Document ID: SEC-2010-1901-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2010-12-15T05:00Z

[Federal Register Volume 75, Number 240 (Wednesday, December 15, 2010)]
[Notices]
[Pages 78284-78285]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-31436]

[[Page 78284]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63470; File No. SR-CBOE-2010-108]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to CBOE's Marketing Fee Program

December 8, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 1, 2010, Chicago Board Options Exchange, Incorporated 
(``CBOE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Exchange has designated this proposal as one establishing or 
changing a due, fee, or other charge imposed by CBOE under Section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposal effective upon filing with the Commission. 
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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Chicago Board Options Exchange, Incorporated (``CBOE'' or 
``Exchange'') proposes to amend its Fees Schedule and specifically make 
certain changes to its Marketing Fee Program. 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.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CBOE 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. CBOE 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
    CBOE proposes to amend its Marketing Fee Program in two respects. 
First, CBOE proposes to amend the types of transactions in which the 
fee is assessed in the SPY option class. Currently, the marketing fee 
is assessed on transactions as set forth in footnote 6 of the Fees 
Schedule.\5\ In that regard, CBOE notes that it is assessed on both 
electronic and open outcry transactions. CBOE now proposes to not 
assess the marketing fee on electronic transactions in SPY options, 
except that it would continue to assess the marketing fee on electronic 
transactions resulting from its Automated Improvement Mechanism (``AIM 
'') pursuant to CBOE Rule 6.74A and transactions in open outcry. CBOE 
proposes to implement this change on a pilot basis starting on December 
1, 2010 and continuing through March 31, 2011.
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    \5\ In particular, the marketing fee is assessed only on 
transactions of Market-Makers, e-DPMs, and DPMs, resulting from (i) 
customer orders from payment accepting firms, or (ii) customer 
orders that have designated a ``Preferred Market-Maker'' under CBOE 
Rule 8.13. However, as described in footnote 6, the marketing fee 
does not apply to: Market-Maker-to-Market-Maker transactions 
including transactions resulting from orders from non-Trading Permit 
Holder market-makers; transactions resulting from accommodation 
liquidations (cabinet trades); and transactions resulting from any 
of the strategies identified and/or defined in footnote 13 of this 
Fees Schedule; and transactions in the Penny Pilot classes resulting 
from orders executed through the Hybrid Agency Liaison under Rule 
6.14.
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    This proposed change is intended to attract more customer volume to 
the Exchange in this option class and to allow CBOE market-makers to 
better compete for order flow. CBOE notes that the SPY option class is 
unique in the manner in which it trades and is one of the most active 
option classes. CBOE also notes that DPMs and Preferred Market-Makers 
can utilize the marketing fee funds to attract orders from payment 
accepting firms that are executed in AIM and in open outcry. Finally, 
CBOE believes that the marketing fee funds received by payment 
accepting firms may be used to offset transaction and other costs 
related to the execution of an order in AIM and in open outcry, 
including in the SPY option class. For these reasons, CBOE believes 
that it would make sense to continue to assess the marketing fee in 
transactions resulting from AIM and in open outcry in the SPY option 
class, and would assist in attracting customer volume to the Exchange.
    In addition, CBOE proposes to amend its Marketing Fee Program to 
not assess the fee in transactions in Flexible Exchange Options 
(``FLEX''), which CBOE believes may encourage Market-Makers to transact 
in FLEX options. CBOE proposes to implement this change to the 
marketing fee program beginning on December 1, 2010. CBOE is not 
amending its Marketing Fee Program in any other respects.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Securities Exchange Act of 1934 (``Act''), \6\ in 
general, and furthers the objectives of Section 6(b)(4) \7\ of the Act 
in particular, in that it is designed to provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
Trading Permit Holders and other persons using its facilities in that 
it is intended to attract more customer volume on the Exchange in the 
SPY option class and also to encourage Market-Makers to transact in 
FLEX options.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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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 [sic] purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change establishes or changes a 
due, fee, or other charge imposed by the Exchange, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and 
subparagraph (f)(2) of Rule 19b-4 \9\ 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

[[Page 78285]]

investors, or otherwise in furtherance of the purposes of the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2010-108 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-2010-108. This file 
number should be included on the subject line if e-mail 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 on official business 
days between the hours of 10 a.m. and 3 p.m. Copies of such filing also 
will be available for inspection and copying at the principal office of 
CBOE. 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-2010-108 and should be submitted on or before January 5, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31436 Filed 12-14-10; 8:45 am]
BILLING CODE 8011-01-P