Federal Register / Vol. 80, No. 20 / Friday, January 30, 2015 / Notices 5163 

19 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

reduce the time frame for bringing 

options on ETFs to market, thereby 

reducing the burdens on issuers and 

other market participants. The Exchange 

also believes enabling the listing and 

trading of options on ETFs pursuant to 

this new listing standard will benefit 

investors by providing them with 

valuable risk management tools. The 

Exchange notes that its proposal does 

not replace the need for a CSSA as 

provided in current Rule 402(i)(5)(ii). 

The provisions of current Rule 

402(i)(5)(ii), including the need for a 

comprehensive surveillance sharing 

agreement, remain materially 

unchanged in proposed Rule 

402(i)(E)(2)(ii) and will continue to 

apply to options on ETFs that are not 

listed on an equities exchange pursuant 

to generic listing standards for series of 

portfolio depositary receipts and index 

fund shares based on international or 

global indexes under which a 

comprehensive surveillance agreement 

is not required. Instead, proposed Rule 

402(i)(E)(2)(i) adds an additional listing 

mechanism for certain qualifying 

options on ETFs to be listed on the 

Exchange in a manner that is 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 facilitating 

transactions in securities, to remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

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 not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes this proposed rule 

change will benefit investors by 

providing additional methods to trade 

options on ETFs, and by providing them 

with valuable risk management tools. 

Specifically, the Exchange believes that 

market participants on MIAX would 

benefit from the introduction and 

availability of options on ETFs in a 

manner that is similar to equities 

exchanges and will provide investors 

with a venue on which to trade options 

on these products. For all the reasons 

stated above, the Exchange does not 

believe that the proposed rule change 

will impose any burden on competition 

not necessary or appropriate in 

furtherance of the purposes of the Act, 

and believes the proposed change will 

enhance competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission shall: (a) by order 

approve or disapprove such proposed 

rule change, or (b) institute proceedings 

to determine whether the proposed rule 

change should be disapproved. 

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 rule-comments@

sec.gov. Please include File Number SR– 

MIAX–2015–04 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–MIAX–2015–04. 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–MIAX– 

2015–04 and should be submitted on or 

before February 20, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01748 Filed 1–29–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74135; File No. SR–C2– 

2015–001] 

Self-Regulatory Organizations; C2 

Options Exchange, Incorporated; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend the Fees Schedule 

January 26, 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 January 

14, 2015, 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, 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. 

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.c2exchange.com/Legal/), at the 

Exchange’s Office of the Secretary, and 

at the Commission’s Public Reference 

Room. 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
5164 Federal Register / Vol. 80, No. 20 / Friday, January 30, 2015 / Notices 

3C2 initially filed the proposed fee change on 

December 31, 2014 (SR–C2–2014–030). On January 

14, 2015, C2 withdrew that filing and submitted 

this filing. All fee amounts described herein are per 

contract unless otherwise noted. 

4See The NASDAQ Stock Market LLC NASDAQ 

Options Market (‘‘NOM’’) Price List, which lists fees 

for Customer orders that remove liquidity in Penny 

Pilot options at $0.48 per contract and non-Penny 

Pilot options at $0.85 per contract, and for nonCustomer orders that remove liquidity in Penny 

Pilot options at $0.49 per contact and non-Penny 

Pilot options at $0.89 per contract. 

5See NOM Price List, which lists fees for orders 

from market participants other than Customers that 

remove liquidity in Penny Pilot options at $0.49 per 

contract and non-Penny Pilot options at $0.89 per 

contract. 

6See NYSE Arca, Inc. (‘‘NYSE Arca’’) Options Fee 

Schedule, which lists, for electronic executions in 

Penny Pilot issues, 1) the standard Customer Maker 

rebate of $0.25 per contract versus a Taker fee of 

$0.47, 2) the standard NYSE Arca Market Maker 

Maker rebate of $0.28 versus a Taker fee of $0.49, 

and 3) the standard Firm and Broker Dealer Maker 

rebate of $0.10 versus a Taker fee of $0.49; and for 

electronic executions in non-Penny Pilot issues, 1) 

the standard Customer Maker rebate of $0.75 versus 

a Taker fee of $0.85, 2) the standard NYSE Arca 

Market Maker Maker rebate of $0.05 versus a Taker 

fee of $0.87, and 3) the standard Firm and Broker 

Dealer Maker fee of $0.50 versus a Taker fee of 

$0.89 (it should be noted that all fee and rebate 

amounts described in this footnote are the standard 

amounts listed on the NYSE Arca Options Fee 

Schedule and do not take into account any NYSE 

Arca programs that provide rebates or credits to 

NYSE Arca market participants based on volume 

transacted on NYSE Arca or other such NYSE Arca 

programs). 

