On March 16, 2026, the Securities and Exchange Commission issued a notice regarding a proposed rule change filed by Cboe EDGX 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 EDGX Depth Data Feed. The waiver applies to the internal distribution fee and non-display usage fee for up to three months, targeting new distributors who have not received the feed in the last 18 months and do not operate a trading platform. This development seeks to lower entry barriers for firms integrating market data, potentially fostering broader access to real-time depth-of-book information in U.S. equities markets. By offering this incentive, Cboe EDGX aims to encourage system setup without immediate financial burdens, aligning with competitive practices in the exchange industry.
Background on EDGX Depth Data Feed and Market Data Fees
The EDGX Depth Data Feed provides aggregated two-sided quotations for all displayed orders on the Cboe EDGX Exchange, offering investors real-time market depth information. As defined in Exchange Rule 13.8(a), this feed includes detailed quote and order data, which supports trading decisions and market analysis. Cboe EDGX, part of the Cboe Global Markets family, operates alongside affiliates like Cboe BZX, BYX, and EDGA, each providing similar depth-of-book products.
Currently, internal distributors—firms that receive and distribute the data within their own entities—face a $1,500 monthly internal distribution fee, plus professional and non-professional user fees, and a $2,000 monthly non-display usage fee for non-trading platform operators. These fees, outlined in the EDGX Equities Exchange Fees Schedule under Market Data Fees, ensure revenue for data provision while complying with regulatory requirements for fair access. The proposed waiver specifically exempts the distribution and non-display fees during the setup period, but user fees would apply once distribution begins.
This proposal builds on existing incentives. For instance, Cboe EDGX and its affiliates already offer credits for external distributors of summary depth feeds, which provide aggregated data up to five price levels along with last sale information. Nasdaq Stock Market LLC similarly waives fees for internal distributors of its Nasdaq Depth of Book feed for up to three months during pre-production setup, as noted in Nasdaq Equities 7 Pricing Schedule, Section 112.
Key Players and Regulatory Context
The primary entity involved is Cboe EDGX Exchange, Inc., a self-regulatory organization under the Securities Exchange Act of 1934. The filing invokes Section 19(b)(1) and Rule 19b-4, requiring exchanges to submit rule changes for SEC review. The SEC's role is to solicit public comments and ensure the proposal aligns with statutory goals, such as promoting just and equitable trade principles under Section 6(b)(5).
No specific comments were received prior to filing, as stated in the document. However, the proposal references a withdrawn earlier filing (SR-CboeEDGX-2026-009) on March 2, 2026, resubmitted on March 10, 2026. This iterative process highlights the exchange's efforts to refine incentives amid competitive pressures. Legal precedents include SEC approvals of similar waivers, such as those for Nasdaq, which emphasize reducing barriers without imposing undue burdens on competition.
From a broader perspective, exchanges like Cboe and Nasdaq compete to attract data subscribers in a market where proprietary feeds supplement consolidated data from the Securities Information Processor. Critics, including some market participants, argue that fee structures can favor larger firms, while proponents view waivers as tools to enhance market efficiency.
Purpose and Statutory Basis of the Proposal
The exchange justifies the waiver as a means to incentivize new internal distributors to integrate the EDGX Depth Data Feed. Eligible firms must not have accessed the feed in the prior 18 months and cannot operate a trading platform, defined under Regulation NMS as a national securities exchange, alternative trading system, or electronic communications network. This restriction targets smaller entities seeking initial access, excluding established platforms to focus on reducing startup costs.
As detailed in the filing, internal distributors need time for software development to handle messages, fields, and flags per the Cboe Titanium US Equities/Options Multicast Depth of Book (PITCH) Specification. The waiver covers the setup period, capped at three months, mirroring Nasdaq's approach. The exchange asserts consistency with Section 6(b)(4) for equitable fee allocation and Section 6(b)(5) for protecting investors by facilitating data access.
The proposal also includes a minor technical amendment: replacing asterisks with numbered footnotes in the fee schedule for non-display and enterprise fees, improving clarity without substantive change.
Potential Implications and Perspectives
Short-term implications include easier entry for qualifying firms, potentially increasing the number of internal distributors and broadening data usage. This could enhance liquidity and transparency on Cboe EDGX, as more entities access depth information for internal purposes like analytics or compliance.
Long-term effects might involve heightened competition among exchanges for data subscribers. If successful, the waiver could set a precedent for similar incentives, influencing fee structures industry-wide. However, it raises questions about revenue impacts for the exchange and whether it disproportionately benefits certain firm types.
Different perspectives emerge: Supporters, including the exchange, see it as promoting a free and open market by lowering barriers, as voluntary data purchases allow firms to opt out if fees seem unreasonable. Skeptics might view it as a selective subsidy, potentially burdening intermarket competition if not adopted uniformly. The filing notes no anticipated undue burden, citing Nasdaq's parallel program.
In conclusion, this proposed rule change by Cboe EDGX introduces a targeted fee waiver to support new internal distributors of market depth data. Key takeaways include its alignment with competitive incentives and focus on setup costs. Potential next steps involve the SEC's review of public comments, due by April 9, 2026, which could lead to approval, disapproval, or suspension. Ongoing debates may center on balancing innovation in data distribution with equitable fee practices, as exchanges continue adapting to regulatory and market demands.
