonable as it would represent a decreased fee for any Distributor 
who is only interested in distributing Cboe Options Top externally. By 
providing an opportunity for lower cost access to U.S. options market 
data, Cboe Options Top benefits a wide range of investors that 
participate in the national market system and makes it more broadly 
available. The Exchange believes the proposed fees for external 
distribution of Cboe Options Top will also continue to be allocated 
fairly and equitably, and are not unfairly discriminatory, as the 
proposed fee will apply equally to all Distributors that choose to 
subscribe to Cboe Options Top and distribute that data to external 
Users. More specifically, as proposed, all External Distributors of 
Cboe Options Top will be subject to the same external distribution fee, 
regardless of the type of business that they operate, or the use they 
plan to make of the data feed. Thus, all External Distributors would 
have access to Cboe Options Top for purposes of external distribution 
on the same equitable and non-discriminatory terms.
    The Exchange believes that it is also fair and equitable, and not 
unfairly discriminatory to charge different fees for internal and 
external distribution of the Cboe Options Top. Although the proposed 
distribution fee charged to External Distributors will be lower than 
the existing distribution fee charged to Internal Distributors, 
External Distributors are subject to Non-Professional user fees to 
which Internal Distributors are not subject, in addition to 
Professional User fees (or alternatively the proposed Enterprise Fee). 
Furthermore, the proposal is designed to incentivize External 
Distributors to subscribe to Cboe Options Top Data. Moreover, as noted 
above, Internal Distributors of Cboe Options Top will still have the 
benefit of receiving Cboe Options Depth at no additional cost, whereas 
such waiver will not be available for External Distributors of Cboe 
Options Top. The Exchange also notes that Cboe Options Depth is more 
likely to be used by Professional Users, including employees of 
Distributors, whereas Cboe Options Top is more likely to be used by 
Non-Professional Users who, by definition, do not receive the data for 
commercial purposes (e.g., retail investors).
    The Exchange believes the proposed changes to adopt new 
Professional and Non-Professional User fees are reasonable as the User 
fees continue to be in line with User fees assessed by other exchanges 
for similar data.\22\ Moreover, External Distributors will now be 
subject to lower fees as the Exchange proposes to significantly reduce 
the monthly User fees from $50 per External User to $15.50 per 
Professional User or $0.30 per Non-Professional User. Although External 
Distributors are currently only subject to fees for external users, the 
fee for external users (which are likely to be Non-Professional Users) 
are significantly lower (i.e., $0.30 per Non-Professional User) than 
the current $50 fee for external users. Moreover, the proposed fee 
structure of differentiated Professional and Non-Professional fees that 
are paid by both Internal and External Distributors has long been used 
by other exchanges, including the Exchange, for their proprietary data 
products, and by the OPRA plan in order to reduce the price of data to 
retail investors and make it more broadly available.\23\ The Exchange 
also believes offering Cboe Options Top Data to Non-Professional Users 
at a lower cost than Professional Users results in greater equity among 
data recipients, as Professional Users are categorized as such based on 
their employment and participation in financial markets, and thus, are 
compensated to participate in the markets. Although Non-Professional 
Users too can receive significant financial benefits through their 
participation in the markets, the Exchange believes it is reasonable to 
charge more to those Users who are more directly engaged in the 
markets. The Exchange believes that the

[[Page 16696]]

proposed fees are equitable and not unfairly discriminatory because 
they will be charged uniformly to Distributors for their Professional 
and Non-professional Users.
---------------------------------------------------------------------------

