[Federal Register Volume 88, Number 146 (Tuesday, August 1, 2023)]
[Notices]
[Pages 50258-50266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-16242]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97997; File No. SR-CboeBZX-2023-051]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Update 
Its Fees Schedule

July 26, 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 July 14, 2023, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
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.
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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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to 
update its Fees 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/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 the Market Data section of its Fees 
Schedule.\3\ Particularly, the Exchange proposes to (i) adopt a New 
External Credit applicable to BZX Options Top, (ii) adopt a credit 
towards the monthly Distribution fees for BZX Options Top, (iii) modify 
the BZX Options Top Enterprise Fee; and (iv) establish fees for Cboe 
One Options Feed.
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    \3\ The Exchange initially filed the proposed fee changes on 
March 1, 2023 (SR-CboeBZX-2023-018). On March 3, 2023, the Exchange 
withdrew that filing and submitted SR-CboeBZX-2023-019. On March 16, 
2023, the Exchange withdrew that filing and submitted SR-CboeBZX-
2023-021. On May 15, 2023, the Exchange withdrew that filing and 
submitted SR-CboeBZX-2023-035. SR-CBOE-2023-027 [sic]. On July 14, 
2023, the Exchange withdrew that filing and submitted this proposal.
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BZX Top Data
    By way of background, the Exchange offers the BZX Options Top Data 
feed, which is an uncompressed data feed that offers top-of-book 
quotations and last sale information based on options orders entered 
into the Exchange's System. The BZX Options Top Data feed benefits 
investors by facilitating their prompt access to real-time top-of-book 
information contained in BZX Options Top Data. The Exchange's 
affiliated options exchanges (i.e., Cboe Exchange, Inc. (``Cboe 
Options''), Cboe C2 Exchange, Inc. (``C2 Options''), and Cboe EDGX 
Exchange, Inc. (``EDGX Options'') (collectively, ``Affiliates'' and 
together with the Exchange, ``Cboe Options Exchanges'') also offer 
similar top-of-book data feeds.\4\ Particularly, each of the Exchange's 
Affiliates 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 BZX 
Options Top. The Exchange proposes to make the following fee changes 
relating to BZX Options Top.
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    \4\ See Cboe Options Fees Schedule, C2 Options Fees Schedule, 
and EDGX Rule 21.15.
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New External Distributor Credit
    The Exchange first proposes to adopt a New External Distributor 
Credit which will provide that new External Distributors of the BZX 
Options Top feed will not be charged an External Distributor Fee for 
their first three (3) months in order to incentivize External 
Distributors to enlist new users to receive BZX Options Top feed.\5\ 
The Exchange notes that other exchanges, including the Exchange's 
affiliated equities exchanges, offer similar credits for similar market 
data products. For example, Cboe's equities exchanges currently offer a 
one (1) month New External Distributor Credit applicable to External 
Distributors of top-of-book data feeds.\6\ They also offer a three (3) 
month new External Credit applicable to External Distributors of 
summary depth-of-book feeds.\7\
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    \5\ Any applicable User fees or Enterprise fee will continue to 
apply during this three-month period. The New External Distributor 
Credit will not apply during an External Distributor's trial usage 
period for BZX Options Top. External Distributors who receive BZX 
Options Top on a trial basis are still eligible for the New 
Distributor Credit and such free trial basis will not count towards 
the three (3) months. For example, if an External Distributor has a 
trial usage period from June 1 through June 30, the New External 
Distributor Credit will apply for July, August and September. 
Additionally, pursuant to the BZX Options Fees Schedule, a 
Distributor that distributes BZX Options Top both externally and 
internally will be subject to the greater of the two Distribution 
fees set forth in the fees schedule (i.e., $3.000). The New External 
Distributor Credit applies only to the External Distribution Fee 
(i.e., $2,000) and therefore any External Distributor that also 
distributes BZX Options Top internally would still be subject to the 
$1,000 difference.
    \6\ See e.g.,, EDGX Equities Exchange Fees Schedule, Market Data 
Fees.
    \7\ See e.g.,, EDGX Equities Exchange Fees Schedule, Market Data 
Fees.
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Distributor Fee Credit
    The Exchange also proposes to provide that each External 
Distributor will receive a credit against its monthly External 
Distributor Fee for the BZX Options Top equal to the amount of its 
monthly User Fees up to a maximum of the Distributor Fee for the BZX 
Options Top feed.\8\ The proposed Enterprise Fees discussed below would 
also be counted towards the Distributor Fee credit, equal to the amount 
of an External Distributor's monthly BZX Options Top External 
Distribution fee. For example, an External Distributor will be subject 
to a $2,000 monthly Distributor Fee where they elect to receive the BZX 
Options Top. If that External Distributor reports User quantities 
totaling $2,000 or more of monthly usage of the BZX Options Top, it 
will pay no net Distributor Fee, whereas if that same External 
Distributor were to report User quantities totaling $1,500 of monthly

[[Page 50259]]

