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Federal Register / Vol. 86, No. 189 / Monday, October 4, 2021 / Notices
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,4 no single registered equities exchange has more than 14% 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 believes that the evershifting market share among the exchanges from month to month demonstrates that market participants can shift order flow, discontinue, or reduce use of certain categories of products, in response to fee changes.
Accordingly, competitive forces constrain the Exchanges transaction fees, and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable.
The Exchange assesses fees and provides rebates in connection with orders routed away to various exchanges. Now, the Exchange proposes to modify certain routing fee codes currently under the Fee Codes and Associated Fees section of the Fee Schedule. First, the Exchange proposes to modify fee code C, which is appended to orders routed to Nasdaq BX, Inc. Nasdaq BX using destination specific, TRIM or SLIM
routing strategies, and currently provides a rebate of $0.00100 per share.
Specifically, the Exchange proposes to reduce the rebate to $0.00050 per share.
Second, the Exchange proposes to modify fee code NX, which is appended to orders routed to NYSE National, Inc.
NYSE National using the TRIM or SLIM routing strategy, and currently provides a rebate of $0.00200 per share.
The Exchange proposes to reduce the rebate to $0.00050 per share.
Finally, as a result of minimal use in the last months, the Exchange proposes to eliminate fee codes BO, IX, and SX
in their entirety. Fee code BO is appended to orders routed using a destination specific routing strategy unless otherwise specified, and currently assesses a fee of $0.00300 per share. Fee code IX is appended to orders routed to the Investors Exchange LLC
IEX using a destination specific routing strategy, and currently assesses a fee of $0.00300 per share. Fee code SX
is appended to orders routed using the 4 See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date August 26, 2021, available at https markets.cboe.com/us/
equities/market_statistics/.

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SLIM routing strategy except to Cboe BZX Exchange, Inc. BZX Equities, Cboe EDGA Exchange, Inc. EDGA
Equities Nasdaq BX, NYSE American LLC NYSE American or NYSE
National, and currently assesses a fee of $0.00290 per share. The Exchange believes that because so few users elect to route their orders with specifications to which fee code BO, IX, or SX is applicable, the current demand does not warrant the infrastructure and ongoing Systems maintenance required to support the separate fee codes.
Therefore, the Exchange now proposes to delete fee code BO, IX, and SX in the Fee Schedule. The Exchange notes that users will continue to be able to choose to route their orders with the same specifications to which fee codes BO, IX, and SX currently appliessuch orders will simply be assessed the fees currently in place for routed orders generally.5 That is, if any of the routed orders to which fee code BO, IX, or SX
currently apply fee code X will be appended to such orders, which assesses a fee of $0.00300 per share.
2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,6
in general, and furthers the objectives of Section 6b4,7 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 8 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 5 The Exchange notes that there are other fee codes that apply to certain other routing specifications, however, those routed orders not otherwise specified in such other routing fee code descriptions yield the general routing fee code X.
6 15 U.S.C. 78f.
7 15 U.S.C. 78fb4.
8 15 U.S.C. 78fb5.

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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 Exchange believes that its proposal to reduce the rebates applicable to fee codes C and NX is fair, equitable, and reasonable because the proposed fees and rebate remain consistent with pricing offered by the Exchanges affiliates and competitors and does not represent a significant departure from the Exchanges general pricing structure.
Specifically, the proposed rebates applicable to fee codes C and NX are more than that offered by the Nasdaq Stock Market LLC Nasdaq, which does not provide a standard rebate for similar orders.9 Therefore, the Exchange believes the proposed rebates associated with fee codes C and NX remain consistent with pricing previously offered by the Exchanges affiliates and other exchanges and does not represent a significant departure from such pricing.
The Exchange believes the proposed rule change to remove fee code BO, IX, and SX is reasonable as the Exchange has observed a minimal amount of volume in orders yielding the fee code and, therefore, the continuation of these fee codes does not warrant the infrastructure and ongoing Systems maintenance required to support separate fee codes for specific routed orders. As such, the Exchange also believes that is reasonable and equitable to assess routed orders which meet the specifications to which fee code BO, IX, and SX are currently applicable the standard routing fee currently in place for all other routed ordersvia fee code X. The fee associated with fee code X is $0.00300, which is the same as the fee currently assessed for orders yielding fee code BO and IX, and is only slightly higher than the fee currently assessed for fee code SX. The Exchange believes that the proposed rule change is equitable and not unfairly discriminatory because Members will continue to have the option to elect to route their orders in the same manner and will be automatically and uniformly assessed the applicable standard rates in place for generally all other routed orders. Further, if members do not favor the Exchanges pricing for routed orders, they can send their routable orders directly to away markets instead of using routing functionality provided by the Exchange. Routing through the Exchange is optional, and the Exchange 9 See Route Rates on the Nasdaq fee schedule at http nasdaqtrader.com/Trader.aspx?id=
PriceListTrading2.

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