[Federal Register Volume 77, Number 48 (Monday, March 12, 2012)]
[Notices]
[Pages 14576-14578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-5905]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66520; File No. SR-CBOE-2012-021]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Make an Amendment Regarding the Administrative
Fee Related to the Marketing Fee
March 6, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 1, 2012, the Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II below, which Items have been prepared by the
Exchange. The Exchange has filed the proposal pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(3) thereunder,\4\
which renders the proposal effective upon filing with the Commission.
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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(3).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to make an amendment regarding the
administrative fee related to the marketing fee. The text of the
proposed rule change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's
Office of the Secretary, and at the Commission's Public Reference Room.
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 Exchange 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 these 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
[[Page 14577]]
the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
In SR-CBOE-2007-95, the Exchange imposed an administrative fee of
0.45% of the Exchange's marketing fee in order to offset the costs of
administering the marketing fee program and also to provide funds to an
association of members (now Trading Permit Holders) (the
``Association'') \5\ for its costs and expenses in supporting CBOE's
marketing fee program and in seeking to bring flow to CBOE.\6\ In that
filing, the Exchange stated that it intended to ``allocate each month
approximately 40% of the funds collected through the administrative fee
to CBOE to offset CBOE's overall costs in administering the (marketing
fee) program; the balance (approximately 60%) collected by this fee
would be allocated to the Association.'' \7\ The Exchange also noted
that it intended to monitor the funds raised by the administrative fee,
and may propose amendments to the fee as appropriate, so that the fee
provides funds to the Association to cover its costs and expenses.\8\
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\5\ The Association is technically known as the DPM (Designated
Primary Market-Maker) Association; however, its activities are not
limited to assisting only DPM organizations. Through its business
development activities, the Association seeks to bring order flow to
CBOE for the benefit of all CBOE liquidity providers.
\6\ See Securities Exchange Act Release No. 56289 (August 20,
2007), 72 FR 49030 (August 27, 2007) (SR-CBOE-2007-95).
\7\ Id.
\8\ Id.
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In recent months, the amounts collected for the marketing fee have
dropped, and as a result, the amount collected through the
administrative fee has dropped as well. As such, the amount of the
administrative fee allocated to the Association has also dropped, to a
level below which the Association requires to operate effectively. At
current collection levels for the administrative fee, the Association
requires greater than approximately 60% of the administrative fee in
order to continue to operate effectively. The Exchange therefore
proposes to revise its previous statement that the Exchange intends to
``allocate each month approximately 40% of the funds collected through
the administrative fee to CBOE to offset CBOE's overall costs in
administering the (marketing fee) program'' and allocate the remainder
(approximately 60%) to the Association. Instead, the Exchange hereby
proposes to allocate to the Association the amount of the funds
collected through the administrative fee that is necessary to
effectively operate the Association (which may, in a given month,
include all of the funds collected through the administrative fee), and
allocate the remainder of the funds collected through the
administrative fee to offset CBOE's overall costs in administering the
marketing fee program. The proposed possible re-allocations considered
in this proposal will of course not affect the Exchange's ability to
continue to fund its regulatory services or engage in its self-
regulatory responsibilities.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\9\ Specifically, the Exchange believes the proposed rule change is
consistent with Section 6(b)(4) of the Act,\10\ which provides that
Exchange rules may provide for the equitable allocation of reasonable
dues, fees, and other charges among its Trading Permit Holders and
other persons using its facilities. The proposed change is reasonable
because there is no change to the actual amount of the administrative
fee. The proposed change is equitable and not unfairly discriminatory
because ensuring that the Association has enough funds to operate
effectively will allow the Association to engage in business
development activities to bring order flow to the Exchange. Such order
flow provides greater liquidity and more trading opportunities for all
market participants.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
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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 that is 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
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change has become effective pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and subparagraph (f)(3) of Rule 19b-4
\12\ thereunder because it is concerned solely with the administration
of the Exchange. 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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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 C.F.R. 240.19b-4(f)(3).
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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 email to [email protected]. Please include
File Number SR-CBOE-2012-021 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-2012-021. This file
number should be included on the subject line if email 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 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
[[Page 14578]]
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 the
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-2012-021 and should be submitted on or before April
2, 2012.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-5905 Filed 3-9-12; 8:45 am]
BILLING CODE 8011-01-P