[Federal Register Volume 78, Number 53 (Tuesday, March 19, 2013)]
[Notices]
[Pages 16903-16905]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-06250]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69130; File No. SR-C2-2013-012]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend the Fees Schedule
March 13, 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 March 1, 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 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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[[Page 16904]]
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 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
The Exchange proposes to amend its transaction fees for simple,
non-complex orders in equity options classes to state that C2 Market-
Makers will not be assessed a fee for Maker trades with any non-Public
Customer market participants. This means that when a C2 Market-Maker is
the Maker in a transaction, the C2 Market-Maker will not be assessed a
fee unless the Taker in the transaction is a Public Customer. The
purpose of the proposed change is to incentivize C2 Market-Makers to
quote more aggressively.
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 Section 6(b)(4) of the Act,\4\ 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 proposed
change is reasonable because it will allow C2 Market-Makers to avoid
paying a transaction fee for transactions for which they previously
paid a transaction fee.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that providing this Maker fee exemption to C2
Market-Makers and not to other market participants is equitable and not
unfairly discriminatory because C2 Market-Makers take on a number of
obligations, including quoting obligations and the need to purchase
permits, that some other market participants do not have. Further,
offering a fee exemption for C2 Market-Makers (and only C2 Market-Maker
Makers), who are the market participants that do the vast majority of
quoting, incentivizes more and narrower quoting, thereby encouraging
liquidity provision, which is vital to the marketplace and benefits all
market participants. The Exchange believes that assessing Maker fees
for C2 Market-Makers who trade with Public Customers while not
assessing Maker fees for C2 Market-Makers who trade with other market
participants is equitable and not unfairly discriminatory because the
Exchange already pays a rebate for Public Customer Taker transactions,
and thus if the Exchange were to also not collect a fee from the C2
Market-Maker in such transactions, it would result in the Exchange
paying for such transactions without collecting any revenue (a net
negative), which would not be economically prudent. Further, market
participants (including C2 Market-Makers) generally prefer to execute
their orders against Public Customer orders, and therefore it is
justifiable for them to be still be assessed a fee for such preferable
executions.
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 Exchange does not believe
that the proposed rule change will impose an unnecessary burden on
intramarket competition because, while it will provide C2 Market-Makers
with a fee exemption that other market participants do not receive,
this change is intended to incentivize C2 Market-Makers, who are the
market participants that do the vast majority of quoting, to provide
more and narrower quoting, thereby encouraging liquidity provision,
which is vital to the marketplace and benefits all market participants.
Further, C2 Market-Makers take on a number of obligations, including
quoting obligations and the need to purchase permits, that some other
market participants do not have. The Exchange does not believe that the
proposed rule change will impose an unnecessary burden on intermarket
competition because it is designed to encourage more and narrower
quoting, which would make C2 a more attractive trading venue for
Market-Makers as well as other market participants on other exchanges
who could benefit from C2's improved quotes. As such, to the extent
that the proposed change may make C2 a more attractive trading venue
for market participants on other exchanges, such market participants
can always elect to become C2 market participants.
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 \5\ and paragraph (f) of Rule 19b-4 \6\
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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\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 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-C2-2013-012 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary,
[[Page 16905]]
Securities and Exchange Commission, 100 F Street NE., Washington, DC
20549-1090.
All submissions should refer to File Number SR-C2-2013-012. 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-C2-2013-012 and should be
submitted on or before April 9, 2013.
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\7\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-06250 Filed 3-18-13; 8:45 am]
BILLING CODE 8011-01-P