usage, it will pay a net of $500 for the Distributor Fee.\9\ External 
Distributors will remain subject to the per User fees applicable to BZX 
Options Top. External Distributors who choose to purchase an Enterprise 
license as an alternative to paying User Fees will get a credit in the 
amount of the External Distribution Fee, which is currently $2,000, 
since the proposed Enterprise Fees are in excess of the External 
Distribution fee. In every case the Exchange will receive at least 
$2,000 in connection with the distribution of the BZX Options Top 
(through a combination of the External Distribution Fee and per User 
Fees or Enterprise Fees, as applicable). The Exchange notes that its 
affiliated equities exchanges offer a similar credit for a similar 
market data product.\10\
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    \8\ The Distributor Fee Credit does not apply during any such 
time that an External Distributor is receiving the New External 
Distributor Credit or during a trial usage period for BZX Options 
Top. The Exchange also proposes to update the Trial Usage section of 
the Fees Schedule to make clear that first time Users and 
Distributors of Exchange Market Data Products will not receive any 
applicable credits during their trial usage period.
    \9\ As noted above, pursuant to the BZX Options Fees Schedule, a 
Distributor that distributes BZX Options Top both externally and 
internally will be subject to the greater of the two Distribution 
fees set forth in the fees schedule (i.e., $3.000). The Distributor 
Fee Credit applies only to the External Distribution Fee (i.e., 
$2,000) and therefore any External Distributor that also distributes 
BZX Options Top internally would still be subject to the $1,000 
difference.
    \10\ See e.g.,, EDGX Equities Exchange Fees Schedule, Id.
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Enterprise Fee Tiers
    The Exchange currently offers Distributors the ability to purchase 
a monthly (and optional) Enterprise license to receive the BZX Options 
Top Feed for distribution to an unlimited number of Professional \11\ 
and Non-Professional \12\ Users. The Enterprise Fee is an alternative 
to Professional and Non-Professional User fees and permits a 
Distributor to pay a flat fee for an unlimited number of Professional 
and Non-Professional Users and is in addition to the Distribution fees. 
The Exchange currently assesses a flat monthly Enterprise fee of 
$20,000. The Exchange proposes to modify the current Enterprise Fee and 
adopt a tiered structure based on the number of Users a Distributor 
has. The Exchange proposes to adopt the following monthly Enterprise 
Fees: $20,000 for up to 1,500,000 Users (Tier 1), $40,000 for 1,500,001 
to 2,500,000 Users (Tier 2) and $60,000 for 2,500,001 or greater Users 
(Tier 3). The proposed fees are non-progressive (e.g., if a Distributor 
has 2,000,000 Users, it will be subject to $40,000 for Tier 2). The 
Enterprise Fee may provide an opportunity to reduce fees. For example, 
if a Distributor has 1 million Non-Professional Users who each receive 
BZX Options Top at $0.10 per month, then that Distributor will pay 
$100,000 per month in Non-Professional Users fees. If the Distributor 
instead were to purchase the proposed Enterprise license (tier 1), it 
would alternatively pay a flat fee of $20,000 for up to 1.5 million 
Professional and Non-Professional Users. A Distributor that pays the 
Tier 1 or Tier 2 Enterprise Fee will have to report its number of such 
Users on a monthly basis. A Distributor that pays the Tier 3 Enterprise 
Fee will only have to report the number of its Users every six 
months.\13\ The Exchange notes that if the reported number of Users 
exceed the Enterprise Tier a Distributor has purchased, the higher Tier 
will apply (e.g., if a Distributor purchases Tier 1, but reports 
1,600,000 Users for a month, the Distributor will be assessed the Tier 
2 fee).
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    \11\ A Professional User of an Exchange Market Data product is 
any User other than a Non-Professional User.
    \12\ A ``Non-Professional User'' of an Exchange Market Data 
product is a natural person or qualifying trust that uses Data only 
for personal purposes and not for any commercial purpose and, for a 
natural person who works in the United States, is not: (i) 
registered or qualified in any capacity with the Securities and 
Exchange Commission, the Commodities 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 202(a)(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.
    \13\ See Cboe Global Markets North American Data Policies, which 
provides that Distributors that have obtained an Enterprise license 
are required to report quantities monthly unless they reach the 
highest Enterprise Tier available (i.e., Tier 3), in which case they 
are required to report user quantities only every six months).
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    The Exchange also proposes to allow Distributors to purchase the 
Enterprise Fee on a monthly or annual basis. Annual licenses will 
receive a 5% discount off the applicable Enterprise Tier fee.\14\ 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 a license need not do so.
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    \14\ The discount will be taken off the applicable fee assessed 
for the applicable Enterprise Tier each month. For example, if a 
Distributor elects to purchase an annual license and is in Tier 1 
for any 9 months of the year and Tier 2 for any 3 months of the 
year, the total amount of fees paid for one year will be $285,000 
($20,000 - 5% x 9 months + $40,000 - 5% x 3 months) as compared to 
$300,000 ($20,000 x 9 months + $40,000 x 3 months).
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Cboe One Options Feed
    By way of background, the Exchange recently adopted a new market 
data product called Cboe One Options Feed, which launchedMarch 1, 
2023.\15\ Cboe One Options Feed will provide top-of-book quotation and 
last sale information based on the quotation and trading activity on 
the Exchange and each of its Affiliates, which the Exchange believes 
offers a comprehensive and highly representative view of US options 
pricing to market participants. More specifically, Cboe One Options 
Feed will contain the aggregate best bid and offer (``BBO'') of all 
displayed orders for options traded on the Exchange and its Affiliates, 
as well as individual last sale information and volume, which includes 
the price, time of execution and individual Cboe options exchange on 
which the trade was executed.
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    \15\ See SR-CboeBZX-2023-014.
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    The Cboe One Options Feed will also consist of Symbol Summary,\16\ 
Market Status,\17\ Trading Status,\18\ and Trade Break \19\ messages 
for the Exchange and each of its Affiliates.
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    \16\ The Symbol Summary message will include the total executed 
volume across all Cboe Options Exchanges.
    \17\ The Market Status message is disseminated to reflect a 
change in the status of one of the Cboe Options Exchanges. For 
example, the Market Status message will indicate whether one of the 
Cboe Options Exchanges is experiencing a systems issue or disruption 
and quotation or trade information from that market is not currently 
being disseminated via the Cboe One Options Feed as part of the 
aggregated BBO. The Market Status message will also indicate when a 
Cboe Options Exchange is no longer experiencing a systems issue or 
disruption to properly reflect the status of the aggregated BBO.
    \18\ The Trade Break message will indicate when an execution on 
a Cboe Options Exchange is broken in accordance with the individual 
Cboe Options Exchange's rules (e.g., Cboe Options Rule 6.5, C2 
Option Rule 6.5, BZX Options Rule 20.6, EDGX Options Rule 20.6).
    \19\ The Trading Status message will indicate the current 
trading status of an option contract on each individual Cboe Options 
Exchange. A Trading Status message will also be sent whenever a 
security's trading status changes. For example, a Trading Status 
message will be sent when a symbol is open for trading or when a 
symbol is subject to a trading halt or when it resumes trading.
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    The Exchange will use the following data feeds to create the Cboe 
One Options Feed, each of which is available to other vendors and/or 
distributors: Cboe Options Top Data, C2 Options Top Data, EDGX Options 
Top and BZX Options Top. A vendor and/or distributor that wishes to 
create a product like the Cboe One Options Feed could instead subscribe 
to each of the aforementioned data feeds. Any entity that receives, or 
elects to receive, the

