FR 2024-31774

The document in question is a notice published by the Securities and Exchange Commission (SEC) regarding a proposed rule change by the Cboe EDGA Exchange, Inc. This change involves an update to the fee schedule associated with the "Consolidated Audit Trail Funding Fees." The proposed rate is set at $0.000022 per executed equivalent share, and the filing has been designated for immediate effectiveness according to specific provisions of the Securities Exchange Act of 1934.

Summary of the Document

The primary purpose of the notice is to inform the public and industry members about the proposed fee update by the Cboe EDGA Exchange. In addition to detailing the proposed rate, the document invites interested parties to submit comments on the change before the deadline of January 27, 2025. This is part of the SEC's process of gathering public input, which helps ensure transparency and consideration of stakeholder perspectives in regulatory changes.

Significant Issues and Concerns

One notable concern is the lack of detailed explanation regarding how the new fee rate of $0.000022 was determined. Understanding the calculation and justification of this fee rate could be crucial for stakeholders who might be impacted financially. This lack of transparency can lead to uncertainties about whether the fee is appropriate and fair.

Furthermore, the document uses complex legal language to explain the immediate effectiveness of the rule change, which may not be easily understood by those unfamiliar with legal or regulatory procedures. This could create confusion among stakeholders about the implications and timeline of the new fee.

Additionally, the document does not provide context or background on what the "Consolidated Audit Trail Funding Fees" encompass. For readers who are not industry insiders, this could lead to a lack of understanding about the nature or purpose of these fees.

The processes for submitting comments are outlined, but it remains unclear whether there are specific criteria or guidelines for these comments. Offering more guidance could help interested parties provide more constructive input.

Impact on the Public and Stakeholders

From a broader perspective, fee changes may impact market participants, including smaller industry members who might feel the financial impact more than larger counterparts. The lack of discussion on the broader implications of the fee rate change could be a concern, as it might disproportionately affect different stakeholder groups based on their size and trading volume.

For the general public, the changes are unlikely to have a direct impact unless they influence the overall costs or structure of participating in the securities market. However, transparency and fairness in these proceedings are always a matter of public interest, as they relate to the integrity of financial markets.

In summary, the proposed rule change involves a modest per-share fee, but the document leaves several questions unanswered regarding the rationale and broader impact of the fee rate changes. More detailed background information and guidance for stakeholder input could enhance the document's clarity and effectiveness in addressing public and industry concerns.

The Federal Register document discusses a proposed rule change by the Cboe EDGA Exchange, Inc. regarding fees associated with the Consolidated Audit Trail (CAT) for the year 2025. The Exchange seeks to establish the CAT Fee 2025-1 at a rate of $0.000022 per executed equivalent share. This financial proposal represents a specific cost that industry members would incur in relation to the regulatory compliance associated with the Consolidated Audit Trail.

Summary of Financial Allocations

The primary financial element in this document is the establishment of the CAT Fee 2025-1 rate, set at $0.000022 per executed equivalent share. This fee is part of the Exchange's "Consolidated Audit Trail Funding Fees" schedule. The CAT Fees are intended to cover costs that are reasonably budgeted for the maintenance and operation of the Consolidated Audit Trail, an essential tool for regulatory oversight in the National Market System.

Financial Implications and Issues

While the document clearly states the fee rate, it does not delve into the methodology or justification behind determining this specific figure. Understanding how this rate is calculated is crucial for stakeholders who wish to comprehend the financial burden it may impose. Without such transparency, industry members might find it challenging to evaluate the fairness or necessity of this fee, especially if it impacts their cost structures.

The lack of detailed explanation regarding the "Consolidated Audit Trail Funding Fees" leaves some ambiguity about the overall financial structure and its objectives. Clarifying the purpose and breakdown of these fees would help industry members, particularly smaller firms, understand the financial allocations and prepare for any changes in their operational budgets.

Furthermore, the document does not address potential differential impacts of this fee on small versus large industry participants. Smaller firms might feel the effects of such fees more acutely, as they could represent a larger proportion of their operating expenses compared to larger entities. A discussion on equitable financial implications could be beneficial in fostering a broader understanding and acceptance among stakeholders.

In conclusion, while the Federal Register notice provides the necessary information about the introduction of a new fee rate, it leaves several critical financial issues unexplored. Greater transparency in fee calculation methods, a clearer explanation of the associated funding structure, and an analysis of the impact on diverse industry members would enhance stakeholders' comprehension and engagement with the proposed changes.