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.3 First, the Exchange 

proposes to amend Taker fees for 

simple, non-complex orders in all 

multiply-listed index, ETF and ETN 

options classes (except RUT). Currently, 

for such orders, the Exchange assesses a 

fee of $0.44 for Public Customers and 

$0.45 to C2 Market-Makers as well as 

orders from all other origins. The 

Exchange proposes to increase these fee 

amounts by $0.03 for all market 

participants, resulting in a fee of $0.47 

per contract for Public Customer orders 

and $0.48 per contract for orders from 

C2 Market-Makers and all other origins. 

The reason for the proposed change is 

for competitive reasons. Additionally, 

the Exchange notes that the proposed 

fee amounts are equivalent to, and in 

some cases lower than, those assessed 

for similar orders by other exchanges.4

The Exchange also proposes to raise, 

from $0.35 per contract to $0.45 per 

contract, the Taker fee for complex 

orders from C2 Market-Makers and all 

other origins (Professional Customer, 

Firm, Broker/Dealer, non-C2 MarketMaker, JBO, etc.) except Public 

Customers in multiply-listed index, ETF 

and ETN options classes (except RUT). 

The Exchange desires to impose this 

increase on orders from C2 MarketMakers and all other origins and not on 

Public Customers due to market forces. 

The Exchange notes that 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 MarketMakers. 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. Moreover, the options 

industry has a long history of providing 

preferential pricing to Public Customers. 

Finally, the proposed fee amount is in 

the range of, and in some cases much 

lower than, those assessed for similar 

orders by other exchanges.5

The Exchange proposes to adopt a 

new fees structure for simple, noncomplex orders in equity options 

classes. Currently, the Exchange’s fees 

and rebates for such orders are 

determined by formulas that take into 

account factors such as the C2 BBO 

Market Width, type of market 

participant, and size of the order. The 

Exchange proposes to eliminate that fees 

structure and replace it with a more 

traditional, simple Maker/Taker fee and 

rebate structure, one that mirrors the 

structure (and even the fee amounts) of 

that which applies to simple, noncomplex orders in multiply-listed index, 

ETF and ETN options classes. The 

proposed new Section 1B of the 

Exchange Fees Schedule would describe 

this new structure as follows: 

The following rates apply to simple, 

non-complex orders in all equity 

options classes. Listed rates are per 

contract. 

Maker Taker fee 

Public Customer * ($.37) $.47 

C2 MarketMaker ............ * ($.40) $.48 

All Other Origins 

(Professional 

Customer, 

Firm, Broker/

Dealer, nonC2 MarketMaker, JBO, 

etc.) ............... * ($.35) $.48 

Trades on the 

Open ............. $.00 $.00 

* Rebates do not apply to orders that trade 

with Public Customer complex orders. In such 

a circumstance, there will be no fee or rebate. 

The Exchange believes that this 

proposed new fee and rebate structure 

will make it easier for market 

participants to determine what their fees 

will be. The Exchange also believes that 

the proposed new structure will better 

allow the Exchange to compete for, and 

attract more, trading flow. The rebates 

offered are intended to incentivize C2 

Market-Makers to quote competitively 

on the Exchange and to attract market 

participants to send orders to the 

Exchange, which will then incent 

Takers to trade with those orders and 

quotes. The differences between the 

Maker rebates and Taker fees are 

intended to cover the costs associated 

with operating the Exchange’s trading 

systems necessary to provide these 

trading opportunities. Further, the 

amounts of these rebates and fees are as, 

or more, beneficial to C2 market 

participants in many circumstances as 

those offered on other exchanges.6 The 

Exchange proposes to not provide a 

rebate to simple orders in equity options 

that trade with Public Customer 

complex orders in equity options 

because the Exchange also proposes to 

provide a rebate for Public Customer 

complex orders, and it would not be 

economically feasible or viable to 

provide a rebate on an order that is 

trading with an order that is not 

generating a fee (as this would result in 

a net negative for the Exchange). In such 

a circumstance, there will be no fee or 

rebate. 

The Exchange also proposes to adopt 

a new fees structure for complex orders 

in equity options classes. Currently, 

Section 1D of the Exchange Fees 

Schedule states: ‘‘For all complex order 

transactions in equity options classes, 

all components of such transactions 

(including simple, non-complex orders 

and/or quotes that execute against a 

complex order) will be assessed no fee 

(or rebate).’’ The Exchange proposes to 

delete this language and instead adopt 

a Maker/Taker fee and rebate structure 

for complex orders in equity options 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 20 / Friday, January 30, 2015 / Notices 5165 

7See Boston Options Exchange LLC (‘‘BOX’’) Fee 

Schedule, Section III, which denotes that BOX 

Market-Makers can pay anywhere from $0.10 to 

$0.80 for a complex order execution (depending on 

the type of order it executes against and the options 

class), with most described fees listed at least $0.40, 

and orders from all other origins (not including 

Public Customers) can pay anywhere from $0.20 to 

$0.80 for a complex order execution (depending on 

the type of order it executes against and the options 

class), with most described fees listed at least $0.40 

and a few listed at $0.80. See also NASDAQ OMX 

PHLX LLC (‘‘PHLX’’) Pricing Schedule, Section II, 

under which Public Customers receive no rebate for 

complex order executions in multiply-listed equity 

options. 