[[Page 50260]]

individual data feeds or the feeds that may be used to create a product 
like the Cboe One Options Feed would be able to, if it so chooses, to 
create a data feed with the same information included in the Cboe One 
Options Feed and sell and distribute it to its clients so that it could 
be received by those clients as quickly as the Cboe One Options Feed 
would be received by those same clients.
    The Exchange proposes to amend its fee schedule to incorporate fees 
related to the Cboe One Options Feed. The Exchange has taken into 
consideration its affiliated relationship with its Affiliates in its 
design of the Cboe One Options Feed to assure that vendors \20\ would 
be able to offer a similar product on the same terms as the Exchange 
from a cost perspective. Although Cboe Options Exchanges are the 
exclusive distributors of the individual data feeds from which certain 
data elements would be taken to create the Cboe One Options Feed, the 
Exchange would not be the exclusive distributor of the aggregated and 
consolidated information that compose the proposed Cboe One Options 
Feed. Distributors and/or vendors would be able, if they chose, to 
create a data feed with the same information as the Cboe One Options 
Feed and distribute it to their clients on a level-playing field with 
respect to latency and cost as compared to the Exchange's proposed Cboe 
One Options Feed. The pricing the Exchange proposes to charge for the 
Cboe One Options Feed, as described more fully below, is not lower than 
the cost to a distributor or vendor to obtain the underlying data 
feeds. In fact, the Distribution and User (Professional and Non-
Professional) fees, as well as the optional Enterprise Fees, that the 
Exchange proposes to adopt for the Cboe One Options Feed are equal to 
the respective combined fees for subscribing to each individual data 
feed. The Exchange also proposes to adopt a ``Data Consolidation Fee,'' 
which would reflect the value of the aggregation and consolidation 
function the Exchange performs in creating the Cboe One Options Feed. 
Therefore, Distributors would be enabled to create a competing product 
based on the individual data feeds and charge their clients a fee that 
they believe reflects the value of the aggregation and consolidation 
function that is competitive with Cboe One Options Feed pricing. For 
these reasons, the Exchange believes that Distributors, including 
vendors, could readily offer a product similar to the Cboe One Options 
Feed on a competitive basis at a similar cost.
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    \20\ For purposes of this filing, a ``vendor'', which is a type 
of distributor, will refer to any entity that receives an exchange 
market data product directly from the exchange or indirectly from 
another entity (for example, from an extranet) and then resell that 
data to a third-party customer (e.g., a data provider that resells 
exchange market data to a retail brokerage firm). The term 
``distributor'' herein, will refer to any entity that receives an 
exchange market data product, directly from the exchange or 
indirectly from another entity (e.g., from a data vendor) and then 
distributes to individual internal or external end-users (e.g., a 
retail brokerage firm who distributes exchange data to its 
individual employees and/or customers). An example of a vendor's 
``third-party customer'' or ``customer'' is an institutional broker 
dealer or a retail broker dealer, who then may in turn distribute 
the data to their customers who are individual internal or external 
end-users.
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    The proposed Cboe One Options Feed fees include the following, each 
of which are described in further detail below: (i) Distributor Fees; 
(ii) User Fees for both Professional and Non-Professional Users; (iii) 
Enterprise Fees; and (iv) a Data Consolidation Fee. The Exchange also 
proposes to adopt a New External Distributor credit and a credit 
against the monthly External Distribution Fee equal to the amount of 
monthly User Fees or Enterprise Fees up to a maximum of the External 
Distributor Fee. To ensure consistency across the Cboe Options 
Exchanges, Cboe Options, EDGX Options, and C2 Options will be filing 
companion proposals to reflect this proposal in their respective fee 
schedules.
Distributor Fees
    As proposed, each Internal Distributor that receives the Cboe One 
Options Feed shall pay a fee of $15,000 per month. The proposed 
Internal Distribution Fee equals the combined monthly Internal 
Distribution fees for the underlying individual data feeds of the Cboe 
Options Exchanges (i.e., the monthly Internal Distribution fees are 
$3,000 for BZX Options Top, $500 for EDGX Options Top, $2,500 for C2 
Options Top and $9,000 for Cboe Options Top). The Exchange also 
proposes to assess External Distributors a monthly fee of $10,000. The 
proposed External Distribution fee equals the combined monthly External 
Distribution fees for the underlying individual data feeds of the Cboe 
Options Exchanges (i.e., the monthly External Distribution fees are 
$5,000 per month for the Cboe Options Top, $2,500 per month for C2 
Options Top, $2,000 per month for BZX Options Top, and $500 for EDGX 
Options Top). As noted above, the Exchange is proposing to charge 
Internal Distributors an Internal Distribution Fee, and External 
Distributors an External Distribution Fee that equals the combined 
respective Distribution fees of each individual Top feed to ensure the 
combined cost of subscribing to Cboe Options, C2 Options, BZX Options 
and EDGX Options Top feeds are no greater than the amount that would be 
charged to subscribe to the Cboe One Options feed, thereby ensuring 
that vendors could compete with the Exchange by creating the same 
product as the Cboe One Options Feed to sell to their clients.
User Fees
    In addition to Internal and External Distributor Fees, the Exchange 
proposes to assess Professional User and Non-Professional User Fees. 
The proposed monthly Professional User fee for the Cboe Options 
Exchanges is $30.50 per Professional User, which equals the combined 
monthly Professional User fees of the underlying individual Cboe 
Options Exchanges Top feeds (i.e., $15.50 per Professional User for the 
Cboe Options Top, $5 per Professional User for C2 Options Top, $5 per 
Professional User for BZX Options Top, and $5 per Professional User for 
EDGX Options Top). The Exchange also proposes to adopt a monthly Non-
Professional User fee of $0.60 per Non-Professional User which 
similarly represents the combined total Non-Professional User fee for 
the individual data feeds of the Cboe Options (i.e., $0.30 per Non-
Professional User for Cboe Options Top, $0.10 per Non-Professional User 
for C2 Options Top, $0.10 per Non-Professional User for BZX Options 
Top, and $0.10 per Non-Professional User for EDGX Options Top). Similar 
to the individual underlying feeds, Distributors that receive Cboe One 
Options Feed will be required to count Professional and Non-
Professional Users to which they provide the data feed. The Exchange is 
proposing to charge Professional and Non-Professional User fees that 
equal the combined respective Professional and Non-Professional User 
fees of each individual Top feed to ensure the combined cost of 
subscribing to Cboe Options, C2 Options, BZX Options and EDGX Options 
Top feeds are no greater than the amount that would be charged to 
subscribe to the Cboe One Options feed, thereby ensuring that vendors 
could compete with the Exchange by creating the same product as the 
Cboe One Options Feed to sell to their clients.
Enterprise Fees
    The Exchange also proposes to establish Enterprise Fees that will 
permit a Distributor to purchase a monthly (and optional) Enterprise 
license to receive the Cboe One Options Feed for distribution to a 
specified number of Professional and Non-Professional Users. The 
Enterprise Fee will be an alternative to Professional and Non-
Professional User fees and will

