8011-01P
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100357; File No. SR-CboeEDGX-2024-037]
Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change to Amend its Fee Schedule
June 17, 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 12, 2024, Cboe EDGX Exchange, Inc.
(“Exchange” or “EDGX”) 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 EDGX Exchange, Inc. (the “Exchange” or “EDGX”) 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/options/regulation/rule_filings/edgx/), 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.

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

17 CFR 240.19b-4.

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 (“EDGX Equities”) by modifying Retail Volume Tier 2. The Exchange proposes to
implement these changes effective June 3, 2024.3
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,4 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.5 For orders in securities
priced below $1.00, the Exchange provides a standard rebate of $0.00003 per share for orders
that add liquidity and assesses a fee of 0.30% of the total dollar value for orders that remove

The Exchange initially filed the proposed fee changes on June 3, 2024 (SR-CboeEDGX-2024-032). On
June 12, 2024, the Exchange withdrew that filing and submitted this proposal.

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 EDGX Equities Fee Schedule, Standard Rates.

liquidity.6 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.
Retail Volume Tier
Under footnote 2 of the Fee Schedule, the Exchange currently offers various Retail
Volume Tiers which provide an enhanced rebate for Retail Member Organizations (“RMOs”)7 an
opportunity to receive an enhanced rebate from the standard rebate for Retail Orders8 that add
liquidity (i.e., yielding fee code ZA or ZO). Currently, the Exchange offers three Retail Volume
Tiers where an RMO is eligible for an enhanced rebate for qualifying orders (i.e., yielding fee
code ZA or ZO) meeting certain add volume-based criteria. The Exchange now proposes to
modify the criteria of Retail Volume Tier 2. Currently, the criteria is as follows:
•

Retail Volume Tier 2 provides a rebate of $0.0037 for securities priced at or
above $1.00 for qualifying orders (i.e., orders yielding fee codes ZA or ZO)
where a Member adds a Retail Order ADV (i.e., yielding fee codes ZA or ZO) ≥
0.45% of the TCV.

The proposed criteria is as follows:
•

Retail Volume Tier 2 provides a rebate of $0.0037 for securities priced at or
above $1.00 for qualifying orders (i.e., orders yielding fee codes ZA or ZO)

Id.

See EDGX Rule 11.21(a)(1). A “Retail Member Organization” or “RMO” is a Member (or a division
thereof) that has been approved by the Exchange under this Rule to submit Retail Orders.

See EDGX Rule 11.21(a)(2). A “Retail Order” is an agency or riskless principal order that meets the
criteria of FINRA Rule 5320.03 that originates from a natural person and is submitted to the Exchange by a
Retail Member Organization, provided that no change is made to the terms of the order with respect to
price or side of the market and the order does not originate from a trading algorithm or any other
computerized methodology.

where a Member adds a Retail Order ADV (i.e., yielding fee codes ZA or ZO) ≥
0.40% of the TCV.
The proposed modifications to Retail Volume Tier 2 are intended to provide Members an
opportunity 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. While the proposed criteria is slightly easier to
achieve than the current criteria, the Exchange believes lowering the TCV requirement reflects
current market trends and will incentivize Members who may not currently qualify for this tier to
increase their order flow to the Exchange in an attempt to achieve this tier. Incentivizing an
increase in liquidity adding volume through enhanced rebate opportunities encourages liquidity
adding Members on the Exchange to contribute to a deeper, more liquid market, 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.9 Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5)10 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

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

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

Exchange believes the proposed rule change is consistent with the Section 6(b)(5)11 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)12 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 Retail Volume Tier 2 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
Exchange’s proposal to introduce slightly lower criteria to Retail Volume Tier 2 is not a
significant departure from existing criteria, is reasonably correlated to the enhanced rebate
offered by the Exchange and other competing exchanges,13 and will continue to incentivize
Members to submit order flow to the Exchange. The lower criteria proposed by the Exchange is
intended to reflect current market trends while encouraging 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,14 including the Exchange,15 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

Id.

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

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 also MEMX
Equities Fee Schedule, Retail Tier, available at https://info.memxtrading.com/equities-trading-resources/usequities-fee-schedule/.

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

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

levels of liquidity provision and/or growth patterns. Competing equity exchanges offer similar
tiered pricing structures, including schedules of 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 modify Retail Volume Tier 2 is
reasonable because the revised 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
modify Retail Volume Tier 2 will provide a reasonable means to encourage liquidity adding
displayed and non-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 additional cost savings,
support the quality of price discovery, promote market transparency and improve market quality,
for all investors.
The Exchange believes that its proposed modification to Retail Volume Tier 2 is
reasonable as it 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 new tier and have the opportunity to meet the tier’s 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 the new proposed tiers. While the
Exchange has no way of predicting with certainty how the proposed changes will impact
Member activity, based on the prior months volume, the Exchange anticipates that at least one
Member will be able to satisfy proposed Retail Volume Tier 2. 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 changes 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 proposed change to Retail Volume Tier 2 will apply to all Members equally
in that all Members are eligible for the tier, have a reasonable opportunity to meet the tier’s
criteria and will receive the enhanced rebate on their qualifying orders if such criteria is met. The
Exchange does not believe the proposed change burdens competition, but rather, enhances
competition as it is intended to increase the competitiveness of EDGX 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.16 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.”17 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’….”.18 Accordingly, the Exchange does not believe

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)).

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

Act19 and paragraph (f) of Rule 19b-420 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-CboeEDGX-2024-037 on the subject line.

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

17 CFR 240.19b-4(f).

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-CboeEDGX-2024-037. 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-CboeEDGX-2024-037 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.21

Sherry R. Haywood,
Assistant Secretary.

[FR Doc. 2024-13708 Filed: 6/21/2024 8:45 am; Publication Date: 6/24/2024]

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