[Federal Register Volume 78, Number 57 (Monday, March 25, 2013)]
[Notices]
[Pages 17967-17969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-06694]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69156; File No. SR-C2-2013-014]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend C2 Rule 6.3 for Mini-Options Launch
March 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 March 14, 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 and II below, which Items have been prepared by the
Exchange. The Exchange filed the proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
\3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
C2 proposes to amend C2 Rule 6.3 (Meaning of Premium Bids and
Offers) by adding how bids and offers will be expressed for option
contracts overlying 10 shares of a security. 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 self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
C2 Chapter 5 (Securities Dealt In) was recently amended to allow
for the listing of option contracts that deliver 10 physical shares on
SPDR S&P 500 (``SPY''), Apple, Inc. (``AAPL''), SPDR Gold Trust
(``GLD''), Google Inc. (``GOOG'') and Amazon.com Inc. (``AMZN'')
(``mini-options''). The purpose of this proposed rule change is to
amend C2 Rule 6.3 (Meaning of Premium Bids and Offers) by adding how
bids and offers would be expressed for mini-options.
CBOE Rules Incorporated by Reference Into C2's Rules
The majority of C2's rules are the same as Chicago Board Options
Exchange, Incorporated's (``CBOE'') rules and were adopted as part of
the Securities and Exchange Commission's
[[Page 17968]]
(``SEC or Commission'') order approving C2's application for
registration as a national securities exchange.\5\ CBOE Rule 5.5.22 was
recently adopted to provide for the listing and trading of mini-
options.\6\ C2 Chapter 5 provides, ``[t]he rules contained in CBOE
Chapter V, as such rules may be in effect from time to time, shall
apply to C2 and are hereby incorporated into this Chapter.''
Accordingly, mini-options trading is permitted on C2. Mini-options
trading on CBOE and C2 is expected to commence on March 18, 2013.
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\5\ See Securities Exchange Act Release No. 61152 (December 10,
2009), 74 FR 66699, 66709-10 (December 16, 2009) (In the Matter of
the Application of C2 Options Exchange, Incorporated for
Registration as a National Securities Exchange Findings, Opinion,
and Order of the Commission (File No. 10-191). In the Order, the
Commission granted C2's request for exemption, pursuant to Section
36 of the Act, from the rule filing requirements of Section 19(b) of
the Act with respect to the rules that C2 proposed to incorporate by
reference. The exemption was conditioned upon C2 providing written
notice to its members whenever CBOE proposes to change a rule that
C2 has incorporated by reference. In the Order, the Commission
stated its belief that ``this exemption is appropriate in the public
interest and consistent with the protection of investors because it
will promote more efficient use of Commission and SRO resources by
avoiding duplicative rule flings based on simultaneous changes to
identical rules sought by more than one SRO.''
C2 satisfied this requirement with respect to mini-options by
posting a copy of the CBOE rule filing to list mini-options (SR-
CBOE-2013-001) on C2's rule filing Web site at the same time the
CBOE rule filing was posted to the CBOE rule filing Web site. The C2
rule filing Web site is located at: http://www.c2exchange.com/Legal/RuleFilings.aspx. By posting CBOE rule filings to C2's rule filing
Web site that amend C2's rule by reference, the Exchange provides
its members with notice of the proposed rule change so that they
have an opportunity to comment on it.
\6\ See Securities Exchange Act Release No. 68656 (January 15,
2013), 78 FR 4526 (January 22, 2013) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to List and Trade Option
Contracts Overlying 10 Shares of Certain Securities) (SR-CBOE-2013-
001) (``CBOE mini-option filing''). The Exchange notes that CBOE
also adopted CBOE Rule 4.11.08 which addresses position limits for
mini-options. CBOE Rule 4.11.08 is also incorporated by reference
into C2's rules. See C2 Chapter 4 that provides, ``[t]he rules
contained in CBOE Chapter IV, as such rules may be in effect from
time to time, shall apply to C2 and are hereby incorporated into
this Chapter.''
