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16 Including ‘‘stip’’ trades and any other TBA 

transactions not intended for TBA Netting. 

17 15 U.S.C. 78s(b)(2)(C). 

18 15 U.S.C. 78q–1(b)(3)(F). 

19 15 U.S.C. 78q–1. 

20 15 U.S.C. 78s(b)(2). 

21 In approving the proposed rule change, the 

Commission considered the proposal’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange initially filed the proposed fee 

changes on December 31, 2014 (SR–CBOE–2014– 

097). On January 14, 2015, the Exchange withdrew 

that filing and submitted this filing. 

• Rule 11, Section 1 is revised to take 

into account the fact that SBO Trades 

are novated upon comparison and are, 

therefore, legally between MBSD 

clearing members and FICC after 

comparison. 

• Rule 15 is revised to clarify the 

current process with respect to 

transactions submitted to and compared 

by FICC, whereby in the event a 

member’s original counterparty becomes 

insolvent, such member cannot 

unilaterally modify its obligations with 

respect to transactions originally 

entered with such counterparty. 

• Rule 16 is revised to clarify the 

current process with respect to 

transactions submitted to and compared 

by FICC, whereby in the event a 

member’s original counterparty becomes 

insolvent, such member cannot 

unilaterally modify its obligations with 

respect to transactions originally 

entered with such counterparty. 

• Rule 17, Section 2 is revised to 

clarify the current process whereby 

when FICC ceases to act for a clearing 

member, such member’s Trade-forTrade Transactions 16 may be disposed 

of based upon their generic terms such 

as agency, product, coupon rate and 

maturity. The other changes are 

typographical corrections. 

• Rule 17A is revised to clarify that 

in the event of FICC’s default, novation 

is deemed to have occurred with respect 

to all transactions at the time such 

transactions are compared, whether or 

not such transactions are SBO-Destined 

Trades that would otherwise have been 

novated at comparison. The other 

changes to this provision are 

grammatical corrections. 

III. Discussion 

Section 19(b)(2)(C) of the Act 17

directs the Commission to approve a 

proposed rule change of a selfregulatory organization if it finds that 

such proposed rule change is consistent 

with the requirements of the Act and the 

rules and regulations thereunder 

applicable to such organization. Section 

17A(b)(3)(F) of the Act 18 requires, 

among other things, that the rules of a 

clearing agency be designed to achieve 

several goals, including promoting the 

prompt and accurate clearance and 

settlement of securities transactions 

and, to the extent applicable, derivative 

agreements, contracts, and transactions. 

The Commission concludes that the 

proposed rule change is consistent with 

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

of the Act, and the rules and regulations 

thereunder, because by moving novation 

for trades that enter GSD’s Netting 

system and MBSD’s TBA Netting 

system, the rule change, as approved, 

should clarify FICC’s responsibilities to 

its members and remove potential 

uncertainty that previously existed due 

to a mismatch between the time of 

guaranty and the time of novation. As a 

result, such clarity should further 

facilitate the prompt and accurate 

clearance and settlement of securities 

transactions. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act, particularly 

those set forth in Section 17A,19 and the 

rules and regulations thereunder. 

IT IS THEREFORE ORDERED, 

pursuant to Section 19(b)(2) of the 

Act,20 that the proposed rule change 

(SR–FICC–2014–11) be, and hereby is, 

APPROVED.21

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–01747 Filed 1–29–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74134; File No. SR–CBOE– 

2015–005] 

Self-Regulatory Organizations; 

Chicago Board 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, 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. 

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 make a 

number of changes to its Fees 

Schedule.3

COB Taker Surcharge 

The Exchange proposes to implement 

a Complex Order Book (‘‘COB’’) Taker 

Surcharge. Specifically, the Exchange 

proposes to adopt a $0.05 per contract 

per side surcharge for non-customer 

complex order executions that take 

liquidity from the COB in all underlying 

classes except OEX, XEO, SPX 

(including SPXW), SPXpm, SRO, VIX, 

VXST, Volatility Indexes and binary 

options (‘‘Underlying Symbol List A’’) 

and mini-options. Additionally, the 

Exchange proposes to provide that the 

COB Taker Surcharge will not be 

assessed on non-customer complex 

order executions in the Complex Order 

Auction (‘‘COA’’), the Automated Aim 

Mechanism (‘‘AIM’’), orders originating 

from a Floor Broker PAR, or electronic 


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4See e.g., NYSE Arca, Inc. (‘‘Arca’’) Options Fees 

Schedule, page 7 (Electronic Complex Order 

Executions) which provides that for complex orderto-complex order transactions, non-customers are 

assessed $0.50 in penny pilot options and $0.85 in 

non-penny pilot options. Depending upon the type 

of market participant a CBOE TPH is, non-customer 

CBOE TPHs would be assessed between $0.08 and 

$0.65 (which includes the proposed surcharge) for 

such transactions (see CBOE Fees Schedule). 

5Excluded from the VIP credit are options in 

Underlying Symbol List A, RUT, DJX, XSP, 

XSPAM, credit default options, credit default basket 

options, mini-options, QCC trades, public customer 

to public customer electronic complex order 

executions, and executions related to contracts that 

are routed to one or more exchanges in connection 

with the Options Order Protection and Locked/

Crossed Market Plan referenced in Rule 6.80 (see 

CBOE Fees Schedule, Volume Incentive Program). 

