Document ID: SEC-2013-1629-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2013-09-18T04:00Z

[Federal Register Volume 78, Number 181 (Wednesday, September 18, 2013)]
[Notices]
[Pages 57427-57429]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-22649]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70382; File No. SR-CBOE-2013-086]

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

September 12, 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 August 30, 2013, 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 the Fees Schedule of its CBOE Stock 
Exchange. 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

[[Page 57428]]

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
    CBSX proposes to amend its Fees Schedule. First, the Exchange 
proposes to amend Footnote 6 of the CBSX Fees Schedule to remove AMD 
and MU from its list of Select Symbols for whom transactions priced $1 
or greater (all fees addressed in this filing relate to transactions 
priced $1 or greater) are assessed a fee of $0.0050 per share (for 
Maker executions) and provided a rebate of $0.0045 per share (for Taker 
executions). This means that AMD and MU will now fall into the ``all 
other securities'' category and fees and rebates applicable to ``all 
other securities'' will apply to AMD and MU, which are as follows (and 
are not being changed in this proposed rule change):

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                     Execution type                                                Rate
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Maker (adds less than 0.08% of TCV of liquidity in one   $0.0018 per share.
 day) (1)(5).
Maker (adds at least 0.08% but less than 0.16% of TCV    0.0017 per share.
 of liquidity in one day) (1)(5).
Maker (adds at least 0.16% but less than 0.24% of TCV    0.0016 per share.
 of liquidity in one day) (1)(5).
Maker (adds at least 0.24% but less than 0.42% of TCV    0.0015 per share.
 of liquidity in one day) (1)(5).
Maker (adds 0.42% or more of TCV of liquidity in one     0.0014 per share.
 day) (1)(5).
Taker (removes 9,999,999 shares or less of liquidity in  0.0015 rebate per share.
 one day (1) or less than 85% Execution Rate).
Taker (removes 10,000,000 shares or more of liquidity    0.0017 rebate per share.
 in one day (1) and equal to or greater than 85%
 Execution Rate).
Maker (adds liquidity using a silent order)............  0.0018 per share.
Taker (removes silent order liquidity).................  0.0015 rebate per share.
Maker (adds liquidity using a silent-mid or silent-post- 0.0018 per share.
 mid order).
Taker (removes silent-mid or silent-post-mid liquidity)  0.0015 rebate per share.
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    AMD and MU had been included in the Select Symbols in an attempt to 
attract greater liquidity in both symbols, but such increased liquidity 
has not been achieved. CBSX hopes that moving AMD and MU into the ``all 
other securities'' category will increase liquidity provision in both 
products.
    CBSX also proposes to add AAPL and GOOG to the list of Select 
Symbols. This proposed change is an aspirational attempt to increase 
liquidity provision in these products. AAPL and GOOG are higher-priced 
stocks that typically have larger spreads than other products, and CBSX 
believes that the Select Symbols fee structure will attract more 
liquidity in stocks fitting this profile.
    CBSX also proposes to amend Footnote 5 of the CBSX Fees Schedule to 
state that volume from Maker executions in the Select Symbols (priced 
$1 or greater) will count towards a market participant's % of TCV. 
Currently, Maker fees for transactions in all other securities are 
determined based on the percentage of TCV \3\ of liquidity that the 
Maker adds to CBSX. Because these fees only apply to transactions in 
all other securities, only volume in all other securities (and not 
volume in the Select Symbols) counted towards a Maker's percentage 
(however, TCV includes volume in the Select Symbols, per the definition 
of TCV). Therefore, CBSX hereby proposes to include volume from Maker 
executions in the Select Symbols to count towards a market 
participant's percentage of TCV. Since volume from the Select Symbols 
is already included in TCV (the denominator of the calculation), this 
proposed change can only be a benefit to market participants, as any 
volume they do in the Select Symbols (the numerator) will push their 
percentages higher, therefore making them more likely to qualify for 
the lower-fee tiers.
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    \3\ ``TCV'' means total consolidated volume calculated as the 
volume reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan.
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    The proposed changes are to take effect on September 3, 2013.
 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.\4\ Specifically, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\5\ 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 it is 
reasonable, equitable and not unfairly discriminatory to move AMD and 
MU to be assessed the fees of ``all other securities'' because 
transactions in these products will merely be assessed the fee and 
rebate amounts of all securities other than the Select Symbols. 
Further, this move is designed to attract more trading in these 
products, as more volume was traded when they were assessed the ``all 
other securities'' fees than when they were assessed the Select Symbols 
fees. CBSX believes that the liquidity profile and characteristics of 
AMD and MU will allow for more liquidity when traded under the fees of 
``all other securities''. Finally, these fees for AMD and MU will be 
assessed equally to all market participants.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it is reasonable, equitable and not 
unfairly discriminatory to designate AAPL and GOOG as Select Symbols 
because transactions in these stocks will be assessed the same fees as 
the other Select Symbols. Further, the amount of the proposed Maker fee 
for the Select Symbols is merely $0.0005 greater than the amount of the 
proposed Taker rebate. CBSX believes that the Select Symbols fee 
structure will attract more liquidity in stocks fitting this profile. 
Finally, these Select Symbols fees will be assessed equally to all 
market participants.
    The Exchange believes that it is reasonable to state that volume 
from Maker executions in the Select Symbols (priced $1 or greater) will 
count towards a market participant's % of TCV because this proposed 
change can only be a benefit to market participants, as any volume they 
do in the Select Symbols (the numerator) will push their percentages 
higher, therefore making them more likely to qualify for the lower-fee 
tiers. The Exchange believes that this change is equitable and not 
unfairly discriminatory because it will

[[Page 57429]]

be applied to all market participants equally.

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. CBSX does not believe that the 
proposed rule changes will impose any burden on intramarket competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act because the proposed changes will be applied to all market 
participants. CBSX does not believe that the proposed rule changes will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed changes only affect trading on CBSX. Further, the proposed 
changes are designed to incentivize more trading on CBSX, which could 
encourage other exchanges to enact their own competitive changes. To 
the extent that the proposed changes make CBSX a more attractive 
trading venue for market participants on other exchanges, such market 
participants may elect to become CBSX 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-2013-086 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-2013-086. 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-2013-086 and should be 
submitted on or before October 9, 2013.

    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. 2013-22649 Filed 9-17-13; 8:45 am]
BILLING CODE 8011-01-P