8011-01P
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100326; File No. SR-CboeBZX-2024-046]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to Amend its Fee Schedule
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 BZX Exchange, Inc. (the
“Exchange” or “BZX”) 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 BZX Exchange, Inc. (the “Exchange” or “BZX”) 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/BZX/), 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 (“BZX Equities”) by modifying the Add Volume Tier. 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 “Maker-Taker” model whereby it pays rebates to
members that add liquidity and assesses fees to those that remove liquidity. The Exchange’s Fee
Schedule sets forth the standard rebates and rates applied per share for orders that provide and
remove liquidity, respectively. Currently, for orders in securities priced at or above $1.00, the
Exchange provides a standard rebate of $0.00160 per share for orders that add liquidity and
assesses a fee of $0.0030 per share for orders that remove liquidity.4 For orders in securities
priced below $1.00, the Exchange does not provide a rebate for orders that add liquidity and

See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-to-Date (May 21, 2024),
available at https://www.cboe.com/us/equities/market_statistics/.

See BZX Equities Fee Schedule, Standard Rates.

assesses a fee of 0.30% 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.
Add/Remove Volume Tiers
Under footnote 1 of the Fee Schedule, the Exchange offers various Add/Remove Volume
Tiers. In particular, the Exchange offers eight Add Volume Tiers that provide enhanced rebates
for orders yielding fee codes B,6 V7 and Y8 where a Member reaches certain add volume-based
criteria. The Exchange now proposes to introduce a new Add Volume Tier 8. The proposed
criteria for the new, proposed Add Volume Tier 8 is as follows:
•

Add Volume Tier 8 provides a rebate of $0.0031 per share in securities priced at or
above $1.00 to qualifying orders (i.e., orders yielding fee codes B, V, or Y) where a
Member: 1) has an ADAV9 as a percentage of TCV10 ≥ 0.40%; and 2) Member has a
Tape C ADV11 ≥ 1.20% of the Tape C TCV; and 3) Member has a Remove ADV ≥
0.40% of the TCV.

In conjunction with the new, proposed Add Volume Tier 8, the Exchange proposes to
renumber the current Add Volume Tier 8 as Add Volume Tier 9. Additionally, the Exchange

Id.

Fee code B is appended to displayed orders that add liquidity to BZX in Tape B securities.

Fee code V is appended to displayed orders that add liquidity to BZX in Tape A securities.

Fee code Y is appended to displayed orders that add liquidity to BZX in Tape C securities.

“ADAV” means average daily added volume calculated as the number of shares added per day. ADAV is
calculated on a monthly basis.

“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.

“ADV” means average daily volume calculated as the number of shares added or removed, combined, per
day, calculated on a monthly basis.

proposes to amend the third prong of criteria associated with proposed Add Volume Tier 9
(current Add Volume Tier 8) and increase the rebate associated with the tier from $0.0031 per
share in securities priced at or above $1.00 to $0.0032 per share. The current criteria for
proposed Add Volume Tier 9 (current Add Volume Tier 8) is as follows:
•

Proposed Add Volume Tier 9 (current Add Volume Tier 8) provides a rebate of
$0.0031 per share in securities priced at or above $1.00 to qualifying orders (i.e.,
orders yielding fee codes B, V, or Y) where a Member:1) has an ADAV as a
percentage of TCV ≥ 0.42%; and 2) Member has a Tape B ADV ≥ 1.50% of the Tape
B TCV; and 3) Member has a Remove ADV ≥ 0.30% of the TCV.

The proposed criteria for proposed Add Volume Tier 9 is as follows:
•

Proposed Add Volume Tier 9 provides a rebate of $0.0032 per share in securities
priced at or above $1.00 to qualifying orders (i.e., orders yielding fee codes B, V, or
Y) where a Member:1) has an ADAV as a percentage of TCV ≥ 0.42%; and 2)
Member has a Tape B ADV ≥ 1.50% of the Tape B TCV; and 3) Member has a
Remove ADV ≥ 0.20% of the TCV.

The proposed, new Add Volume Tier 8 and the proposed Add Volume Tier 9 are
intended to continue to provide an additional opportunity to incentivize Members to earn an
enhanced rebate by increasing their order flow to the Exchange, which further contributes to a
deeper, more liquid market and provides even more execution opportunities for active market
participants. The Exchange believes that the proposed, new Add Volume Tier 8 and proposed
Add Volume Tier 9 continue to offer an enhanced rebate that is commensurate with the proposed
criteria, which is not significantly more difficult nor significantly easier than the current criteria
found in the Add Volume Tiers. Incentivizing an increase in liquidity adding volume through
enhanced rebate opportunities encourages liquidity-adding Members on the Exchange 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 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.12 Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5)13 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)14 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)15 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 modify the Add Volume Tiers reflects 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. Specifically, the

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

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

Id.

