[Federal Register Volume 79, Number 197 (Friday, October 10, 2014)]
[Notices]
[Pages 61357-61358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-24207]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73306; File No. SR-C2-2014-025]


Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Amend the Fees Schedule

October 6, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 30, 2014, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
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.

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\ Specifically, 
the Exchange proposes to increase the Linkage Routing fee from $0.50 
per contract to $0.65 per contract in addition to the applicable C2 
taker fee. The Linkage Routing fee is assessed to all orders routed 
pursuant to the Options Order Protection and Locked/Crossed Market 
Plan, excluding Public Customer orders in equity option classes. The 
purpose of the proposed change is to cover increased costs associated 
with routing orders through Linkage and paying the transaction fees for 
such executions at other exchanges.
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    \3\ C2 initially filed the proposed fee change on September 2, 
2014 (SR-C2-2014-021). On September 10, 2014, C2 withdrew that 
filing and submitted filing SR-C2-2014-022. On September 18, 2014, 
C2 withdrew SR-C2-2014-022 and submitted SR-C2-2014-023. On 
September 30, 2014, C2 withdrew SR-C2-2014-023 and submitted this 
filing.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\4\ Specifically, the 
Exchange believes the proposed rule change is consistent with Section 
6(b)(4) of the Act,\5\ which requires that Exchange rules provide for 
the equitable allocation of reasonable dues, fees, and other charges 
among its Trading Permit Holders and other persons using its 
facilities.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
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    In particular, the Exchange's proposal to increase the Linkage 
Routing fee from $0.50 per contract to $0.65 per contract is reasonable 
because such increase will help offset the costs associated with 
routing orders through Linkage and paying the transaction fees for such 
executions at other exchanges. Additionally, the Exchange notes that if 
a non-customer market participant wishes to avoid the Linkage fee, it 
may choose to specify that C2 not route orders away on its behalf or 
designate the order as Immediate or Cancel, which would prevent the 
order from linking [sic] away to another Exchange [sic]. Moreover, a 
non-customer market participant may route directly to exchanges posting 
the best market if desired to avoid Linkage routing fees.
    The Exchange next notes that this fee amount will be assessed to 
all orders routed via Linkage (excluding Public Customer orders in 
equity options classes). The Exchange believes that this proposed 
change is equitable and not unfairly discriminatory because non-
customer (e.g., broker-dealer proprietary) orders originate from 
broker-dealers who are by and large more sophisticated than public 
customers and can readily control the exchange to which their orders 
are routed. While there may be some sophisticated customers who are 
capable of directing the exchange to which their orders are routed, 
generally, retail customers submit orders to their brokerages but do 
not or cannot specify the exchange to which a customer order is sent. 
Therefore, non-customer order flow can, in most cases, more easily 
route directly to other markets if desired and thus avoid Linkage 
routing fees. Therefore, it is equitable to assess a reasonable fee to 
cover the costs incurred for processing non-customer Linkage orders 
while continuing to exempt such Public Customer orders.

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

[[Page 61358]]

appropriate in furtherance of the purposes of the Act. In particular, 
the increase to the Linkage Routing Fee will apply equally to all non-
customers. Additionally, although different linkage fees are assessed 
to different market participants (i.e., non-customers vs public 
customers), as described above, non-customer order flow can, in most 
cases, more easily route directly to other markets if desired and thus 
avoid Linkage fees. Therefore, it is equitable to assess a reasonable 
fee to cover the costs incurred for processing non-customer Linkage 
orders while continuing to exempt such public customer orders. The 
Exchange believes that the proposal to increase the linkage fee amount 
assessed to non-customers will not cause an unnecessary burden on 
intermarket competition because although the total fee amount assessed 
to an order routed via Linkage (i.e., the Linkage Routing fee and 
applicable C2 taker fee) may not always be lower than assessed at other 
exchanges, non-customer market participants may, as noted above, choose 
to specify that C2 not route orders away on its [sic] behalf, designate 
the order as Immediate or Cancel, or route directly to exchanges 
posting the best market to avoid Linkage routing fees. To the extent 
that the proposed changes make C2 a more attractive marketplace for 
market participants at other exchanges, such market participants are 
welcome to become C2 market participants.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \6\ and paragraph (f) of Rule 19b-4 \7\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#2c5e594049014f4341414942585f6c5f494f024b435a"><span class="__cf_email__" data-cfemail="6210170e074f010d0f0f070c1611221107014c050d14">[email protected]</span></a>. Please include 
File Number SR-C2-2014-025 on the subject line.

Paper Comments

    <bullet> 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-C2-2014-025. 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 
a.m. and 3 p.m. Copies of such 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-C2-2014-025, and should be 
submitted on or before October 31, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24207 Filed 10-9-14; 8:45 am]
BILLING CODE 8011-01-P


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