[[Page 50261]]

permit a Distributor to pay a flat fee to receive the data for a 
specified 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 Exchange proposes to adopt the following monthly Enterprise 
Fees: $350,000 for up to 1,500,000 Users (Tier 1), $550,000 for 
1,500,001 to 2,500,000 Users (Tier 2) and $750,000 for 2,500,001 or 
greater Users (Tier 3). The proposed fee amounts for each Tier equals 
the combined Enterprise Fees for the respective tiers for the 
underlying individual Cboe Options Exchanges Top feeds (i.e., $300,000, 
$450,000 and $600,000 for Tiers 1, 2 and 3 respectively for the Cboe 
Options Top; $10,000, $20,000 and $30,000 for Tiers 1, 2 and 3 
respectively for C2 Options Top; $20,000, $40,000 and $60,000 for Tiers 
1, 2 and 3 respectively for BZX Options Top; and $20,000, $40,000 and 
$60,000 for Tiers 1, 2 and 3 respectively for EDGX Options Top). The 
proposed fees are non-progressive (e.g., if a Distributor has 2,000,000 
Users, it will be subject to $550,000 for Tier 2). The Enterprise Fee 
may provide an opportunity to reduce fees. For example, if a 
Distributor has 1 million Non-Professional Users who each receive Cboe 
One Options Feed at $0.60 per month (as proposed), then that 
Distributor will pay $600,000 per month in Non-Professional Users fees. 
If the Distributor instead were to purchase the proposed Enterprise 
license (Tier 1), it would alternatively pay a flat fee of $350,000 for 
up to 1.5 million Professional and Non-Professional Users. A 
Distributor must pay a separate Enterprise Fee for each entity that 
controls the display of Cboe One Options Feed if it wishes for such 
Users to be covered by an Enterprise Fee rather than by per User 
fees.\21\ A Distributor that pays the Tier 1 or Tier 2 Enterprise Fee 
will have to report its number of such Users on a monthly basis. A 
Distributor that pays the Tier 3 Enterprise Fee will only have to 
report the number of its Users every six months.\22\ The Exchange notes 
that if the reported number of Users exceed the Enterprise Tier a 
Distributor has purchased, the higher Tier will apply (e.g., if a 
Distributor purchases Tier 1, but reports 1,600,000 Users for a month, 
the Distributor will be assessed the Tier 2 fee).
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    \21\ For example, if a Distributor that distributes BZX 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.
    \22\ See Cboe Global Markets North American Data Policies, which 
provides that Distributors that have obtained an Enterprise license 
are required to report quantities monthly unless they reach the 
highest Enterprise Tier available (i.e., Tier 3), in which case they 
are required to report user quantities only every six months).
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    The Exchange also proposes to allow Distributors to purchase the 
Enterprise Fee on a monthly or annual basis. Annual licenses will 
receive a 5% discount off the applicable Enterprise Fee tier.\23\ 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 a license need not do so. The Exchange is proposing to 
charge Enterprise Fees that equal the combined respective Enterprise 
Fees of each individual Top feed and is also is proposing to adopt a 5% 
discount for those that purchase an Annual license for Cboe Options Top 
(with a corresponding change will also be proposed by the Exchange's 
Affiliates) to ensure the combined cost of subscribing to Cboe Options, 
C2 Options, BZX Options and EDGX Options Top feeds will be the same as 
those that would be charged to subscribe to the Cboe One Options feed, 
thereby ensuring that vendors could compete with the Exchange by 
creating the same product as the Cboe One Options Feed to sell to their 
clients.
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    \23\ The discount will be taken off the applicable fee assessed 
for the applicable Enterprise Tier each month. For example, if a 
Distributor elects to purchase an annual license and is in Tier 1 
for any 9 months of the year and Tier 2 for any 3 months of the 
year, the total amount of fees paid for one year will be $4,560,00 
($350,000--5% x 9 months + $550,000 -5% x 3 months) as compared to 
$4,800,000 ($350,000 x 9 months + $550,000 x 3 months). 3150000 
[sic]
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New External Distributor Credit
    The Exchange proposes to adopt a New External Distributor Credit 
which would provide that new External Distributors of the Cboe One 
Options Feed will not be charged an External Distributor Fee for their 
first three (3) months in order to incentivize them to enlist new Users 
to receive the Cboe One Options Feed.\24\ The Exchange notes that other 
exchanges, including the Exchange's affiliated equities exchanges offer 
similar credits for similar market data products. For example, Cboe's 
equities exchanges currently offer a one (1) month New External 
Distributor Credit applicable to the Cboe One Summary Feed and a three 
(3) month New External Distributor Credit applicable to the 
distribution of the Cboe One Premium Feed.\25\ To alleviate any 
competitive issues that may arise with a vendor seeking to offer a 
product similar to the Cboe One Options Feed based on the underlying 
data feeds, the Exchange is proposing, as discussed above, to also 
adopt a three-month New External Distributor Credit for the underlying 
top-of-book data feeds for the Cboe Options Exchanges. The respective 
proposals to adopt a three-month credit ensures the proposed New 
External Distributor Credit for Cboe One Options will not cause the 
combined cost of subscribing to Cboe Options, C2 Options, BZX Options 
and EDGX Options Top feeds for new External Distributors to be greater 
than those that would be charged to subscribe to the Cboe One Options 
feed, thereby ensuring that vendors could compete with the Exchange by 
creating the same product as the Cboe One Options Feed to sell to their 
clients.
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    \24\ Any applicable User fees will continue to apply during this 
three-month period. The New External Distributor Credit will not 
apply during an External Distributor's trial usage period for Cboe 
One Options and such free trial basis will not count towards the 
three (3) months. For example, if an External Distributor has a 
trial usage period from June 1 through June 30, the New External 
Distributor Credit will apply for July, August and September.
    \25\ See e.g.,, EDGX Equities Exchange Fees Schedule, Market 
Data Fees.
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Distributor Fee Credit
    The Exchange also proposes to provide that each External 
Distributor will receive a credit against its monthly External 
Distributor Fee for the Cboe One Options Feed equal to the amount of 
its monthly User Fees up to a maximum of the External Distributor Fee 
for the Cboe One Options Feed.\26\ The proposed Enterprise Fees 
discussed above would also be counted towards the Distributor Fee 
credit, equal to the amount of its monthly Cboe One Options External 
Distribution fee. For example, an External Distributor will be subject 
to a $10,000 monthly Distributor Fee where they elect to receive the 
Cboe One Options Feed. If that External Distributor reports User 
quantities totaling $10,000 or more of monthly User fees of the Cboe 
Options One Feed, it will pay no net Distributor Fee, whereas if that 
same External Distributor were to report User quantities totaling 
$9,000 of monthly usage, it will pay a net of $1,000 for the 
Distributor Fee. External Distributors will remain subject to the per 
User fees discussed above. External Distributors who choose to purchase 
an Enterprise