8As such, the Exchange proposes to delete the 

language ‘‘(excluding Public Customer orders in 

equity options classes). For Public Customer orders 

in equity options classes, C2 shall pass through the 

actual transaction fee assessed by the exchange(s) 

to which the order was routed’’ from Section 2 of 

the Fees Schedule. 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(5). 

classes, one that mirrors the structure 

(and even the fee amounts) of that 

which applies to complex orders in 

multiply-listed index, ETF and ETN 

options classes. The following rates 

apply to complex orders in equity 

options classes. Listed rates are per 

contract. 

Maker fee/

(rebate) 

Taker fee/

(rebate) 

Public Customer * ($.35) * ($.35) 

C2 MarketMaker ............ $.10 $.45 

All Other Origins 

(Professional 

Customer, 

Firm, Broker/

Dealer, nonC2 MarketMaker, JBO, 

etc.) ............... $.20 $.45 

Trades on the 

Open ............. $.00 $.00 

The purpose of this change is to align 

and improve the Exchange’s competitive 

position in relation to other exchanges. 

Additionally, the Exchange proposes to 

denote in an asterisk on the Fees 

Schedule that the rebate will only apply 

to Public Customer complex orders that 

trade with non-Public Customer 

complex orders. In other circumstances, 

there will be no Maker or Taker fee or 

rebate. This is because, if the Exchange 

offered the rebate when a Public 

Customer complex order trades with 

another Public Customer complex order, 

the Exchange would be providing a 

rebate on both sides of the order. It 

would not be economically feasible or 

viable to provide a rebate on an order 

that is trading with an order that is not 

generating a fee (as this would result in 

a net negative for the Exchange). 

Finally, the amounts of these rebates 

and fees are as, or more, beneficial to C2 

market participants in many 

circumstances as those offered on other 

exchanges.7

Just as the Exchange handles complex 

orders in multiply-listed index, ETF and 

ETN options classes, for transactions in 

which simple, non-complex orders 

execute against a complex order, each 

component of the complex order will be 

assessed the complex order fees listed in 

Section 1D of this Fees Schedule, while 

the simple, non-complex orders will be 

assessed the transaction fees listed in 

Section 1B of this Fees Schedule. For 

transactions in which a complex order 

executes against another complex order, 

each component of the complex order 

will be assessed the complex order fees 

listed in Section 1D of this Fees 

Schedule. This follows common sense; 

when a market participant submits an 

order, he likely does not know whether 

it will trade with a simple or complex 

order, and should get assessed the fee 

amount applicable to the type of order 

he submits, regardless of what type of 

order with which it trades. 

As with complex orders in multiplylisted index, ETF and ETN options 

classes, for executions that occur within 

the Complex Order Auction (‘‘COA’’) 

against auction responses, the 

incoming/auctioned order is considered 

maker, and auction responses are 

considered taker. This is because the 

incoming/auctioned order is the one 

creating trading interest, and the 

response is taking that interest. 

For the newly-proposed fees 

structures that apply to both simple and 

complex orders in equity options, the 

Exchange proposes to assess no fees and 

offer no rebates for Trades on the Open. 

Trades on the Open involve the 

matching of undisplayed pre-opening 

trading interest. As such, there is, in 

effect, no Maker or Taker activity 

occurring. The Exchange would like to 

encourage users to submit pre-opening 

orders. The Exchange also does not 

assess fees or offer rebates for Trades on 

the Open in multiply-listed index, ETF 

and ETN options classes (for both 

simple and complex orders). 

The Exchange also proposes to raise 

the PULSe On-Floor Workstation 

(‘‘PULSe’’) fee. Currently, the Exchange 

charges a fee of $350 per month for the 

first 10 users of a Permit Holder 

workstation and $100 per month for all 

subsequent users. Permit Holders may 

also make the workstation available to 

their customers, which may include 

non-broker dealer public customers and 

non-Permit Holder broker dealers 

(referred to herein as ‘‘non-Permit 

Holders’’). For such non-Permit Holders 

workstations, the Exchange charges a fee 

of $350 per month per workstation. The 

Exchange proposes raising the PULSe 

On-Floor Workstation fee from $350 per 

month to $400 per month for both 

Permit Holder and non-Permit Holder 

workstations. The Exchange expended 

significant resources developing PULSe, 

and intends to recoup some of those 

costs. 