    \22\ See e.g., Nasdaq PHLX Options 7 Pricing Schedule, Section 
10 (Proprietary Data Feed Fees), which provides for a fee of $40 per 
month to professional users and $1.00 per month to non-professional 
users to cover the usage of PHLX Options (TOPO) Data, TOPO Plus 
Orders, PHLX Orders and PHLX Depth Data feeds. See also NYSE 
American Options Proprietary Market Data Fees schedule, which 
provides for a fee of $50 per month to professional users and $1.00 
per month to non-professional users of American Options Top Data, 
American Options Deep and American Options Complex products. By 
comparison, the total Professional User fee for Cboe Options Top and 
Cboe Options COB is in line with the above Professional User fee at 
$40.50 per Professional User (i.e., $15.50 per Professional Users of 
Cboe Options Top, as proposed, and $25 per Professional User of Cboe 
Options COB). The Exchange's combined Non-Professional User Fee at 
$0.30 per Non-Professional User (i.e., $0.30 per Non-Professional 
User of Cboe Options Top, as proposed, and $0 per Non-Professional 
User of Cboe Options COB) is lower than PHLX's and NYSE American's 
aforementioned Non-Professional User fees. As discussed above, Cboe 
Options Depth does not charge users based on Professional or Non-
Professional classification and market participants were always 
subject to separate User fees across Cboe Options market data 
products.
    \23\ See, e.g., Securities Exchange Act Release No. 59544 (March 
9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131) 
(establishing the $15 Non-Professional User Fee (Per User) for NYSE 
OpenBook); See, e.g., Securities Exchange Act Release No. 67589 
(August 2, 2012), 77 FR 47459 (August 8, 2012) (revising OPRA's 
definition of the term ``Nonprofessional''); and See Securities 
Exchange Act Release No. 70683 (October 15, 2013), 78 FR 62798 
(October 22, 2013) (SR-CBOE-2013-087) (establishing Professional and 
Non-Professional User fees for Cboe Options COB Data Feed).
---------------------------------------------------------------------------

    The Exchange next notes it is not required to charge a single 
distribution fee to cover more than one of its available data products, 
but none-the-less has opted to not charge for separate data fees for 
Cboe Options Depth and Cboe Options COB for Distributors of Cboe 
Options Top, since such waiver was adopted in January 1, 2015.\24\ 
However, the Exchange no longer wishes to maintain a fee waiver of Cboe 
Options Depth and Cboe Options COB for External Distributors of Cboe 
Options Top. Although External Distributors will not receive the 
benefit of the fee waiver, they will be subject to a lower distribution 
fee as compared to Internal Distributors who will continue to be 
charged the higher fee of $9,000. Moreover, Distributors are less 
likely to distribute Cboe Options Depth externally, as such data feed 
is generally used more often by Professional Users. Moreover, the Cboe 
Options Depth feed and Cboe Options COB, like all of the Exchange's 
market data products, are purely optional. Only those Distributors that 
deem the product to be of sufficient overall value and usefulness would 
purchase them for distribution to Users. Further, Distributors are not 
required to distribute, and Users are not required to receive, any one 
particular data product and may choose to receive none, one, or several 
of the Exchange's market data products. Indeed, only approximately 30% 
of the Exchange's market data subscriptions is for Cboe Options Top. 
Additionally, the Exchange is not required to provide any such waiver 
to any Distributors of Cboe Options Top. The Exchange believes the 
proposed change is equitable and not unfairly discriminatory as it will 
apply uniformly to External Distributors.
---------------------------------------------------------------------------

    \24\ See Securities Exchange Act Release No. 70683 (October 15, 
2013), 78 FR 62798 (October 22, 2013) (SR-CBOE-2013-087).
---------------------------------------------------------------------------

    The proposed Enterprise Fee for Cboe Options Top Feed is equitable 
and reasonable as the proposed fee could result in a fee reduction for 
Distributors with a large number of Professional and Non-Professional 
Users. If a Distributor has a smaller number of Professional Users of 
Cboe Options Top Data, then it may continue using the per User 
structure and benefit from the proposed per Cboe Options Top User Fee 
reductions. By reducing prices for recipient firms with a large number 
of Professional and Non-Professional Users, the Exchange believes that 
more firms may choose to receive and to distribute Cboe Options Top 
Data, thereby expanding the distribution of this market data for the 
benefit of investors.
    The Exchange further believes that the proposed Enterprise Fee is 
reasonable because it will simplify reporting for certain recipients 
that have large numbers of Professional and Non-Professional Users. 
Firms that pay the proposed Enterprise Fee will not have to report the 
number of Users on a monthly basis as they currently do, but rather 
will only have to count Professional and Non-Professional users every 
six months, which is a significant reduction in administrative burden. 
Finally, as described above the Enterprise Fee is entirely optional. A 
firm that does not have a sufficient number of Users to benefit from 
purchase of the license need not do so.
    The Exchange lastly believes the proposed changes relating to the 
defined terms and terminology will provide additional specificity and 
clarity, while also harmonizing the various definition with that of its 
affiliates. Doing so would ensure consistent terms amongst the Exchange 
and its affiliates, thereby reducing the potential for confusion 
amongst market data subscribers of the Exchange's and its affiliates' 
market data products. Additionally, the proposed new terms are 
identical to the terms already used by the Exchange's affiliates BZX 
Options and EDGX Options. Similarly, the Exchange believes the proposal 
to relocate the fees in the CDS Fees Schedule to the Cboe Options Fees 
Schedule will provide for a more streamlined fees schedule and allow 
TPHs to more readily and easily find all fees applicable to Cboe 
Option, thereby reducing potential confusion. Further, the Exchange is 
the only exchange of the Cboe options exchanges that currently 
maintains a separate fees schedule for its market data product fees. 
Accordingly, the Exchange believes the proposed changes remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, protect investors and the 
public interest.

