Document ID: SEC-2012-0642-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2012-04-20T04:00Z

[Federal Register Volume 77, Number 77 (Friday, April 20, 2012)]
[Notices]
[Pages 23767-23768]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-9526]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66812; File No. SR-CBOE-2012-037]

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

April 16, 2012.
    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 April 10, 2012, the Chicago Board Options Exchange, 
Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities 
and Exchange Commission (``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.org/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 waive the CMI and FIX Login ID fees 
through September 30, 2012 for CMI and FIX Login IDs used to access the 
Exchange's FLEX Hybrid Trading System (the ``CFLEX System'') for FLEX 
Options \3\ trading (the ``Waiver''). CMI Client Application Servers 
and FIX Ports are used by Exchange Trading Permit Holders (``TPHs'') to 
access CBOEdirect, which is the platform provided by the Exchange to 
connect to Exchange systems. The Exchange assesses a fee of $500 per 
month for each CMI or FIX Login ID that a TPH uses to access CBOEdirect 
(and $1000 per month for each CMI or FLEX Login ID that a Sponsored 
User uses to access CBOEdirect). The Exchange is in the process of 
enhancing the CFLEX System in order to further integrate it with the 
Exchange's existing CBOEdirect technology platform.\4\ As part of these 
enhancements, TPHs will connect to the CFLEX System through CBOEdirect, 
and will need to get either a CMI or FIX Login ID to do so.\5\ As such, 
the Exchange proposes the Waiver in order to encourage TPHs to trade on 
the CFLEX System.
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    \3\ Flexible Exchange Options (``FLEX Options'') provide 
investors with the ability to customize basic option features 
including size, expiration date, exercise style, and certain 
exercise prices. FLEX Options can be FLEX Index Options or FLEX 
Equity Options. In addition, other products are permitted to be 
traded pursuant to the FLEX trading procedures. For example, credit 
options are eligible for trading as FLEX Options pursuant to the 
FLEX rules in Chapters XXIVA and XXIVB. See CBOE Rules 24A.1(e) and 
(f), 24A.4(b)(1) and (c)(1), 24B.1(f) and (g), 24B.4(b)(1) and 
(c)(1), and 28.17. The rules governing the trading of FLEX Options 
on the FLEX Request for Quote (``RFQ'') System platform (which is 
limited to open outcry trading only) are contained in Chapter XXIVA. 
The rules governing the trading of FLEX Options on the FLEX Hybrid 
Trading System platform (which combines both open outcry and 
electronic trading) are contained in Chapter XXIVB. The Exchange 
notes that, currently, all FLEX Options are traded on the FLEX 
Hybrid Trading System platform.
    \4\ See, e.g., SR-CBOE-2012-033.
    \5\ TPHs may also access the CFLEX System using an internet-
based application. There is currently no login fee associated with 
the internet-based application.
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2. Statutory Basis
    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.\6\ Specifically, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\7\ which provides that 
Exchange rules may provide for the equitable allocation of reasonable 
dues, fees, and other charges among its TPHs and other persons using 
its facilities. The Waiver is reasonable because it will allow all TPHs 
trading FLEX Options on the CFLEX System to avoid having to

[[Page 23768]]

pay a fee that they would otherwise have to pay. The Waiver is 
equitable and not unfairly discriminatory because the Exchange believes 
that the Waiver will encourage TPHs to transact business in FLEX 
Options using the CFLEX System and encourage trading of customized 
options in an exchange environment.\8\ The Exchange believes such 
increased business will provide greater FLEX Options trading 
opportunities for all market participants. Also, the transaction fees 
collected from this increased business will allow the Exchange to 
recoup costs expended in building and developing the CFLEX System.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ The Exchange believes that FLEX Options provide TPHs and 
investors with an improved but comparable alternative to the over-
the-counter (``OTC'') market in customized options, which can take 
on contract characteristics similar to FLEX Options. The Exchange 
believes market participants benefit from being able to trade 
customized options in an exchange environment in several ways, 
including, but not limited to the following: (i) Enhanced efficiency 
in initiating and closing out positions; (ii) increased market 
transparency; and (iii) heightened contra-party creditworthiness due 
to the role of The Options Clearing Corporation as issuer and 
guarantor of FLEX Options.
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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.

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) \9\ of the Act 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.
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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-2012-037 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2012-037. 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 
a.m. and 3 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-2012-037 and should be 
submitted on or before May 11, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-9526 Filed 4-19-12; 8:45 am]
BILLING CODE 8011-01-P