[Federal Register Volume 77, Number 88 (Monday, May 7, 2012)]
[Notices]
[Pages 26813-26814]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-10877]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66888; File No. SR-CBOE-2012-038]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the Fees Schedule
May 1, 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 April 20, 2012, the Chicago Board Options Exchange,
Incorporated (the ``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 its Fees Schedule. 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'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 the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On November 23, 2011, the Exchange amended its Fees Schedule to
provide that FLEX Options \3\ transactions for the account of non-
Trading Permit Holder broker-dealers (which use the ``C'' order origin
code) would be subject to the same transaction fee rates that are
applicable to public customers (which also use the ``C'' order origin
code).\4\ The rationale behind that change was that FLEX Options
transactions for the account of non-Trading Permit Holder broker-
dealers were being identified using the same ``C'' origin code as such
transactions for public customers, so the Exchange wanted to avoid any
potential billing discrepancies.\5\
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\3\ Flexible Exchange Options (``FLEX Options'') provide
investors with the ability to customize basic option features
including size, expiration date, exercise style, and certain
exercise prices. FLEX Options can be FLEX Index Options or FLEX
Equity Options. In addition, other products are permitted to be
traded pursuant to the FLEX trading procedures. For example, credit
options are eligible for trading as FLEX Options pursuant to the
FLEX rules in Chapters XXIVA and XXIVB. See CBOE Rules 24A.1(e) and
(f), 24A.4(b)(1) and (c)(1), 24B.1(f) and (g), 24B.4(b)(1) and
(c)(1), and 28.17. The rules governing the trading of FLEX Options
on the FLEX Request for Quote (``RFQ'') System platform (which is
limited to open outcry trading only) are contained in Chapter XXIVA.
The rules governing the trading of FLEX Options on the FLEX Hybrid
Trading System platform (which combines both open outcry and
electronic trading) are contained in Chapter XXIVB. The Exchange
notes that, currently, all FLEX Options are traded on the FLEX
Hybrid Trading System platform.
\4\ See Securities Exchange Act Release No. 65875 (December 2,
2011), 76 FR 76783 (December 8, 2011) (SR-CBOE-2011-112).
\5\ Id.
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Beginning as soon as April 24, 2012, the Exchange will begin
rolling out its newly-enhanced FLEX Hybrid Trading System (the ``CFLEX
System'') for FLEX Options trading. The Exchange intends to transition
a few classes at a time and anticipates full implementation within
approximately one to three weeks of the initial transition. This
enhanced CFLEX System will allow for the entry of non-Trading Permit
Holder broker-dealer transactions using a different order origin code
than the ``C'' origin code used for public customers (and currently,
for non-Trading Permit Holder broker-dealers). As such, the Exchange
proposes deleting from the Fees Schedule the language that states that
for FLEX Options only, customer transaction fees apply to non-Trading
Permit Holder broker-dealer orders (orders with ``C'' origin code), as
those fees are only applicable for non-Trading Permit Holder broker-
dealer executions on the old CFLEX System. Going forward as FLEX
Options are rolled out to the newly-enhanced CFLEX System, broker-
dealer fees would apply to non-Trading Permit Holder broker-dealer FLEX
Options transactions, as they do for all other non-Trading Permit
Holder broker-dealer transactions, and as they
[[Page 26814]]
did prior to the above-referenced rule change.
The proposed change is to take effect on April 24, 2012.
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.\6\ Specifically, the Exchange believes the proposed rule change is
consistent with Section 6(b)(4) of the Act,\7\ 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 non-Trading Permit Holder broker-dealers will be assessed the
same FLEX Options transaction fees as Trading Permit Holder broker-
dealers, as they were prior to November 23, 2012 [sic]. The proposed
change is equitable and not unfairly discriminatory because it will
place non-Trading Permit Holder broker-dealers trading FLEX Options on
the same footing, transaction fees-wise, as Trading Permit Holder
broker-dealers.
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\6\ 15 U.S.C. 78f(b).
\7\ 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 foregoing rule change has become effective pursuant to Section
19(b)(3)(A) \8\ of the Act and paragraph (f)(2) of Rule 19b-4 \9\
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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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 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 email to rule-comments@sec.gov. Please include
File Number SR-CBOE-2012-038 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-2012-038. 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 Reference Room, 100 F Street NE., Washington,
DC 20549, on official business days between the hours of 10:00 a.m. and
3:00 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-2012-038 and should be
submitted on or before May 29, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-10877 Filed 5-4-12; 8:45 am]
BILLING CODE 8011-01-P