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

    The Exchange does not believe that the proposed rule change would 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
operates in a highly competitive environment, and its ability to price 
top-of-book data is constrained by competition among exchanges that 
offer similar data products to their customers. Top-of-book data is 
broadly disseminated by competing U.S. options exchanges and through 
OPRA. There are therefore a number of alternative products available to 
market participants and investors, including products offered by 
certain competing exchanges, as well as OPRA. Further, the Exchange's 
proposal to eliminate the waiver for the Cboe Options Depth data fee 
for External Distributors of Cboe Options Top does not modify the 
existing fee amounts, but simply eliminates a waiver to receive such 
data free of charge that the Exchange is not required to maintain. 
Other exchanges are free to adopt a similar waiver if they choose. In 
this competitive environment potential Distributors are free to choose 
which competing product to purchase to satisfy their respective needs 
for market information. Often, the choice comes down to price, as 
market data participants look to purchase cheaper data products, and 
quality, as market participants seek to purchase data that represents 
significant market liquidity.
    The Exchange believes that the proposed fees do not put any market 
participants at a relative disadvantage compared to other market 
participants. As discussed, the proposed fees and eliminated waiver 
would apply to all similarly situated Distributors of Cboe Options Top 
on an equal and non-discriminatory basis. The Exchange believes the 
reduced fees for External Distributors and not Internal Distributors of 
Cboe Options Top is appropriate given External Distributors are subject 
to the proposed Non-Professional user fees to which Internal 
Distributors are not subject, in addition to the proposed Professional 
User fees. Additionally, Internal Distributors will continue to receive 
the benefit of a fee waiver for Cboe Options Depth, which is the more 
commonly used product for internal distribution amongst Professional 
Users. The Exchange believes the differentiated fees for Professional 
and Non-Professional Users of Cboe options Top is appropriate given 
Professional Users are categorized as such based on their employment 
and participation in financial markets, and thus, are compensated to 
participate in the markets. Non-Professional Users too can receive 
significant financial benefits through their participation in the 
markets, however the Exchange believes it is reasonable to charge more 
to those Users who are more directly engaged in the markets. The 
Exchange therefore believes that the proposed fee neither favors nor 
penalizes one or more categories of market participants in a

[[Page 16697]]

manner that would impose an undue burden on competition.
    The Exchange believes that the proposed fees do not impose a burden 
on competition or on other SROs that is not necessary or appropriate in 
furtherance of the purposes of the Act. In particular, market 
participants are not forced to subscribe to Cboe Options Top Data, or 
any of the Exchange's data feeds, as described above. As noted, the 
quote and last sale data contained in the Exchange's Cboe Options Top 
feed is identical to the data sent to OPRA for redistribution to the 
public, including data relating to the Exchange's proprietary and 
exclusively listed products. Accordingly, Exchange top-of-book data is 
therefore widely available today from a number of different sources.
    Because market data customers can find suitable substitute feeds, 
an exchange that overprices its market data products stands a high risk 
that users may substitute another product. These competitive pressures 
ensure that no one exchange's market data fees can impose an undue 
burden on competition, and the Exchange's proposed fees do not do so 
here.

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 \25\ and paragraph (f) of Rule 19b-4 \26\ 
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.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 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 [email protected]. Please include 
File Number SR-CBOE-2023-013 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-2023-013. 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-2023-013 and should be submitted on 
or before April 10, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
---------------------------------------------------------------------------

    \27\ 17 CFR-200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-05544 Filed 3-17-23; 8:45 am]
BILLING CODE 8011-01-P