6For example, a 750-lot butterfly spread would 

total 3,000 contracts. As each leg of the order is 

below 1,000 contracts, the Exchange would pay 

credits for each contract of each leg, totaling 3,000 

contacts. If for example leg 1 of a complex order 

was for 600 contracts and leg 2 of the order was for 

1,200 contracts, the Exchange would pay a VIP 

credit for a total of 1,600 contracts (i.e., all 600 

contracts on leg 1 and 1,000 contracts on leg 2). 

7To demonstrate this cap, consider the following: 

a TPH submits an order for 1500 contracts. Of the 

1500 contracts, 400 contracts execute electronically 

against a Market-Maker quote. The remaining 1,100 

contracts are executed via HAL. The Exchange 

would pay credits for a total of 1,400 contracts (i.e., 

the 400 contracts executed outside of HAL and 

1,000 contracts executed in HAL). 

8See CBOE Fees Schedule, Hybrid Agency 

Liaison (‘‘HAL’’) Step Up Rebate. 

executions against single leg markets. 

The purpose of the COB Taker 

Surcharge is to help offset the rebate 

given to complex orders under the 

Volume Incentive Program (‘‘VIP’’). The 

Exchange notes that even with the 

additional surcharge, the amount of 

Exchange fees assessed for noncustomer complex order-to-complex 

order executions that take liquidity are 

less than those assessed for similar 

transactions on certain other 

exchanges.4

CBOE Proprietary Products Sliding 

Scale 

The CBOE Proprietary Products 

Sliding Scale table provides that 

Clearing Trading Permit Holder 

Proprietary transaction fees and 

transaction fees for Non-Clearing 

Trading Permit Holder Affiliates in 

OEX, XEO, SPX, SPXpm, VIX, VXST, 

and VOLATILITY INDEXES are reduced 

provided a Clearing Trading Permit 

Holder (‘‘Clearing TPH’’) reaches certain 

average daily volume (‘‘ADV’’) 

thresholds in all underlying symbols 

excluding Underlying Symbol List A 

and mini-options on the Exchange in a 

month. The Exchange proposes to 

implement two changes to the CBOE 

Proprietary Products Sliding Scale. 

First, the Exchange proposes to increase 

the current qualifying ADV thresholds. 

Specifically, the threshold 18,000 ADV 

to 71,999 ADV would be changed to 

20,000 ADV to 79,999 ADV, and the 

threshold 72,000 ADV and above would 

be changed to 80,000 ADV and above. 

The purpose of the proposed change is 

to account for increased trading volume 

in multi-listed products across the 

industry. The Exchange also proposes to 

make corresponding changes related to 

the ADV thresholds to Footnote 23, 

which Footnote relates to the CBOE 

Proprietary Products Sliding Scale. The 

Exchange next proposes to increase the 

rates set forth in the B3 and B2 tiers (for 

Proprietary Product Volume from 0.00% 

to 8.50% of total Monthly Proprietary 

Product Firm (F) volume) by 2 cents and 

5 cents, respectively, and the rate in the 

A2 tier (for Proprietary Product Volume 

from 0.00% to 6.50% of total Monthly 

Proprietary Product Firm (F) volume) by 

1 cent. The proposed changes are 

further detailed below. 

Current Proposed 

Tier Proprietary product volume 

thresholds 

Transaction fee 

per contract Tier Proprietary product volume thresholds 

Transaction fee 

per contract 

≥18,000 ADV ≤71,999 ADV in multi list products ≥20,000 ADV ≤79,999 ADV in multi list products 

B3 ............. 0.00%–6.50% ........................... $0.18 B3 ................ 0.00%–6.50% ........................... $0.20 

B2 ............. 6.51%–8.50% ........................... 0.05 B2 ................ 6.51%–8.50% ........................... 0.10 

B1 ............. Above 8.50% ............................ 0.02 B1 ................ Above 8.50% ............................ 0.02 

≥72,000 ADV in multi list products ≥80,000 ADV in multi list products 

A2 ............. 0.00%–6.50% ........................... 0.15 A2 ................ 0.00%–6.50% ........................... 0.16 

A1 ............. Above 6.50% ............................ 0.01 A1 ................ Above 6.50% ............................ 0.01 

The purpose of increasing the 

Transaction Fee Per Contract rates (and 

thereby reducing the amount of the 

discount Clearing TPHs may receive on 

proprietary products) is to moderate the 

discount levels for these products in 

view of their growth and performance. 

Particularly, the Exchange does not 

believe it’s necessary to maintain the 

existing discounted rates for these tiers, 

but seeks to maintain an incremental 

incentive for Clearing TPHs to strive for 

the highest tier level. 

Volume Incentive Program 

The Exchange next proposes to amend 

the VIP rebate schedule. By way of 

background, under VIP, the Exchange 

credits each Trading Permit Holder 

(‘‘TPH’’) the per contract amount set 

forth in the VIP table resulting from 

each public customer (‘‘C’’ origin code) 

order transmitted by that TPH (with 

certain exceptions) which is executed 

electronically on the Exchange in all 

underlying symbols excluding 

Underlying Symbol List A, RUT, DJX, 

XSP, XSPAM, credit default options, 

credit default basket options and minioptions, provided the TPH meets certain 

volume thresholds in a month.5

The Exchange first proposes to reduce 

the VIP credit for complex orders in 

Tiers 2 and 3 from $0.17 per contract to 

$0.16. The purpose of this change is to 

adjust the incentive tiers accordingly as 

competition requires while maintaining 

an incremental incentive for TPH’s to 

strive for the highest tier level. 

