FR 2021-01280

The document details a filing by Cboe EDGX Exchange, Inc. to the Securities and Exchange Commission regarding changes in fees for its EDGX Top Feed data product. The key proposed changes include increasing the monthly fee for internal distribution from $500 to $750 and introducing a $4 per month fee for each professional user accessing this information within a company. The Exchange justifies these adjustments as competitive compared with similar offerings from other exchanges and emphasizes the enhanced market data quality it provides.

Significant Issues and Concerns

There are several critical issues and concerns arising from this proposal. Firstly, these fee increases might disproportionately affect smaller firms. These organizations may find it challenging to absorb additional costs as easily as larger corporations can. This could potentially tilt the playing field in favor of larger participants who have the financial flexibility to handle such increases without significant impact.

Secondly, the document employs complex language, which might hinder comprehensibility for individuals unfamiliar with legal or financial terminologies. This complexity could limit broader public understanding and reduce the effectiveness of the comment solicitation process—a crucial step for transparent regulatory development.

Furthermore, while the exchange cites competition as a justification for the fee increase, there is a lack of clarity regarding the specific reasons that merit higher fees despite the availability of similar data for free from other, often newer, exchanges. The selective nature of price comparisons with other leading exchanges may not adequately account for qualitative differences in the data that might justify different pricing structures.

There is also ambiguous reasoning behind the choice not to charge fees for internal non-professional users. The absence of a detailed explanation can create perceptions of arbitrary policy decisions that could benefit from more transparency.

Impact on the Public and Stakeholders

Broadly, the impact on the public might be limited as the changes primarily affect financial firms and professionals who utilize these data feeds for business purposes. However, smaller market participants might feel a squeeze from these higher fees, potentially impacting the diversity of firms engaged in trading activities.

For large brokerages and financial institutions, these changes may represent a minor cost increase amid broader operational expenses. Conversely, small firms could face challenging decisions about continuing to subscribe to the EDGX Top Feed or seeking alternatives, which may affect their ability to compete effectively in the marketplace.

In summary, while the proposed fee adjustments align with competitive product offerings and enhancements in market data value, they raise concerns about fairness and transparency. Addressing these concerns adequately could help ensure more equitable market participation and uphold the integrity of fair competition within the financial industry.

The document outlines changes to the fees associated with the EDGX Top Feed, which is a data service offered by the Cboe EDGX Exchange, Inc. The changes primarily involve the increase of fees for internal distribution of the data feed and the introduction of fees for professional users.

The proposal suggests increasing the monthly charge for internal distribution from $500 to $750. This increase is portrayed as remaining competitive when compared to similar products from other exchanges. For instance, New York Stock Exchange (NYSE) charges $3,000 per month for the internal distribution of similar data, while other exchanges like Arca and Nasdaq have their fees structured similarly, with Nasdaq charging $1,500 per month. Despite the proposed fee increase by EDGX, these comparisons highlight that the Exchange's pricing remains lower than that of its main competitors.

Furthermore, there is an introduction of a fee of $4 per month for each professional user of the EDGX Top Feed. In contrast, Nasdaq charges significantly more, with fees totaling $26 per month per professional user for similar services. NYSE and Arca have a total fee of $8 per month per professional user for accessing top-of-book data and trades information.

The document posits that the EDGX Top Feed is competitively priced compared to core data products offered by SIPs (Securities Information Processors), providing an appealing alternative for firms that do not require consolidated data from all U.S. equities exchanges.

One of the issues identified in the document involves the potential for the increased fees to burden smaller firms. The significant difference between the proposed fees by Cboe EDGX and the higher fees charged by competitors could indeed provide EDGX with a competitive edge, yet questions remain about how such fees might impact smaller market participants. The explanation provided suggests that even with these increases, EDGX Top Feed's pricing will still be competitive, indicating an attempt to balance cost with maintaining market presence amid claims of significant competition.

Another issue relates to the complexity of the language used, which might obscure the financial implications for general readers. The rationale behind the proposed fee increase, although justified by competition and enhancements in the data feed, lacks detailed explanation regarding specific improvements that warrant higher costs, especially for firms that might find it financially challenging.

While the decision not to charge Non-Professional Users for internal distribution of data has been justified as a means to facilitate access for retail investors, this decision appears somewhat arbitrary without additional context or detail on expected outcomes or benefits. This area could benefit from clarity to better explain its purpose and impact.

In conclusion, the document provides a detailed comparison of EDGX Top Feed fees with those of competing exchanges, highlighting efforts to maintain reasonable pricing in a competitive environment. However, questions remain regarding how the fee structures impact various market participants, particularly smaller firms, and whether the benefits of paying these fees are sufficiently clear to all stakeholders.