As the Exchange proposes to amend 

the Fees Schedule to set transaction fees 

and rebates for equity options at the 

same rates as those for multiply-listed 

index, ETF and ETN options classes, the 

Exchange therefore also proposes to 

standardize Linkage Routing fees for 

equity options and multiply-listed 

index, ETF and ETN options. Currently, 

Section 2 of the Exchange Fees 

Schedule states that $0.65 per routed 

contract in addition to applicable C2 

taker fee (excluding Public Customer 

orders in equity options classes). For 

Public Customer orders in equity 

options classes, C2 shall pass through 

the actual transaction fee assessed by 

the exchange(s) to which the order was 

routed. In order to achieve the abovementioned standardization, as well as 

cover the costs associated with 

managing the Exchange’s Linkage 

systems and processes, the Exchange 

proposes to delete the language that 

excludes Public Customer orders in 

equity classes from the stated fee that 

applies to all other Linkage routing and 

provides a separate fee structure for 

such orders.8 Going forward, the 

Exchange proposes to merely state in 

Section 2 of the Fees Schedule that the 

Linkage Routing fee will be ‘‘$0.65 per 

routed contract in addition to applicable 

C2 taker fee.’’ 

Finally, as of January 2, 2015, the 

Exchange no longer lists Mini-Options. 

Accordingly, the Exchange proposes to 

delete from the Fees Schedule all 

references to Mini-Options, as such 

references are no longer necessary and 

will be obsolete. 

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.9 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 10 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, 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
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11 15 U.S.C. 78f(b)(4). 

12See NOM Price List, which lists fees for 

Customer orders that remove liquidity in Penny 

Pilot options at $0.48 per contract and non-Penny 

Pilot options at $0.85 per contract, and for nonCustomer orders that remove liquidity in Penny 

Pilot options at $0.49 per contact and non-Penny 

Pilot options at $0.89 per contract. 

13See NOM Price List, which lists fees for orders 

from market participants other than Customers that 

remove liquidity in Penny Pilot options at $0.49 per 

contract and non-Penny Pilot options at $0.89 per 

contract. 

14See NYSE Arca Options Fee Schedule, which 

lists, for electronic executions in Penny Pilot issues, 

(1) the standard Customer Maker rebate of $0.25 per 

contract versus a Taker fee of $0.47, (2) the standard 

NYSE Arca Market Maker Maker rebate of $0.28 

versus a Taker fee of $0.49, and (3) the standard 

Firm and Broker Dealer Maker rebate of $0.10 

versus a Taker fee of $0.49; and for electronic 

executions in non-Penny Pilot issues, (1) the 

standard Customer Maker rebate of $0.75 versus a 

Taker fee of $0.85, (2) the standard NYSE Arca 

Market Maker Maker rebate of $0.05 versus a Taker 

fee of $0.87, and (3) the standard Firm and Broker 

Dealer Maker fee of $0.50 versus a Taker fee of 

$0.89 (it should be noted that all fee and rebate 

amounts described in this footnote are the standard 

amounts listed on the NYSE Arca Options Fee 

Schedule and do not take into account any NYSE 

Arca programs that provide rebates or credits to 

NYSE Arca market participants based on volume 

transacted on NYSE Arca or other such NYSE Arca 

programs). 

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,11 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 that it is 

equitable and not unfairly 

discriminatory to assess lower fees to 

Public Customers as compared to other 

market participants and to provide 

higher rebates to Public Customers as 

compared to other market participants 

other than Market-Makers in some 

circumstances because as noted above, 

Public Customer order flow enhances 

liquidity on the Exchange for the benefit 

of all market participants. Specifically, 

Public 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. The fees and rebates 

offered to Public Customers are 

intended to attract more Public 

Customer trading volume to the 

Exchange. Moreover, the options 

industry has a long history of providing 

preferential pricing to Public Customers, 

and the Exchange’s current Fees 

Schedule currently does so in many 

places, as do the fees structures of many 

other exchanges. Finally, all fee 

amounts listed as applying to Public 

Customers will be applied equally to all 

Public Customers (meaning that all 

Public Customers will be assessed the 

same amount). 

The Exchange believes that it is 

equitable and not unfairly 

discriminatory to, in some 

circumstances, assess lower fees to 

Market-Makers as compared to other 

market participants other than Public 

Customers and provide higher rebates to 

C2 Market-Makers as compared to other 

market participants because C2 MarketMakers, unlike other C2 market 

participants, take on a number of 

obligations, including quoting 

obligations, that other market 

participants do not have. Further, these 

lower fees and higher rebates offered to 

C2 Market-Makers are intended to 

incent C2 Market-Makers to quote and 

trade more on C2, thereby providing 

more trading opportunities for all C2 

market participants. Finally, all fee 

amounts listed as applying to C2 

Market-Makers will be applied equally 

to all C2 Market-Makers (meaning that 

all C2 Market-Makers will be assessed 

the same amount). This concept also 

applies to orders from all other origins. 

