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Federal Register / Vol. 86, No. 121 / Monday, June 28, 2021 / Notices The proposal constitutes an equitable allocation of fees because all similarly situated member organizations and other market participants that, following the transition period, choose to connect to the Exchange through the use of Phase I ports during the Decommission Period would continue to be charged the same, unchanged Decommission Extension Fee.

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The Proposal Is Not Unfairly Discriminatory The Exchange believes that the proposal is not unfairly discriminatory.
In the prevailing competitive environment, member organizations are free to disfavor the Exchanges pricing if they believe that alternatives offer them better value, and are free to discontinue to connect to the Exchange through its ports. As noted, the Exchange is offering upgraded connections in an effort to keep pace with changes in the industry and evolving customer needs as new technologies emerge and products continue to develop and change.
The proposal neither targets nor will it have a disparate impact on any particular category of market participant. The Exchange believes that the proposal does not permit unfair discrimination because the proposal would be applied to all similarly situated member organizations and other market participants would be charged the same rates, which will remain unchanged.
The Exchange believes that the proposal does not permit unfair discrimination because the Decommission Extension Fee would apply equally to all member organizations that require additional time to complete their transition to the Phase II ports. At any point during the Decommission Period, a member organization could cease to be subject to the Decommission Fee by expediting its transition to the new ports. The Decommission Fee would thus apply equally to all member organizations during the proposed extended Decommission Period that choose to continue to connect to the Exchange through the use of legacy ports. As noted, to the extent a member organization continues to use ports activated before July 1, 2019 to connect to the Exchange during the proposed extended Decommission Period, the Exchange believes it is fair, equitable and not unfairly discriminatory to continue to charge flat fees for such ports until such time that connection to the Exchange through the use of old ports is no longer available beginning, as proposed, on September 1, 2021.

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Finally, the Exchange believes that it is subject to significant competitive forces, as described below in the Exchanges statement regarding the burden on competition.
For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act.
B. Self-Regulatory Organizations Statement on Burden on Competition In accordance with Section 6b8 of the Act,22 the Exchange believes that the proposed rule change would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Instead, as discussed above, the Exchange believes that the proposed changes would provide additional time for member organizations to finalize the transition from older to newer and more efficient Pillar technology with no fee increase and offset the Exchanges continuing costs of supporting the Phase I ports for the few firms that do not transition to the new ports during the longer transition period without any change to the fees currently charged by the Exchange for the use of ports to connect to the Exchanges trading systems.
Intramarket Competition. The Exchange does not believe the proposed rule change would impose any burden on intramarket competition that is not necessary or appropriate because it would apply to all member organizations equally that connect to the Exchange. All member organizations, regardless of size, that did not complete the transition to Phase II ports by the end of February 2021 date are subject to the Decommission Fee on an equal basis and would continue to be subject to the fee on an equal basis for the proposed additional two months if they do not complete the transition to Phase II ports.
As noted, as of April 2021, 16.2% of legacy ports have not been cancelled.
The pricing is designed so that these few remaining member organizations utilizing legacy ports would pay for the Exchange to continue to support their Phase I ports through August 2021.
Intermarket Competition. The Exchange does not believe the proposed rule change would impose any burden on intermarket competition that is not necessary or appropriate because the Exchange operates in a highly competitive market in which market participants can readily choose to send their orders to other exchange and offexchange venues if they deem fee levels at those other venues to be more favorable. The Exchange believes that fees for connectivity are constrained by 22 15

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the robust competition for order flow among exchanges and non-exchange markets.
As noted, the no single exchange has more than 16% of the market share of executed volume of equity trades whether excluding or including auction volume.23 The Exchange believes that the ever-shifting market share among the exchanges from month to month demonstrates that market participants can shift order flow, or discontinue or reduce use of certain categories of products, including ports, in response to fee changes. Accordingly, the Exchanges fees, including port fees, are reasonably constrained by competitive alternatives and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable.
The Exchange is proposing these changes in the context of a competitive environment in which market participants can and do shift order flow, or discontinue or reduce use of certain categories of products, in response to fee changes. Because ports are used by member organizations to trade electronically on the Exchange, fees associated with ports are subject to these same competitive forces. The Exchange therefore believes that the proposal would not impose an undue burden on intermarket competition because the purpose of this filing is not to change the rates charged for ports or to offset the Exchanges continuing costs of supporting legacy ports but rather to provide member organizations with more time to effect an orderly transition to upgraded technology without needing to incur any additional costs.
C. Self-Regulatory Organizations Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19b3A 24 of the Act and subparagraph f2 of Rule 19b4 25
thereunder, because it establishes a due, fee, or other charge imposed by the Exchange.
At any time within 60 days of the filing of such proposed rule change, the 23 See Cboe Global Markets U.S. Equities Market Volume Summary, available at http
markets.cboe.com/us/equities/market_share/.
24 15 U.S.C. 78sb3A.
25 17 CFR 240.19b4f2.

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