[Federal Register Volume 82, Number 113 (Wednesday, June 14, 2017)]
[Notices]
[Pages 27300-27302]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-12258]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80882; File No. SR-C2-2017-020]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to the Penny Pilot Program
June 8, 2017.
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 May 31, 2017, 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 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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[[Page 27301]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the operation of Penny Pilot
Program through December 31, 2017. The text of the proposed rule change
is provided below.
(additions are in italics; deletions are [bracketed])
* * * * *
C2 Options Exchange, Incorporated Rules
* * * * *
Rule 6.4. Minimum Increments for Bids and Offers
The Board of Directors may establish minimum quoting increments for
options traded on the Exchange. When the Board of Directors determines
to change the minimum increments, the Exchange will designate such
change as a stated policy, practice, or interpretation with respect to
the administration of this Rule within the meaning of subparagraph
(3)(A) of subsection 19(b) of the Exchange Act and will file a rule
change for effectiveness upon filing with the Commission. Until such
time as the Board of Directors makes a change to the minimum
increments, the following minimum increments shall apply to options
traded on the Exchange:
(1) No change.
(2) No change.
(3) The decimal increments for bids and offers for all series of
the option classes participating in the Penny Pilot Program are: $0.01
for all option series quoted below $3 (including LEAPS), and $0.05 for
all option series $3 and above (including LEAPS). For QQQQs, IWM, and
SPY, the minimum increment is $0.01 for all option series. The Exchange
may replace any option class participating in the Penny Pilot Program
that has been delisted with the next most actively-traded, multiply-
listed option class, based on national average daily volume in the
preceding six calendar months, that is not yet included in the Pilot
Program. Any replacement class would be added on the second trading day
following [January 1, 2017]July 1, 2017. The Penny Pilot shall expire
on [June 30, 2017]December 31, 2017. Also, for so long as SPDR options
(SPY) and options on Diamonds (DIA) participate in the Penny Pilot
Program, the minimum increments for Mini-SPX Index Options (XSP) and
options on the Dow Jones Industrial Average (DJX), respectively, may be
$0.01 for all option series quoting less than $3 (including LEAPS), and
$0.05 for all option series quoting at $3 or higher (including LEAPS).
(4) No change.
* * * * *
The text of the proposed rule change is also 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 Penny Pilot Program (the ``Pilot Program'') is scheduled to
expire on June 30, 2017. C2 proposes to extend the Pilot Program until
December 31, 2017. C2 believes that extending the Pilot Program will
allow for further analysis of the Pilot Program and a determination of
how the Pilot Program should be structured in the future.
During this extension of the Pilot Program, C2 proposes that it may
replace any option class that is currently included in the Pilot
Program and that has been delisted with the next most actively traded,
multiply listed option class that is not yet participating in the Pilot
Program (``replacement class''). Any replacement class would be
determined based on national average daily volume in the preceding six
months,\5\ and would be added on the second trading day following July
1, 2017. C2 will announce to its Trading Permit Holders by circular any
replacement classes in the Pilot Program. The Exchange notes that it
intends to utilize the same parameters to prospective replacement
classes as was originally approved.
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\5\ The month immediately preceding a replacement class's
addition to the Pilot Program (i.e., June) would not be used for
purposes of the six-month analysis. Thus, a replacement class to be
added on the second trading day following July 1, 2017 would be
identified based on The Option Clearing Corporation's trading volume
data from December 1, 2016 through May 31, 2017.
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C2 is specifically authorized to act jointly with the other options
exchanges participating in the Pilot Program in identifying any
replacement class.
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.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ 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 the
Section 6(b)(5)8 requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. In particular, the proposed rule change allows for
an extension of the Pilot Program for the benefit of market
participants.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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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. Specifically, the Exchange
believes that, by extending the expiration of the Pilot Program, the
proposed rule change will allow for further analysis of the Pilot
Program and a determination of how the Program shall be structured in
the future. In doing so, the proposed rule change will also serve to
promote regulatory clarity and consistency, thereby reducing burdens on
the marketplace and facilitating investor protection. In addition, the
Exchange has been authorized to act jointly in extending the Pilot
Program and believes the other exchanges will be filing similar
extensions.
[[Page 27302]]
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act\9\ and Rule 19b-4(f)(6) thereunder.\10\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, 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 and Rule 19b-
4(f)(6)(iii) thereunder.
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative prior to 30 days after the date of the
filing.\12\ However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the
Commission may designate a shorter time if such action is consistent
with the protection of investors and the public interest. Without a
waiver of 30-day operative delay, CBOE's Pilot Program will expire
before the extension of the Pilot Program is operative. The Commission
believes that waiving the 30-day operative delay for the instant filing
is consistent with the protection of investors and the public interest
because doing so will allow the Pilot Program to continue without
interruption in a manner that is consistent with the Commission's prior
approval of the extension and expansion of the Pilot Program and will
allow the Exchange and the Commission additional time to analyze the
impact of the Pilot Program. Accordingly, the Commission designates the
proposed rule change as operative upon filing with the Commission.\14\
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 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 the 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 pre-filing requirement.
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(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-C2-2017-020 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-C2-2017-020. 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-C2-2017-020 and should be
submitted on or before July 5, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-12258 Filed 6-13-17; 8:45 am]
BILLING CODE 8011-01-P