[Federal Register Volume 78, Number 23 (Monday, February 4, 2013)]
[Notices]
[Pages 7837-7840]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-02297]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68751; File No. SR-C2-2013-005]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to Amending the Fees Schedule
January 29, 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 18, 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 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
The Exchange proposes to amend its Fees Schedule. The text of the
proposed rule change is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
C2 OPTIONS EXCHANGE, INCORPORATED
FEES SCHEDULE
JANUARY 18[1], 2013
* * * * *
[[Page 7838]]
3. Access Fees
------------------------------------------------------------------------
Type of permit Cost per month
------------------------------------------------------------------------
Market-Maker Permit....................... $5,000.
Electronic Access Permit.................. $1,000.
SPXPM Tier Appointment.................... $4,000 (waived through March
31, 2013).
------------------------------------------------------------------------
Market-Maker Permit- Entitles the holder to act as a Market-Maker.
This permit provides an appointment credit of 1.0, a quoting and order
entry bandwidth allowance, up to three logins and Trading Permit Holder
status. The quoting bandwidth allowance for a Market-Maker Permit is
equivalent to a maximum of 156,000,000 quotes over the course of a
trading day.
Electronic Access Permit- Entitles the holder to access to the
Exchange. Holders must be broker-dealers registered with the Exchange
and are allowed to submit orders to the Exchange. The EAP provides an
order entry bandwidth allowance, up to three logins and Trading Permit
Holder status.
SPXPM Tier Appointment- In order for a Market-Maker Permit to be
used to act as a Market-Maker in SPXPM, the Trading Permit Holder must
obtain an SPXPM Tier Appointment (Registration) for that Market-Maker
Permit. The SPXPM Tier Appointment fee will be assessed to any Market-
Maker Permit Holder that has an SPXPM Tier Appointment at any time
during a calendar month.
Access fees are non-refundable and are assessed through the
integrated billing system during the first week of the following month.
If a Trading Permit is issued during a calendar month after the first
trading day of the month, the access fee for the Trading Permit for
that calendar month is prorated based on the remaining trading days in
the calendar month. Trading Permits will be renewed automatically for
the next month unless the Trading Permit Holder submits written
notification to the Registration Services Department by the 25th day of
the prior month (or the preceding business day if the 25th is not a
business day) to cancel the Trading Permit effective at or prior to the
end of the applicable month. If cancellation of a Trading Permit is
effective prior to the end of the applicable month, and the cancelling
Trading Permit Holder later requests issuance of the same type of
Trading Permit for the remainder of that month, the Exchange may issue
the same type of Trading Permit (provided that a Trading Permit is
available) but will not impose the additional prorated access fee for
that month.
* * * * *
The text of the proposed rule change is also available on the
Exchange's Web site (http://www.c2exchange.com/ Legal/), 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 Fees Schedule.\3\ More
specifically, the Exchange is proposing to make changes to the section
``Access Fees.'' Pursuant to that section, the Exchange charges a
Trading Permit Holder a monthly fee to use a Trading Permit, the amount
of which fee is based on the type of Trading Permit.
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\3\ See Exchange Rule 2.1, which authorizes fees to Participants
to be ``fixed from time to time by the Exchange.''
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Currently, the Exchange charges the following access fees:
------------------------------------------------------------------------
Type of permit Cost per month
------------------------------------------------------------------------
Market-Maker Permit \4\................... $5,000.
Electronic Access Permit \5\.............. 1,000.
SPXPM Tier Appointment \6\................ 4,000 (waived through March
31, 2013).
------------------------------------------------------------------------
Pursuant to the Fees Schedule, the Exchange assesses the access
fees in arrears during the first week of the following month. For
example, a Trading Permit Holder will be billed in February for use of
a Trading Permit in January. The Fees Schedule further provides that if
a Trading Permit is issued during a calendar month after the first
trading day of the month, the access fee for the Trading Permit for
that calendar month is prorated based on the remaining trading days in
the calendar month. A Trading Permit will be renewed automatically for
the next month unless the Trading Permit Holder submits written
notification to the Registration Services Department by the 25th day of
the prior month (or the preceding business day if the 25th is not a
business day) to cancel the Trading Permit effective at or prior to the
end of the applicable month.
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\4\ A Market-Maker Permit entitles the holder to act as a
Market-Maker. This permit provides an appointment credit of 1.0, a
quoting and order entry bandwidth allowance, up to three logins and
Trading Permit Holder status. The quoting bandwidth allowance for a
Market-Maker Permit is equivalent to a maximum of 156,000,000 quotes
over the course of a trading day.
\5\ An Electronic Access Permit entitles the holder to access
the Exchange. Holders must be broker-dealers registered with the
Exchange and are allowed to submit orders to the Exchange. The
permit provides an order entry bandwidth allowance, up to three
logins and Trading Permit Holder status.
\6\ An SPXPM Tier Appointment must be obtained by a Market-Maker
for its Market-Maker Permit in order for the Market-Maker to act as
a Market-Maker in SPXPM. The SPXPM Tier Appointment fee will be
assessed to any Market-Maker that has an SPXPM Tier Appointment at
any time during a calendar month.
