[Federal Register Volume 78, Number 41 (Friday, March 1, 2013)]
[Notices]
[Pages 13920-13922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-04748]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68980; File No. SR-C2-2013-009]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the Fees Schedule
February 25, 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 February 12, 2013, the 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 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.c2exchange.com/Legal/), at the Exchange's Office of the Secretary,
and
[[Page 13921]]
at the Commission's Public Reference Room.
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
On February 1, 2013, the Exchange began operating under a new fees
structure for simple, non-complex orders in equity options classes.\3\
This new fees structure factors BBO Market Width at the time of
execution into determining the amount of fees and rebates, and includes
a maximum fee of $0.85 per contract and a maximum rebate of $0.75 per
contract. More specifically, fees are calculated based on the following
formula (fees are calculated on a per-contract basis): \4\
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\3\ See Securities Exchange Act Release No. 68792 (January 31,
2013) (SR-C2-2013-004).
\4\ The Market Participant Rates are different rates for
different types of market participants, and are currently set as
follows: C2 Market-Maker (30%); Public Customer (Maker) (40%); and
All Other Origins (50%).
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Fee = (C2 BBO Market Width at time of execution) x (Market
Participant Rate) x 50.
Rebates are calculated based upon the following formula (rebates
are calculated on a per-contract basis): \5\
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\5\ The Order Size Multiplier is a different multiplier based
upon the size of the order, and are currently set as follows: 1-10
contracts in an order (36%); 11-99 contracts in an order (30%); 100-
250 contracts in an order (20%); and 251+ contracts in an order
(0%).
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Rebate = (C2 BBO Market Width at time of execution) x (Order Size
Multiplier) x 50.
The C2 BBO Market Width is the difference between the quoted best
offer and best bid in each class on C2 (the displayed C2 ask price
minus the displayed C2 bid price).
However, the new fees structure does not directly contemplate a
circumstance in which an execution occurs when there is no displayed C2
ask price. Such transactions occasionally occur, when a C2 bid is
displayed (while an ask price is not) and an order is sent to the
Exchange that immediately interacts with that displayed C2 bid.
Currently, if such a circumstance occurs, it would result in a negative
BBO Market Width, which would result in a negative fee or rebate amount
(meaning that the Exchange would actually be paying a rebate where a
fee would otherwise be assessed and that the Exchange would be
assessing a fee where a rebate would otherwise be paid \6\).
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\6\ No circumstance has occurred yet in which the Exchange has
assessed a fee to a Public Customer Taker who would otherwise
receive a rebate if there was a displayed C2 ask price.
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As such, the Exchange proposes to amend the section of its Fees
Schedule that regards this new fees structure to state that if an
execution occurs when there is no Displayed C2 Ask Price, the maximum
fee and/or rebate will apply. The purpose of this proposed change is to
ensure that fees and rebates are still assessed in circumstances where
there may not be both a bid and an offer, and that the maximum fee and/
or rebates applies in such circumstances, since the lack of a positive
BBO Market Width does not imply a narrow bid-ask spread.
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.\7\ Specifically, the Exchange believes the proposed rule change is
consistent with Section 6(b)(4) of the Act,\8\ which requires that
Exchange rules provide for the equitable allocation of reasonable dues,
fees, and other charges among its Trading Permit Holders and other
persons using its facilities. The Exchange believes that, if an
execution occurs when there is no displayed C2 ask price, applying the
maximum fee and/or rebate is reasonable because the new fees structure
described above and in SR-C2-2013-004 is designed to encourage tighter
quoting (and thus tighter spreads), and the execution of a trade when
there is no displayed C2 ask price will not serve to narrow the spread.
The Exchange believes that this proposed change is equitable and not
unfairly discriminatory because it will apply to all market
participants who trade when there is no displayed C2 ask price, and the
maximum amounts will be the same as they were previously and apply to
the same market participants as they did previously.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
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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. C2 does not believe that the
proposed rule change will impose any burden on intramarket competition
because it will apply to all market participants who trade when there
is no displayed C2 ask price, and the maximum amounts will be the same
as they were previously and apply to the same market participants as
they did previously. C2 does not believe that the proposed rule change
will impose any burden on intermarket competition because very few
trades occur when there is no displayed ask price, and the new C2 fees
structure is very unique and different than those offered on other U.S.
options exchanges. However, to the extent that this change could
attract market participants trading on other exchanges to do so on C2,
market participants trading on other exchanges can always elect to do
so.
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 \9\ and paragraph (f) of Rule 19b-4 \10\
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 will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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:
[[Page 13922]]
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-C2-2013-009 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-C2-2013-009. 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-C2-2013-009 and should be
submitted on or before March 22, 2013.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-04748 Filed 2-28-13; 8:45 am]
BILLING CODE 8011-01-P