It should also be noted that all fee 

amounts described herein are intended 

to attract greater order flow to the 

Exchange, which should therefore serve 

to benefit all Exchange market 

participants. 

The Exchange believes that the 

proposed increases to Taker fees for 

simple, non-complex orders in all 

multiply-listed index, ETF and ETN 

options classes (except RUT) are 

reasonable because the proposed fee 

amounts are equivalent to, and in some 

cases lower than, those assessed for 

similar orders by other exchanges.12

The Exchange believes that the 

proposed increase in the Taker fee for 

complex orders from C2 Market-Makers 

and all other origins (Professional 

Customer, Firm, Broker/Dealer, non-C2 

Market-Maker, JBO, etc.) except Public 

Customers in multiply-listed index, ETF 

and ETN options classes (except RUT) is 

reasonable, equitable, and not unfairly 

discriminatory because the proposed fee 

amount is in the range of, and in some 

cases much lower than, those assessed 

for similar orders by other exchanges.13

The Exchange believes that the 

proposed new fee and rebate structure 

for simple, non-complex orders in 

equity options is reasonable, equitable 

and not unfairly discriminatory because 

the Exchange also believes that the 

proposed new structure will better 

allow the Exchange to compete for, and 

attract more, trading flow, which will 

benefit all C2 market participants. The 

rebates offered are intended to 

encourage C2 Market-Makers to quote 

more often and attract market 

participants to send orders to the 

Exchange, which will then incent 

Takers to trade with those orders and 

quotes. The Exchange believes that the 

proposed new fee and rebate structure is 

also reasonable because it may make it 

easier for market participants to 

determine what their fees will be. The 

Exchange believes that the differences 

between the Maker rebates and Taker 

fees are reasonable, equitable and not 

unfairly discriminatory because they are 

intended to cover the costs associated 

with operating the Exchange’s trading 

systems necessary to provide these 

trading opportunities. Further, the 

amounts of these rebates and fees are as, 

or more, beneficial to C2 market 

participants in many circumstances as 

those offered on other exchanges.14 The 

Exchange believes that its proposal to 

not provide a rebate for simple orders in 

equity options that trade with Public 

Customer complex orders in equity 

options is reasonable, equitable and not 

unfairly discriminatory because the 

Exchange also proposes to provide a 

rebate for Public Customer complex 

orders, and it would not be 

economically feasible or viable to 

provide a rebate on an order that is 

trading with an order that is not 

generating a fee (as this would result in 

a net negative for the Exchange). 

Finally, the Exchange believes that the 

proposed new fee and rebate structure 

for simple, non-complex orders in 

equity options is equitable and not 

unfairly discriminatory because the 

structure and fee amounts are identical 

to those which apply to simple, noncomplex orders in multiply-listed index, 

ETF and ETN options classes. 

The Exchange believes that the 

proposed new fee and rebate structure 

for complex orders in equity options is 

reasonable, equitable and not unfairly 

discriminatory because the Exchange 

also believes that the lower fees for C2 

Market-Maker orders as compared to 

other market participants other than 

Public Customers will encourage C2 

Market-Makers to quote more often and 

send more orders to the Exchange, 

thereby providing more liquidity and 

trading opportunities for other market 

participants. The Exchange believes that 

offering a rebate for Public Customer 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 20 / Friday, January 30, 2015 / Notices 5167 

15See BOX Fee Schedule, Section III, which 

denotes that BOX Market-Makers can pay anywhere 

from $0.10 to $0.80 for a complex order execution 

(depending on the type of order it executes against 

and the options class), with most described fees 

listed at at least $0.40, and orders from all other 

origins (not including Public Customers) can pay 

anywhere from $0.20 to $0.80 for a complex order 

execution (depending on the type of order it 

executes against and the options class), with most 

described fees listed at at least $0.40 and many [sic] 

listed at $0.80. See also PHLX Pricing Schedule, 

Section II, under which Public Customers receive 

no rebate for complex order executions in multiplylisted equity options. 

16See NOM Price List, which lists fees for 

Customer orders that remove liquidity in Penny 

Pilot options at $0.48 per contract and non-Penny 

Pilot options at $0.85 per contract, and for nonCustomer orders that remove liquidity in Penny 

Pilot options at $0.49 per contact and non-Penny 

Pilot options at $0.89 per contract. 

complex orders, whether Maker or 

Taker, will attract Public Customer 

orders to the Exchange. Since other 

market participants prefer to trade with 

Public Customer orders, this will in turn 

attract other market participants to send 

orders to the Exchange. The Exchange 

believes that the differences between the 

Maker and Taker fees are reasonable, 

equitable and not unfairly 

discriminatory because they are 

intended to cover the costs associated 

with operating the Exchange’s trading 

systems necessary to provide these 

trading opportunities. The Exchange 

believes that not offering a rebate to 

Public Customer complex orders that 

trade with other Public Customer orders 

is reasonable, equitable and not unfairly 

discriminatory because this would 

result in the Exchange providing a 

rebate on both sides of a transaction, 

and it would not be economically 

feasible or viable to provide a rebate on 

an order that is trading with an order 

that is not generating a fee (as this 

would result in a net negative for the 

Exchange). Further, the amounts of 

these rebates and fees are as, or more, 

beneficial to C2 market participants in 

many circumstances as those offered on 

other exchanges.15 Finally, the 

Exchange believes that the proposed 

new fee and rebate structure for 

complex orders in equity options is 

equitable and not unfairly 

discriminatory because the structure 

and fee amounts are identical to those 

which apply to complex orders in 

multiply-listed index, ETF and ETN 

options classes. 

