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Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Notices II. Self-Regulatory Organizations 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 Organizations Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its fee schedule applicable to its equities trading platform EDGX Equities by amending its Add/Remove Volume Tiers, effective February 1, 2021.
The Exchange first notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. More specifically, the Exchange is only one of 16 registered equities exchanges, as well as a number of alternative trading systems and other off-exchange venues that do not have similar self-regulatory responsibilities under the Exchange Act, to which market participants may direct their order flow. Based on publicly available information,3 no single registered equities exchange has more than 16% of the market share. Thus, in such a low-concentrated and highly competitive market, no single equities exchange possesses significant pricing power in the execution of order flow.
The Exchange in particular operates a Maker-Taker model whereby it pays credits to members that provide liquidity and assesses fees to those that remove liquidity. The Exchanges fee schedule sets forth the standard rebates and rates applied per share for orders that provide and remove liquidity, respectively. Currently, for orders priced at or above $1.00, the Exchange provides a standard rebate of $0.0016
per share for orders that add liquidity and assesses a fee of $0.0027 per share for orders that remove liquidity. For orders priced below $1.00, the Exchange 3 See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date January 25, 2021, available at https markets.cboe.com/us/
equities/market_statistics/.

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sic a standard rebate of $0.00009 per share for orders that add liquidity and assesses a fee of 0.30% of Dollar Value for orders that remove liquidity.
Additionally, in response to the competitive environment, the Exchange also offers tiered pricing which provides Members opportunities to qualify for higher rebates or reduced fees where certain volume criteria and thresholds are met. Tiered pricing provides an incremental incentive for Members to strive for higher tier levels, which provides increasingly higher benefits or discounts for satisfying increasingly more stringent criteria.
Currently, the Exchange provides for certain Add/Remove Volume Tiers under footnote 1 of the Fee Schedule.
More specifically, the Add/Remove Volume Tiers provide for seven different volume tiers that offer enhanced rebates on Members orders yielding fee codes B 4, V 5, Y 6, 3 7 and 4 8, where a Member reaches certain volume-based criteria offered in each tier. Two of these tiers are Growth Tiers, which are designed to encourage growth in order flow by providing specific criteria in which Members must increase their relative liquidity each month over a predetermined baseline. Growth Tier 2, for example, provides an enhanced rebate of $0.0027 on qualifying orders i.e., B, V, Y, 3 and 4 where a Member has a Retail Step-Up Add TCV 9 i.e., yielding fee code ZA 10 from May 2020
that is greater than or equal to 0.10%.
The Exchange now proposes to amend Growth Tier 2 to provide an increased enhanced rebated of $0.0030 on qualifying orders where a Member: 1
Has a Step-Up Add TCV from January 2021 greater than or equal to 0.10%; 2
4 Appended to orders that add liquidity to EDGX
Tape B and offers a rebate of $0.0016 per share.
5 Appended to orders that add liquidity to EDGX
Tape A and offers a rebate of $0.0016 per share.
6 Appended to orders that add liquidity to EDGX
Tape C and offers a rebate of $0.0016 per share.
7 Appended to orders that add liquidity to EDGX
pre and post market Tape A or C and offers a rebate of $0.0016 per share.
8 Appended to orders that add liquidity to EDGX
pre and post market Tape B and offers a rebate of $0.0016 per share.
9 Step-Up Add TCV means ADAV as a percentage of TCV in the relevant baseline month subtracted from current ADAV as a percentage of TCV. TCV means total consolidated volume calculated as the volume reported by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the month for which the fees apply. ADAV means ADAV means average daily added volume calculated as the number of shares added per day. ADAV is calculated on a monthly basis.
10 Appended to Retail Orders that add liquidity to EDGX and offers a rebate of $0.0032 per share.

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adds an ADV 11 greater than or equal to 0.50% of the TCV; and 3 removes an ADV of greater than or equal to 0.80%
of the TCV.
Additionally, under the Add/Remove Volume Tiers in footnote 1 of the Fee Schedule, the Exchange also provides for three Non-Displayed Add Volume Tiers, which offer enhanced rebates on Members orders yielding fee codes DM 12, HA 13, MM 14 and RP 15
where a Member reaches certain required volume-based criteria offered in each tier. For example, NonDisplayed Add Volume Tier 3 provides an enhanced rebated of $0.0025 on qualifying orders i.e., DM, HA, MM and RP where a Member has an ADAV 16 of greater than or equal to 0.10% of TCV
for Non-Displayed orders that yield fee codes DM, HA, HI, MM or RP. The Exchange now proposes to add a new Non-Displayed tier, specifically, a NonDisplayed Step-Up Tier, which provides an enhanced rebate of $0.0025 where a Member: 1 Has a Step-Up Add TCV
from January 2021 greater than or equal to 0.10%; 2 adds an ADV greater than or equal to 0.50% of the TCV; and 3
removes an ADV of greater than or equal to 0.80% of the TCV.
Growth Tier 2, as amended, and the new Non-Displayed Step-Up Tier, both of which offer the same three-pronged criteria, are designed to incentivize overall order flow, particularly by offering enhanced rebates for both displayed i.e., B, V, Y, 3 and 4 and non-displayed DM, HA, MM and RP
orders if a Member meets the different, incrementally more difficult criteria as amended in Growth Tier 2 or the additional opportunity as provided in the proposed Non-Displayed Step-Up Tier. Specifically the proposed criteria will encourage a Member to: 1 Grow in overall order flow by providing criteria in which a Member must increase relative overall order flow, not just retail order flow, each month over baseline liquidity in January 2021; 2 increase 11 ADV means average daily volume calculated as the number of shares added to, removed from, or routed by, the Exchange, or any combination or subset thereof, per day. ADV is calculated on a monthly basis.
12 Appended to orders that add liquidity using MidPoint Discretionary order within discretionary range and are provided a rebate of $0.00100.
13 Appended to non-displayed orders that add liquidity and are provided a rebate of $0.00100.
14 Appended to non-displayed orders that add liquidity using Mid-Point Peg and are provided a rebate of $0.00100.
15 Appended to non-displayed orders that add liquidity using Supplemental Peg and are provided a rebate of $0.00100.
16 ADAV means ADAV means average daily added volume calculated as the number of shares added per day. ADAV is calculated on a monthly basis.

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