On March 16, 2026, the Securities and Exchange Commission issued a notice regarding a proposed rule change filed by Cboe EDGA Exchange, Inc. This filing, effective immediately under Section 19(b)(3)(A) of the Securities Exchange Act of 1934, introduces a fee waiver for eligible internal distributors of the EDGA Depth Data Feed. The waiver covers the internal distribution fee and non-display usage fee for up to three months, provided the distributor has not received the feed in the last 18 months and does not operate a trading platform. This development seeks to reduce initial costs for new distributors integrating the data feed, potentially enhancing competition and access to real-time market information. Published in the Federal Register on March 19, 2026, the notice invites public comments until April 9, 2026, underscoring the ongoing evolution of market data pricing in U.S. equities exchanges.
Background on EDGA Depth Data Feed and Market Data Fees
The EDGA Depth Data Feed provides aggregated two-sided quotations for all displayed orders on the Cboe EDGA Exchange. This feed offers real-time market depth information, which helps investors access detailed order book data. As outlined in Exchange Rule 13.8(a), it includes quotations and trading activity similar to depth-of-book feeds from EDGA's affiliates, such as Cboe BZX, EDGX, and BYX exchanges.
Currently, internal distributors—firms that receive and distribute the data within their own entity—pay a $1,000 monthly internal distribution fee, plus user fees for professional and non-professional users, and a $1,000 monthly non-display usage fee for non-trading platforms. The proposed waiver targets new internal distributors to ease setup costs during system integration. This mirrors incentives offered by other exchanges, including Nasdaq's pre-production waivers for its Depth of Book feed, which also last up to three months.
The filing notes that EDGA previously submitted a related proposal on March 2, 2026, which was withdrawn and replaced by this version on March 10, 2026. The change aims to incentivize adoption by covering the time needed for software development, such as integrating messages, fields, and flags per the exchange's specifications.
Key Elements of the Proposed Rule Change
The waiver applies specifically to internal distributors that meet two criteria: they must not have received the EDGA Depth Data Feed in the prior 18 months, and they must not operate a trading platform, defined as a national securities exchange, alternative trading system, or electronic communications network under relevant regulations.
Eligible distributors receive a waiver of the $1,000 internal distribution fee and the $1,000 non-display usage fee for non-trading platforms. This period allows for system setup but cannot exceed three months. User fees for professional and non-professional users remain applicable once distribution begins, but no waiver is needed initially as no users receive data until integration is complete.
The proposal distinguishes between internal and external distributors. External distributors can access existing waivers for EDGA's Summary Depth Feed, which provides similar data but aggregated to five price levels with additional messages like last sale information. The filing emphasizes that this waiver supports firms seeking access to trade on EDGA without the burden of immediate fees, particularly smaller entities facing high startup costs.
Additionally, the filing includes a technical update to the fee schedule, replacing asterisks with numbered footnotes for terms like non-display usage fees in the BZX Depth section, improving clarity without altering substantive fees.
Statutory Basis and Regulatory Justification
In its statement, EDGA asserts that the rule change aligns with Section 6(b) of the Securities Exchange Act of 1934. Specifically, it promotes just and equitable principles under Section 6(b)(5) by fostering a free and open market, protecting investors, and facilitating transactions. The exchange argues that waiving fees for setup reduces barriers to entry, encouraging broader data distribution without mandating use of the voluntary feed.
Under Section 6(b)(4), the proposal ensures equitable allocation of reasonable fees among members and users. EDGA highlights that similar waivers exist on its platform for external distributors of summary depth data and on affiliates like BZX, BYX, and EDGX. It draws parallels to Nasdaq's waivers, noting the 18-month eligibility period mirrors EDGA's existing requirements for other incentives.
The exchange contends the change imposes no undue burden on competition. Intramarket competition is unaffected as the waiver applies uniformly to qualifying internal distributors. Intermarket competition benefits from increased investor choice, as firms can opt for EDGA's data without initial costs, competing with offerings from other exchanges. No comments were received on the proposal prior to filing.
Perspectives and Implications
Stakeholders may view this positively as a step toward democratizing market data access. Internal distributors, especially smaller firms or those new to EDGA, could benefit from lower entry barriers, potentially increasing liquidity and participation on the exchange. Regulators and investor advocates might appreciate the alignment with public interest goals, as broader data availability supports informed decision-making.
Conversely, some market participants could argue that fee waivers favor certain distributors, potentially distorting pricing equity. Larger firms or those operating trading platforms are excluded, which might be seen as targeted support for non-competitive entities. The voluntary nature of the feed and existing alternatives mitigate such concerns, but debates on market data affordability persist, as evidenced by ongoing SEC discussions on data pricing reforms.
Short-term implications include easier adoption for eligible firms, possibly boosting EDGA's data subscriber base. Long-term, this could influence how exchanges structure incentives, encouraging innovation in data products while navigating regulatory scrutiny on fee reasonableness.
In summary, this proposed rule change reflects efforts to balance competitive incentives with regulatory compliance. Potential next steps include SEC review of public comments, which could lead to approval, disapproval, or suspension within 60 days. Ongoing challenges involve ensuring waivers do not create unintended market distortions, while debates on data access equity continue amid evolving exchange practices.
