[Federal Register Volume 80, Number 228 (Friday, November 27, 2015)]
[Notices]
[Pages 74151-74153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-30087]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76498; File No. SR-CBOE-2015-105]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the Fees Schedule
November 20, 2015.
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 November 16, 2015, Chicago Board Options Exchange, Incorporated
(the ``Exchange''
[[Page 74152]]
or ``CBOE'') 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 the
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.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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 Fees Schedule, effective
November 16, 2015. Specifically, the Exchange proposes to amend the
Fees Schedule with respect to Qualified Contingent Cross (``QCC'') \3\
orders. Currently, the Fees Schedule provides for a transaction fee for
all non-customer QCC orders of $0.15 per contract side (customer orders
are not assessed a charge) and a $0.10 per contract credit for the
initiating order side, regardless of origin code.\4\ The Exchange first
proposes to increase the fee for QCC transactions from $0.15 per
contract to $0.17 per contract for all non-customer orders. The
Exchange notes that the proposed increase is in line with other
exchanges.\5\
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\3\ A QCC order is comprised of an order to buy or sell at least
1,000 contracts (or 10,000 mini-option contracts) that is identified
as being part of a qualified contingent trade, coupled with a
contra-side order or orders totaling an equal number of contracts.
\4\ The Exchange notes that the $0.10 per contract credit is not
be available for customer-to-customer transactions.
\5\ See e.g., NASDAQ OMX PHLX LLC (``PHLX'') Pricing Schedule,
Section II, QCC Transaction Fees.
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Next, the Exchange proposes to provide that the maximum credit paid
shall not exceed $350,000 per month per Trading Permit Holder
(``TPH''). The Exchange notes that it will aggregate the credits of
affiliated TPHs (TPHs with at least 75% common ownership between the
firms as reflected on each firm's Form BD, Schedule A) for purposes of
determining whether a TPH has met the QCC credit cap. The Exchange
believes that, while limiting the amount of rebate that a market
participant can receive, the current QCC rebate will continue to
incentivize market participants to seek to obtain the highest rebate
possible. The Exchange also notes that other Exchanges have similar
caps on rebates offered for QCC transactions.\6\
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\6\ See e.g., PHLX Pricing Schedule, Section II, QCC Transaction
Fees and NSYE Amex Options Fees Schedule (``Amex''), Section IE,
Qualified Contingent Cross (``QCC'') Fees and Credits for Standard
Options and Mini Options.
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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. Specifically, the Exchange
believes the proposed rule change is consistent with the Section
6(b)(5) 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 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 Section 6(b)(4) of
the Act, 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 the proposed increase to the transaction fee
for QCC orders is reasonable because the proposed amount is in line
with the amount assessed at other Exchanges for similar
transactions.\7\ Additionally, the proposed fee increase would be
charged to all non-customers alike. Assessing QCC rates to all market
participants except customers is equitable and not unfairly
discriminatory because Customer order flow enhances liquidity on the
Exchange for the benefit of all market participants. Specifically,
Customer liquidity benefits all market participants by providing more
trading opportunities, which attracts Market-Makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. By exempting customer orders, the
QCC transaction fees will not discourage the sending of customer
orders.
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\7\ See e.g., PHLX Pricing Schedule, Section II, QCC Transaction
Fees and NSYE Amex Options Fees Schedule, Section I.E, Qualified
Contingent Cross (``QCC'') Fees and Credits for Standard Options and
Mini Options.
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The Exchange believes the proposed QCC credit cap is reasonable,
equitable and not unfairly discriminatory because it is in line with
similar caps on rebates paid for QCC transactions at other exchanges
\8\ and because all TPHs would be uniformly capped at $350,000 per
month. The Exchange also believes it's reasonable, equitable and not
unfairly discriminatory to provide that it will aggregate the credits
of affiliated TPHs to determine whether the credit cap has been met, as
the Exchange believes this should prevent TPHs from dividing up their
orders to different affiliates in order to avoid meeting the cap and it
would apply to all TPHs.
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\8\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition that are not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act, because the proposes [sic] rule
changes apply uniformly to all Trading Permit Holders. The Exchange
believes this proposal will not cause an unnecessary burden on
intermarket competition because it only affects trading on CBOE. To the
extent that the proposed changes make CBOE a more attractive
marketplace for market participants at other exchanges, such market
participants are welcome to become CBOE market participants.
Additionally,
[[Page 74153]]
the Exchange notes that it operates in a highly competitive market,
comprised of thirteen options exchanges, in which market participants
can easily and readily direct order flow to competing venues if they
deem fee levels at a particular venue to be excessive or rebates to be
inadequate.
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:
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-CBOE-2015-105 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2015-105. 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 offices 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-CBOE-2015-105,
and should be submitted on or before December 18, 2015.
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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\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-30087 Filed 11-25-15; 8:45 am]
BILLING CODE 8011-01-P