Document ID: SEC-2014-1742-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2014-10-16T04:00Z

[Federal Register Volume 79, Number 200 (Thursday, October 16, 2014)]
[Notices]
[Pages 62237-62239]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24541]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73327; File No. SR-CBOE-2014-072]

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

October 9, 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 October 1, 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, 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 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

[[Page 62238]]

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, to be effective 
October 1, 2014. Specifically, the Exchange proposes to increase the 
Customer Priority Surcharge fee assessed to contracts executed in VIX 
volatility index options (``VIX options''). Currently, the VIX Customer 
Priority Surcharge (``Surcharge'') is assessed on all Customer (C) VIX 
contracts executed electronically that are Maker and not Market Turner. 
Additionally, the surcharge is only assessed on such contracts that 
have a premium of $0.11 or greater. The Exchange proposes to increase 
the Surcharge from $0.05 per contract to $0.10 per contract on such 
contracts that have a premium of $0.11 or greater.
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 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. The Exchange 
also believes the proposed rule change is consistent with Section 
6(b)(4) of the Act,\5\ which provides that Exchange rules may provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its Trading Permit Holders.
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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 the VIX Customer Priority Surcharge 
increase is reasonable because the amount of the new fee is within the 
range of surcharges assessed for customer transactions in other CBOE 
proprietary products (for example customers are currently assessed a 
$0.20 Hybrid 3.0 Execution Surcharge (which essentially acts as a 
customer priority surcharge) in SPX options).
    The Exchange believes that it is equitable and not unfairly 
discriminatory to assess the VIX Priority Surcharge to Customers and 
not other market participants because Customers are not subject to 
additional costs for effecting transactions in VIX which are applicable 
to other market participants, such as license surcharges. Additionally, 
Customers are not subject to fees applicable to other market 
participants such as connectivity fees and fees relating to Trading 
Permits, and are not subject to the same obligations as other market 
participants, including regulatory and compliance requirements and 
quoting obligations. The Exchange believes that it is equitable and not 
unfairly discriminatory to only assess the Surcharge to Maker Non-
Turners because the Exchange wants to encourage improving the market 
(``turning'').
    The Exchange believes that it is equitable and not unfairly 
discriminatory to only assess this fee when the contract premium is at 
least $0.11 because the Exchange wants to reduce costs on low priced 
VIX options to encourage Customers to close and roll over positions 
close to expiration at low premium levels. Currently, such Customers 
are less likely to do this because the transaction fee is closer to the 
premium level. The Exchange believes that maintaining lowered fees 
overall for VIX options trading with a premium of $0.00-$0.10 will 
encourage the trading of such options. As such, the Exchange does not 
wish to assess Customer Priority Surcharge on such options in order to 
keep the costs low.
    The Exchange believes that increasing the customer priority 
surcharge for VIX options and not VXST is equitable and not unfairly 
discriminatory because VXST is a relatively new product that the 
Exchange has expended significant resources in developing and believes 
that not assessing a higher surcharge will encourage trading in VXST.

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 because, while different 
electronic transaction fees are assessed to different market 
participants, different market participants have different obligations 
and circumstances as noted above. The Exchange believes that the 
proposal to increase the surcharge amount assessed to Customers for 
executions in VIX contracts will not cause an unnecessary burden on 
intermarket competition because the proposed change was not motivated 
by intermarket competition. Additionally, VIX is only traded 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.

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

     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-2014-072 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.

[[Page 62239]]

All submissions should refer to File Number SR-CBOE-2014-072. 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-2014-072 and should be 
submitted on or before November 6, 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. 2014-24541 Filed 10-15-14; 8:45 am]
BILLING CODE 8011-01-P