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

Exchange’s proposed, new Add Volume Tier 8 and proposed Add Volume Tier 9 are not a
significant departure from existing criteria, are reasonably correlated to the enhanced rebate
offered by the Exchange and other competing exchanges,16 and will continue to incentivize
Members to submit order flow to the Exchange. Additionally, the Exchange notes that relative
volume-based incentives and discounts have been widely adopted by exchanges,17 including the
Exchange,18 and are reasonable, equitable and non-discriminatory 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 exchange’s market quality and (ii) associated higher levels of market
activity, such as higher levels of liquidity provision and/or growth patterns. Competing equity
exchanges offer similar tiered pricing structures, including schedules or rebates and fees that
apply based upon members achieving certain volume and/or growth thresholds, as well as assess
similar fees or rebates for similar types of orders, to that of the Exchange.
In particular, the Exchange believes its proposal to introduce a new Add Volume Tier 8
and renumber current Add Volume Tier 8 as proposed Add Volume Tier 9 with amended criteria
is reasonable because the proposed tiers will be available to all Members and provide all
Members with an opportunity to receive an enhanced rebate. The Exchange further believes its
proposal to introduce a new Add Volume Tier 8 and renumber current Add Volume Tier 8 as
proposed Add Volume Tier 9 with amended criteria will provide a reasonable means to
encourage liquidity adding displayed orders in Members’ order flow to the Exchange and to
incentivize Members to continue to provide liquidity adding and liquidity removing volume to
the Exchange by offering them an opportunity to receive an enhanced rebate on qualifying
orders. An overall increase in activity would deepen the Exchange’s liquidity pool, offer

See Nasdaq Price List, Add and Remove Rates, Rebate to Add Displayed Liquidity, Shares Executed at or
Above $1.00, available at https://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.

See e.g., EDGX Equities Fee Schedule, Footnote 1, Add/Remove Volume Tiers.

See e.g., BZX Equities Fee Schedule, Footnote 1, Add/Remove Volume Tiers.

additional cost savings, support the quality of price discovery, promote market transparency and
improve market quality, for all investors.
The Exchange believes that its proposal to introduce a new Add Volume Tier 8 and
renumber current Add Volume Tier 8 as proposed Add Volume Tier 9 with amended criteria is
reasonable as the proposed criteria does not represent a significant departure from the criteria
currently offered in the Fee Schedule. The Exchange also believes that the proposal represents an
equitable allocation of fees and rebates and is not unfairly discriminatory because all Members
will be eligible for the proposed a new Add Volume Tier 8 and proposed Add Volume Tier 9 and
have the opportunity to meet the tiers’ criteria and receive the corresponding enhanced rebate if
such criteria is met. Without having a view of activity on other markets and off-exchange
venues, the Exchange has no way of knowing whether this proposed rule change would
definitely result in any Members qualifying for proposed Add Volume Tier 8 and proposed Add
Volume Tier 9. While the Exchange has no way of predicting with certainty how the proposed
changes will impact Member activity, based on the prior month’s volume, the Exchange
anticipates that at least one Member will be able to satisfy proposed Add Volume Tier 8 and at
least one Member will be able to satisfy proposed Add Volume Tier 9. The Exchange also notes
that proposed changes will not adversely impact any Member’s ability to qualify for enhanced
rebates offered under other tiers. Should a Member not meet the proposed new criteria, the
Member will merely not receive that corresponding enhanced rebate.
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 rule changes do not impose any burden on
intramarket competition that is not necessary or appropriate in furtherance of the purposes of the
Act. Particularly, the Exchange’s proposal to introduce new Add Volume Tier 8 and renumber
current Add Volume Tier 8 as proposed Add Volume Tier 9 with amended criteria will apply to
all Members equally in that all Members are eligible for the proposed tiers, have a reasonable
opportunity to meet the proposed tiers’ criteria and will receive the enhanced rebate on their
qualifying orders if such criteria is met. The Exchange does not believe the proposed changes
burden competition, but rather, enhance competition as they are intended to increase the
competitiveness of BZX by amending existing pricing incentives in order to attract order flow
and incentivize participants to increase their participation on the Exchange, providing for
additional execution opportunities for market participants and improved price transparency.
Greater overall order flow, trading opportunities, and pricing transparency benefits all market
participants on the Exchange by enhancing market quality and continuing to encourage Members
to send orders, thereby contributing towards a robust and well-balanced market ecosystem.
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.19 Therefore, no exchange possesses significant pricing power in the execution of order
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.”20 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’….”.21 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.

Supra note 3.

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)).

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

Act22 and paragraph (f) of Rule 19b-423 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
(https://www.sec.gov/rules/sro.shtml); or

•

Send an email to rule-comments@sec.gov. Please include file number
SR-CboeBZX-2024-046 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-CboeBZX-2024-046. 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).

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

17 CFR 240.19b-4(f).

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-CboeBZX-2024-046 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.24

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-13417 Filed: 6/18/2024 8:45 am; Publication Date: 6/20/2024]

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