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Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices 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
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1. Purpose The Exchange proposes to amend its Fee Schedule by adopting a new Single Market Participant Identifier MPID
Investor Tier under footnote 4 of the Fee Schedule, effective July 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 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.
Particularly, for securities at or above $1.00, the Exchange provides a standard rebate of $0.0018 per share for orders that add liquidity and assesses a fee of $0.0030 per share 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 3 See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date May 26, 2021, available at https markets.cboe.com/us/equities/
market_statistics/.

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benefits or discounts for satisfying increasingly more stringent criteria.
Pursuant to footnote 4 of the Fee Schedule, the Exchange currently offers three Single MPID Investor Tiers that provide Members an opportunity to receive incrementally greater enhanced rebates from the standard rebate for liquidity adding orders that yield fee codes B, V and Y 4 where Members by MPID meet certain incrementally more difficult volume-based criteria. For example, Single MPID Investor Tier 1
currently provides an enhanced rebate of $0.0031 per share for qualifying orders i.e., yield fee code B, V and Y
where an MPID has 1 an ADAV 5 as a percentage of TCV 6 greater than or equal to 0.30%, and 2 an ADAV as a percentage of ADV 7 greater than or equal to 90%. Single MPID Investor Tier 2 provides an enhanced rebate of $0.0032 per share for qualifying orders where an MPID has 1 an ADAV as a percentage of TCV greater than or equal to 0.75%, and 2 an ADAV as a percentage of ADV greater than or equal to 80% and Single MPID Investor Tier 3 provides an enhanced rebate of $0.0032 per share for Tape B securities or $0.00033 sic per share for Tapes A
and C securities for qualifying orders where an MPID has 1 a Step-Up ADV 8
as a percentage of TCV greater than or equal to 0.10% from May 2021; or MPID
has a Step-Up ADV8,000,000 from May 2021, and 2 an ADAV as a percentage of TCV greater than or equal to 0.55%;
or an ADAV greater than or equal to 50,000,000.
The Exchange proposes to offer a new Single MPID Investor Tier 1 and, subsequently update the titles of current Tier 1 to Tier 2, current Tier 2 to Tier 3 and current Tier 3 to Tier 4. New Tier 1 provides a proposed enhanced rebate $0.0030 for a Members qualifying orders where an MPID has 1 a Step-Up ADV from May 2021 greater than or equal to 0.10% of TCV, or a Step-Up ADV greater than or equal to 8,000,000
from May 2021, and 2 adds a Step-Up 4 Fee code B is appended to displayed orders adding liquidity to BZX Tape B, fee code V is appended to displayed orders adding liquidity to BZX Tape A, and fee code V sic is appended to displayed orders adding liquidity to BZX Tape C.
Each is provided a rebate of $ 0.00180.
5 ADAV means average daily added volume calculated as the number of shares added per day.
ADAV 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 ADV means average daily volume calculated as the number of shares added or removed, combined, per day. ADV is calculated on a monthly basis.
8 Step-up ADV means ADV in the relevant baseline month subtracted from current day ADV.

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ADAV from May 2021 greater than or equal to 0.05% of TCV. Members that achieve the proposed Single MPID
Investor Tier 1 must therefore increase the amount of overall liquidity, both add and remove volume, that they provide on BZX over a baseline amount, thereby contributing to a deeper and more liquid market. More specifically, incentivizing an increase in both liquidity adding volume and in liquidity removing volume, through additional criteria and enhanced rebate opportunities, encourages liquidity adding Members on the Exchange to contribute to a deeper, more liquid market, and 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 and 6b5,10 in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its Members, issuers and other persons using its facilities. 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.
In particular, the Exchange notes that volume-based rebates such as that proposed herein have been widely adopted by exchanges,11 including the Exchange,12 and are equitable because they are open to all Members on an equal basis and provide additional benefits or discounts that are reasonably related to: i The value to an exchanges 9 15

U.S.C. 78f.
U.S.C. 78fb4 and 5.
11 See generally NYSE Price List, Transaction Fees; Nasdaq Equity 7, Section 118a1, Fees for Execution and Routing of Orders in Nasdaq-Listed Securities; and EDGX Equities Fee Schedule, Footnote 1, Add/Remove Volume Tiers.
12 See BZX Equities Fee Schedule, Footnote 1, Add/Remove Volume Tiers.
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