[Federal Register Volume 76, Number 196 (Tuesday, October 11, 2011)]
[Notices]
[Pages 62877-62879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-26137]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65480; File No. SR-CBOE-2011-091]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend CBOE Stock Exchange Transaction Fees
October 4, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 30 2011, the Chicago Board Options Exchange, Incorporated
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend CBOE Stock Exchange (``CBSX'')
transaction fees. The text of the proposed rule change is available on
the Exchange's Web site (http://www.cboe.org/legal), at the Exchange's
Office of the Secretary, and at the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
CBSX proposes to modify its fees for transactions in securities
priced $1 or greater. The Exchange proposes to adopt a Maker fee of
$0.0017 per share and a Taker rebate of $0.0015 per share. For a Maker
that adds more than two million shares of liquidity to CBSX in a single
day, the Exchange proposes a fee of $0.0015 per share. This lower rate
will be calculated on a daily basis. Market participants who share a
trading acronym or MPID may aggregate their trading activity for
purposes of this rate. Qualification for this rate will require that a
market participant appropriately indicate his trading acronym and/or
MPID in the appropriate field on the order. CBSX will promulgate an
information circular to direct market participants on how to accurately
qualify and aggregate their trading activity in order to receive this
reduced rate. CBSX also proposes to change the language on the Fees
Schedule describing the execution type for transactions in securities
priced below $1 from ``Single-sided execution'' to ``Maker or Taker''
in order to achieve consistency on the Fee Schedule and make clear that
such fee applies to either the Maker or the Taker in transactions in
securities priced below $1.
The proposed fee change for transactions in securities priced at $1
or greater is intended to encourage increased trading activity and
liquidity on CBSX, which would benefit all market participants. By
encouraging market participants to hit a threshold of executing at
least two million shares a day (at which point such market participants
would receive the lower Maker fee for all shares executed by the market
participant that day), the Exchange incentivizes market
[[Page 62878]]
participants who may be able to meet that threshold to add more volume
and liquidity to the CBSX marketplace. This increased volume and
liquidity would benefit all CBSX market participants, including those
who do not trade at that level, by providing them with more
opportunities for execution. If the lower rate did not exist for market
participants who execute at least two million shares a day, even those
market participants who do not hit that threshold will not receive the
benefit of this added volume and liquidity. The threshold is applied on
a daily basis in order to encourage market participants to add volume
and liquidity on a consistent basis. The Exchange seeks market
participants who will be active on CBSX on a regular basis, as the
liquidity that such larger-volume participants provide will be
attractive to all investors and benefit all market participants.
The proposed rule change is to take effect October 1, 2011.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the Act
\3\ in general, and furthers the objectives of Section 6(b)(4) \4\ of
the Act in particular, in that it is designed to provide for the
equitable allocation of reasonable dues, fees, and other charges among
CBOE Trading Permit Holders and other persons using Exchange
facilities. The proposed Maker fees of $0.0017 per share or $0.0015 per
share for a Maker that adds more than two million shares of liquidity
in a single day and Taker Rebate of $0.0015 are reasonable because they
are within the range of fees assessed for similar transactions in
securities priced $1 or greater on other exchanges.\5\ The fees are
equitable and not unfairly discriminatory because they will apply to
all market participants, and all market participants will have the
opportunity to qualify for the reduced rate for a Maker that adds more
than two million shares of liquidity in a single day.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(4).
\5\ See NASDAQ OMX BX, Inc. (``BX'') Fee Schedule regarding
trading of shares executed at or above $1.00. The BX rebate for
removing liquidity is $0.0005 per share, or $0.0014 per share for
MPIDs removing greater than 3.5 million shares per day or adding
greater than 25,000 shares per day. The proposed CBSX rebate is
$0.0015 per share. The BX fee for adding liquidity is $0.0018 per
share, or $0.0015 for MPIDs meeting BX's Qualified Liquidity
Provider Program criteria. The proposed CBSX fee is $0.0017 per
share, or $0.0015 per share for a Maker that adds more than two
million shares of liquidity in a single day.
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Further, the reduced fee for market participants that execute at
least two million shares a day is equitable and not unfairly
discriminatory because it will encourage market participants to trade
on CBSX and bring greater liquidity to CBSX, which will benefit all
market participants. By encouraging market participants to hit a
threshold of executing at least two million shares a day (at which
point such market participants would receive the lower Maker fee for
all shares executed by the market participant that day), the Exchange
incentivizes market participants who may be able to meet that threshold
to add more volume and liquidity to the CBSX marketplace. This
increased volume and liquidity would benefit all CBSX market
participants, including those who do not trade at that level, by
providing them with more opportunities for execution. Orders that
provide liquidity increase the likelihood that members seeking to
access liquidity will have their orders filled. If the lower rate did
not exist for market participants who execute at least two million
shares a day, even those market participants who do not hit that
threshold will not receive the benefit of this added volume and
liquidity. Applying the two million share threshold on a daily basis
will encourage these larger-volume market participants to add volume
and liquidity on a consistent basis, and the resulting consistently-
available executions will benefit all market participants. As such, the
Exchange believes that it is reasonable and equitable to use pricing
incentives, such as a lower fee for creating large amounts of
liquidity, to encourage market participants to increase their
participation in the market.
Finally, changing the language on the Fees Schedule describing the
execution type for transactions in securities priced below $1 from
``Single-sided execution'' to ``Maker or Taker'' furthers the
objectives of Section 6(b)(5) \6\ of the Act in particular in that the
change is designed to impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest by achieving consistency in
the language of the Fees Schedule, thereby eliminating any potential
confusion.
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\6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change is designated by the Exchange as
establishing or changing a due, fee, or other charge, thereby
qualifying for effectiveness on filing pursuant to Section 19(b)(3)(A)
of the Act \7\ and subparagraph (f)(2) of Rule 19b-4 \8\ thereunder. At
any time within 60 days of the filing of the proposed rule change, the
Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 C.F.R. 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-CBOE-2011-091 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2011-091. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written
[[Page 62879]]
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street, NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of such
filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-CBOE-2011-091 and should be submitted on or before
November 1, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-26137 Filed 10-7-11; 8:45 am]
BILLING CODE 8011-01-P