[Federal Register Volume 77, Number 113 (Tuesday, June 12, 2012)]
[Notices]
[Pages 35091-35092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-14164]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67124; File No. SR-CBOE-2012-052]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change to Amend the CBOE Stock Exchange Fees Schedule
June 5, 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 31, 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, 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 the CBOE Stock Exchange (``CBSX'')
Fees Schedule. 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 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the CBSX Fees Schedule with regards
to connectivity fees. CBSX recently moved its trading systems over to
the Equinix NY4 facility (``NY4''). In addition to 1 Gigabit Ethernet
(``1 Gbps'') network access, NY4 has capacity to accommodate 10 Gigabit
Ethernet (``10 Gbps'') network access. The Exchange would like to make
such a connection available to CBSX market participants. However, the
equipment and infrastructure necessary to provide the 10 Gbps
connection is more expensive than that necessary to provide a 1 Gbps
connection. As such, the Exchange proposes to adopt a $1,000 per month
fee for access to a 10 Gbps Network Access Port ($2,000 for Sponsored
Users), and to clarify on the Fees Schedule that the connection
currently being provided for $250 per month ($500 for Sponsored Users)
is for a 1 Gbps connection to a Network Access Port. CBSX market
participants will be able to elect to connect to CBSX's trading system
via either a 1 Gbps or 10 Gbps Network Access port. Regardless of which
is chosen, the Network Access Port fee will be assessed for each port
that provides direct access to CBSX's trading system. The Exchange
currently charges a different rate for regular access and Sponsored
User access, and merely proposes to increase the rates in equal
proportion.
The proposed change is to take effect on June 1, 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
[[Page 35092]]
Section 6(b) of the Act.\3\ Specifically, the Exchange believes the
proposed rule change is consistent with the Section 6(b)(5) \4\
requirements that the rules of an exchange be designed to promote just
and equitable principles of trade, to prevent fraudulent and
manipulative acts, to remove impediments to and to perfect the
mechanism for a free and open market and a national market system, and,
in general, to protect investors and the public interest, and with
Section 6(b)(4) of the Act \5\, 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.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(5).
\5\ 15 U.S.C. 78f(b)(4).
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Assessing a higher fee for 10 Gbps connectivity than for 1 Gbps
connectivity is reasonable because 10 Gbps connectivity is more robust
than 1 Gbps connectivity, and is equitable and not unfairly
discriminatory because 10 Gbps connectivity requires more costly
equipment and maintenance, and the Exchange must recoup the costs
related to providing 10 Gbps connectivity. Further, CBSX market
participants may still elect for the less-expensive 1 Gbps
connectivity. Finally, the amount of the fee for 10 Gbps connectivity
is less than the amount of the fees for 10 Gbps connectivity assessed
by other exchanges.\6\
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\6\ See New York Stock Exchange Price List, page 13, which lists
monthly prices of $12,000-61,500 for different types of 10 Gbps
connectivity (along with initial charges of $10,000-50,000) and
International Securities Exchange Schedule of Fees, page 9, which
lists a low-latency Ethernet network access fee of $7,000 per month.
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Assessing higher fees for Sponsored Users is equitable and not
unfairly discriminatory because Sponsored Users are able to access the
Exchange and use the equipment provided without possessing a trading
permit. As such, Trading Permit Holders who have a trading permit will
have a higher level of commitment to transacting business on CBSX and
using Exchange facilities than Sponsored Users. Finally, these
increases maintain the same proportionate amounts that are paid by
regular users relative to Sponsored Users.
Clarifying that the current $250 monthly fee for a Network Access
Port ($500 for Sponsored Users) is for a 1 Gbps connection removes
impediments to and to perfect the mechanism for a free and open market
and a national market system, and, in general, protects investors and
the public interest by eliminating any confusion about which connection
will be assessed which fee (now that CBSX will be offering both the 1
Gbps and 10 Gbps connection options).
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)\7\ of the Act and paragraph (f) 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 CFR 240.19b-4(f).
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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-2012-052 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-2012-052. 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 such filing also will be available
for inspection and copying at the principal offices 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-2012-052,
and should be submitted on or before July 3, 2012.
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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14164 Filed 6-11-12; 8:45 am]
BILLING CODE 8011-01-P