[Federal Register Volume 78, Number 17 (Friday, January 25, 2013)]
[Notices]
[Pages 5523-5525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-01491]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68697; File No. SR-C2-2013-001]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to the BBO Data Feed for C2 Listed Options
January 18, 2013.
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 January 11, 2013, 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, II and III below, which Items
[[Page 5524]]
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 identify certain additional market data
made available by Market Data Express, LLC (``MDX''), an affiliate of
C2, as part of the BBO Data Feed for C2 listed options (``C2 BBO Data
Feed''). 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
The purpose of the proposed rule change is to reflect MDX's current
practice of making certain additional market data available as part of
the C2 BBO Data Feed.\3\
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\3\ The C2 BBO Data Feed and the fees charged by MDX for the C2
BBO Data Feed were established in March 2011. See Securities
Exchange Act Release No. 63996 (March 1, 2011), 76 FR 12386 (March
7, 2011).
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The C2 BBO Data Feed is a real-time, low latency data feed that
includes C2 ``BBO data'' and last sale data.\4\ The BBO and last sale
data contained in the C2 BBO Data Feed is identical to the data that C2
sends to the Options Price Reporting Authority (``OPRA'') for
redistribution to the public.\5\
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\4\ The BBO Data Feed includes the ``best bid and offer,'' or
``BBO'', consisting of all outstanding quotes and standing orders at
the best available price level on each side of the market, with
aggregate size (``BBO data,'' sometimes referred to as ``top of book
data''). Data with respect to executed trades is referred to as
``last sale'' data.
\5\ The Exchange notes that MDX makes available to ``Customers''
the BBO data and last sale data that is included in the C2 BBO Data
Feed no earlier than the time at which the Exchange sends that data
to OPRA. A ``Customer'' is any entity that receives the C2 BBO Data
Feed directly from MDX's system and then distributes it either
internally or externally to Subscribers. A ``Subscriber'' is a
person (other than an employee of a Customer) that receives the C2
BBO Data Feed from a Customer for its own internal use.
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The C2 BBO Data Feed also includes certain data that is not
included in the data sent to OPRA, namely, totals of customer versus
non-customer contracts at the BBO, All-or-None contingency orders
priced better than or equal to the BBO, and BBO data and last sale data
for complex strategies (e.g., spreads, straddles, buy-writes, etc.).
MDX charges Customers a ``direct connect fee'' of $1,000 per connection
per month and a ``per user fee'' of $25 per month per ``Authorized
User'' or ``Device'' for receipt of the C2 BBO Data Feed by
Subscribers.\6\ Either a C2 Permit Holder or a non-C2 Permit Holder may
be a Customer. All Customers are assessed the same fees.
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\6\ An ``Authorized User'' is defined as an individual user (an
individual human being) who is uniquely identified (by user ID and
confidential password or other unambiguous method reasonably
acceptable to MDX) and authorized by a Customer to access the C2 BBO
Data Feed supplied by the Customer. A ``Device'' is defined as any
computer, workstation or other item of equipment, fixed or portable,
that receives, accesses and/or displays data in visual, audible or
other form.
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MDX currently makes available an additional set of data as part of
the C2 BBO Data Feed at no additional charge to Customers.
Specifically, the C2 BBO Data Feed also includes expected opening price
(``EOP'') and expected opening size (``EOS'') information that is
disseminated prior to the opening of the market and during trading
rotations (collectively, ``EOP/EOS data''). EOP/EOS data is calculated
by the C2 System based on resting orders in the Book that remain from
the prior business day and any orders and quotes submitted before the
opening.\7\ The EOP is the price at which the greatest number of orders
and quotes in the Book are expected to trade.\8\ EOP/EOS data is not
offered separate from the C2 BBO Data Feed.
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\7\ See C2 Rule 6.11(a)(2). The Exchange has filed a separate
proposed rule change to amend C2 Rule 6.11(a)(2) to provide that
such pre-opening information will be disseminated to users that have
elected to receive such information and to remove the existing
reference to such pre-opening information being disseminated to
Participants. The term ``Participant'' means a Permit Holder as
defined in C2 Rule 1.1. See SR-C2-2013-002.
\8\ Id.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the provisions of Section 6 of the Securities Exchange Act of 1934 (the
``Act'') \9\ in general and with Section 6(b)(5) of the Act \10\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, promote just and equitable principles
of trade, to foster cooperation and coordination with persons engaged
in facilitating transactions in securities, to remove impediments to
and perfect the mechanism of a free and open market and a national
market system and, in general, to protect investors and the public
interest, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5). [sic]
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In adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility to
offer new and unique market data to the public. It was believed that
this authority would expand the amount of data available to consumers,
and also spur innovation and competition for the provision of market
data. The Exchange believes that the proposed rule change is in keeping
with those principles by promoting increased transparency through the
dissemination of more useful proprietary data and also by clarifying
its availability to market participants.
Additionally, the Exchange believes the proposed rule change would
not permit unfair discrimination because the C2 BBO Data Feed,
including EOP/EOS data, is made equally available by MDX to any market
participant that wishes to subscribe to it. The Exchange notes that
other exchanges make information relating to the market opening
available to members and non-members.\11\
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\11\ See e.g., Securities Exchange Act Release No. 66967 (May
11, 2012), 77 FR 29440 (May 17, 2012) (SR-PHLX-2012-60); and
Securities Exchange Act Release No. 67720 (August 23, 2012), 77 FR
52769 (August 30, 2012) (SR-NYSEARCA-2012-89). In addition, the
Nasdaq Options Market (``NOM'') disseminates certain pre-opening
order imbalance information every five seconds for a period of time
prior to the open and this information is made available via
subscription. See NOM Chapter VI, Section 8(b)(1) and Chapter XV,
Section 4(e); see also http://www.nasdaqtrader.com/trader.aspx?id=openclose.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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. The Exchange believes the C2
BBO Data Feed, including EOP/EOS data, offered
[[Page 5525]]
by MDX will help attract new users and new order flow to the Exchange,
thereby improving the Exchange's ability to compete in the market for
options order flow and executions.
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:
A. Significantly affect the protection of investors or the public
interest;
B. Impose any significant burden on competition; and
C. Become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) \12\ of the Act and
Rule 19b-4(f)(6) \13\ thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of this 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 Number SR-C2-2013-001 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-C2-2013-001. 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-C2-2013-001,
and should be submitted on or before February 15, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-01491 Filed 1-24-13; 8:45 am]
BILLING CODE 8011-01-P