2019-10228. Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the EDGA Equities Trading Platform Fee Schedule

May 13, 2019.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),^[1] and Rule 19b-4 thereunder,^[2] notice is hereby given that on May 1, 2019, Cboe EDGA Exchange, Inc. (“Exchange” or “EDGA”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

Cboe EDGA Exchange, Inc. (“EDGA” or the “Exchange”) is filing with the Securities and Exchange Commission (the “Commission”) a proposed rule change to amend the fee schedule applicable to the EDGA equities trading platform (“EDGA Equities”) as it relates to pricing for the use of the ROBB and ROCO routing strategies. The text of the proposed rule change is attached [sic] as Exhibit 5.

The text of the proposed rule change is also available on the Exchange's website (http://markets.cboe.com/​us/​equities/​regulation/​rule_​filings/​edga/​), at the Exchange's Office of the Secretary, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the 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 Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

The purpose of the proposed rule change is to amend the EDGA Equities fee schedule to change the pricing applicable to orders routed using the ROBB and ROCO routing strategies in connection with planned changes to the System routing table.^[3] ROBB and ROCO are a routing strategies offered by the Exchange that are used to target certain low cost venues by routing to those venues after accessing available liquidity on the EDGA Book. In February 2019, NYSE American LLC (“NYSE American”) and NYSE National, Inc. (“NYSE National”) were added to the System routing table as a low cost protected market centers. Therefore, pursuant to Rule 11.11(g), the Exchange has determined to add NYSE American and NYSE National as a low cost venues under the ROBB and ROCO routing strategies. These changes to the ROBB and ROCO routing strategies are scheduled to be introduced on May 1, 2019.

In recognition of the fact that NYSE American and NYSE National can be accessed at a low cost today, for securities priced at or above $1.00, the Exchange proposes to provide a fee to orders routed to NYSE American using the ROBB or ROCO routing strategies and a rebate for orders routed to NYSE National using the ROBB or ROCO routing strategies. Specifically, the Exchange proposes to add ROBB and ROCO to the list of routing strategies that yield fee code NX, which relates to orders routed to NYSE National, and to the list of routing strategies that yield fee code MX, which relates to orders routed to NYSE American. As proposed, orders routed to NYSE National using the ROBB or ROCO routing strategies would be provided a rebate of $0.00200 per share in securities priced at or above $1.00, and no charge or rebate would be applied for securities priced below $1.00. Orders routed to NYSE American using the ROBB or ROCO routing strategies would be assessed a fee of $0.00020, and no charge or rebate would be applied for securities prices below $1.00. The fee and rebate are consistent with those currently offered for orders routed to NYSE National and NYSE American using a similar low cost routing strategy, ROUC, yielding fee code NX and MX, respectively.

In addition to this, the Exchange proposes to reduce the per share rebate [sic] for orders routed to Cboe EDGX Exchange, Inc. (“EDGX”) and to reduce the per share fee [sic] assessed for orders routed to EDGX that add liquidity, including pre- and post-market orders. Currently, the Exchange assesses a fee of $0.0030 per share for orders routed to EDGX (yielding fee code I) in securities priced at or above $1.00. The Exchange also currently provides a standard rebate of $0.0027 per share for orders routed to EDGX that add liquidity, including pre- and post-market orders, (yielding fee code P) in securities priced at or above $1.00. The Exchange now proposes to reduce the fee assessed for orders routed to EDGX (yielding fee code I) in securities priced at or above $1.00 from $0.0030 to $0.00265. With respect to orders routed to EDGX that add liquidity, including pre- and post-market orders, (yielding fee code P) in securities priced at or above $1.00, the Exchange proposes to reduce the per share rebate from $0.0027 to $0.0017.

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with Section 6 of the Act,^[4] in general, and furthers the requirements of Section 6(b)(4),^[5] in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its members and other persons using its facilities. The Exchange believes the proposed routing fee changes are appropriate as they reflect changes to the System routing table used to determine the order in which venues are accessed using the ROBB and ROCO routing strategies. As stated, ROBB and ROCO specifically target certain equities exchanges that provide low cost executions or rebates to liquidity removing orders, and routes to those venues after trading with the EDGA Book. The Exchange believes that the proposed changes reflect the intent of Members when they submit routable order flow to the Exchange using the ROBB and ROCO routing strategies.

