Document ID: SEC-2015-1995-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2015-11-27T05:00Z

[Federal Register Volume 80, Number 228 (Friday, November 27, 2015)]
[Notices]
[Pages 74151-74153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-30087]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76498; File No. SR-CBOE-2015-105]

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

November 20, 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 November 16, 2015, Chicago Board Options Exchange, Incorporated 
(the ``Exchange''

[[Page 74152]]

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 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.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, effective 
November 16, 2015. Specifically, the Exchange proposes to amend the 
Fees Schedule with respect to Qualified Contingent Cross (``QCC'') \3\ 
orders. Currently, the Fees Schedule provides for a transaction fee for 
all non-customer QCC orders of $0.15 per contract side (customer orders 
are not assessed a charge) and a $0.10 per contract credit for the 
initiating order side, regardless of origin code.\4\ The Exchange first 
proposes to increase the fee for QCC transactions from $0.15 per 
contract to $0.17 per contract for all non-customer orders. The 
Exchange notes that the proposed increase is in line with other 
exchanges.\5\
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    \3\ A QCC order is comprised of an order to buy or sell at least 
1,000 contracts (or 10,000 mini-option contracts) that is identified 
as being part of a qualified contingent trade, coupled with a 
contra-side order or orders totaling an equal number of contracts.
    \4\ The Exchange notes that the $0.10 per contract credit is not 
be available for customer-to-customer transactions.
    \5\ See e.g., NASDAQ OMX PHLX LLC (``PHLX'') Pricing Schedule, 
Section II, QCC Transaction Fees.
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    Next, the Exchange proposes to provide that the maximum credit paid 
shall not exceed $350,000 per month per Trading Permit Holder 
(``TPH''). The Exchange notes that it will aggregate the credits of 
affiliated TPHs (TPHs with at least 75% common ownership between the 
firms as reflected on each firm's Form BD, Schedule A) for purposes of 
determining whether a TPH has met the QCC credit cap. The Exchange 
believes that, while limiting the amount of rebate that a market 
participant can receive, the current QCC rebate will continue to 
incentivize market participants to seek to obtain the highest rebate 
possible. The Exchange also notes that other Exchanges have similar 
caps on rebates offered for QCC transactions.\6\
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    \6\ See e.g., PHLX Pricing Schedule, Section II, QCC Transaction 
Fees and NSYE Amex Options Fees Schedule (``Amex''), Section IE, 
Qualified Contingent Cross (``QCC'') Fees and Credits for Standard 
Options and Mini Options.
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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. Specifically, the Exchange 
believes the proposed rule change is consistent with the Section 
6(b)(5) 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, 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 the proposed increase to the transaction fee 
for QCC orders is reasonable because the proposed amount is in line 
with the amount assessed at other Exchanges for similar 
transactions.\7\ Additionally, the proposed fee increase would be 
charged to all non-customers alike. Assessing QCC rates to all market 
participants except customers is equitable and not unfairly 
discriminatory because Customer order flow enhances liquidity on the 
Exchange for the benefit of all market participants. Specifically, 
Customer liquidity benefits all market participants by providing more 
trading opportunities, which attracts Market-Makers. An increase in the 
activity of these market participants in turn facilitates tighter 
spreads, which may cause an additional corresponding increase in order 
flow from other market participants. By exempting customer orders, the 
QCC transaction fees will not discourage the sending of customer 
orders.
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    \7\ See e.g., PHLX Pricing Schedule, Section II, QCC Transaction 
Fees and NSYE Amex Options Fees Schedule, Section I.E, Qualified 
Contingent Cross (``QCC'') Fees and Credits for Standard Options and 
Mini Options.
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    The Exchange believes the proposed QCC credit cap is reasonable, 
equitable and not unfairly discriminatory because it is in line with 
similar caps on rebates paid for QCC transactions at other exchanges 
\8\ and because all TPHs would be uniformly capped at $350,000 per 
month. The Exchange also believes it's reasonable, equitable and not 
unfairly discriminatory to provide that it will aggregate the credits 
of affiliated TPHs to determine whether the credit cap has been met, as 
the Exchange believes this should prevent TPHs from dividing up their 
orders to different affiliates in order to avoid meeting the cap and it 
would apply to all TPHs.
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    \8\ Id.
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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 the proposes [sic] rule 
changes apply uniformly to all Trading Permit Holders. The Exchange 
believes this proposal will not cause an unnecessary burden on 
intermarket competition because it only affects 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. 
Additionally,

[[Page 74153]]

the Exchange notes that it operates in a highly competitive market, 
comprised of thirteen options exchanges, in which market participants 
can easily and readily direct order flow to competing venues if they 
deem fee levels at a particular venue to be excessive or rebates to be 
inadequate.

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 \9\ and paragraph (f) of Rule 19b-4 \10\ 
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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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-2015-105 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-2015-105. 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-2015-105, 
and should be submitted on or before December 18, 2015.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-30087 Filed 11-25-15; 8:45 am]
 BILLING CODE 8011-01-P