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Federal Register / Vol. 86, No. 174 / Monday, September 13, 2021 / Notices
A. Self-Regulatory Organizations Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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1. Purpose The Exchange proposes to amend its Fee Schedule applicable to its equities trading platform EDGX Equities to modify Growth Tier, effective September 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 rebates to members that add 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 in securities priced at or above $1.00, the Exchange provides a standard rebate of $0.00160
per share for orders that add liquidity and assesses a fee of $0.00285 per share for orders that remove liquidity. For orders in securities priced below $1.00, the Exchange provides a standard rebate of $0.00009 per share for orders that add liquidity and assesses a fee of 0.30% of total 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.
3 See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date August 30, 2021, available at https markets.cboe.com/us/
equities/market_statistics/.

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Under footnote 1 of the Fee Schedule the Exchange currently offers various Add/Remove Volume Tiers. In particular, the Exchange offers three Growth Tiers that each provide an enhanced rebate for Members qualifying orders yielding fee codes B, V, Y, 3 and 4,4 where a Member reaches certain add volume-based criteria, including growing its volume over a certain baseline month. Currently, Growth Tier 1 provides an enhanced rebated of $0.0026 per share on qualifying orders i.e., orders yielding fee code B, V, Y, 3 and 4 where a Member 1 adds an ADV 5 of greater than or equal to 0.20% of the TCV,6 and 2 has a Step-Up Add TCV 7 from March 2019 that is greater than or equal to 0.10%. The Exchange proposes to amend the second prong of Growth Tier 1 to update the baseline month and provide an alternative threshold that Members may meet to satisfy the second prong criteria. More specifically, the Exchange proposes to require that in addition to a Member needing to add an ADV of greater than or equal to 0.20%
of the TCV, the Member must i have a Step-Up Add TCV from August 2021
greater than or equal to 0.10% or ii must add a Step-Up ADAV 8 from August 2021 greater than or equal to 8,000,000. Overall, the Growth tiers, including Growth Tier 1 as amended, are designed to provide Members with an additional opportunity to receive an enhanced rebate by increasing their order flow to the Exchange, which further contributes to a deeper, more liquid market and provides even more execution opportunities for active market participants. Incentivizing an increase in liquidity adding volume, through enhanced rebate opportunities, encourages liquidity adding Members on the Exchange to contribute to a 4 B is appended to orders that add liquidity to EDGX in Tape B securities, V is appended to order that add liquidity to EDGX in Tape A securities, Y
is appended to orders that add liquidity to EDGX
in Tape C securities, 3 is appended to orders that add liquidity to EDGX in pre and post market in Tape A or C securities, and 4 is appended to orders that add liquidity to EDGX in pre and post market in Tape A sic or C sic securities. Each is provided the standard rebate of $0.00160.
5 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.
6 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.
7 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.
8 Step-up ADAV means ADAV in the relevant baseline month subtracted from current ADAV.

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deeper, more liquid market, and liquidity executing Members on the Exchange to increase transactions and take execution opportunities provided by such increased liquidity, together providing for overall enhanced price discovery and price improvement opportunities on the Exchange. As such, increased overall order flow benefits all Members by contributing towards a robust and well-balanced market ecosystem.
2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,9
in general, and furthers the objectives of Section 6b4,10 in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its Members and issuers and other persons using its facilities. The Exchange also believes that the proposed rule change is consistent with the objectives of Section 6b5 11 requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest, and, particularly, is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.
As described above, the Exchange 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. The proposed rule changes reflect a competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange, which the Exchange believes would enhance market quality to the benefit of all Members. Additionally, the Exchange notes that relative volumebased incentives and discounts have been widely adopted by exchanges,12
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U.S.C. 78f.
U.S.C. 78fb4.
11 15 U.S.C. 78f.b5.
12 See generally NYSE Price List, Transaction Fees; Nasdaq Equity 7, Section 118a1, Fees for Execution and Routing of Orders in Nasdaq-Listed Securities; and BZX Equities Fee Schedule, Footnote 1, Add/Remove Volume Tiers.
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