The Exchange believes that it is reasonable and equitable to begin rebating orders routed to NYSE National using the ROBB and ROCO routing strategies. As mentioned previously, the Exchange added these exchanges to its list of low cost protected market centers, and wishes to provide the benefit of the rebate or lower fee provided by those markets to EDGA members using the ROBB and ROCO routing strategies. The Exchange currently offers such incentives when routing to those markets using another low cost routing strategy, ROUC. As is the case for orders routed via the ROUC routing strategy to NYSE American or NYSE National, the Exchange believes the proposed fees and rebates applicable to the ROBB and ROCO routing strategies to these venues generally reflect the current transaction fees and rebates available for accessing liquidity on those markets.^[6] The Exchange believes that this change may increase interest in the Exchange's ROBB and ROCO routing strategies, in particular, by passing on better pricing to EDGA Members that choose to enter such orders on the Exchange, thereby encouraging additional order flow to be entered to the EDGA Book.

In addition to this, the Exchange believes that the proposed routing fee changes are equitable and not unfairly discriminatory as the proposed rebate would apply equally to all Members that use the Exchange to route orders using the associated routing strategies. The proposed fees are designed to reflect the fees charged and rebates offered by certain away trading centers that are accessed by Exchange routing strategies, and are being made in conjunction with changes to the System routing table designed to provide Members with low cost executions for their routable order flow. Furthermore, if Members do not favor the proposed pricing, they can send their routable orders directly to away markets instead of using routing functionality provided by the Exchange. Routing through the Exchange is voluntary, and the Exchange operates in a competitive environment where market participants can readily direct order flow to competing venues or providers of routing services if they deem fee levels to be excessive.

The Exchange also believes that its proposal to reduce rates for orders routed to EDGX is reasonable because Members will pay lower transaction fees for such orders. Additionally, the Exchange notes that the proposed fee is lower than transaction fees assessed on other Exchanges.^[7] The Exchange notes that the proposed fee reduction is not unfairly discriminatory as it applies uniformly to Members.

Finally, the Exchange believes the proposed reduced rebates for orders routed to EDGX that add liquidity (including pre- and post-market orders) is reasonable, equitable and not unfairly discriminatory because Members will still receive rebates for such orders, albeit at a lower amount. The Exchange also believes the proposed reduction of rebates for such orders is reasonable because the Exchange must balance the revenue received for orders that add liquidity (and as described above, the Exchange is reducing the rates assessed for orders routed to EDGX). Rebates for orders that add liquidity incentivize members to bring additional order flow through the Exchange, thereby promoting price discovery and enhancing order execution opportunities for Members.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. The proposed routing fee changes are designed to reflect changes being made to the System routing table used to determine where to send certain routable orders, and generally provide better pricing to Members for orders routed to low cost protected market centers using the Exchange's routing strategies. The Exchange notes that the use of available routing strategies is optional for all Members. Also, the proposed rates and rebates would apply uniformly to all Members, and members may opt to disfavor the Exchange's pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing venues to maintain their competitive standing in the financial markets. Further, excessive fees would serve to impair an exchange's ability to compete for order flow and members rather than burdening competition. Moreover, the proposed fee changes are designed to incentivize liquidity, which the Exchange believes will benefit all market participants by encouraging a transparent and competitive market. The Exchange operates in a highly competitive market in which market participants can readily direct their order flow to competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and rebates to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed fee changes reflect this competitive environment.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others

No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act ^[8] and paragraph (f) of Rule 19b-4 ^[9] thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:

Electronic Comments

• Use the Commission's internet comment form (http://www.sec.gov/​rules/​sro.shtml); or
• Send an email to [e-mail]. Please include File Number SR-CboeEDGA-2019-010 on the subject line.

Paper Comments

• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-CboeEDGA-2019-010. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (http://www.sec.gov/​rules/​sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street, NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CboeEDGA-2019-010 and should be submitted on or before June 7, 2019.

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.^[10]

Eduardo A. Aleman,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78s(b)(1).

2.  17 CFR 240.19b-4.

3.  The term “System routing table” refers to the proprietary process for determining the specific trading venues to which the System routes orders and the order in which it routes them. See Rule 11.11(g). The Exchange reserves the right to maintain a different System routing table for different routing options and to modify the System routing table at any time without notice.

4.  15 U.S.C. 78f.

5.  15 U.S.C. 78f(b)(4).

6.  NYSE American currently charges a fee for removing liquidity that is $0.00020 per share in securities priced at or above $1.00, and 0.25% of the total dollar value of the transaction in securities priced below $1.00. See NYSE American Equities Price List, I. Transaction Fees.

NYSE National currently provides a rebate of $0.00200 per share in securities priced at or above $1.00 for members that achieve their taking tier. See NYSE National Schedule of Fees and Rebates, I. Transaction Fees, B. Tiered Rates. Orders that remove liquidity in securities below $1.00 are executed without charge or rebate. See NYSE National, Schedule of Fees and Rebates, I. Transaction Fees, A. General Rates.

7.  See NYSE Price List 2019, Routing Fees.

8.  15 U.S.C. 78s(b)(3)(A).

9.  17 CFR 240.19b-4(f).

10.  17 CFR 200.30-3(a)(12).