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The premium multiplier for mini-options is $10, rather than $100,
which reflects the smaller unit of trading. To reflect this mini-option
feature, new subparagraph (c) was added to CBOE Rule 6.41 (Meaning of
Premium Bids and Offers) and provides that bids and offers for an
option contract overlying 10 shares will be expressed in terms of
dollars per \1/10\th part of the total value of the contract.\7\ Thus,
an offer of ``.50'' shall represent an offer $5.00 for an option
contract having a unit of trading consisting of 10 shares.
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\7\ See 78 FR at 4527 (CBOE mini-option filing). The Exchange
notes that NYSE Arca, Inc. (``NYSE Arca'') and International
Securities Exchange, LLC (``ISE'') have similar rules governing how
bids and offers for mini-options will be expressed. See Securities
Exchange Act Release No. 67948 (September 28, 2012) 77 FR 60735
(October 4, 2012) (Notice of Filing of Amendments No. 1 and Order
Granting Accelerated Approval of Proposed Rule Changes as Modified
by Amendments No. 1 to List and Trade Option Contracts Overlying 10
Shares of Certain Securities) (SR-NYSEArca-2012-64 and SR-ISE-2012-
58).
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Chapter 6 to C2's rules does not incorporate CBOE's rules by
reference. However, C2 Rule 6.3 (Meaning of Premium Bids and Offers) is
identical to CBOE Rule 6.41 (Meaning of Premium Bids and Offers).
Accordingly, C2 proposes to add new subparagraph (c) to C2 Rule 6.3 to
provide that bids and offers for an option contract overlying 10 shares
will be expressed in terms of dollars per \1/10\th part of the total
value of the contract. Thus, an offer of ``.50'' shall represent an
offer $5.00 for an option contract having a unit of trading consisting
of 10 shares.
No other changes to C2's rules are being proposed by this filing.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder, including the
requirements of Section 6(b) of the Act.\8\ In particular, the Exchange
believes the proposed rule change is consistent with the Section
6(b)(5) \9\ requirements that the rules of an exchange be designed to
promote just and equitable principles of trade, to prevent fraudulent
and manipulative acts, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, 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.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that investors would benefit
from the current rule proposal because it would specify how premium
bids and offers would be expressed for mini-options traded on C2. The
Exchange believes that the marketplace and investors will be expecting
that premium bids and offers for mini-options traded on C2 would be
expressed in the same manner as premium bids and offers for mini-
options traded on CBOE (and other exchanges). As a result, the Exchange
believes that this change would lessen investor and marketplace
confusion because C2 Rule 6.3 will be clear as to how premium bids and
offers for mini-options would be expressed.
B. Self-Regulatory Organization's Statement on Burden on Competition
This proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. In this regard and as indicated above, the Exchange notes that
the rule change is being proposed to ready C2 for mini-options trading
which is scheduled to commence on March 18, 2013. The Exchange notes
that the CBOE mini-option filing (which permits C2 to list mini-options
as well) was submitted as a competitive response to approved NYSE Arca
and ISE filings. C2 believes this proposed rule change is necessary to
permit fair competition among the options exchanges.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6)
thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with written notice of its intent to file the proposed rule change,
along with a brief description and text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange has fulfilled this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter
time if such action is consistent with the protection of investors and
the public interest. The Exchange requests that the Commission waive
the 30-day operative delay so that the proposed rule change may
coincide with the anticipated launch of trading in Mini Options. The
Commission believes that waiving the 30-day operative delay
[[Page 17969]]
is consistent with the protection of investors and the public
interest.\12\ Waiver of the operative delay will allow the Exchange to
implement its proposal consistent with the commencement of trading in
Mini Options as scheduled and expected by members and other
participants on March 18, 2013. For these reasons, the Commission
designates the proposed rule change as operative upon filing.
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\12\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
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-C2-2013-014 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-C2-2013-014 on the
subject line. 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-C2-2013-014 on the subject line and should be submitted
on or before April 15, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-06694 Filed 3-22-13; 8:45 am]
BILLING CODE 8011-01-P