Document ID: SEC-2013-0530-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: C2 Options Exchange, Inc.
Posted Date: 2013-03-19T04:00Z

[Federal Register Volume 78, Number 53 (Tuesday, March 19, 2013)]
[Notices]
[Pages 16903-16905]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-06250]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69130; File No. SR-C2-2013-012]

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

March 13, 2013.
    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 1, 2013, 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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[[Page 16904]]

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.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 transaction fees for simple, 
non-complex orders in equity options classes to state that C2 Market-
Makers will not be assessed a fee for Maker trades with any non-Public 
Customer market participants. This means that when a C2 Market-Maker is 
the Maker in a transaction, the C2 Market-Maker will not be assessed a 
fee unless the Taker in the transaction is a Public Customer. The 
purpose of the proposed change is to incentivize C2 Market-Makers to 
quote more aggressively.
    The Exchange believes the proposed rule change is consistent with 
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 Section 6(b)(4) of the Act,\4\ 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 proposed 
change is reasonable because it will allow C2 Market-Makers to avoid 
paying a transaction fee for transactions for which they previously 
paid a transaction fee.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that providing this Maker fee exemption to C2 
Market-Makers and not to other market participants is equitable and not 
unfairly discriminatory because C2 Market-Makers take on a number of 
obligations, including quoting obligations and the need to purchase 
permits, that some other market participants do not have. Further, 
offering a fee exemption for C2 Market-Makers (and only C2 Market-Maker 
Makers), who are the market participants that do the vast majority of 
quoting, incentivizes more and narrower quoting, thereby encouraging 
liquidity provision, which is vital to the marketplace and benefits all 
market participants. The Exchange believes that assessing Maker fees 
for C2 Market-Makers who trade with Public Customers while not 
assessing Maker fees for C2 Market-Makers who trade with other market 
participants is equitable and not unfairly discriminatory because the 
Exchange already pays a rebate for Public Customer Taker transactions, 
and thus if the Exchange were to also not collect a fee from the C2 
Market-Maker in such transactions, it would result in the Exchange 
paying for such transactions without collecting any revenue (a net 
negative), which would not be economically prudent. Further, market 
participants (including C2 Market-Makers) generally prefer to execute 
their orders against Public Customer orders, and therefore it is 
justifiable for them to be still be assessed a fee for such preferable 
executions.

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 appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed rule change will impose an unnecessary burden on 
intramarket competition because, while it will provide C2 Market-Makers 
with a fee exemption that other market participants do not receive, 
this change is intended to incentivize C2 Market-Makers, who are the 
market participants that do the vast majority of quoting, to provide 
more and narrower quoting, thereby encouraging liquidity provision, 
which is vital to the marketplace and benefits all market participants. 
Further, C2 Market-Makers take on a number of obligations, including 
quoting obligations and the need to purchase permits, that some other 
market participants do not have. The Exchange does not believe that the 
proposed rule change will impose an unnecessary burden on intermarket 
competition because it is designed to encourage more and narrower 
quoting, which would make C2 a more attractive trading venue for 
Market-Makers as well as other market participants on other exchanges 
who could benefit from C2's improved quotes. As such, to the extent 
that the proposed change may make C2 a more attractive trading venue 
for market participants on other exchanges, such market participants 
can always elect 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 \5\ and paragraph (f) of Rule 19b-4 \6\ 
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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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 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-C2-2013-012 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 16905]]

Securities and Exchange Commission, 100 F Street NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-C2-2013-012. 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-C2-2013-012 and should be 
submitted on or before April 9, 2013.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-06250 Filed 3-18-13; 8:45 am]
BILLING CODE 8011-01-P