[Federal Register Volume 77, Number 88 (Monday, May 7, 2012)]
[Pages 26813-26814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-10877]



[Release No. 34-66888; File No. SR-CBOE-2012-038]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend the Fees Schedule

 May 1, 2012.
    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 April 20, 2012, the Chicago Board Options Exchange, 
Incorporated (the ``Exchange'' or ``CBOE'') 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.

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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.org/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 

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On November 23, 2011, the Exchange amended its Fees Schedule to 
provide that FLEX Options \3\ transactions for the account of non-
Trading Permit Holder broker-dealers (which use the ``C'' order origin 
code) would be subject to the same transaction fee rates that are 
applicable to public customers (which also use the ``C'' order origin 
code).\4\ The rationale behind that change was that FLEX Options 
transactions for the account of non-Trading Permit Holder broker-
dealers were being identified using the same ``C'' origin code as such 
transactions for public customers, so the Exchange wanted to avoid any 
potential billing discrepancies.\5\

    \3\ Flexible Exchange Options (``FLEX Options'') provide 
investors with the ability to customize basic option features 
including size, expiration date, exercise style, and certain 
exercise prices. FLEX Options can be FLEX Index Options or FLEX 
Equity Options. In addition, other products are permitted to be 
traded pursuant to the FLEX trading procedures. For example, credit 
options are eligible for trading as FLEX Options pursuant to the 
FLEX rules in Chapters XXIVA and XXIVB. See CBOE Rules 24A.1(e) and 
(f), 24A.4(b)(1) and (c)(1), 24B.1(f) and (g), 24B.4(b)(1) and 
(c)(1), and 28.17. The rules governing the trading of FLEX Options 
on the FLEX Request for Quote (``RFQ'') System platform (which is 
limited to open outcry trading only) are contained in Chapter XXIVA. 
The rules governing the trading of FLEX Options on the FLEX Hybrid 
Trading System platform (which combines both open outcry and 
electronic trading) are contained in Chapter XXIVB. The Exchange 
notes that, currently, all FLEX Options are traded on the FLEX 
Hybrid Trading System platform.
    \4\ See Securities Exchange Act Release No. 65875 (December 2, 
2011), 76 FR 76783 (December 8, 2011) (SR-CBOE-2011-112).
    \5\ Id.

    Beginning as soon as April 24, 2012, the Exchange will begin 
rolling out its newly-enhanced FLEX Hybrid Trading System (the ``CFLEX 
System'') for FLEX Options trading. The Exchange intends to transition 
a few classes at a time and anticipates full implementation within 
approximately one to three weeks of the initial transition. This 
enhanced CFLEX System will allow for the entry of non-Trading Permit 
Holder broker-dealer transactions using a different order origin code 
than the ``C'' origin code used for public customers (and currently, 
for non-Trading Permit Holder broker-dealers). As such, the Exchange 
proposes deleting from the Fees Schedule the language that states that 
for FLEX Options only, customer transaction fees apply to non-Trading 
Permit Holder broker-dealer orders (orders with ``C'' origin code), as 
those fees are only applicable for non-Trading Permit Holder broker-
dealer executions on the old CFLEX System. Going forward as FLEX 
Options are rolled out to the newly-enhanced CFLEX System, broker-
dealer fees would apply to non-Trading Permit Holder broker-dealer FLEX 
Options transactions, as they do for all other non-Trading Permit 
Holder broker-dealer transactions, and as they

[[Page 26814]]

did prior to the above-referenced rule change.
    The proposed change is to take effect on April 24, 2012.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
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 Section 6(b)(4) of the Act,\7\ which provides that 
Exchange rules may provide for the equitable allocation of reasonable 
dues, fees, and other charges among its Trading Permit Holders and 
other persons using its facilities. The proposed change is reasonable 
because non-Trading Permit Holder broker-dealers will be assessed the 
same FLEX Options transaction fees as Trading Permit Holder broker-
dealers, as they were prior to November 23, 2012 [sic]. The proposed 
change is equitable and not unfairly discriminatory because it will 
place non-Trading Permit Holder broker-dealers trading FLEX Options on 
the same footing, transaction fees-wise, as Trading Permit Holder 

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).

B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE 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.

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) \8\ of the Act and paragraph (f)(2) of Rule 19b-4 \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.

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).

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-2012-038 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-CBOE-2012-038. 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-CBOE-2012-038 and should be 
submitted on or before May 29, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\

    \10\ 17 CFR 200.30-3(a)(12).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-10877 Filed 5-4-12; 8:45 am]