Document ID: SEC-2012-1550-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: C2 Options Exchange, Inc.
Posted Date: 2012-09-19T04:00Z

[Federal Register Volume 77, Number 182 (Wednesday, September 19, 2012)]
[Notices]
[Pages 58188-58189]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-23036]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67848; File No. SR-C2-2012-032]

Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Adopt a Rule Regarding Mandatory Trading Permit Holder Education and 
Corresponding Set of Fines

September 13, 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 September 4, 2012, 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 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.
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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

    C2 proposes to adopt a rule requiring Trading Permit Holder 
(``TPH'') education and corresponding fine structure. The text of the 
proposed rule change is available on the Exchange's Web site (http://www.c2exchange.com/Legal/), at the Commission's Web site (http://www.sec.gov), 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to adopt proposed Rule 6.46 stating that TPHs 
and persons associated with TPHs (``Associated Persons'') are required 
to attend such educational classes as the Exchange may require from 
time to time. Failure to attend Exchange-mandated continuing 
educational classes may subject TPHs and Associated Persons to 
sanctions pursuant to the Exchange's Minor Rule Violation Plan provided 
in Exchange Rule 17.50. The Exchange believes that it is important and 
necessary from time to time to require mandatory participation in 
certain educational training classes by its TPHs and Associated Persons 
for a variety of reasons, including to explain the operation of new 
technology and new rules, procedures and policies regarding trading on 
the Exchange. The text of the proposed Rule 6.46 is identical to that 
of Chicago Board Options Exchange, Incorporated (``CBOE'') Rule 6.20(e) 
(with the exclusion of a sentence in CBOE Rule 6.20(e) regarding Floor 
Officials, which is inapplicable to C2, as C2 is an all-electronic 
exchange that does not have a trading floor).\3\
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    \3\ See CBOE Rule 6.20(e).
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    To correspond with the adoption of proposed Rule 6.46, the Exchange 
also proposes to amend its Rule 17.50--Imposition of Fines for Minor 
Rule Violations. CBOE Chapter 17--Discipline (which includes Rule 
17.50--Imposition of Fines for Minor Rule Violations) is incorporated 
into the C2 rules by reference as C2 Chapter 17.\4\ CBOE Rule 
17.50(g)(6)--Violations of Trading Conduct and Decorum Policies--
imposes fines for violations of trading conduct and decorum policies. 
Because C2 (an all-electronic exchange) does not have a trading floor, 
the majority of the violations for which fines can be imposed under 
CBOE Rule 17.50(g)(6) (such as not complying with the trading floor 
dress code, bringing impermissible food or drink onto the trading 
floor, and running on the trading floor) could not take place on C2. 
However, there is one exception: CBOE Rule 17.50(g)(6) allows for the 
imposition of fines for the failure to attend CBOE-mandated educational 
training.\5\ Therefore, instead of simply stating that, with respect to 
applicability to C2 only, CBOE Rule 17.50(g)(6) shall not apply to C2, 
the Exchange instead proposes to state that, notwithstanding the 
remainder of C2 Chapter 17, with respect to its applicability to C2 
only, CBOE Rule 17.50(g)(6)--Violations of Trading Conduct and Decorum 
Policies--will be replaced in its entirety with the following: A fine 
may be imposed upon a Trading Permit Holder or persons associated with 
Trading Permit Holders in accordance with the fine schedule set forth 
below for failure

[[Page 58189]]

to attend Exchange-mandated educational training (per Rule 6.46).
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    \4\ See Securities Exchange Act Release No. 62323 (June 17, 
2010), 75 FR 36144 (June 24, 2012) (SR-C2-2010-002).
    \5\ See CBOE Regulatory Circular RG09-92 (August 28, 2009).

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   Number of offenses in any rolling twenty-four month
                         period                             Fine amount
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1st Offense.............................................          $1,000
2nd Offense.............................................           2,500
Subsequent Offenses.....................................           5,000
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    In making this change, C2 cleans up its rules and establishes that 
the aspects of CBOE Rule 17.50(g)(6) that are not relevant to C2 (due 
to C2's status as an all-electronic exchange without a trading floor) 
do not apply to C2 while still retaining the ability to levy fines for 
failure to attend C2-mandated educational training (per the proposed 
Rule 6.46). The amounts of the proposed fines are identical to those 
that can be currently assessed on CBOE for a failure to attend CBOE-
mandated educational training.\6\
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    \6\ See CBOE Regulatory Circular RG09-92 (August 28, 2009).
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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.\7\ Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5)\8\ requirements that the rules of 
an exchange be designed to promote just and equitable principles of 
trade, to prevent fraudulent and manipulative acts and practices, to 
remove impediments to and to perfect the mechanism for a free and open 
market and a national market system, and, in general, to protect 
investors and the public interest. Establishing both a rule requiring 
TPHs and Associated Persons to attend such educational classes as the 
Exchange may require from time to time and a corresponding guideline 
for fines for the failure to attend such educational classes helps 
ensure that TPHs and Associated Persons are educated and knowledgeable 
as necessary regarding relevant technologies, rules, procedures and 
policies. This removes impediments to and to perfects the mechanism for 
a free and open market and a national market system, and, in general, 
protects investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    By removing inapplicable sections violations within Rule 
17.50(g)(6) that relate to floor trading, the Exchange eliminates 
confusion that could arise from reading Exchange rules and circulars, 
thereby removing impediments to and perfecting the mechanism for a free 
and open market.

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.

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: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\ 
thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    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.

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 No. SR-C2-2012-032 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 No. SR-C2-2012-032. 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 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 office of C2. 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 No. SR-C2-2012-032 and should be submitted on or 
before October 10, 2012.
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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\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-23036 Filed 9-18-12; 8:45 am]
BILLING CODE 8011-01-P