The Exchange next proposes to 

implement a cap on VIP credits at 1,000 

contracts per simple order executed 

electronically in AIM and 1,000 

contracts per leg per complex order 

executed electronically in AIM.6 The 

Exchange also proposes to cap orders 

executed electronically in the Hybrid 

Agency Liaison (‘‘HAL’’) mechanism at 

1,000 contracts per auction quantity.7

The Exchange is proposing to 

implement the cap on executions via 

AIM because the vast majority of orders 

over 1,000 contracts executed via AIM 

are traded primarily against the 

submitting contra party, for which the 

Exchange collects minimal revenue. 

Additionally, in HAL, the Exchange 

provides a HAL Step-Up Rebate 8 which 

reduces the collected net Exchange 


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9For example, if a user adds a new login ID in 

March 2015, the user will receive a fee waiver for 

that login ID for March 2015. 

10WebCRD is the Central Registration Depository 

system which is operated by the Financial Industry 

Regulatory Authority, Incorporated (‘‘FINRA’’). 

transaction fees to those market 

participants that qualify. The Exchange 

notes that generally, the parties which 

collect this credit have greater 

participation in larger orders. As such, 

it would not be viable for the Exchange 

to pay credits on contracts that do not 

create corresponding and offsetting 

revenue for the Exchange. The Exchange 

notes that all contracts executed in AIM 

(including complex AIM) and all 

contracts executed in HAL will continue 

to be counted towards the qualifying 

percentage thresholds, as the Exchange 

would like to continue to encourage the 

use of these price improvement 

mechanisms. 

Finally with respect to VIP, the 

Exchange proposes to provide that 

multiple simple orders from the same 

TPH in the same series on the same side 

of the market that are received within 

three hundred (300) seconds and 

executed in AIM or HAL will be 

aggregated for purposes of determining 

the order quantity subject to the cap 

discussed above. For this aggregation, 

activity in AIM and HAL will be 

aggregated separately. The AIM 

aggregation timer will begin with an 

order entered into AIM and continue for 

300 seconds, aggregating any other 

orders entered into AIM in the same 

series on the same side of the market by 

the same affiliated TPH. The HAL 

aggregation timer will begin at the start 

of a HAL auction and continue for 300 

seconds, aggregating any other orders 

executed in HAL in the same series on 

the same side of the market for the same 

affiliated TPH. Any portion of the 

original order quantity that is executed 

outside of HAL will not be part of the 

aggregation or counted towards the 

1,000 contract threshold. The Exchange 

believes this change should prevent 

TPHs from breaking up their orders in 

order to avoid the fee cap. 

Finally, the Exchange proposes to 

relocate the language currently set forth 

in the Notes section of the VIP table to 

a new footnote (Footnote 36). In light of 

the additional language being added to 

the current Notes section of the VIP 

table, the Exchange believes the 

relocation of the existing language to a 

new and separate footnote will make the 

Fees Schedule easier to read. No 

substantive changes to the relocated 

language are being made. 

SPX Customer Large Trade Discount 

The Customer Large Trade Discount 

program (the ‘‘Discount’’) provides a 

discount in the form of a cap on the 

quantity of customer (‘‘C’’ origin code’’) 

contracts that are assessed transactions 

fees in certain options classes. The 

Discount table in the Fees Schedule sets 

forth the quantity of contracts necessary 

for a large customer trade to qualify for 

the Discount, which varies by product. 

Currently, under the ‘‘Products’’ section 

in the Discount table, the following S&P 

products for which the Discount is in 

effect are listed: ‘‘SPX, SPXw, SPXpm, 

SRO.’’ Customer transaction fees for 

each of these products are currently 

only charged up to the first 10,000 

contracts. The Exchange proposes to 

raise the quantity of SPX, SPXw, 

SPXpm, and SRO contracts necessary 

for a large customer trade to qualify for 

the Discount from 10,000 contracts per 

order to 15,000 contracts per order. The 

purpose of the proposed rule change is 

to moderate the discount level for 

Customer (C) orders in the SPX product 

group in view of its mature and 

established position in the industry. 

Facility Fees Communications 

The Exchange proposes to increase 

the Exchangefone relocation fee from 

$116 to $129. The Exchange contracts 

with a vendor to provide the 

Exchangefone relocations, and this 

vendor has increased its fees, so the 

Exchange proposes to increase the 

Exchangefone relocation fee to reflect 

the increased vendor cost. 

The Exchange also proposes to 

eliminate certain telecommunication 

fees. The Exchange currently assesses 

monthly fees for three types of services 

the Exchange offers related to 

PhoneMail: (i) Basic Service, (ii) 

PhoneMail with Outcall and (iii) 

PhoneMail with Outcall & Pager. The 

Exchange notes that no TPHs have 

availed themselves of these services in 

a number of years. As such, the 

Exchange believes offering such services 

is no longer necessary and proposes to 

accordingly delete all fees for and 

references to such services from the 

Fees Schedule. 