The Exchange believes that it is 

reasonable, equitable and not unfairly 

discriminatory to assess no fee and 

provide no rebate for Trades on the 

Open in equity options, both simple and 

complex orders, because this is in line 

with the treatment of Trades on the 

Open in multiply-listed index, ETF and 

ETN options classes. Further, all market 

participants will be subject to this same 

treatment. 

The Exchange believes increasing the 

PULSe fee from $350 per month to $400 

per month for the first 10 users of a 

Permit Holder workstation and from 

$350 to $400 per month per workstation 

for non-Permit Holder workstations is 

reasonable because the Exchange 

expended significant resources 

developing PULSe and desires to recoup 

some of those costs. This change is 

equitable and not unfairly 

discriminatory because all market 

participants who desire to use PULSe 

will be assessed the same fee. 

The Exchange believes that deleting 

the exception for Public Customer 

equity options orders from the standard 

Linkage Routing fee is reasonable 

because, while this change removes an 

exception, it merely makes Linkage 

Routing fees the same amount for all 

orders sent through the Linkage, 

regardless of the type of market 

participant sending the order or 

product. Indeed, this $0.65 fee amount 

(plus applicable Taker fee) is reasonable 

because it is the amount that is 

currently being assessed to all market 

participants for all other orders, 

including to Public Customers for orders 

in multiply-listed index, ETF and ETN 

options classes. Similarly, the Exchange 

believes the proposed change is 

equitable and not unfairly 

discriminatory because it will 

standardize the Linkage Routing fee, 

meaning that this fee structure will 

apply to all C2 market participants 

trading both options and multiply-listed 

index, ETF and ETN options classes. 

Finally, the Exchange believes 

removing all references to Mini-Options, 

which have been delisted, maintains 

clarity in the Fees Schedule and 

promotes just and equitable principles 

of trade by eliminating potential 

confusion and removing impediments to 

and perfecting the mechanism of a free 

and open market and a national market 

system. 

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 that any circumstances in 

which the Exchange assesses a lower 

fee, or provides a higher rebate, to 

Public Customers will impose any 

burden on intramarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act 

because Public Customers order flow as 

discussed above enhances liquidity on 

the Exchange for the benefit of all 

market participants.. These lower fees 

and higher rebates offered to Public 

Customers are intended to attract more 

Public Customer trading volume to the 

Exchange. This, in turn, would increase 

liquidity and trading opportunities for 

other market participants on C2, and 

provide these other market participants 

with greater opportunity to trade with 

Public Customer orders. Therefore, the 

Exchange believes that these lower fees 

and higher rebates for Public Customers 

should serve to benefit all C2 market 

participants. Moreover, the options 

industry has a long history of providing 

preferential pricing to Public Customers, 

and the Exchange’s current Fees 

Schedule currently does so in many 

places, as do the fees structures of many 

other exchanges. Finally, all fee 

amounts listed as applying to Public 

Customers will be applied equally to all 

Public Customers (meaning that all 

Public Customers will be assessed the 

same amount). 

The Exchange does not believe that 

any circumstances in which the 

Exchange assesses a lower fee, or 

provides a higher rebate, to C2 MarketMakers will impose any burden on 

intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act because C2 

Market-Makers, unlike other C2 market 

participants, take on a number of 

obligations, including quoting 

obligations, that other market 

participants do not have. Further, these 

lower fees and higher rebates offered to 

C2 Market-Makers are intended to 

incent C2 Market-Makers to quote and 

trade more on C2, thereby providing 

more trading opportunities for all C2 

market participants. Finally, all fee 

amounts listed as applying to C2 

Market-Makers will be applied equally 

to all C2 Market-Makers (meaning that 

all C2 Market-Makers will be assessed 

the same amount). This concept also 

applies to orders from all other origins. 

The Exchange does not believe that 

the proposed increases to Taker fees for 

simple, non-complex orders in all 

multiply-listed index, ETF and ETN 

options classes (except RUT) will 

impose any burden on intermarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act because they only 

apply to trading on the Exchange. 

