[Federal Register Volume 77, Number 100 (Wednesday, May 23, 2012)]
[Notices]
[Pages 30571-30572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-12440]
[[Page 30571]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67008; File No. SR-C2-2012-011]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing of a Proposed Rule Change Relating to the Adoption of
a Disaster Recovery Rule
May 17, 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 May 14, 2012, C2 Options Exchange, Incorporated (the
``Exchange'' or ``C2'') filed with the Securities and Exchange
Commission (the ``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
C2 proposes to adopt a disaster recovery facility. The text of the
proposed rule change is available on the Exchange's Web site (http://www.c2exchange.com/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 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to adopt new Rule 6.45, which would allow for
the operation of a Disaster Recovery Facility (``DRF'') in the event a
disaster or other unusual circumstance renders the C2 trading system
inoperable. The purpose of the DRF is to allow C2 to continue to trade
exclusively-listed option classes until the Exchange's main trading
system is again available (currently, only one exclusively-listed
product trades on C2: Standard & Poor's 500 Index options with third-
Friday-of-the-month expiration dates for which the exercise settlement
value is based on the index value derived from the closing prices of
component securities (SPXPM)). An exclusively-listed option is an
option that trades exclusively on C2 because C2 has an exclusive
license to list and trade such option, or has proprietary rights in the
interest underlying the option.\3\ The DRF will provide a venue for
exclusively-listed options to continue to trade so investors may open
and close positions in those options in the event the main C2 system
becomes inoperable.
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\3\ Exclusively-listed options are different than ``singly-
listed options'' which are options that are not exclusively-listed
options but that are listed by an exchange and by not any other
national securities exchange. C2 does not currently trade any
singly-listed options and will take measures to ensure that it does
not trade singly-listed options in the future.
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C2 intends to utilize hardware located in the Chicago Board Options
Exchange, Incorporated (``CBOE'') building in Chicago, IL to run the
DRF. C2's main trade engine is currently located on the East coast. As
proposed, trading on the DRF would be identical to trading on C2. All
C2 trading rules would continue to apply (including rules applicable to
market-making) and the C2 fee schedule would continue to apply. Thus,
the transition to the DRF would be relatively seamless for users. The
Exchange is conducting testing with C2 Trading Permit Holders
(``TPHs'') to facilitate their readiness to trade on the DRF (a
certification process is also employed). To that end, DRF test plan
documents are currently available to all TPHs.\4\
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\4\ Completion of the test plan generally prepares a TPH to be
ready to trade on the DRF if necessary.
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The Exchange expects the DRF to be continuously usable and
available, as needed. In connection with the commencement of trading on
the DRF, C2 would announce its activation and identify the classes that
would be available for trading. As previously mentioned, all classes
traded via the DRF would be subject to all applicable C2 rules
including non-trading rules. As soon as C2's main trading system
becomes operable, the Exchange would resume trading on the main C2
platform and cease trading on the DRF.
Proposed Rule 6.45 also provides that TPHs shall take such action
as instructed by the Exchange to accommodate the Exchange's ability to
trade options via the DRF. As mentioned above, such actions will
include an Exchange certification process to ensure that TPHs are
prepared to migrate to the DRF when necessary. All C2 TPHs, including
those that may only be a C2 TPH (and not a CBOE trading permit holder)
will have access to the DRF.
The Exchange expects the DRF to be operational shortly, and it will
be continuously maintained so that it would always be available if
needed. The Exchange has written supervisory procedures that cover
activation and use of the DRF. To the extent trading on the DRF is ever
necessary, those procedures will help ensure that the transition to the
DRF is handled efficiently and effectively. Lastly, the Exchange
represents that it and CBOE have the necessary systems capacity to
handle trading associated with the DRF including the extra quotation
traffic that would be processed through the hardware located in the
CBOE building.
2. Statutory Basis
The basis under the Securities Exchange Act of 1934 (the ``Act'')
for this proposed rule change is the requirement under Section 6(b)(5)
\5\ that an exchange have rules that are designed to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to promote just and equitable principles of
trade, and to remove impediments to and perfect the mechanism for a
free and open market and a national market system, and, in general, to
protect investors and the public interest. In particular, the Exchange
believes that providing a venue for C2 TPHs to continue to trade
options that are only available for trading on C2 in the event the C2
system is rendered inoperable, facilitates transactions in securities
and helps remove impediments to a free and open market and a national
market system. This protects investors and serves the public interest
in that investors with open positions will have the ability to trade
out of those positions if C2 is unavailable, which is also consistent
with Section 6(b) of the Act.
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\5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
C2 does not believe that the proposed rule change will impose any
burden on competition that is not necessary or
[[Page 30572]]
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
A. By order approve or disapprove such proposed rule change, or
B. Institute proceedings to determine whether the proposed rule
change should be disapproved.
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-C2-2012-011 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-C2-2012-011. 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-C2-2012-011 and should be
submitted on or before June 13, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-12440 Filed 5-22-12; 8:45 am]
BILLING CODE 8011-01-P