Floor Broker Workstation and PULSe 

Workstation 

The Exchange proposes raising the 

Floor Broker Workstation (‘‘FBW’’) fee 

from $350 per month (per login ID) to 

$400 per month (per login ID). The 

Exchange’s vendor that provides the 

FBW charges the Exchange more than 

$350 per month (per login ID) for the 

FBW (actually, more than $350 per 

month (per login ID), and the Exchange 

had been subsidizing those costs for 

FBW users. However, it is no longer 

economically feasible to subsidize those 

costs to that great an extent. As such, 

the Exchange proposes increasing the 

FBW fee to $400 per month (per login 

ID), which still includes a subsidy for 

FBW users (though smaller). 

Additionally, the Exchange proposes 

to establish a FBW fee for an updated 

version of FBW (‘‘FBW2’’), which will 

be made available shortly to all TPHs. 

The fee for FBW2 will be the same as 

the existing FBW fee (i.e., $400 per 

month (per login ID). The Exchange also 

proposes adopting a fee waiver for the 

months of January and February 2015. 

Additionally, the Exchange proposes to 

provide that, after March 1, 2015 the 

monthly fee for FBW2 login IDs will be 

waived for the first month.9 The 

purpose of the proposed fee waivers is 

to give new users time to become 

familiar with and fully acclimated to the 

new FBW workstation functionality. 

The Exchange notes that after February 

2015 (and absent an applicable fee 

waiver noted above), TPHs will be 

charged each of $400 for FBW and 

FBW2 (i.e., total of $800) if such users 

continue to use both FBW and FBW2. 

The Exchange also proposes raising 

the PULSe On-Floor Workstation 

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

charges a fee of $350 per month for the 

first 10 users of a TPH workstation and 

$100 per month for all subsequent users. 

TPHs may also make the workstation 

available to their customers, which may 

include non-broker dealer public 

customers and non-TPH broker dealers 

(referred to herein as ‘‘non-TPHs’’). For 

such non-TPH 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 TPH and nonTPH workstations. The Exchange 

expended significant resources 

developing PULSe, and intends to 

recoup some of those costs. Further, 

because PULSe and FBW serve similar 

functions, the Exchange desires to 

assess equivalent fees for each so as not 

to offer a pricing advantage for one over 

the other. 

Proprietary Registration Fees 

The Exchange next proposes to raise 

the Initial Proprietary Registration fee 

from $50 to $65 and the Annual 

Proprietary Registration fee from $25 to 

$40. The Initial Proprietary Registration 

fee is payable by any TPH organization 

for the registration of any associated 

person on WebCRD 10 with the 

Proprietary Trader registration. The 

Annual Proprietary Registration fee is 

payable annually by any TPH 

organization for each associated person 


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11See International Securities Exchange, LLC 

(‘‘ISE’’) Schedule of Fees, Section VIII.B., which 

lists Network Ethernet fees of $750 per month for 

1 Gigabit and $4,000 per month for 10 Gigabits, and 

a Network Ethernet—Low Latency fee of $7,000 per 

month for 10 Gigabits, and see also Miami 

International Securities Exchange LLC (‘‘MIAX’’) 

Options Fees Schedule, Section 5(a), which lists 

connectivity fees of $1,000 per month for 1 Gbps 

and $5,000 per month for 10 Gbps. 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(5). 

14 15 U.S.C. 78f(b)(4). 

15See e.g., NYSE Arca, Inc. (‘‘Arca’’) Options Fees 

Schedule, page 7 (Electronic Complex Order 

Executions) which provides that for complex orderto-complex order transactions, non-customers are 

assessed $0.50 in penny pilot options and $0.85 in 

non-penny pilot options. Depending upon the type 

of market participant a CBOE TPH is, non-customer 

CBOE TPHs would be assessed between $0.08 and 

$0.65 (which includes the proposed surcharge) for 

such transactions (see CBOE Fees Schedule). 

16See ISE Schedule of Fees, Section I (which lists 

regular Maker rebates and fees and Taker fees for 

Select Symbols) as compared to Section II (which 

lists complex order fees and rebates for Select 

Symbols). Market participants are assessed higher 

fees for executing complex orders. 

17See CBOE Fees Schedule, Floor Brokerage Fees. 

that the TPH organization maintains 

registered on WebCRD with the 

Proprietary Trader registration. By way 

of background, the Exchange adopted 

these fees in conjunction with the 

implementation of the then new 

Proprietary Trading registration 

requirement (the ‘‘Proprietary Trading 

Registration Program’’ or ‘‘Program’’). 

These fees were adopted to recoup some 

of the costs expended to maintain the 

Program. The Exchange notes that the 

Proprietary Trading Registration 

Program continues to require on-going 

work, including testing and monitoring 

of the WebCRD system, as well as 

consideration of new applicants. In 

order to offset these increasing costs, the 

Exchange proposes to increase the 

Initial Proprietary Registration fee and 

the Annual Proprietary Registration fee. 

CBOE Command Connectivity Changes 

Next, the Exchange proposes to 

increase Network Access Port fees. By 

way of background, CBOE market 

participants can access the Exchange’s 

trading systems via Network Access 

Ports, and can elect for a Network 

Access Port (or Ports) of either 1 gigabit 

per second (‘‘Gbps’’) or 10 Gbps. 

