8011-01P
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100325; File No. SR-CboeBYX-2024-019]
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to Amend its Fee Schedule Regarding Fee Code
MT
June 13, 2024.
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 June 3, 2024, Cboe BYX Exchange, Inc. (the
“Exchange” or “BYX”) 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 BYX Exchange, Inc. (the “Exchange” or “BYX”) proposes to amend its Fee

Schedule. The text of the proposed rule change is provided in 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/BYX/), 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

15 U.S.C. 78s(b)(1).

17 CFR 240.19b-4.

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 Exchange proposes to amend its Fee Schedule applicable to its equities trading
platform (“BYX Equities”) by modifying the description associated with fee code MT. The
Exchange proposes to implement these changes effective June 3, 2024.
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 Securities Exchange Act of 1934 (the “Act”), to which market participants may direct
their order flow. Based on publicly available information,3 no single registered equities exchange
has more than 15% 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 “Taker-Maker” model whereby it pays credits to
members that remove liquidity and assesses fees to those that add liquidity. The Exchange’s Fee
Schedule sets forth the standard rebates and rates applied per share for orders that remove and
provide liquidity, respectively. Currently, for orders in securities priced at or above $1.00, the
Exchange provides a standard rebate of $0.00200 per share for orders that remove liquidity and
assesses a fee of $0.00200 per share for orders that add liquidity.4 For orders in securities priced
below $1.00, the Exchange does not assess any fees for orders that add liquidity, and provides a

See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date (May 22, 2024),
available at https://www.cboe.com/us/equities/market_statistics/.

See BYX Equities Fee Schedule, Standard Rates.

rebate in the amount of 0.10% of the total dollar value for orders that remove liquidity.5
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 benefits or
discounts for satisfying increasingly more stringent criteria.
Fee Code MT
Fee code MT is appended to orders that remove Mid-Point Peg liquidity from BYX. A
Mid-Point Peg Order is a limit order that after entry into the System,6 the price of the order is
automatically adjusted by the System in response to changes in the NBBO to be pegged to the
mid-point of the NBBO, or, alternatively, pegged to the less aggressive of the midpoint of the
NBBO or one minimum price variation inside the same side of the NBBO as the order.7 Based
on customer feedback, the Exchange proposes to amend the description of fee code MT in order
to clarify when the fee code is appended to orders. The Exchange believes that amending the
description of fee code MT to state that it will be appended to orders that remove liquidity
designated as Mid-Point Peg orders more accurately captures the alternative scenario described
in Rule 11.9(c)(9) where a Mid-Point Peg Order is pegged to one minimum price variation inside
the same side of the NBBO as the order. This change will not affect when fee code MT is
appended to an order and only serves to clarify to Members when an order may be designated
with fee code MT.

Id.

See BYX Rule 1.5(aa). The “System” shall mean the electronic communications and trading facility
designated by the Board through which securities orders of Users are consolidated for ranking, execution
and, when applicable, routing away.

See BYX Rule 11.9(c)(9).

2.

Statutory Basis

The Exchange believes the proposed rule change is consistent with the Act and the rules
and regulations thereunder applicable to the Exchange and, in particular, the requirements of
Section 6(b) of the Act.8 Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5)9 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. Additionally, the
Exchange believes the proposed rule change is consistent with the Section 6(b)(5)10 requirement
that the rules of an exchange not be designed to permit unfair discrimination between customers,
issuers, brokers, or dealers as well as Section 6(b)(4)11 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.
As described above, 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 Exchange believes that its
proposal to amend the description associated with fee code MT is reasonable, equitable, and
consistent with the Act because such change is designed to provide additional clarity to Members
as to which orders may be appended with fee code MT without changing how fee code MT is
currently applied to orders. The Exchange further believes that the proposed amendment to the
description associated with fee code MT is not unfairly discriminatory because it applies to all

15 U.S.C. 78f(b).

15 U.S.C. 78f(b)(5).

Id.

15 U.S.C. 78f(b)(4)

Members equally, in that the amended description will apply to all Members and fee code MT
will be applied to all orders matching the revised description.
B.

Self-Regulatory Organization’s Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will impose any burden on
competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Rather, as discussed above, the Exchange believes that the proposed change would encourage the
submission of additional order flow to a public exchange, thereby promoting market depth,
execution incentives and enhanced execution opportunities, as well as price discovery and
transparency for all Members. As a result, the Exchange believes that the proposed changes
further the Commission’s goal in adopting Regulation NMS of fostering competition among
orders, which promotes “more efficient pricing of individual stocks for all types of orders, large
and small.”
The Exchange believes the proposed revised description associated with fee code MT
does not impose any burden on intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed description associated with fee code MT
would apply to all Members equally in that all Members would be subject to the revised
definition and fee code MT will be applied to all orders matching the revised description.
Next, the Exchange believes the proposed rule changes does not impose any burden on
intermarket competition that is not necessary or appropriate in furtherance of the purposes of the
Act. As previously discussed, the Exchange operates in a highly competitive market. Members
have numerous alternative venues that they may participate on and direct their order flow,
including other equities exchanges, off-exchange venues, and alternative trading systems.
Additionally, the Exchange represents a small percentage of the overall market. Based on
publicly available information, no single equities exchange has more than 15% of the market
share.12 Therefore, no exchange possesses significant pricing power in the execution of order
Supra note 3.

flow. Indeed, 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. Moreover,
the Commission has repeatedly expressed its preference for competition over regulatory
intervention in determining prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market forces in determining
prices and SRO revenues and, also, recognized that current regulation of the market system “has
been remarkably successful in promoting market competition in its broader forms that are most
important to investors and listed companies.”13 The fact that this market is competitive has also
long been recognized by the courts. In NetCoalition v. Securities and Exchange Commission, the
D.C. Circuit stated as follows: “[n]o one disputes that competition for order flow is ‘fierce.’ …
As the SEC explained, ‘[i]n the U.S. national market system, buyers and sellers of securities, and
the broker-dealers that act as their order-routing agents, have a wide range of choices of where to
route orders for execution’; [and] ‘no exchange can afford to take its market share percentages
for granted’ because ‘no exchange possesses a monopoly, regulatory or otherwise, in the
execution of order flow from broker dealers’….”.14 Accordingly, the Exchange does not believe
its proposed fee change imposes any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C.

Self-Regulatory Organization’s Statement on Comments on the Proposed Rule
Change Received from Members, Participants, or Others

The Exchange neither solicited nor received comments on the proposed rule change.
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

Act15 and paragraph (f) of Rule 19b-416 thereunder. At any time within 60 days of the filing of

See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).

NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-21)).

15 U.S.C. 78s(b)(3)(A).

17 CFR 240.19b-4(f).

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
(https://www.sec.gov/rules/sro.shtml); or

•

Send an email to rule-comments@sec.gov. Please include file number
SR-CboeBYX-2024-019 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-CboeBYX-2024-019. 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 (https://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 a.m. and 3
p.m. Copies of the filing also will be available for inspection and copying at the principal office
of the Exchange. Do not include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We may redact in part or
withhold entirely from publication submitted material that is obscene or subject to copyright
protection. All submissions should refer to file number SR-CboeBYX-2024-019 and should be
submitted on or before [INSERT DATE 21 DAYS AFTER DATE OF PUBLICATION IN THE
FEDERAL REGISTER].
For the Commission, by the Division of Trading and Markets, pursuant to delegated
authority.17
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-13416 Filed: 6/18/2024 8:45 am; Publication Date: 6/20/2024]

17 CFR 200.30-3(a)(12).