[[Page 50262]]

license as an alternative to paying User Fees will get a credit in the 
amount of the External Distribution Fee, which is currently $10,000, 
since the proposed Enterprise Fees are in excess of the External 
Distribution fee. In every case the Exchange will receive at least 
$10,000 in connection with the distribution of the Cboe One Options 
Feed (through a combination of the External Distribution Fee and per 
User Fees or the Enterprise Fees, as applicable). The Exchange notes 
that its affiliated equities exchanges offer a similar credit for a 
similar market data product.\27\ The proposal to adopt a Distributor 
Fee Credit for Cboe One Options Feed ensures the proposed credit for 
Cboe One Options will not cause the combined cost of subscribing to 
Cboe Options, C2 Options, BZX Options and EDGX Options Top feeds for 
External Distributors to be greater than the amount that would be 
charged to subscribe to the Cboe One Options feed, thereby ensuring 
that vendors could compete with the Exchange by creating the same 
product as the Cboe One Options Feed to sell to their clients.
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    \26\ The Distributor Fee Credit does not apply during any such 
time that an External Distributor is receiving the New External 
Distributor Credit or during a trial usage period for Cboe One 
Options.
    \27\ See e.g., EDGX Equities Exchange Fees Schedule, Market Data 
Fees.
---------------------------------------------------------------------------

Data Consolidation Fee
    The Exchange also proposes to charge Distributors of the Cboe One 
Options Feed a separate Data Consolidation Fee, which reflects the 
value of the aggregation and consolidation function the Exchange 
performs in creating the Cboe One Options Feed.\28\ As stated above, 
the Exchange creates the Cboe One Options Feed from data derived from 
the Cboe Options Top, C2 Options Top, BZX Options Top, and EDGX Options 
Top Feeds. Distributors (including vendors) could similarly create a 
competing product to the Cboe One Options Feed based on these 
individual data feeds offered by the Exchanges, and could charge its 
clients a fee that it believes reflects the value of the aggregation 
and consolidation function. Accordingly, the Exchange believes that 
vendors could readily offer a product similar to the Cboe One Options 
Feed on a competitive basis at a similar cost.
---------------------------------------------------------------------------

    \28\ If a vendor distributes the Cboe One Options Feed to 
another firm, who then re-distributes the Cboe One Options Feed, 
both entities would be subject to the Data Consolidation Fee. A 
vendor will only be assessed a single Data Consolidated Fee, even if 
it distributes Cboe One Options Feed to more than one entity.
---------------------------------------------------------------------------