Currently, the Exchange assesses a fee of 

$500 per month for a 1 Gbps Network 

Access Port and a fee of $3,000 per 

month for a 10 Gbps Network Access 

Port. The Exchange has expended 

significant resources setting up, 

providing and maintaining this 

connectivity, and the costs related to 

such provision and maintenance has 

increased. The Exchange desires to 

recoup such increased costs. Therefore, 

the Exchange proposes to amend its 

Network Access Port fees to increase the 

fee for a 1 Gbps Network Access Port to 

$750 per month and for a 10 Gbps 

Network Access Port to $3,500 per 

month. These new fee amounts are still 

within the range of, and in some cases 

less than, similar fees assessed by other 

exchanges.11

The ‘‘Notes’’ section that describes the 

Network Access Port fees provides 

detail which states that ‘‘Separate 

Network Access Port fees are assessed 

for unicast (orders, quotes) and 

multicast (market data) connectivity 

(i.e., if a TPH uses the 1 Gbps Network 

Access Port for unicast and multicast 

connectivity, the TPH will be charged 

$1,000 per month and if a TPH uses the 

1 Gbps Disaster Recovery Network 

Access Port for unicast and multicast 

connectivity, the TPH will be charged 

$500 per month.)’’. The example 

provided above that states that, if a TPH 

uses the 1 Gbps Network Access Port for 

unicast and multicast connectivity, the 

TPH will be charged $1,000 per month, 

is based on the current 1 Gbps Network 

Access Port fee of $500 per month. 

Because the Exchange herein proposes 

to increase the fee for a 1 Gbps Network 

Access Port to $750 per month, the 

Exchange needs to also update the 

example to state that ‘‘if a TPH uses the 

1 Gbps Network Access Port for unicast 

and multicast connectivity, the TPH 

will be charged $1,500 per month . . .’’ 

The proposed change will accurately 

reflect the proposed new fee amount 

and provide correct guidance to market 

participants reading the Fees Schedule. 

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.12 Specifically, 

the Exchange believes the proposed rule 

change is consistent with the Section 

6(b)(5) 13 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,14 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 the 

proposal to adopt a $0.05 per contract 

per side surcharge for noncustomer 

complex order executions that remove 

liquidity from the COB is reasonable 

because although a surcharge is being 

added, the total amount assessed to 

these transactions is still within the 

range of fees paid by other market 

participants for similar transactions.15

Further, other exchanges assess higher 

fees for complex orders than for 

noncomplex ones.16 Applying the COB 

Taker Surcharge to all market 

participants except customers is 

equitable and not unfairly 

discriminatory because other market 

participants generally prefer to execute 

their orders against customer orders. By 

exempting customer orders, the COB 

Taker Surcharge will not discourage the 

sending of customer orders, and 

therefore there should still be plenty of 

customer orders for other market 

participants to trade with. Further, the 

options industry has a long-standing 

practice of assessing preferable fee 

structures to customers. Excluding from 

the COB Taker Surcharge options in 

Underlying Symbol List A is equitable 

and not unfairly discriminatory because 

the Exchange has devoted a lot of 

resources to develop its proprietary 

options classes, and therefore does not 

desire to risk discouraging the trading of 

such proprietary singly-listed options 

classes. Excluding mini-options from 

the COB Taker Surcharge is reasonable 

because the Exchange does not currently 

pay VIP credit for mini-options, so the 

economic differential which the COB 

taker fee is addressing (i.e., offsetting the 

VIP complex order credits) is not 

present for mini-options. Excluding 

mini-options from the COB Taker 

Surcharge is not unfairly discriminatory 

because it will apply to all TPHs. 

Limiting the COB Taker Surcharge to 

orders entered electronically 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. The Exchange believes it 

is reasonable and not unfairly 

discriminatory to exclude complex 

orders that originate from a Floor Broker 

PAR station because such transactions 

are already subject to Floor Brokerage 

fees.17 Additionally, Floor Brokers 

ensure that the difficult-to-execute 

orders (such as large and complex 


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orders) are able to be executed manually 

by accessing the CBOE’s in-person 

market-maker crowds, while also 

helping to achieve price improvement 

and the Exchange does not want to 

discourage this activity. The Exchange 

notes that a similar exemption exists for 

the Hybrid 3.0 Surcharge. The Exchange 

believes that it is equitable and not 

unfairly discriminatory to only assess 

this surcharge to those removing 

liquidity from the market (‘‘Takers’’) 

and not Makers because the Exchange 

wants to continue to encourage market 

participation and price improvement. 

The Exchange next notes that when a 

Market-Maker submits a quote, the 

Market-Maker does not know whether it 

will trade with a simple or complex 

order. As such, the Exchange believes it 

is reasonable, equitable and not unfairly 

discriminatory to exclude electronic 

executions against single leg markets 

because it wants to encourage MarketMakers to continue to provide trading 

opportunities and tight spreads, which 

they may be discouraged to do if there 

is a possibility they will be assessed a 

surcharge if and when their quotes fills 

against a complex order. Finally, the 

Exchange believes it’s reasonable, 

equitable and not unfairly 

discriminatory to exclude from the COB 

Taker Surcharge executions in COA and 

AIM because the Exchange wants to 

continue to encourage price 

improvement via these functionalities 

and because this exclusion is applicable 

to all TPHs. 

