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Federal Register / Vol. 86, No. 44 / Tuesday, March 9, 2021 / Notices other person or entity Agency Order against any other order it represents as agent, as well as against principal interest in AIM an Initiating Order, provided it submits the Agency Order for electronic execution into an AIM
Auction.5 The Exchange may designate any class of options traded on Cboe Options as eligible for AIM. The Exchange notes that all Users, other than the Initiating TPH, may submit responses to an Auction AIM
Responses. AIM Auctions take into account AIM Responses to the applicable Auction as well as contra interest resting on the Cboe Options Book at the conclusion of the Auction unrelated orders, regardless of whether such unrelated orders were already present on the Book when the Agency Order was received by the Exchange or were received after the Exchange commenced the applicable Auction. If contracts remain from one or more unrelated orders at the time the Auction ends, they are considered for participation in the AIM order allocation process.
The Exchange does not currently activate AIM for SPX/SPXW while it operates in its normal hybrid trading environment i.e., when the trading floor is operable.6 The Exchange, however, plans to activate AIM for SPX/
SPXW on February 22, 2021 for operation in the Exchanges normal hybrid environment. In connection with the planned activation of AIM for SPX/
SPXW while the Exchange functions in its normal hybrid setting, the Exchange proposes to adopt certain surcharges under Rate TableUnderlying Symbol List A of the Fees Schedule.
Specifically, the Exchange proposes to adopt an SPX AIM Hybrid Surcharge of $0.50 per contract for all Broker-Dealer capacity B, Joint Back-Office capacity J, Non-TPH Market-Maker capacity N and Professional capacity U collectively, NonCustomers, and Market-Maker capacity M orders in SPX/SPXW
options executed in AIM. The Exchange also proposes to adopt an SPX AIM
Hybrid Surcharge of $0.39 per contract 5 See
Rule 5.37 AIM; and Rule 5.38 CAIM.
March 2020, the Exchange suspended open outcry trading to help prevent the spread of the novel coronavirus and operated in an all-electronic configuration though June 2020. During this time, the Exchange activated AIM for SPX and SPXW
options in an all-electronic environment to provide TPHs with a mechanism to execute crosses electronically, as they could no longer represent those crosses for open outcry execution. Footnote 12 in the Fees Schedule provides specifically that in the event the Exchange operates in a screenbased only environment, AIM may be available for SPX and SPXW during Regular Trading Hours, and the Fees Schedule provides for certain SPX AIM
Surcharges that apply only in that case.

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for all Clearing TPHs capacity F and for Non-Clearing TPH Affiliates capacity L collectively, Firms orders in SPX/SPXW options executed in AIM. Finally, the Exchange proposes to adopt an SPX AIM Hybrid Originator Surcharge of $0.10. Proposed footnote 26 is appended to the proposed surcharges and provides that the SPX
AIM Hybrid Surcharges, including the Originator Surcharge, apply only to SPX/SPXW orders executed in AIM and CAIM 7 during RTH when the Exchange is operating in a hybrid environment i.e., the trading floor is operable. The SPX AIM Hybrid Surcharge will apply to all SPX/SPXW
AIM Agency/Primary, Contra and Response orders. The SPX AIM Hybrid Originator Surcharge will apply to all SPX/SPXW Agency/Primary orders and such fee will be invoiced to the executing TPH.
Particularly, the Exchange notes that it can determine AIM eligibility on a class-by-class basis 8 and, as stated above, historically has not designated SPX/SPXW as eligible for AIM
Auctions. As such, the Exchange wants to encourage market participants to continue to execute SPX/SPXW volume in open outcry or against quotes in its electronic Book when AIM is switched on for SPX/SPXW. The Exchange believes the SPX AIM Hybrid Surcharges including the Originator surcharge will provide a reasonable cost incentive to market participants to continue to execute SPX/SPXW orders as they do today as well as through AIM
when appropriate once activated. More specifically, the SPX AIM Hybrid Surcharges aim to balance incentives between executing via the AIM
Auctions and executing via open outcry or the electronic Book, which the Exchange believes will maintain robust hybrid markets and continue to incentivize the provision of liquidity to both its electronic and trading floor environments in order to support price discovery and increased execution opportunities. The new functionality for SPX/SPXW will allow market participants to interact with SPX/SPXW
order flow in a manner not previously available in a hybrid trading environment.9 Therefore, the Exchange believes it is appropriate to assess additional fees to market participants that choose to leverage auction 7 See supra note 3. The Exchange notes that it already activates FLEX AIM for SPX/SPXW and that all currently applicable FLEX transaction fees and surcharges will continue to apply.
8 See Rule 5.37a1 and 5.38a1.
9 Previously only available while the trading floor was inoperable for a period of time during 2020.
See supra note 6.

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execution opportunities outside of contributing to SPX/SPXW liquidity in open outcry and the sic on the electronic Book. Indeed, the Exchange currently does so in various places in the Fees Schedule with respect to other classes. For example, the Exchange currently assesses a higher charge for Non-Customer and Firm AIM Responses in all products, except Sector Indexes 10
and Underlying Symbol List A,11 of $0.50 Penny classes and $1.05 NonPenny classes than the applicable standard transaction rates. The Exchange also notes that when it is operating in a screen-based only environment, it assesses an AIM
Agency/Primary Surcharge of $0.10, which, like the proposed SPX AIM
Hybrid Originator Surcharge, applies to all AIM Agency/Primary orders in SPX/
SPXW and is invoiced to the executing TPH. Additionally, the Exchange notes that it assesses certain surcharges on proprietary products i.e., SPX/SPXW, SPESG and VIX 12 to similarly create a reasonable cost equivalence between the primary execution channels open outcry and electronic book for such products and likewise maintain a robust hybrid system.13 Overall, the proposed fees are designed to balance fees at an appropriate level in order to assess SPX/
SPXW order flow to the AIM Auctions while also maintaining incentive for participation and the provision of liquidity in SPX/SPXW on the trading floor and in the electronic book when AIM is activated for SPX/SPXW.
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 6b of the Act.14 Specifically, the Exchange believes the proposed rule change is consistent with the Section 10 Sector Index underlying symbols: IXB, SIXC, IXE, IXI, IXM, IXR, IXRE, IXT, IXU, IXV AND IXY.
Corresponding option symbols: SIXB, SIXC, SIXE, SIXI, SIXM, SIXR, SIXRE, SIXT, SIXU, SIXV AND
SIXY.
11 Underlying Symbol List A: OEX, XEO, RUT, RLG, RLV, RUI, UKXM, SPX includes SPXW, SPESG and VIX.
12 See Cboe Options Fees Schedule, Rate Table Underlying Symbol List A, which assesses an Execution Surcharge of $0.21 for all non-MarketMaker orders in SPX and SPESG and $0.13 for all non-Market-Maker orders in SPXW, and assesses a Customer Priority Surcharge of $0.20 for all Customer maker orders in VIX.
13 See e.g., Securities and Exchange Release Nos.
71295 January 14, 2014, 79 FR 3443 January 21, 2014 SRCBOE2013129; and 88426 March 19, 2020, 85 FR 16978 March 25, 2020 SRCBOE
2020021.
14 15 U.S.C. 78fb.

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