[Federal Register Volume 77, Number 236 (Friday, December 7, 2012)]
[Notices]
[Pages 73096-73097]
From the Federal Register Online via the Government Printing 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 rule-comments@sec.gov. 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