Document ID: SEC-2014-0502-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2014-03-28T04:00Z

[Federal Register Volume 79, Number 60 (Friday, March 28, 2014)]
[Notices]
[Pages 17619-17621]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-06886]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71774; File No. SR-CBOE-2014-020]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to Certain CBOE Real-Time Data Feeds and 
a New Book Depth Data Feed

March 24, 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 March 11, 2014, 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 and II below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

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

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Chicago Board Options Exchange, Incorporated (the ``Exchange'' or 
``CBOE'') proposes to (i) update the description of the data included 
in certain CBOE real-time data feeds and (ii) offer a book depth data 
feed for CBOE listed options. 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 purpose of the proposed rule change is to (i) update the 
description of the data included in the following CBOE real-time data 
feeds: BBO Data Feed, Complex Order Book (``COB'') Data Feed and 
Flexible Exchange option (``FLEX'') Data Feed, and (ii) offer a book 
depth data feed for CBOE listed options.
BBO, COB and FLEX Data Feeds
    The BBO Data Feed is a real-time, low latency data feed that 
includes CBOE ``BBO data'' and last sale data.\3\ The BBO and last sale 
data contained in the BBO Data Feed is identical to the data that CBOE 
sends to the Options Price Reporting Authority (``OPRA'') for 
redistribution to the public.\4\ The BBO Data Feed is made available by 
CBOE's affiliate Market Data Express, LLC (``MDX'').
---------------------------------------------------------------------------

    \3\ The BBO Data Feed includes the ``best bid and offer,'' or 
``BBO'', consisting of all outstanding quotes and standing orders at 
the best available price level on each side of the market, with 
aggregate size (``BBO data,'' sometimes referred to as ``top-of-book 
data''). Data with respect to executed trades is referred to as 
``last sale'' data. See Securities Exchange Act Release No. 69438 
(April 23, 2013), 78 FR 25334 (April 30, 2013).
    \4\ The Exchange notes that MDX makes available to Customers the 
BBO data and last sale data that is included in the BBO Data Feed no 
earlier than the time at which the Exchange sends that data to OPRA. 
A ``Customer'' is any entity that receives the BBO Data Feed, either 
directly from MDX's system or through a connection to MDX provided 
by an approved redistributor (i.e., a market data vendor or an 
extranet service provider) and then distributes it externally or 
uses it internally.
---------------------------------------------------------------------------

    The BBO Data Feed also includes certain data that is not included 
in the data sent to OPRA, namely, (i) totals of customer versus non-
customer contracts at the BBO, (ii) All-or-None contingency orders 
priced better than or equal to the BBO, (iii) BBO data and last sale 
data for complex strategies (e.g., spreads, straddles, buy-writes, 
etc.), (iv) BBO data and last sale data for FLEX options traded on the 
CBOE FLEX Hybrid Trading System, including BBO data and last sale data 
for FLEX complex strategies (collectively, ``FLEX BBO data''), and (v) 
expected opening price (``EOP'') and expected opening size (``EOS'') 
information that is disseminated prior to the opening of the market and 
during trading rotations (collectively, ``EOP/EOS data'').
    The COB Data Feed is a real-time data feed that includes data 
regarding the Exchange's Complex Order Book and related complex order 
information. The COB Data Feed includes BBO quotes and identifying 
information for all CBOE-traded complex order strategies, as well as 
all executed CBOE complex order trades (and identifies whether the 
trade was a customer trade, or whether a complex order in the COB is a 
customer order).\5\ The FLEX Data Feed is a real-time data feed that 
includes FLEX BBO data, as described above.\6\ The COB and FLEX Data 
Feeds are both made available by MDX and are subsets of the BBO Data 
Feed.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 70118 (August 5, 
2013), 78 FR 48757 (August 9, 2013).
    \6\ See Securities Exchange Act Release No. 69438 (April 23, 
2013), 78 FR 25334 (April 30, 2013).
---------------------------------------------------------------------------

    The Exchange, through MDX, plans to make additional data available 
in the BBO, COB and FLEX Data Feeds and therefore proposes to update 
the description of the data included in the feeds. Specifically, the 
Exchange proposes to add end-of-day (``EOD'') summary messages and 
recap messages to the feeds. EOD summary messages are messages that 
will be disseminated after the close of a trading session that will 
include summary information about trading in CBOE listed options. Such 
information includes product name, opening price, high and low price 
during the trading session and last sale price. Recap messages are 
messages that will be disseminated during a trading session any time 
there is a change in the open, high, low or last sale price of a CBOE 
listed option. In addition to open, high, low and last sale prices, 
such messages will also include product name and total volume traded in 
the product during the trading session.
    At this time, the Exchange does not intend to amend the fees for 
the BBO and COB Data Feeds. The FLEX Data Feed is currently made 
available at no charge.