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Under the Fees Schedule, if a Trading Permit Holder cancels a
Trading Permit effective prior to the end of the applicable month, the
Trading Permit Holder will still be assessed the full access fee for
that month (the same amount it would pay if the Trading Permit Holder
had cancelled the Trading Permit effective at the end of the month).
However, if the Trading Permit Holder later requests that the Exchange
issue the same type of Trading Permit for the remainder of that same
month, pursuant to the Fees Schedule, the Exchange will assess a
prorated access fee based on the remaining trading days in that month.
Thus, the Trading Permit Holder would be double-paying the access fee
for that remaining portion of the month.
The purpose of the proposed rule change is to prevent a Trading
Permit Holder from double-paying a portion of the monthly access fee in
this situation. The proposed rule change amends the Access Fees section
of the Fees Schedule to provide that if cancellation of a Trading
Permit is effective prior to the end of the applicable month, and the
cancelling Trading Permit Holder later requests issuance of the same
type of Trading Permit for the remainder of that same month, the
Exchange may issue the same type of Trading Permit (assuming one is
available) \7\ but will not
[[Page 7839]]
impose the additional prorated access fee for the remainder of that
month.\8\ The proposed rule change results in a Trading Permit Holder
that cancels a Trading Permit prior to the end of the month but then
has the same type of Trading Permit issued during that same month
paying the same monthly access fee amount as it would if it had
cancelled its Trading Permit effective at the end of a month.
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\7\ The Exchange will determine whether to issue a Trading
Permit to the Trading Permit Holder in the same manner that it
issues any Trading Permit pursuant to Rule 3.1, including subject to
any announced limit on the number of Trading Permits that may be
issued.
\8\ The proposed rule change does not change the amounts of the
access fees imposed on Trading Permit Holders for the use of Trading
Permits.
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For example, if a Trading Permit Holder cancels a Market-Maker
Permit effective January 18, 2013, but upon request of the Trading
Permit Holder issues [sic] a Maker-Maker [sic] Permit effective January
23, 2013, the Trading Permit Holder will be billed a total of $5,000
for use of the Market-Maker Permit during January (which will be billed
during the first week of February).\9\ Without the proposed rule
change, the Trading Permit Holder would be billed $5,000 for use of the
Market-Maker Permit for the trading days in January through January 18
plus a prorated amount of $1,666.67 for use of the Market-Maker Permit
for the trading days in January between January 23 and January 31.
Thus, with the proposed rule change, the Trading Permit Holder will pay
the same amount in access fees for January as it would if it had
cancelled the Market-Maker Permit effective at the end of January.
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\9\ At that point, the Trading Permit will be subject to the
auto-renewal provision described above unless the Trading Permit
Holder requests that the Trading Permit not be automatically renewed
at the end of the applicable month.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitation
[sic] 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.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \12\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange also believes the
proposed rule change is consistent with Section 6(b)(4) of the Act,\13\
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.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ Id.
\13\ 15 U.S.C. 78f(b)(4).
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In particular, the proposed rule change is equitable and not
unfairly discriminatory as it applies to all Trading Permit Holders
that cancel a Trading Permit effective prior to the end of a month and
request issuance of the same type of Trading Permit during that same
month. The Exchange believes the proposed rule change protects
investors and the public interest, as it prevents a Trading Permit
Holder from paying the monthly access fee twice during the same month
for a Trading Permit in the event that the Trading Permit Holder
cancels the Trading Permit effective prior to the end of the month but
later requests issuance of the same type of Trading Permit during that
month. The Exchange believes that the proposed rule change is fair and
reasonable, because it results in a Trading Permit Holder that cancels
a Trading Permit prior to the end of the month but then has the same
type of Trading Permit issued that month paying the same amount in
access fees for that month as a Trading Permit Holder that cancels a
Trading Permit effective at the end of a month. A Trading Permit Holder
is able to trade the same amount in either situation; therefore, the
Exchange believes it is reasonable that the Trading Permit Holder pay
the same amount in either situation.
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. The proposed rule change
applies in the same manner to all Trading Permit Holders that request
the issuance of a Trading Permit during the same month they cancelled
the same type of Trading Permit. Additionally, the proposed rule change
results in a Trading Permit Holder that cancels a Trading Permit
effective prior to the end of the month but then has the same type of
Trading Permit issued that same month paying the same amount in access
fees as a Trading Permit Holder that cancels a Trading Permit effective
at the end of a month. Thus, these Trading Permit Holders would pay the
same access fee during the month for the same allowable trading
activity in each situation. The proposed rule change does not change
the amounts of the access fees imposed on Trading Permit Holders for
the use of Trading Permits.
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) of the Act \14\ and paragraph (f) of Rule 19b-4 \15\
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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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-C2-2013-005 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.
[[Page 7840]]
All submissions should refer to File Number SR-C2-2013-005. 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 office. 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-C2-2013-005, and should be
submitted on or before February 25, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02297 Filed 2-1-13; 8:45 am]
BILLING CODE 8011-01-P