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.\29\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \30\ 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) requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange also believes this proposal is 
consistent with section 6(b)(8) of the Act, which requires that the 
rules of an exchange not impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.\31\ 
In addition, the Exchange believes that the proposed rule change is 
consistent with section 11(A) of the Act as it supports (i) fair 
competition among brokers and dealers, among exchange markets, and 
between exchange markets and markets other than exchange markets, and 
(ii) the availability to brokers, dealers, and investors of information 
with respect to quotations for and transactions in securities.\32\ The 
Exchange also believes the proposed rule change is consistent with 
section 6(b)(4) of the Act,\33\ 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.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78f(b).
    \30\ 15 U.S.C. 78f(b)(5).
    \31\ 15 U.S.C. 78f(b)(8).
    \32\ 15 U.S.C. 78k-1.
    \33\ 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 18% of the market share.\34\ 
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.\35\ 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 BZX 
Options Top Data Feed. Further, the quote and last sale data contained 
in the BZX Data Feed is identical to the data sent to OPRA for 
redistribution to the public.\36\ Accordingly, Exchange top-of-book 
data is widely available today from a number of different sources.
---------------------------------------------------------------------------

    \34\ See Cboe Global Markets U.S. Options Market Month-to-Date 
Volume Summary (April 24, 2023), available at https://markets.cboe.com/us/options/market_statistics/.
    \35\ 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 Cboe Data Services, LLC Fees 
Schedule.
    \36\ The Exchange makes available the top-of-book data and last 
sale data that is included in the BZX Options Top Data Feed no 
earlier than the time at which the Exchange sends that data to OPRA.
---------------------------------------------------------------------------

    Moreover, the BZX Options Top Data Feed and Cboe One Options Feeds 
are 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 these data products available. Accordingly, 
Distributors (including vendors) and Users can discontinue use at any 
time and for any reason, including due to an assessment of the 
reasonableness of fees charged. Further, the Exchange is not required 
to make any proprietary data products available or to 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 \37\ from OPRA for the same

[[Page 50263]]

classes or series of options that are included in the proprietary data 
feed, and proprietary data feeds cannot be used to meet that particular 
requirement.\38\ As such, all proprietary data feeds are optional.
---------------------------------------------------------------------------

    \37\ ``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.
    \38\ 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.'' \39\ 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 BZX Options Top 
Data and Cboe One Options Feed.
---------------------------------------------------------------------------

    \39\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    The Exchange has also taken into consideration its affiliated 
relationship with its Affiliates in its design of the Cboe One Options 
Feed to ensure that vendors would be able to offer a similar product on 
the same terms as the Exchange from a cost perspective. While the Cboe 
Options Exchanges are the exclusive distributors of the individual data 
feeds from which certain data elements may be taken to create the Cboe 
One Options Feed, they are not the exclusive distributors of the 
aggregated and consolidated information that comprises the Cboe One 
Options Feed. Any entity that receives, or elects to receive, the 
individual data feeds would be able to, if it so chooses, to create a 
data feed with the same information included in the Cboe One Options 
Feed and sell and distribute it to its clients so that it could be 
received by those clients as quickly as the Cboe One Options Feed would 
be received by those same clients with no greater cost than the 
Exchange.
    In addition, vendors and Distributors that do not wish to purchase 
the Cboe One Options Feed may separately purchase the individual 
underlying products, and if they so choose, perform a similar 
aggregation and consolidation function that the Exchange performs in 
creating the Cboe One Options Feed. To enable such competition, the 
Exchange is offering the Cboe One Options Feed on terms that a vendor 
of those underlying feeds could offer a competing product if it so 
chooses.
    In addition, the fees that are the subject of this rule filing are 
constrained by competition. Particularly, the Exchange competes with 
other exchanges (and their affiliates) that may choose to offer similar 
market data products. If another exchange (or its affiliate) were to 
charge less to consolidate and distribute a similar product than the 
Exchange charges to consolidate and distribute the Cboe One Options 
Feed, prospective Users likely could choose to not subscribe to, or 
would cease subscribing to, the Cboe One Options Feed. In addition, the 
Exchange would compete with unaffiliated market data vendors who would 
be in a position to consolidate and distribute the same data that 
comprises the Cboe One Options Feed into the vendor's own comparable 
market data product. If the third-party vendor is able to provide the 
exact same data for a lower cost, prospective Users would avail 
themselves of that lower cost and elect not to take the Cboe One 
Options Feed.
    For these reasons, the Exchange believes that the proposed fees are 
reasonable, equitable, and not unfairly discriminatory.
    User Fees. The Exchange believes that the proposed Professional and 
Non-Professional User fees for the Cboe One Options Feed are reasonable 
because they represent the combined monthly fees for Professional and 
Non-Professional User fees, respectively for the underlying individual 
data feeds, which have previously been filed with the Commission. The 
Exchange believes that the proposed fees are equitable and not unfairly 
discriminatory because they will be charged uniformly to Distributors. 
Combining the Professional and Non-Professional User fees, of each 
individual Top feed, respectively, further ensures vendors can compete 
with the Exchange by creating the same product as the Cboe One Options 
Feed to sell to their clients. 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.\40\ The Exchange also 
believes offering Cboe One Options Feed 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.
---------------------------------------------------------------------------

    \40\ 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).
---------------------------------------------------------------------------

