Document ID: SEC-2017-0305-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2017-02-27T05:00Z

[Federal Register Volume 82, Number 37 (Monday, February 27, 2017)]
[Notices]
[Pages 11988-11990]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03805]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80086; File No. SR-CBOE-2017-015]

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

February 22, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on February 10, 2017, 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.
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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 Substance 
of the Proposed Rule Change

    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 amend its Fees Schedule. The Exchange is 
changing fees for functionality related to its PULSe workstation. The 
fees herein will be effective on February 10, 2017.
    By way of background, the PULSe workstation is a front-end order 
entry system designed for use with respect to orders that may be sent 
to the trading systems of the Exchange. Exchange Trading Permit Holders 
(``TPHs'') may also make workstations available to their customers, 
which may include TPHs, non-broker dealer public customers and non-TPH 
broker dealers.
Drop Copies
    Financial Information eXchange (``FIX'') language-based 
connectivity, upon request, provides customers (both TPH and non-TPH) 
of TPHs that are brokers and PULSe users (``PULSe brokers'') with the 
ability to receive ``drop-copy'' order fill messages from their PULSe 
brokers. These fill messages allow customers to update positions, risk 
calculations and streamline back-office functions.
    The Exchange is proposing reducing the monthly fee to be assessed 
on TPHs who are either receiving or sending drop copies via a PULSe 
workstation. Whether the drop copy sender or receiver is assessed the 
fee is dependent upon whether the customer receiving the drop copies is 
a TPH or non-TPH.
    If a customer receiving drop copies is a TPH, that TPH customer 
(the receiving TPH) will now be charged a fee of $425 per month (down 
from $1000 per month), per PULSe broker from whom it receives drop 
copies via PULSe. For example, if TPH customer A receives drop copies 
from each of PULSe broker A, PULSe broker B, and PULSe broker C (all of 
which are TPHs), TPH A (the receiving TPH) will be charged a fee of 
$1275 per month for receiving drop copies via PULSe from PULSe brokers 
A, B and C (the sending TPHs).
    If a customer receiving drop copies is a non-TPH, the PULSe broker 
(the sending TPH) who sends drop copies via PULSe to that customer will 
now be charged a fee of $400 per month (down from $500 per month). If 
that PULSe broker sends drop copies via PULSe to multiple non-TPH 
customers, the PULSe broker will be charged the fee for each customer. 
For example, if PULSe broker A sends drop copies via its PULSe 
workstation to each of non-TPH customer A, non-TPH customer B and non-
TPH customer C, PULSe broker A (the sending TPH) will be charged a fee 
of $1200 per month for drop copies it sends via PULSe to non-TPH 
customers A, B and C (the receiving non-TPHs).

[[Page 11989]]

``OATS Reports'' to ``Equity Order Reports''
    The Exchange is proposing to change the name of its fee relating to 
OATS Reports to ``Equity Order Reports''. The Equity Order Reports 
related to this fee are provided for PULSe users' own use. Electing to 
receive these reports does not currently and will not fulfill any PULSe 
users' OATS reporting obligations. The change will eliminate any 
potential confusion as to whether the Exchange itself or the PULSe 
system is able to fulfill any OATS reporting obligation for a PULSe 
user. Neither the content of the reports nor the manner in which they 
are received from PULSe is changing.
SPX Liquidity Provider Sliding Scale
    Lastly, the Exchange proposes to add a reference to Footnote 41 in 
the SPX Liquidity Provider Sliding Scale (``SPX LP Sliding Scale'') 
table. Particularly, the Exchange notes that when it adopted the SPX LP 
Sliding Scale, it had appended a reference to Footnote 41 in the rate 
table for Underlying Symbol List A products under the Market-Maker fees 
section for SPX, SPXW and SPXPM (which references the SPX LP Sliding 
Scale), but had inadvertently not appended the Footnote to the new SPX 
LP Sliding Scale table itself. As such, the Exchange proposes to append 
Footnote 41 to the SPX Liquidity Provider Sliding Scale Table to 
clarify its applicability. The Exchange notes no substantive changes 
are being made by this change, rather the Exchange merely seeks to add 
further clarification and alleviate potential confusion.
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.\3\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \4\ 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 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,\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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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
    \5\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that lowering the $1000 per month fee to $425 
per month on a TPH receiving drop copies from PULSe is reasonable 
because the reduced fee will continue to allow the Exchange to monitor, 
develop and implement upgrade, maintain and customize PULSe to ensure 
the TPH customer receives timely and accurate drop copies while also 
reducing TPH customers' costs. The Exchange believes the fee is 
equitable and not unfairly discriminatory because the monthly fee is 
assessed to any TPH electing to receive drop copies from a PULSe 
broker. Use of the drop copy functionality by a TPH customer is 
voluntary.
    The Exchange believes that lowering the $500 per month fee to $400 
per month on a TPH sending drop copies from PULSe to a non-TPH customer 
is reasonable because the reduced fee will continue to allow the 
Exchange to monitor, develop and implement upgrades, maintain and 
customize PULSe to ensure a non-TPH customer receives timely and 
accurate drop copies while also reducing the sending TPH's costs. The 
Exchange believes the fee is equitable and not unfairly discriminatory 
because the monthly fee is assessed equally to any TPH sending drop 
copies to its non-TPH customers. The Exchange believes that assessing a 
TPH sending drop copies to a non-TPH a monthly fee of $400, as opposed 
to the $425 per month rate assessed to TPH customers receiving drop 
copies from PULSe, is reasonable, equitable, and not unfairly 
discriminatory. Specially, the lower rates are designed to encourage 
non-TPH market participants to interact with the Exchange, which will 
accordingly attract more volume and liquidity to the Exchange and 
benefit all Exchange participants through increased opportunities to 
trade. Use of the drop copy functionality by a non-TPH customer is 
voluntary.
    The Exchange believes that changing the name of the ``OATS 
reports'' fee to ``Equity Order Reports'' alleviates potential 
confusion and maintains clarity in the Fees Schedule, which removes 
impediments to and perfects the mechanism of a free and open market and 
a national market system, and, in general, protects investors and the 
public interest.
    The Exchange believes adding a reference to Footnote 41 in the SPX 
LP Sliding Scale table alleviates potential confusion and maintains 
clarity in the Fees Schedule, which removes impediments to and perfects 
the mechanism of a free and open market and a national market system, 
and, in general, protects investors and the public interest.

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

    The Exchange does not believe that the proposed rule changes will 
impose any burdens 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 the proposed PULSe-
related fees relate to optional reports and/or functionality and are 
assessed equally on PULSe users or TPH electing to use the 
functionality and/or receive the reports. The Exchange does not believe 
that the proposed change will cause any unnecessary burden on 
intermarket competition because the proposed fees relate to use of an 
Exchange-provided order entry system. To the extent that any proposed 
change makes the Exchange a more attractive marketplace for market 
participants at other exchanges, such market participants are welcome 
to become Exchange 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

[[Page 11990]]

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

     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-2017-015 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-2017-015. 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-2017-015 and should be 
submitted on or before March 20, 2017.

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03805 Filed 2-24-17; 8:45 am]
 BILLING CODE 8011-01-P