[Federal Register Volume 77, Number 183 (Thursday, September 20, 2012)]
[Notices]
[Pages 58431-58432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-23179]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67861; File No. SR-CBOE-2012-088]
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
September 14, 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 7, 2012, 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.
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
CBSX proposes to amend its Fees Schedule. Starting on September 10,
2012, CBSX will begin to implement the functionality that will allow
CBSX Traders to send silent orders, silent-mid orders, silent-post-mid
orders, and silent-mid-seeker orders to CBSX.\3\ Pursuant to such
implementation, CBSX proposes to adopt Maker and Taker fees for
transactions in securities priced $1 or greater relating to these new
order types. For transactions in securities priced less than $1, these
new order types will be subject to the same Maker and Taker fees ($0.00
fee for Makers, 0.30% of the dollar value of the transaction fee for
Takers) that apply to most other orders.
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\3\ See Securities Exchange Act Release No. 67548 (July 31,
2012) 77 FR 46783 (August 6, 2012) (SR-CBOE-2012-049).
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The Maker fee for adding liquidity using a silent order will be
$0.0018 per share, same as the regular Maker rate (though not subject
to the reduced fee tiers for adding increasing amounts of liquidity in
one day). The Taker rebate for removing silent order liquidity will be
$0.0014 per share. The Maker fee for adding liquidity using a silent-
mid or silent-post-mid order will be $0.0008 per share. The Taker
rebate for removing silent-mid or silent-post-mid liquidity will be
$0.0004 per share. The purpose of the new Maker fees is to incentivize
passive liquidity provision using the silent, silent-mid, and silent-
post-mid order types. The purpose of the new Taker rebates is to
incentivize routing to the Exchange for the purpose of removing
liquidity. The fees proposed for adding and rebates for removing
liquidity are both intended to compliment the existing maker-taker fee
structure and to improve realized prices and price discovery on the
Exchange by efficiently and predictably allocating the economics
specifically for each form of liquidity provision, and to incentivize
participants to route orders to the Exchange in the first instance.
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.\4\ Specifically, the Exchange believes the proposed rule change is
consistent 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. The amount of the proposed Maker
fee for silent orders is reasonable because it is the same amount as
the regular Maker fee. Not applying the reduced fee tiers for adding
increasing amounts of liquidity in one day to silent Maker orders is
equitable and not unfairly discriminatory because these silent orders
are not displayed [sic] do not improve the Exchange's displayed prices.
Further, the Maker fee for silent orders will apply to all market
participants trading silent orders.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4).
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The amount of the proposed Taker rebate for removing silent order
liquidity is reasonable because it will allow market participants
removing silent order liquidity to receive a rebate (and not pay a fee)
for doing so. The proposed Taker rebate is equitable and not unfairly
discriminatory because such undisplayed orders do not transparently
improve the prices available within the market, while displayed orders
do. As such, the pricing is designed to promote the use of and
interaction with displayed liquidity more than undisplayed liquidity.
Further, the Taker rebate for silent orders will apply to all market
participants trading silent orders.
The amount of the proposed Maker fee for adding liquidity using a
silent-mid or silent-post-mid order is reasonable because it is lower
than the amount of the fee for other Maker orders. This is equitable
and not unfairly discriminatory because the liquidity is priced at the
midpoint of the NBBO, and therefore the fee will be less. This offers
the remover of liquidity significant price improvement. Further, the
Maker [sic] proposed Maker fee for adding liquidity using a silent-mid
or silent-post-mid order will apply to all market participants adding
liquidity using a silent-mid or silent-post-mid order.
The amount of the proposed Taker rebate for removing silent-mid or
silent-post-mid liquidity is reasonable because it will allow market
participants removing silent order liquidity to receive a rebate (and
not pay a fee) for doing so. The proposed Taker rebate for removing
silent-mid or silent-post-mid liquidity is equitable and not unfairly
discriminatory because the trade will result in an improved price over
the
[[Page 58432]]
displayed market (as the trade occurs at the midpoint of the NBBO).
Further, the Taker removing silent-mid or silent-post-mid liquidity
will apply to all market participants removing silent-mid or silent-
post-mid liquidity.
Assessing different fees for orders priced $1 or greater than for
such orders priced less than $1 is equitable and not unfairly
discriminatory because since orders priced less than $1 can be entered
in sub-penny increments (four-decimal increments), the Exchange
believes that employing Maker-Taker pricing similar to that employed
for orders priced $1 or greater would not be effective given a market
participant's ability to more-transparently and finitely establish
prices in the book. Further, CBSX already assesses different fees for
other orders priced $1 or greater than for the same orders priced less
than $1.\6\
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\6\ See CBSX Fees Schedule, Section 2.
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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) \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-2012-088 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-2012-088. 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-2012-088 and should be
submitted on or before October 11, 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. 2012-23179 Filed 9-19-12; 8:45 am]
BILLING CODE 8011-01-P