    Enterprise Fee. The Exchange believes the proposed Enterprise Fees 
for the Cboe One Options Feed and proposed changes to the Enterprise 
Fee for the BZX Options Top feed are reasonable as the fees proposed 
could result in a fee reduction for Distributors of the respective 
products with a large number of Professional and Non-Professional 
Users. If a Distributor has a smaller number of Professional or Non-
Professional Users of the Cboe One Options Feed or BZX Options Top 
Feed, then it may continue using the per User structure and benefit 
from the per User Fee reductions for each respective product. By 
reducing prices for Distributors with a large number of Professional 
and Non-Professional Users, the Exchange believes that more firms may 
choose to receive and to distribute the Cboe One Options or BZX Options 
Top feeds, thereby expanding the distribution of this market data for 
the benefit of investors. The Exchange believes it is reasonable, 
equitable and not unfairly discriminatory to assess incrementally 
higher fees for higher tiers, because such tier covers a higher number 
of users (and indeed for those in Tier 3, an unlimited number of 
users). The Exchange believes it's reasonable to require monthly 
reporting only for proposed Tiers 1 and 2 because such tiers cover a 
defined number of Users that need to be accounted for billing purposes, 
as compared to Tier 3

[[Page 50264]]

which covers unlimited Users. Also as described above, the Enterprise 
Fees are entirely optional. A firm that does not have a sufficient 
number of Users to benefit from purchase of a license, or purchase of a 
specific tier level, need not do so. The Exchange believes the proposed 
discount for an Annual license is also reasonable, equitable and not 
unfairly discriminatory as it provides Distributors an opportunity to 
be assessed lower fees and is available to any Distributor who chooses 
to make a one-year commitment via the Annual license. The Exchange 
believes the proposed 5% discount will attract Distributors to purchase 
and make available Cboe [sic] Options Top Data and Cboe One Options 
Feed for at least one year, thereby fostering and expanding the 
distribution of these market data products for the benefit of 
investors, and particularly retail investors. The Exchange lastly notes 
that the proposed Enterprise Fees for Cboe One Options and the proposed 
5% discount for an Annual license equal the combined respective 
Enterprise Fees and discount, respectively, of each individual Top 
feed, thereby ensuring that vendors can compete with the Exchange by 
creating the same product as the Cboe One Options Feed to sell to their 
clients.
    Distributor Fees. The Exchange believes that the proposed 
Distributor fees for the Cboe One Options Feed are reasonable because 
they represent the combined monthly fees for Internal and External 
Distributor fees, respectively for the underlying individual data 
feeds, which have previously been filed with the Commission. The 
Exchange believes that the proposed fees are equitable and not unfairly 
discriminatory because they will be charged uniformly to Internal and 
External Distributors. 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 One Options Feed. 
Although the proposed distribution fee charged to External Distributors 
will be lower than the 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). The Exchange also notes that Cboe One Options Feed, like the 
underlying top-of-book feeds, are more likely to be distributed 
externally as such data is expected to be used more frequently by Non-
Professional Users who, by definition, do not receive the data for 
commercial purposes (e.g., retail investors) and are therefore not 
internal. The Exchange therefore believes that the proposed reduced fee 
for External Distributors is reasonable because it may encourage more 
distributors to choose to offer the Cboe One Options, thereby expanding 
the distribution of this market data for the benefit of investors, and 
particularly retail investors.
    The proposed Distributor Fees for the Cboe One Options Feed are 
also designed to ensure that vendors could compete with the Exchange by 
creating a similar product as the Cboe One Options Feed. The Exchange 
believes that the proposed Distributor Fees are equitable and 
reasonable as they equal the combined fee of subscribing to each 
individual data feed of the Cboe Options Exchanges, which have been 
previously published by the Commission.
    New External Distributor Credit. In addition, the Exchange believes 
it is reasonable to not charge External Distributors of BZX Options Top 
and Cboe One Options Feed a Distribution Fee during their first three 
(3) months because such Distributors will not be subject to any 
External Distribution fees for those months.\41\ Additionally, the 
Exchange's affiliated equities exchanges offer a similar credit for a 
similar market data product.\42\ The proposed credit is also intended 
to incentivize new External Distributors to enlist Users to subscribe 
to the BZX Options Top or Cboe One Options feeds in an effort to 
broaden the products' distribution. While this incentive is not 
available to Internal Distributors of these products, the Exchange 
believes it is appropriate as Internal Distributors have no Users 
outside of their own firm. Furthermore, External Distributors are 
subject to higher risks of launch as the data is provided outside their 
own firm. For these reasons, the Exchange believes it is appropriate to 
provide this incentive so that External Distributors have sufficient 
time to test the data within their own systems prior to going live 
externally. The Exchange also does not believe this would inhibit a 
vendor from creating a competing product and offer a similar free 
period as the Exchange. Specifically, a vendor seeking to create the 
Cboe One Options Feed could do so by subscribing to the underlying 
individual data feeds, all of which will also include a New External 
Distributor Credit identical to that proposed for the Cboe One Options 
Feed. As a result, a competing vendor would incur similar costs as the 
Exchange in offering such free period for a competing product and may 
do so on the same terms as the Exchange.
---------------------------------------------------------------------------

    \41\ As noted above, Distributors are additionally not assessed 
any Distribution fee during any trial usage period, under the 
existing Trial Usage period offered by the Exchange.
    \42\ See e.g., EDGX Equities Exchange Fees Schedule, Market Data 
Fees.
---------------------------------------------------------------------------

    Distributor Fee Credit. The Exchange believes the proposal to 
provide External Distributors a credit against their monthly External 
Distribution Fee equal to the amount of its monthly Usage Fee or 
Enterprise Fees, is reasonable as it could result in the External 
Distributor paying a discounted, or no, External Distribution fee.\43\ 
The Exchange notes that its affiliated equities exchanges offer a 
similar credit for a similar market data product.\44\ Further, in every 
case the Exchange will receive at least the amount of the External 
Distribution fee for BZX Options Top or Cboe One Options, as 
applicable, in connection with the distribution of each respective feed 
(through a combination of the External Distribution Fee and per User 
Fees or Enterprise Fees, as applicable). The Exchange believes it is 
also equitable and not unfairly discriminatory to apply the credit to 
External Distributors only because, like the free three-month credit 
described above, it is also intended to incentivize new External 
Distributors to enlist Users, including Non-Professional Users such as 
retail investors, to subscribe to the BZX Options Top or Cboe One 
Options Feed in an effort to broaden the products' distribution. While 
this incentive is not available to Internal Distributors of these 
products, the Exchange believes it is appropriate as Internal 
Distributors have no Users outside of their own firm. Furthermore, 
External Distributors are subject to higher risks of launch as the data 
is provided outside their own firm. For these reasons, the Exchange 
believes it is appropriate to provide this incentive to only External 
Distributors. The proposal to adopt a Distributor Fee Credit for Cboe 
One Options Feed in particular also ensures the proposed credit for 
Cboe One Options will not cause the combined cost of subscribing to 
Cboe Options, C2 Options, BZX Options and EDGX Options Top feeds for 
External Distributors to be greater than the amount that would be 
charged to subscribe to the Cboe One Options feed, thereby ensuring 
that vendors can compete with the Exchange by creating the same product 
as the Cboe One

