[Federal Register Volume 77, Number 236 (Friday, December 7, 2012)]
[Notices]
[Pages 73096-73097]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-29623]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68342; File No. SR-CBOE-2012-114]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the Fees Schedule
December 3, 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 November 21, 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 its 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Network Access Port fees.
Currently, the Exchange only offers 1 Gigabit Ethernet (``1 Gbps'')
network access connectivity. However, as of December 1, 2012, the
Exchange is moving its trading systems over to the Equinix NY4 facility
(``NY4''). In addition to 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 CBOE 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
$3,000 per month fee for access to a 10 Gbps Network Access Port
($6,000 for Sponsored Users). CBOE market participants will be able to
elect to connect to CBOE'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 CBOE'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.
Following the move to NY4, CBOE will be retaining some trading
systems in Chicago (the ``Disaster Recovery Systems'') in case of the
occurrence of some kind of disaster which prevents NY4 from operating.
These Disaster Recovery Systems can be accessed via Network Access
Ports in Chicago (the ``Disaster Recovery Network Access Ports''). CBOE
market participants may maintain Disaster Recovery Network Access Ports
in order to be able to connect to the Disaster Recovery Systems in case
of such disaster. The fee for a Disaster Recovery Network Access Port
will be $250 per month ($500 for Sponsored Users; for connectivity
fees, CBOE charges twice the rate for Sponsored Users as for regular
access, and therefore merely proposes to apply the same concept to the
new Disaster Recovery Network Access Port fees). This amount will allow
CBOE to maintain the Disaster Recovery Network Access Ports in case
they become necessary.
The Exchange also proposes to amend the reference in its Fees
Schedule to its 1-Gbps Network Access Port. Currently, that port fee is
listed as for ``1 Gigabyte''. However, ``Gigabyte'' is not the correct
term (``Gigabit'' is the correct term) to refer to that manner of
access. The Exchange proposes to replace the word ``Gigabyte'' with
``Gbps'', which is the abbreviation of the term ``Gigabit'', in order
to use the correct terminology.
The proposed change is to take effect on December 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 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
[[Page 73097]]
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, CBOE 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 [sic], 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 [sic],
which lists a low-latency Ethernet network access fee of $7,000 per
month.
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The fee for Disaster Recovery Network Access Ports is reasonable
because it will allow CBOE to maintain those ports in case of
necessity. The fee for Disaster Recovery Network Access Ports is
equitable and not unfairly discriminatory because it will be applied
equally to all CBOE market participants wishing to maintain a
connection to the Disaster Recovery Systems via a Disaster Recovery
Network Access Port (except Sponsored Users).
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, CBOE Trading Permit Holders who have a trading permit
will have a higher level of commitment to transacting business on CBOE
and using Exchange facilities than Sponsored Users. Finally, these
differences in the amounts for Sponsored Users and regular users
maintain the same proportional difference as that for other
connectivity fees.
Amending the references in the Fees Schedule to its 1-Gbps Network
Access Port from ``1 Gigabyte'' to ``1 Gbps'' 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 by eliminating any confusion that could be caused due to the
use of inaccurate terminology.
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 C.F.R. 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-2012-114 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-2012-114. 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 20549-1090, 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 CBOE's principal office and on
its Internet Web site. 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-2012-114, and should be submitted on or before December 28,
2012.
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\9\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29623 Filed 12-6-12; 8:45 am]
BILLING CODE 8011-01-P