[[Page 17620]]

Book Depth Data Feed
    The Exchange proposes to make available, through MDX, a real-time, 
low latency data feed that includes all outstanding quotes and standing 
orders up to the first five price levels on each side of the market, 
with aggregate size (``Book Depth Data Feed'').\7\ The Book Depth Data 
Feed will also include all of the other data contained in the BBO Data 
Feed (as described above), including last sale data and BBO and book 
depth data for complex strategies.\8\ The data in the Book Depth Data 
Feed would be refreshed periodically during the trading session.
---------------------------------------------------------------------------

    \7\ The Exchange notes that MDX will make available the BBO and 
last sale data that is included in the Book Depth Data Feed no 
earlier than the time at which the Exchange sends that data to OPRA.
    \8\ With the introduction of the Book Depth Data Feed, the COB 
Data Feed would also be enhanced to include book depth data for 
complex strategies.
---------------------------------------------------------------------------

    The Exchange will file a separate proposed rule change to establish 
the fees to be charged by MDX for the Book Depth Data Feed.
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, 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 the 
Section 6(b)(5) \11\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers because the enhanced BBO, COB and FLEX Data Feeds 
and the Book Depth Data Feed would be made available by MDX to any 
market participant that wishes to subscribe to any of the feeds.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ Id.
---------------------------------------------------------------------------

    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations and broker-dealers increased authority and flexibility to 
offer new and unique market data to the public. It was believed that 
this authority would expand the amount of data available to consumers, 
and also spur innovation and competition for the provision of market 
data. The Exchange believes that this proposal is in keeping with those 
principles by promoting increased transparency through the 
dissemination of useful data and also by clarifying its availability to 
market participants. The Exchange believes that updating the 
description of the BBO, COB and FLEX Data Feeds will benefit users by 
making clearer what data is included in each feed. The Exchange 
believes offering the Book Depth Data Feed will increase transparency, 
help attract order flow and provide investors with additional 
information that may help to inform their trading decisions.

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

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposal to update the 
description of the BBO, COB and FLEX Data Feeds is intended not to 
address any competitive issue but rather to reflect the data that is 
included in the feeds. The Exchange notes other exchanges offer depth 
of market products similar to the Book Depth Data Feed. For example, 
BATS offers Multicast PITCH, which is their depth of market and last 
sale feed similar to the Book Depth Data Feed. The International 
Securities Exchange offers a data feed that shows the top five price 
levels entitled Depth of Market. NASDAQ OMX PHLX offers a Depth of 
Market data feed that includes full depth of quotes and orders and last 
sale data for options listed on PHLX. NASDAQ Options Market offers a 
product entitled ``NASDAQ ITCH-to-Trade Options'' (ITTO) that is 
similar to the Book Depth Data Feed. NYSE offers market data products 
entitled ``NYSE ArcaBook for Amex Options'' and ``NYSE ArcaBook for 
Arca Options'' that include top-of-book, last sale and depth of quote 
data. In addition, the OPRA data feed is a significant competitive 
alternative to both the BBO Data Feed and the Book Depth Data Feed.
    The Exchange believes the enhanced BBO, COB and FLEX Data Feeds and 
the Book Depth Data Feed will help to attract new users and new order 
flow to the Exchange, thereby improving the Exchange's ability to 
compete in the market for options order flow and executions.

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

    Because the foregoing proposed rule change does not:
    A. Significantly affect the protection of investors or the public 
interest;
    B. impose any significant burden on competition; and
    C. become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \12\ and 
Rule 19b-4(f)(6) \13\ thereunder.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day 
operative delay so that the proposal may become operative immediately 
upon filing. The Exchange has stated that it does not intend to amend 
the fees for the BBO and COB Data Feeds, that the FLEX Data Feed is 
currently made available at no charge, and that the proposed Book Depth 
Data Feed mostly includes data already made available by the Exchange 
through the BBO Data Feed. The Commission believes that waiving the 30-
day operative delay is consistent with the protection of investors and 
the public interest, because such waiver will enable market 
participants to receive more market data via the Exchange's new and 
existing data feeds at no charge. For this reason, the Commission 
hereby waives the 30-day operative delay requirement and designates the 
proposed rule change to be operative upon filing.\14\
---------------------------------------------------------------------------

    \14\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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.

[[Page 17621]]

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-2014-020 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-2014-020. 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 such filing also will be available 
for inspection and copying at the principal offices 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-2014-020, 
and should be submitted on or before April 18, 2014.
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-06886 Filed 3-27-14; 8:45 am]
BILLING CODE 8011-01-P