The Exchange believes the proposal to 

change the qualifying volume 

thresholds for the reduced fees in the 

CBOE Proprietary Products Sliding 

Scale is reasonable because the changes 

account for the increase in multi-listed 

trading volumes since the ADV 

thresholds were established. The 

Exchange believes it is equitable and not 

unfairly discriminatory because the 

proposed changes to the qualifying 

volume thresholds apply to all Clearing 

TPHs. 

The Exchange believes increasing the 

rates in the B3, B2 and A2 tiers of the 

CBOE Proprietary Products Sliding 

Scale (and thereby reducing the overall 

discount) is reasonable because it still 

provides Clearing TPHs an opportunity 

to receive notable discounted rates on 

classes in Underlying Symbol list A for 

reaching certain qualifying volume 

thresholds that they would not 

otherwise receive (now just a smaller 

discount). Additionally, the Exchange 

notes that lower fees for executing more 

contracts is equitable and not unfairly 

discriminatory because it provides 

market participants with an incentive to 

execute more contracts on the Exchange. 

This brings greater liquidity and trading 

opportunity, which benefits all market 

participants. The Exchange believes that 

the proposed change is not unfairly 

discriminatory because it will apply to 

all Clearing TPHs that meet the 

qualifying volume thresholds. The 

Exchange also believes offering lower 

fees under the CBOE Proprietary 

Products Sliding Scale to Clearing TPHs 

and not other CBOE market participants 

is equitable and not unfairly 

discriminatory because Clearing TPHs 

must take on certain obligations and 

responsibilities, such as clearing and 

membership with the Options Clearing 

Corporation, as well as significant 

regulatory burdens and financial 

obligations, that other market 

participants are not required to 

undertake. 

The Exchange believes it’s reasonable 

to reduce the VIP credit for complex 

orders in Tiers 2 and 3 from $0.17 per 

contract to $0.16 because it is 

decreasing a mere $0.01 and it still 

provides an opportunity for TPHs to 

receive credits for complex orders for 

reaching certain qualifying volume 

thresholds that they would not 

otherwise receive (now just a smaller 

discount). The Exchange believes the 

proposed change is equitable and not 

unfairly discriminatory because it 

applies to all TPHs that meet the 

qualifying volume thresholds. 

The Exchange believes that the 

proposal to implement a cap on VIP 

credits at 1,000 contracts per simple 

order and 1,000 contracts per leg per 

complex order for orders executed 

electronically in AIM and a cap of 1,000 

contracts per auction quantity for orders 

executed in HAL is reasonable because 

in both cases the exchange collects little 

or no net transaction fees from the 

contra parties, and as such, the 

Exchange does not wish to also provide 

a credit on these transactions as it 

would result in the Exchange paying for 

such transactions without collecting any 

revenue (a net negative), which would 

not be economically prudent. 

Additionally, the Exchange believes the 

proposed cap is equitable and not 

unfairly discriminatory because it 

applies to all TPHs. 

The Exchange believes it’s reasonable, 

equitable and not unfairly 

discriminatory to provide that all 

contracts executed in AIM (including 

complex AIM) and all contracts 

executed in HAL will continue to be 

counted towards the percentage 

thresholds because the Exchange would 

like to continue to encourage the use of 

these price improvement mechanisms 

and because the proposed change would 

apply to all TPHs. The Exchange also 

believes its reasonable, equitable and 

not unfairly discriminatory to provide 

that multiple simple orders from the 

same TPH in the same series on the 

same side of the market that are 

received within three hundred (300) 

seconds will be aggregated for purposes 

of determining the order quantity 

subject to the cap, as the Exchange 

believes this should prevent TPHs from 

breaking up their orders in order to 

avoid the fee cap and it would apply to 

all TPHs. 

The Exchange believes the relocation 

of the current language in the Notes 

section of the VIP table to a new 

Footnote of the Fees Schedule will make 

the Fees Schedule easier to read and 

avoid potential confusion, thereby 

removing impediments to and 

perfecting the mechanism of a free and 

open market and a national market 

system, and, in general, protecting 

investors and the public interest. 

The Exchange believes that raising the 

discount threshold for SPX (including 

SPXw), SPXPM and SROs is reasonable 

because customers will still be receiving 

a discount for large trades that they 

would not otherwise receive. This 

change is equitable and not unfairly 

discriminatory because all customers 

whose large trades qualify for the 

Discount will still receive it and the 

SPX product group has reached a 

mature and established level since its 

introduction while other products, such 

as VIX, have not. 

The Exchange believes that the 

increased Exchangefone relocation fee is 

reasonable because the increase is being 

enacted to reflect an increase in the 

amount that a vendor charges the 

Exchange to provide the Exchangefone 

relocations. The Exchange believes that 

this change is equitable and not unfairly 

discriminatory because the increased 

Exchangefone relocation fee will apply 

to all market participants who request 

an Exchangefone relocation. 

Additionally, the Exchange believes the 

deletion of the PhoneMail services and 

fees is reasonable, equitable and not 

unfairly discriminatory because it 

merely removes fees associated with 

outdated services that have not been 

used by TPHs in a number of years. 