Further, these proposed fee amounts are 

equivalent to, and in some cases lower 

than, those assessed for similar orders 

by other exchanges 16, and therefore 

shall continue to encourage 

competition. 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
5168 Federal Register / Vol. 80, No. 20 / Friday, January 30, 2015 / Notices 

17See NOM Price List, which lists fees for orders 

from market participants other than Customers that 

remove liquidity in Penny Pilot options at $0.49 per 

contract and non-Penny Pilot options at $0.89 per 

contract. 

18See NYSE Arca Options Fee Schedule, which 

lists, for electronic executions in Penny Pilot issues, 

(1) the standard Customer Maker rebate of $0.25 per 

contract versus a Taker fee of $0.47, (2) the standard 

NYSE Arca Market Maker Maker rebate of $0.28 

versus a Taker fee of $0.49, and (3) the standard 

Firm and Broker Dealer Maker rebate of $0.10 

versus a Taker fee of $0.49; and for electronic 

executions in non-Penny Pilot issues, (1) the 

standard Customer Maker rebate of $0.75 versus a 

Taker fee of $0.85, (2) the standard NYSE Arca 

Market Maker Maker rebate of $0.05 versus a Taker 

fee of $0.87, and (3) the standard Firm and Broker 

Dealer Maker fee of $0.50 versus a Taker fee of 

$0.89 (it should be noted that all fee and rebate 

amounts described in this footnote are the standard 

amounts listed on the NYSE Arca Options Fee 

Schedule and do not take into account any NYSE 

Arca programs that provide rebates or credits to 

NYSE Arca market participants based on volume 

transacted on NYSE Arca or other such NYSE Arca 

programs). 

19 15 U.S.C. 78s(b)(3)(A). 

20 17 CFR 240.19b–4(f). 21 17 CFR 200.30–3(a)(12). 

The Exchange does not believe that 

the proposed increase in the Taker fee 

for complex orders from C2 MarketMakers and all other origins 

(Professional Customer, Firm, Broker/

Dealer, non-C2 Market-Maker, JBO, etc.) 

except Public Customers in multiplylisted index, ETF and ETN options 

classes (except RUT) will impose any 

burden on intermarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act 

because it only applies to trading on the 

Exchange. Further, the proposed fee 

amount is in the range of, and in some 

cases much lower than, those assessed 

for similar orders by other exchanges,17

and therefore should continue to 

encourage competition. 

The Exchange does not believe that 

the proposed new fee and rebate 

structure for simple orders in equity 

options will impose any burden on 

intermarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act because it 

only applies to trading on the Exchange. 

The Exchange also believes that the 

proposed new structure will better 

allow the Exchange to compete for, and 

attract more, trading flow, thereby 

enhancing competition. Along those 

lines, the amounts of these rebates and 

fees are as, or more, beneficial to C2 

market participants in many 

circumstances as those offered on other 

exchanges.18

The Exchange does not believe that 

the proposed new fee and rebate 

structure for complex orders in equity 

options will impose any burden on 

intermarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act because it 

only applies to trading on the Exchange. 

The Exchange also believes that the 

proposed new structure will better 

allow the Exchange to compete for, and 

attract more, trading flow, thereby 

enhancing competition. 

The Exchange does not believe that 

the proposal to assess no fees and 

provide no rebates for Trades on the 

Open because will impose any burden 

on intermarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act because it 

only applies to trading on the Exchange. 

The Exchange does not believe that this 

proposal will impose any burden on 

intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act because it 

applies equally to all market 

participants. 

The Exchange does not believe that 

the proposed change to the Linkage 

Routing fee will impose any burden on 

intramarket competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act because the 

new proposed fee structure will apply to 

all market participants. The Exchange 

does not believe that the proposed 

change to the Linkage Routing fee will 

impose any burden on intermarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act because it only 

applies to trading on the Exchange and 

orders sent from the Exchange to other 

exchanges via Linkage. 

Should any of the proposed changes 

make C2 a more attractive trading venue 

for market participants at other 

exchanges, such market participants 

may elect to become market participants 

at C2. 

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 19 and paragraph (f) of Rule 

19b–4 20 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. 

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 rule-comments@

sec.gov. Please include File Number SR– 

C2–2015–001 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–C2–2015–001. 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– 

2015–001 and should be submitted on 

or before February 20, 2015. 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 20 / Friday, January 30, 2015 / Notices 5169 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Current cross-currency haircuts are set out in 

the List of Permitted Cover and Limits on Collateral 

published on the Clearing House’s Web site, https:// 

www.theice.com/publicdocs/clear_europe/list-ofpermitted-covers.pdf. 

4 15 U.S.C. 78q–1. 

5 15 U.S.C. 78q–1(b)(3)(F). 

