FR 2024-30900

Summary of the Document

The document is a notice from the Securities and Exchange Commission (SEC) regarding a proposed rule change by the Cboe EDGA Exchange, Inc. The proposed amendment aims to update its fee schedule by introducing fee waivers for new Uncontrolled External Distributors of certain data feeds. These data feeds include the EDGA Summary Depth Data Feed, the Cboe One Summary, and the Cboe One Premium Feed. The waiver would apply until these new distributors enlist users for the data feeds. This initiative is designed to encourage vendors to adopt and distribute these feeds more broadly, without having to bear initial distribution costs.

Significant Issues and Concerns

There are several notable issues within the proposal that may be of concern:

1. Complexity of Technical Language: The document uses technical jargon extensively, which may be challenging for those unfamiliar with securities regulation and market data feeds.

2. Clarification on Eligibility: The criteria for defining "new" Uncontrolled External Distributors, particularly the 18-month requirement, are not clearly explained. This might lead to confusion about eligibility for fee waivers.

3. Impact on Competition: There is potential ambiguity regarding how these fee waivers might affect competitors in the market. The document suggests that the waivers are designed to promote fair competition, but it may disproportionately favor Cboe’s affiliated exchanges.

4. Financial Implications: The document does not address the financial impact of these waivers on the Exchange's revenue. This lack of transparency might lead to concerns about the sustainability of these offerings.

5. Impact on Various Stakeholders: The proposal's impact on large versus small distributors is insufficiently explored. This raises questions about whether smaller firms will benefit equitably compared to larger, established distributors.

Broad Public Impact

The proposed rule change might have several broad effects on the public. By promoting the adoption of more advanced data feeds, end-users, such as investors and brokers, could gain enhanced access to real-time market data. This could facilitate more informed trading decisions and potentially improve market efficiency. However, if smaller distributors are disproportionately disadvantaged, there might be less diversity in how market data is accessed and disseminated, potentially affecting end-users who rely on smaller firms for their data services.

Impact on Specific Stakeholders

• Uncontrolled External Distributors: These stakeholders stand to benefit the most from the proposed fee waivers, as it will reduce their upfront costs associated with distributing new data feeds. This could incentivize them to expand their offerings and services.

• Controlled External Distributors: These firms might not benefit directly from this rule change and could view it as a competitive disadvantage, given that the waivers specifically target Uncontrolled Distributors.

• Investors and Financial Analysts: The broader distribution of real-time market data could potentially empower these users with better insights, improving their ability to make informed investment decisions.

• Cboe and Affiliates: While the waivers aim to create a more dynamic market data environment, they could also position Cboe and its affiliates favorably in the data distribution ecosystem, potentially raising antitrust concerns if not implemented with care.

In summary, while the proposed rule changes seek to stimulate market data innovation and distribution, it is crucial for the SEC to ensure that the implementation is fair and does not unduly favor certain market participants. These changes should be continuously assessed for their true impact on market competition and participants of all sizes.

The document discusses proposed changes to the fee structure of Cboe EDGA Exchange, Inc., particularly focusing on fee waivers for certain distributors. The financial allocations mentioned revolve around the fees associated with market data feeds.

Financial Summary

External Distribution Fees: Various types of data feeds provided by the Exchange to distributors incur specific charges. For example, the EDGA Summary Depth Data Feed incurs an External Distribution fee of $2,500 per month. Additionally, the Cboe One Summary is charged at $5,000 per month, while the Cboe One Premium commands a fee of $12,500 per month.

Data Consolidation Fee: For the consolidation of data into products like the Cboe One Options Feed, distributors are additionally assessed a Data Consolidation Fee of $1,000 per month.

Fee Waivers and Implications

The main financial focus is on the Exchange's proposal to waive certain fees for new "Uncontrolled External Distributors." These are distributors who send data to users not affiliated with them and have no direct control over how the data is displayed to such users. The waivers aim to encourage these distributors to adopt and integrate specific data feeds more readily by removing financial barriers until they have acquired users.

Eligibility for Fee Waivers: The document specifies that to qualify for these waivers, an "Uncontrolled External Distributor" must not have received the specific data feed in the past 18 months. This qualification seeks to define "new" distributors while also potentially limiting established distributors from continuously benefiting from fee waivers, addressing concerns about competitive fairness.

Issues Related to Financial References

Complexity and Clarity: The document's technical terminology around fee structures and market data distribution could be confusing for general readers. The detailed financial terms may not be easily understandable, potentially leading to areas of ambiguity, such as the precise determination of eligibility for waivers based on the "new" designation and the 18-month requirement.

Competitive Implications: The fee waivers appear structured to incentivize the adoption and distribution of Cboe Exchange's data feeds, which might raise concerns about competition. By potentially lowering costs for certain new distributors, the Exchange may be seen as favoring its own affiliated exchanges, possibly impacting how other exchanges compete with such bundled and consolidated data offerings.

Financial Impacts: Although the fee waivers could lower initial costs for new distributors, the document does not clarify potential financial impacts on the Exchange's revenue. This omission may raise questions about whether the reduced income from these fees might affect the Exchange's financial health or could be considered wasteful if not balanced by increased adoption and usage of its data products.

Overall, while the proposed changes aim to reduce barriers for new distributors, the financial implications, both for the distributors and the Exchange itself, highlight the need for clear explanations and transparency about these economic decisions within broader market dynamics.