[Federal Register Volume 77, Number 182 (Wednesday, September 19, 2012)]
[Notices]
[Pages 58188-58189]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-23036]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67848; File No. SR-C2-2012-032]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Adopt a Rule Regarding Mandatory Trading Permit Holder Education and
Corresponding Set of Fines
September 13, 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 September 4, 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 and II, 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 rule requiring Trading Permit Holder
(``TPH'') education and corresponding fine structure. The text of the
proposed rule change is available on the Exchange's Web site (http://www.c2exchange.com/Legal/), at the Commission's Web site (http://www.sec.gov), 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to adopt proposed Rule 6.46 stating that TPHs
and persons associated with TPHs (``Associated Persons'') are required
to attend such educational classes as the Exchange may require from
time to time. Failure to attend Exchange-mandated continuing
educational classes may subject TPHs and Associated Persons to
sanctions pursuant to the Exchange's Minor Rule Violation Plan provided
in Exchange Rule 17.50. The Exchange believes that it is important and
necessary from time to time to require mandatory participation in
certain educational training classes by its TPHs and Associated Persons
for a variety of reasons, including to explain the operation of new
technology and new rules, procedures and policies regarding trading on
the Exchange. The text of the proposed Rule 6.46 is identical to that
of Chicago Board Options Exchange, Incorporated (``CBOE'') Rule 6.20(e)
(with the exclusion of a sentence in CBOE Rule 6.20(e) regarding Floor
Officials, which is inapplicable to C2, as C2 is an all-electronic
exchange that does not have a trading floor).\3\
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\3\ See CBOE Rule 6.20(e).
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To correspond with the adoption of proposed Rule 6.46, the Exchange
also proposes to amend its Rule 17.50--Imposition of Fines for Minor
Rule Violations. CBOE Chapter 17--Discipline (which includes Rule
17.50--Imposition of Fines for Minor Rule Violations) is incorporated
into the C2 rules by reference as C2 Chapter 17.\4\ CBOE Rule
17.50(g)(6)--Violations of Trading Conduct and Decorum Policies--
imposes fines for violations of trading conduct and decorum policies.
Because C2 (an all-electronic exchange) does not have a trading floor,
the majority of the violations for which fines can be imposed under
CBOE Rule 17.50(g)(6) (such as not complying with the trading floor
dress code, bringing impermissible food or drink onto the trading
floor, and running on the trading floor) could not take place on C2.
However, there is one exception: CBOE Rule 17.50(g)(6) allows for the
imposition of fines for the failure to attend CBOE-mandated educational
training.\5\ Therefore, instead of simply stating that, with respect to
applicability to C2 only, CBOE Rule 17.50(g)(6) shall not apply to C2,
the Exchange instead proposes to state that, notwithstanding the
remainder of C2 Chapter 17, with respect to its applicability to C2
only, CBOE Rule 17.50(g)(6)--Violations of Trading Conduct and Decorum
Policies--will be replaced in its entirety with the following: A fine
may be imposed upon a Trading Permit Holder or persons associated with
Trading Permit Holders in accordance with the fine schedule set forth
below for failure
[[Page 58189]]
to attend Exchange-mandated educational training (per Rule 6.46).
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\4\ See Securities Exchange Act Release No. 62323 (June 17,
2010), 75 FR 36144 (June 24, 2012) (SR-C2-2010-002).
\5\ See CBOE Regulatory Circular RG09-92 (August 28, 2009).
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Number of offenses in any rolling twenty-four month
period Fine amount
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1st Offense............................................. $1,000
2nd Offense............................................. 2,500
Subsequent Offenses..................................... 5,000
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In making this change, C2 cleans up its rules and establishes that
the aspects of CBOE Rule 17.50(g)(6) that are not relevant to C2 (due
to C2's status as an all-electronic exchange without a trading floor)
do not apply to C2 while still retaining the ability to levy fines for
failure to attend C2-mandated educational training (per the proposed
Rule 6.46). The amounts of the proposed fines are identical to those
that can be currently assessed on CBOE for a failure to attend CBOE-
mandated educational training.\6\
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\6\ See CBOE Regulatory Circular RG09-92 (August 28, 2009).
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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.\7\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5)\8\ requirements that the rules of
an exchange be designed to promote just and equitable principles of
trade, to prevent fraudulent and manipulative acts and practices, 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. Establishing both a rule requiring
TPHs and Associated Persons to attend such educational classes as the
Exchange may require from time to time and a corresponding guideline
for fines for the failure to attend such educational classes helps
ensure that TPHs and Associated Persons are educated and knowledgeable
as necessary regarding relevant technologies, rules, procedures and
policies. This removes impediments to and to perfects the mechanism for
a free and open market and a national market system, and, in general,
protects investors and the public interest.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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By removing inapplicable sections violations within Rule
17.50(g)(6) that relate to floor trading, the Exchange eliminates
confusion that could arise from reading Exchange rules and circulars,
thereby removing impediments to and perfecting the mechanism for a free
and open market.
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 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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\
thereunder.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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.
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 No. SR-C2-2012-032 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 No. SR-C2-2012-032. 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 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 office of C2. 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 No. SR-C2-2012-032 and should be submitted on or
before October 10, 2012.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-23036 Filed 9-18-12; 8:45 am]
BILLING CODE 8011-01-P