6 15 U.S.C. 78q–1(b)(3)(F). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–01754 Filed 1–29–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74133; File No. SR–ICEEU– 

2015–003] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Notice of Filing 

and Order Granting Accelerated 

Approval of Proposed Rule Change 

Related to New Haircuts 

January 26, 2015. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b-4 thereunder,2

notice is hereby given that on January 

23, 2015, ICE Clear Europe Limited 

(‘‘ICE Clear Europe’’) 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 primarily by ICE Clear Europe. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons and to approve the proposed 

rule change on an accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The principal purpose of the 

proposed rule change is to modify the 

cross-currency haircuts applied by ICE 

Clear Europe to Permitted Cover 

provided by Clearing Members in order 

to address recent volatility in Swiss 

franc (‘‘CHF’’) exchange rates. The 

Clearing House has determined to 

modify the CHF cross-currency haircuts 

as follows: 

PROPOSED CHF CROSS CURRENCY

HAIRCUTS

Currency pair 

Current 

haircut 

(%) 

Proposed 

haircut 

(%) 

CHF–CAD ................. 10.00 16.00 

CHF–CZK ................. 6.00 17.25 

CHF–DKK ................. 6.00 17.25 

CHF–EUR ................. 10.00 17.25 

CHF–GBP ................. 10.00 16.25 

CHF–HUF ................. 6.00 17.25 

CHF–JPY .................. 6.00 16.25 

CHF–NOK ................. 6.00 14.75 

PROPOSED CHF CROSS CURRENCY

HAIRCUTS—Continued 

Currency pair 

Current 

haircut 

(%) 

Proposed 

haircut 

(%) 

CHF–PLN ................. 6.00 18.50 

CHF–SEK ................. 8.00 16.00 

CHF–TRY ................. 6.00 17.50 

CHF–USD ................. 10.00 15.75 

CHF–ZAR ................. 6.00 19.75 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, ICE 

Clear Europe 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 III below. ICE 

Clear Europe has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant aspects of these 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Under its existing margin and haircut 

methodology, ICE Clear Europe imposes 

an additional haircut, referred to as a 

‘‘cross-currency haircut,’’ with respect 

to assets provided by Clearing Members 

as Permitted Cover for margin 

obligations where the Permitted Cover is 

denominated in a different currency 

from that of the relevant margin 

requirement. The cross-currency haircut 

is designed to protect the Clearing 

House against exchange rate risk in the 

event it needs to liquidate the Permitted 

Cover and convert the proceeds into the 

currency of the relevant underlying 

obligation following a Clearing Member 

default.3

As has been publicly reported, on 

January 15, 2015, the Swiss central bank 

discontinued a policy establishing a 

minimum exchange rate of 1.20 Swiss 

francs per Euro. Very large moves in 

Swiss franc exchange rates followed that 

decision, with the result that the Swiss 

franc appreciated approximately 16– 

17% on that day against other major 

currencies such as the US dollar, Euro 

and British pound. Because that level of 

appreciation exceeded the existing 

cross-currency haircut of 10% applied 

by the Clearing House for those 

currency pairs, the Clearing House, 

consistent with its internal policies, 

reviewed the cross-currency haircut 

levels for all relevant Swiss franc 

currency pairs. As a result of that 

review, the Clearing House determined 

to modify the CHF cross-currency 

haircuts as set forth in Item I above. 

In reviewing the haircuts, the Clearing 

House applied, consistent with its 

policies and practices, a value at risk 

model under both parametric and 

historical simulation methods, taking 

into account both recent volatility and 

historical volatility, and looking at both 

one and two day liquidation period 

assumptions for the relevant Permitted 

Cover. 

2. Statutory Basis 

ICE Clear Europe believes that the 

change in CHF cross-currency haircuts 

is consistent with the requirements of 

Section 17A of the Act 4 and the 

regulations thereunder applicable to it, 

and in particular, is consistent with the 

prompt and accurate clearance of and 

settlement of securities transactions, the 

safeguarding of securities and funds in 

the custody or control of ICE Clear 

Europe and the protection of investors 

and the public interest, within the 

meaning of Section 17A(b)(3)(F) of the 

Act.5 ICE Clear Europe is proposing the 

change in response to a significant 

recent increase in the volatility of CHF 

exchange rates as observed in the 

market. The Clearing House has 

determined, based on the application of 

its internal policies and value at risk 

models, that the proposed increase in 

cross-currency haircuts is appropriate to 

protect the Clearing House against 

currency risk where Clearing Members 

provide Permitted Cover in one 

currency to cover margin obligations in 

a different currency. The change thus 

enhances the Clearing House’s risk 

management, margin framework and 

financial resources to support its 

clearing operations in the event of 

Clearing Member default. As a result, 

ICE Clear Europe believes that the 

change will facilitate the prompt and 

accurate clearance and settlement of 

securities and derivatives transactions, 

and promote the public interest and the 

protection of investors, within the 

meaning of Section 17A(b)(3)(F) of the 

Act.6


asabaliauskas on DSK5VPTVN1PROD with NOTICES