[Federal Register Volume 78, Number 150 (Monday, August 5, 2013)]
[Notices]
[Pages 47452-47453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18748]
[[Page 47452]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70060; File No. SR-C2-2013-027]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating To Amending Exchange Rules To Clarify Rules 6.1 and 6.32
July 30, 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 July 17, 2013, C2 Options Exchange, Incorporated (the
``Exchange'' or ``C2'') filed with the Securities and Exchange
Commission (``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 is proposing to change its rules to clarify when it
will be open for trading along with when trading halts on underlying
securities will inhibit trading on the Exchange. 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to change its rules to clarify when it
will be open for trading along with when trading halts on underlying
securities will inhibit trading on the Exchange. The Exchange is
proposing to amend its rules to clarify that it will not be solely
dependent upon the ``primary market'' when determining when to open
and/or halt securities. Instead, the Exchange is proposing to clarify
in its rules that it will be open if there is ample liquidity in the
underlying market for that security. Generally, the national equity
exchanges have similar core business hours.\3\ With this proposal, the
Exchange is attempting to clarify in its rules that it can remain open
to trade options during such business hours even if the ``primary
market'' of the underlying securities is not open for business. The
Exchange believes that the proposed changes will allow the markets
[sic] to continue to function in an instance where all exchanges may
not be open. In addition, the Exchange believes the proposed changes
will bring greater clarity to its Trading Permit Holders (``TPHs'')
regarding when the Exchange will be open for trading.
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\3\ See, e.g., New York Stock Exchange Rule 51(a) and Bats
Exchange Rule 1.5(w) which describes regular trading hours as 9:30
a.m. through 4:00 p.m. Eastern.
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First, the Exchange is proposing to add language to Rule 6.1.01 to
specify that the Exchange will not solely rely on the ``primary
market'' of an underlying security to determine whether the Exchange
may trade the option for such security. The Exchange believes that the
proposed rule change will specify that if there is an ample market in
the underlying security, the Exchange has the authority to trade the
option even if the primary market is not open. The Exchange believes
that allowing such discretion will create a lesser market disruption if
the primary exchange is unable to open for trading.
Next, Exchange Rule 6.32 specifies when the Exchange may halt
trading.\4\ Specifically, Rule 6.32(a) lists factors that may be
considered by the Exchange when making that determination. Currently,
Rule 6.32(a)(1) lists, as a factor in the decision with respect to
options, ``trading in the underlying security has been halted or
suspended in the primary market.'' The Exchange is proposing to add
language to state, instead of the ``primary market,'' that the Exchange
may factor in if ``trading in the underlying security has been halted
or suspended in one or more of the markets trading the underlying
security.''
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\4\ See Exchange Rule 6.32.
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The Exchange believes the proposed changes will allow the Exchange
to trade options for underlying stocks even if that underlying listing
market shall be unable to trade due to an emergency or other
circumstance unique to that stock exchange. Making these proposed
changes will allow the Exchange to trade options when an underlying
security is trading on any national securities exchange regardless of
where that security is formally listed. The proposed discretion
attempts to create a lessor market disruption if a listing or primary
market is unable to trade due to some circumstance. Because of the
connectivity of the national securities exchanges today, the Exchange
believes limiting its ability to trade options to when the primary
market of the underlying security is open might hurt investors if some
circumstance should render the primary exchange inoperable. In
addition, the Exchange believes that the reference to ``primary
market'' is ambiguous and has the potential to cause confusion. Thus,
the Exchange believes by further clarifying the language, it is clearer
when the Exchange will be open for trading.
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.\5\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \6\ 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 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. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ requirement that the rules of an exchange not be
designed
[[Page 47453]]
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
\7\ Id.
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In particular, the Exchange believes the proposed rule change
protects investors by allowing trading in options as long as the
underlying security is trading on another exchange. Instead of relying
on the ``primary market,'' the proposed rule change attempts to clarify
when options will trade on the Exchange to allow greater continuity in
the marketplace. By allowing the Exchange to trade options whenever the
underlying securities are trading, the proposed changes seek to create
less of a disconnect if the ``primary'' market should be experiencing
technical difficulties, an emergency, or situation that may inhibit it
to be connected to the marketplace.
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
the proposed rule change imposes any burden on intramarket competition
because it is applied to all TPHs. In addition, the Exchange does not
believe the proposed rule change will impose any burden on intermarket
competition as it will merely give the Exchange discretion to trade
options when there is an ample market for the underlying security of
those options. Thus, the Exchange believes the proposed rule change
will promote competition by giving the Exchange the ability to trade
options when the underlying security is trading anywhere, and, thus,
helping the Exchange to better participate in the marketplace.
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) of the Act \8\ and
Rule 19b-4(f)(6) \9\ 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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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's 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 satisfied this requirement.
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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-C2-2013-027 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-C2-2013-027. 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-C2-2013-027 and should be
submitted on or before August 26, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-18748 Filed 8-2-13; 8:45 am]
BILLING CODE 8011-01-P