Increasing the PULSe fee from $350 

per month to $400 per month for the 

first 10 users of a TPH workstation and 

from $350 to $400 per month per 

workstation for non-TPH workstations is 

reasonable because the Exchange 

expended significant resources 

developing PULSe and desires to recoup 

some of those costs. Moreover, the 

Exchange will be assessing the same 

amount for the FBW, which is a similar 

product. This change is equitable and 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 20 / Friday, January 30, 2015 / Notices 5187 

18See ISE Schedule of Fees, Section VIII.B., 

which lists Network Ethernet fees of $750 per 

month for 1 Gigabit and $4,000 per month for 10 

Gigabits, and a Network Ethernet—Low Latency fee 

of $7,000 per month for 10 Gigabits, and see also 

MIAX Options Fees Schedule, Section 5(a), which 

lists connectivity fees of $1,000 per month for 1 

Gbps and $5,000 per month for 10 Gbps. 

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

20 17 CFR 240.19b–4(f). 

not unfairly discriminatory because all 

market participants who desire to use 

PULSe will be assessed the same fee, 

and because the same amount is being 

assessed for use of a similar product, the 

FBW. 

Increasing the FBW fee from $350 per 

month (per login ID) to $400 per month 

(per login ID) is reasonable because the 

Exchange is charged by the vendor that 

provides the FBW more than $350 per 

month (per login ID) and simply wants 

to reduce the extent to which the 

Exchange subsidizes such costs. This 

change is equitable and not unfairly 

discriminatory because all market 

participants who desire to use the FBW 

will be assessed the same fee. 

Implementing a $400 per month (per 

login ID) for FBW2 is reasonable 

because the Exchange will be charged 

by the vendor that provides FBW2 more 

than $400 per month (per login ID) and 

again simply wants to reduce the extent 

to which the Exchange subsidizes these 

costs. This change is equitable and not 

unfairly discriminatory because all 

market participants who desire to use 

FBW2 will be assessed the same fee. 

The Exchange believes it is reasonable 

to provide a waiver for the months of 

January 2015 and February 2015 

because it allows new users time to 

become familiar with and fully 

acclimated to the new FBW 

functionality and incentivizes the users 

to begin this process as soon as the new 

functionality becomes available. The 

Exchange believes it is reasonable to 

provide a waiver for the first month for 

a new login ID beginning March 1, 2015, 

because it allows a new user after 

February 2015 to fully acclimate to the 

new FBW functionality. The Exchange 

believes that the proposed changes 

regarding the fee waivers are equitable 

and not unfairly discriminatory because 

it applies to all new users of FBW2. 

Increasing the Initial Proprietary 

Registration Fee from $50 to $65 and the 

Annual Proprietary Registration fee 

from $25 to $40 is reasonable because 

the Exchange continually expends 

resources in maintaining the Proprietary 

Trading Registration Program and 

desires to recoup some of the increasing 

costs. This change is equitable and not 

unfairly discriminatory because all 

market participants who register for the 

Proprietary Trader registration will be 

assessed the same fee. 

The Exchange believes that the 

proposed changes to the Network 

Access Port fees are reasonable because 

the Exchange has expended significant 

resources setting up, providing and 

maintaining this connectivity, and the 

costs related to such provision and 

maintenance have increased. The 

Exchange merely desires to recoup such 

increased costs. The Exchange believes 

that the proposed changes to the 

Network Access Port fees are equitable 

and not unfairly discriminatory because 

the newly-increased fees will, as before, 

be applied in the same manner to all 

CBOE market participants (in that all 

CBOE market participants who seek a 1 

Gbps Network Access Port will be 

assessed the new $750 per port per 

month fee, and all CBOE market 

participants who seek a 10 Gbps 

Network Access Port will be assessed 

the new $3,500 per port per month fee). 

Assessing a higher fee for 10 Gbps 

connectivity than for 1 Gbps 

connectivity is equitable and not 

unfairly discriminatory because 10 Gbps 

connectivity is more robust than 1 Gbps 

connectivity, and requires more costly 

equipment and maintenance, and the 

Exchange must recoup the costs related 

to providing such connectivity. Further, 

these new fee amounts are still within 

the range of, and in some cases less 

than, similar fees assessed by other 

exchanges.18

The Exchange believes that the 

proposed change to the example 

provided in the Notes section that 

describes the Network Access Port fees 

serves 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 by 

preventing any potential confusion 

regarding the application of the Network 

Access Port fees and the proposed new 

fee amounts. 

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, while different fees and rebates 

are assessed to different market 

participants in some circumstances, 

these different market participants have 

different obligations and different 

circumstances (as described in the 

‘‘Statutory Basis’’ section above). For 

example, Clearing TPHs have clearing 

obligations that other market 

participants do not have. Market-Makers 

have quoting obligations that other 

market participants do not have. There 

is a history in the options markets of 

providing preferential treatment to 

Customers, as they often do not have as 

sophisticated trading operations and 

systems as other market participants, 

which often makes other market 

participants prefer to trade with 

Customers. Further, the Exchange fees 

and rebates, both current and those 

proposed to be changed, are intended to 

encourage market participants to bring 

increased volume to the Exchange 

(which benefits all market participants), 

while still covering Exchange costs 

(including those associated with the 

upgrading and maintenance of Exchange 

systems). 

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 are 

intended to promote competition and 

better improve the Exchange’s 

competitive position and make CBOE a 

more attractive marketplace in order to 

encourage market participants to bring 

increased volume to the Exchange 

(while still covering costs as necessary). 

