[Federal Register Volume 81, Number 178 (Wednesday, September 14, 2016)]
[Notices]
[Pages 63243-63245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22027]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78786; File No. SR-CBOE-2016-066]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the Fees Schedule
September 8, 2016.
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 September 1, 2016, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' 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 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. Specifically, the
Exchange proposes to (1) increase the payment to the Designated Primary
Market-Maker(s) appointed in FTSE 100 Index (``UKXM'') and the China 50
Index ``(FXTM'') and (2) eliminate the transaction fee for Professional
Customers and Voluntary Professionals (``W'' origin code)
(``Professionals'') for all manual transactions in all penny and non-
penny equity, index (excluding Underlying Symbol List A \3\), ETF and
ETN options classes.
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\3\ See CBOE Fees Schedule, Footnote 34.
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Currently, the Exchange offers a compensation plan to the DPM(s)
appointed in FXTM or UKXM to offset the initial DPM costs. More
specifically, Footnote 43 to the Fees Schedule provides that DPM(s)
appointed for an entire month in either FXTM or UKXM will receive a
payment of $5,000 per class per month through December 31, 2016. The
Payment was adopted to offset the initial DPM costs. The Exchange notes
that the startup and ongoing costs to support these products still
exceeds the current DPM payment. As such, the Exchange proposes to
increase the payment to $7,500 per class per month in order to help
offset the ongoing costs.
Next, the Exchange proposes to reduce the transaction fee for
Professionals for all manual transactions in all penny and non-penny
equity, index (excluding Underlying Symbol List A), ETF and ETN options
classes to $0.00 per contract. Currently, Professionals are assessed
$0.25 per contract for manual executions in those
[[Page 63244]]
classes. The Exchange notes that the proposed change is consistent with
the amount assessed to similar transactions for Professionals at
another Exchange.\4\
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\4\ See NYSE Arca Options Fees and Charges, Trade-Related
Charges for Standard 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.\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
section 6(b)(4) of the Act,\7\ 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.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
\7\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that it's reasonable to increase the FXTM and
UKXM DPM payment because the initial setup and ongoing costs exceed the
DPM payment. Additionally, the Exchange believes it is equitable and
not unfairly discriminatory to compensate DPM(s) that are appointed for
an entire month in either FXTM or UKXM because the DPM(s) incur costs
when receiving and maintaining an appointment, and in the case of FXTM
and UKXM, the Exchange believes it is appropriate to continue to
provide and increase compensation to the DPM(s) to offset those costs.
The Exchange believes it's reasonable to reduce the transaction fee
for Professionals for all manual transactions in all penny and non-
penny equity, index (excluding Underlying Symbol List A), ETF and ETN
options classes to $0.00 per contract because Professionals would not
incur a fee for those transactions. The Exchange notes that Customers
are also not charged transaction fees for these transactions. The
Exchange believes it's equitable and not unfairly discriminatory to
propose to reduce the transaction fee for Professionals only because it
is designed to attract a greater number of Professional orders in these
classes. This increased volume creates greater trading opportunities
that benefit all market participants. Specifically, while only Customer
and Professional orders are not charged a transaction fee for manual
executions, an increase in Customer and Professional order flow will
bring greater volume and liquidity, which benefit all market
participants by providing more trading opportunities and tighter
spreads. In addition, another Exchange also does not charge
Professionals a transaction fee for manual executions for similar
transactions.\8\ The Exchange lastly notes that assessing a different
fee amount for manual executions than for electronic executions is
equitable and not unfairly discriminatory because the Exchange has
expended considerable resources to develop its electronic trading
platforms and seeks to recoup the costs of such expenditures.
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\8\ See supra note 4.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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 any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because, while only the DPM(s)
appointed in UKXM and FXTM receive the increased DPM Payment, the
DPM(s) have costs and obligations that other market participants do
not. Additionally, while reducing the transaction rate to $0.00 for
manual executions in penny and non-penny equity, index (excluding
Underlying Symbol List A), ETF and ETN option classes only applies to
Professionals, the proposed change is designed to encourage increased
Professional options volume, which provides greater trading
opportunities for all market participants. The Exchange does not
believe that the proposed rule changes will impose any burden on
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because the proposed changes
only affect 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.
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-2016-066 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-2016-066. 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
[[Page 63245]]
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-CBOE-2016-066 and should be
submitted on or before October 5, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-22027 Filed 9-13-16; 8:45 am]
BILLING CODE 8011-01-P