[[Page 50265]]

Options Feed (i.e., purchasing the underlying data feeds and 
aggregating the feeds themselves)to sell to their clients.
---------------------------------------------------------------------------

    \43\ A Distributor that does not qualify to receive the New 
External Distributor Credit, does not need to wait three months to 
be eligible to receive the Distributor Fee Credit (i.e., the 
Distributor would be eligible to receive the credit immediately).
    \44\ See e.g., EDGX Equities Exchange Fees Schedule, Market Data 
Fees.
---------------------------------------------------------------------------

    The Exchange also believes updating the Trial Usage section avoids 
potential confusion as to whether new Users or Distributors would be 
entitled to any credits, including the proposed Distributor Fee Credit 
(and New External Distributor Credit), during the trial usage period. 
The Exchange believes its reasonable not to provide such credits as 
such new users are not paying assessed any fees during their trial 
period.
    Data Consolidation Fee. The Exchange believes that the proposed 
$500 per month Data Consolidation Fee charged to Distributors 
(including vendors) who receive the Cboe One Options Feed is reasonable 
because it represents the value of the data aggregation and 
consolidation function that the Exchange performs. The Exchange further 
believes the proposed Data Consolidation Fee is not designed to permit 
unfair discrimination because all Distributors who obtain the Cboe One 
Options Feed will be charged the same fee. Accordingly, the Exchange 
believes that Distributors could readily offer a product similar to the 
Cboe One Options Feed on a competitive basis at a similar cost. 
Therefore, the Exchange believes the proposed application of the Data 
Consolidation Fee is reasonable would not permit unfair discrimination.

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. 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 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 BZX Options Top, Cboe One 
Options Feed or any of the Exchange's data feeds, as described above. 
As noted, the quote and last sale data contained in the Exchange's BZX 
Options Top feed is identical to the data sent to OPRA for 
redistribution to the public. Accordingly, Exchange top-of-book data is 
widely available today from a number of different sources.
    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 waiver, credits and Enterprise 
Fees would apply to all similarly situated Distributors of BZX Options 
Top on an equal and non-discriminatory basis. 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.
    Additionally, the Cboe One Options Feed will enhance competition 
because it provides investors with an alternative option for receiving 
market data. Although the Cboe Options Exchanges are the exclusive 
distributors of the individual data feeds from which certain data 
elements would be taken to create the Cboe One Options Feed, the 
Exchange would not be the exclusive distributor of the aggregated and 
consolidated information that would compose the proposed Cboe One 
Options Feed. Any entity that receives, or elects to receive, the 
underlying data feeds would be able to, if it so chooses, to create a 
data feed with the same information included in the Cboe One Options 
Feed and sell and distribute it to its clients so that it could be 
received by those clients as quickly as the Cboe One Options Feed would 
be received by those same clients and at a similar cost.
    The proposed pricing the Exchange would charge for the Cboe One 
Options Feed compared to the cost of the individual data feeds from the 
Cboe Options Exchanges would enable a vendor to receive the underlying 
individual data feeds and offer a similar product on a competitive 
basis and with no greater cost than the Exchange. The pricing the 
Exchange proposes to charge for the Cboe One Options Feed is not lower 
than the cost to a vendor of receiving the underlying data feeds. 
Indeed, the proposed pricing equals the combined costs of the 
respective fees, and the proposed waivers are also being proposed for 
the underlying individual feeds as well, thereby enabling a vendor to 
receive the underlying data feeds and offer a similar product on a 
competitive basis and with no greater cost than the Exchange.
    The Exchange further believes that its proposed monthly Data 
Consolidation Fee would be pro-competitive because a vendor could 
create a competing product, perform a similar aggregating and 
consolidating function, and similarly charge for such service. The 
Exchange notes that a competing vendor might engage in a different 
analysis of assessing the cost of a competing product. For these 
reasons, the Exchange believes the proposed pricing, fee waiver and 
credit, would enable a vendor to create a competing product based on 
the individual data feeds and charge its clients a fee that it believes 
reflects the value of the aggregation and consolidation function that 
is competitive with Cboe One Options Feed pricing.
    In establishing the proposed fees, the Exchange considered the 
competitiveness of the market for proprietary data and all of the 
implications of that competition. The Exchange believes that it has 
considered all relevant factors and has not considered irrelevant 
factors in order to establish fair, reasonable, and not unreasonably 
discriminatory fees and an equitable allocation of fees among all 
users.

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 \45\ and paragraph (f) of Rule 19b-4 \46\ 
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

[[Page 50266]]

Commission will institute proceedings to determine whether the proposed 
rule change should be approved or disapproved.
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    \45\ 15 U.S.C. 78s(b)(3)(A).
    \46\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2023-051 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-2023-051. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CboeBZX-2023-051 and should 
be submitted on or before August 22, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\47\
---------------------------------------------------------------------------

    \47\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-16242 Filed 7-31-23; 8:45 am]
BILLING CODE 8011-01-P