Further, 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 written 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 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
5188 Federal Register / Vol. 80, No. 20 / Friday, January 30, 2015 / Notices 

21 17 CFR 200.30–3(a)(12). 1 12 U.S.C. 5465(e)(1). 

2 17 CFR 240.19b–4(n)(1)(i). 

3NSCC and DTC filed Amendment Nos. 1 to 

provide additional description of the changes 

proposed in advance notices SR–NSCC–2014–811 

and SR–DTC–2014–812, respectively. 

4FICC withdrew Amendment No. 1 to advance 

notice SR–FICC–2014–810 due to an error in filing 

the amendment. FICC filed Amendment No. 2 to 

advance notice SR–FICC–2014–810 in order to 

provide additional description of the changes 

proposed in the advance notice. 

5Release No. 34–73755 (Dec. 5, 2014), 79 FR 

73665 (Dec. 11, 2014). 

6Release No. 34–73975 (Dec. 31, 2014), 80 FR 918 

(Jan. 7, 2015). 

7When the changes proposed in the Advance 

Notices become effective, the title of the Existing 

Shareholders Agreement will become the ‘‘Fourth 

Amended and Restated Shareholders Agreement.’’ 

8Pursuant to the Existing Shareholders 

Agreement and the rules of each of the Clearing 

Agencies, some Members, generally full-service 

Members, are required to own Common Shares (i.e., 

Mandatory Shareholders) while other Members, 

generally limited-service Members, are permitted 

but not required to own such shares (‘‘Voluntary 

Shareholders’’). Further, certain Members are not 

permitted to purchase and own Common Shares or 

become parties to the Existing Shareholders 

Agreement. 

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– 

CBOE–2015–005 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–2015–005. 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– 

2015–005 and should be submitted on 

or before February 20, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–01753 Filed 1–29–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74142; File Nos. SR–FICC– 

2014–810; SR–NSCC–2014–811; SR–DTC– 

2014–812] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; National 

Securities Clearing Corporation; the 

Depository Trust Company; Notice of 

No Objection to Advance Notices, as 

Amended, To Amend and Restate the 

Third Amended and Restated 

Shareholders Agreement, Dated as of 

December 7, 2005 

January 27, 2015. 

On November 5, 2014, Fixed Income 

Clearing Corporation (‘‘FICC’’), National 

Securities Clearing Corporation 

(‘‘NSCC’’), and The Depository Trust 

Company (‘‘DTC,’’ together with FICC 

and NSCC, ‘‘Clearing Agencies’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) advance 

notices SR–FICC–2014–810, SR–NSCC– 

2014–811 and SR–DTC–2014–812 

(‘‘Advance Notices’’), pursuant to 

Section 806(e)(1) of the Payment, 

Clearing, and Settlement Supervision 

Act of 2010 (‘‘Clearing Supervision 

Act’’) 1 and Rule 19b–4(n)(1)(i) under 

the Securities Exchange Act of 1934.2

On November 17, 2014, the Clearing 

Agencies each filed Amendments No. 1 

to the Advance Notices.3 On November 

17, 2014 FICC withdrew Amendment 

No. 1 and filed Amendment No. 2 to 

advance notice SR–FICC–2014–810.4

The Advance Notices, as amended, were 

published for comment in the Federal 

Register on December 11, 2014.5 On 

December 31, 2014, the Commission 

published notice of its extension of the 

review period for the Advance Notices.6

The Commission did not receive any 

comments on the Advance Notices. This 

publication serves as notice of no 

objection to the Advance Notices, as 

amended. 

I. Description of the Advance Notices 

The Advance Notices are a proposal 

by the Clearing Agencies, which are 

wholly owned subsidiaries of the 

Depository Trust and Clearing 

Corporation (‘‘DTCC’’), to amend and 

restate their Third Amended and 

Restated Shareholders Agreement, dated 

as of December 7, 2005 (‘‘Existing 

Shareholders Agreement’’) 7 — a single 

agreement covering all of the Clearing 

Agencies and their respective members 

and participants (‘‘Members’’). The 

Clearing Agencies state that the 

proposed revisions to the Existing 

Shareholders Agreement (‘‘Revised 

Shareholders Agreement’’) are the 

product of a comprehensive review by 

DTCC of its ownership, governance, and 

capital structure, undertaken for the 

purposes of increasing the financial 

resources available to support the 

conduct of the businesses of the 

Clearing Agencies and enhancing 

regulatory risk management. 

With the Advance Notices of the 

Revised Shareholders Agreement, the 

Clearing Agencies propose: (1) To issue 

new common stock of DTCC (‘‘Common 

Shares’’), which mandatory common 

shareholders (‘‘Mandatory 

Shareholders’’) 8 will be required to 

purchase, upon approval by the DTCC 

Board of Directors (‘‘Board’’) and twothirds of Mandatory Shareholders; (2) to 

buyback such newly issued Common 

Shares From Mandatory Shareholders, 

at the Board’s discretion and approval; 

(3) to modify the formula for allocating 

Common Shares among shareholders 

(‘‘Common Shareholders’’); (4) to 

modify the formula for pricing the 

Common Shares; (5) to remove 

restrictions on the frequency with 

which DTCC can reallocate Common 

Shares; and (6) make other conforming 

and technical changes. Details of these 

proposed changes are summarized 

below. 


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