Document ID: SEC-2011-1575-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2011-10-14T04:00Z

[Federal Register Volume 76, Number 199 (Friday, October 14, 2011)]
[Notices]
[Pages 63971-63973]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-26530]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65518; File No. SR-CBOE-2011-096]

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

October 7, 2011.
    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 3, 2011, the 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 the 
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.

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 self-regulatory organization 
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 those 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 parts 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 currently waives the $.18 per contract transaction fee 
for public customer (``C'' origin code) orders in options on Standard & 
Poor's Depositary Receipts (``SPY options'') that are executed in open 
outcry or in the Automated Improvement Mechanism (``AIM'') \3\. This 
fee waiver is due to expire on September 30, 2011. The Exchange 
proposes to extend the fee waiver through December 31, 2011.\4\ The 
Exchange also proposes to extend the fee waiver to options on the 
Financial Select Sector SPDR Fund (``XLF options''),\5\ which is 
currently traded on the Exchange. The proposed fee waiver is intended 
to attract more customer volume on the Exchange in these products. For 
competitive reasons, the customer base for open outcry and AIM trading 
in SPY and XLF options appears more sensitive to fees than the customer 
base for such trading in other exchange-traded funds (``ETFs''). The 
Exchange believes that waiving the transaction fee for such customer 
trades in SPY and XLF options will encourage greater customer trading 
in these products. The increased volume and liquidity resulting from 
greater customer trading in SPY and XLF options will benefit all market 
participants trading in these products. The Exchange would also like to 
encourage use of open

[[Page 63972]]

outcry and AIM, which is a price improvement mechanism.
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    \3\ See Securities Exchange Act Release No. 34-62902 (September 
14, 2010), 75 FR 57313 (September 20, 2010), Securities Exchange Act 
Release No. 34-63422 (December 3, 2010), 75 FR 76770 (December 9, 
2010), Securities Exchange Act Release No. 34-64197 (April 6, 2011), 
76 FR 20390 (April 12, 2011), Securities Exchange Act Release No. 
34-64817 (July 6, 2011), 76 FR 40948 (July 12, 2011) and CBOE Fees 
Schedule, footnote 8. AIM is an electronic auction system that 
exposes certain orders electronically in an auction to provide such 
orders with the opportunity to receive an execution at an improved 
price. AIM is governed by CBOE Rule 6.74A.
    \4\ The Exchange notes that transaction fees are also currently 
waived for customer orders of 99 contracts or less in ETF (including 
SPY and XLF options), ETN and HOLDRs options. See CBOE Fees 
Schedule, footnote 9.
    \5\ XLF seeks to provide investment results that correspond to 
the price and yield performance of the Financial Select Sector of 
the S&P 500 Index (the ``Index''). The Index includes companies from 
industries, such as diversified financial services, insurance, 
commercial banks, capital markets, real estate investment trusts, 
consumer finance, thrifts and mortgage finance, and real estate 
management and development. XLF utilizes a passive or indexing 
investment approach to attempt to approximate the investment 
performance of the Index.
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    In drafting this filing, it became clear that having a separate 
section on the Fees Schedule for transaction fees for QQQQ and SPY 
options is unnecessary. Aside from the $0.00 fee for customer 
transactions in QQQQ, all other fees on QQQQ and SPY options are the 
same amounts as the fees for other ETFs (QQQQ and SPY are both ETFs). 
As such, the Exchange proposes to eliminate the separate section for 
transaction fees for QQQQ and SPY options, and simply add a line 
regarding the $0.00 fee for customer transactions in QQQQ to the 
section of the Fees Schedule that lists transaction fees for all other 
ETFs. This change will make the Fees Schedule easier for investors and 
market participants to read, thereby eliminating any potential 
confusion.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act \6\, in general, and furthers the objectives of 
Section 6(b)(4) \7\ of the Act in particular, in that it is designed to 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among CBOE Trading Permit Holders and other persons using 
its facilities. The Exchange believes the proposed extension of the fee 
waiver for open outcry and AIM trades in SPY options through December 
31, 2011 and to XLF options is equitable and not unfairly 
discriminatory because the fee waiver would apply uniformly to all 
public customers trading SPY and XLF options in open outcry and AIM, 
and because the fee waiver is designed to attract new order flow to the 
Exchange. The Exchange believes that waiving the transaction fee for 
such customer trades in SPY and XLF options will encourage greater 
customer trading in these products. The increased volume and liquidity 
resulting from greater customer trading in SPY and XLF options will 
benefit all market participants trading in these products. The Exchange 
believes the proposed extension of the fee waiver is reasonable because 
it would continue to provide cost savings during the extended waiver 
period for public customers trading SPY options and begin to provide 
such savings to public customers trading XLF options. Further, the 
Exchange believes the proposed fee waiver is consistent with other fees 
assessed by the Exchange. Specifically, the Exchange assesses manually 
executed broker-dealer orders a different rate ($.25 per contract) as 
compared to electronically executed broker-dealer orders ($.45 per 
contract).\8\ Other exchange fee schedules also distinguish between 
electronically and non-electronically executed orders.\9\
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ See CBOE Fees Schedule, Section 1.
    \9\ NASDAQ OMX PHLX, Inc. categorizes its equity options 
transaction fees for Specialists, ROTs, SQTs, RSQTs and Broker-
Dealers as either electronic or non-electronic. See NASDAQ OMX PHLX 
Fees Schedule, Equity Options Fees. NYSE Amex, Inc. categorizes its 
options transaction fees for Non-NYSE Amex Options Market Makers, 
Broker-Dealers, Professional Customers, Non BD Customers and Firms 
as either electronic or manual. See NYSE Amex Options Fees Schedule, 
Trade Related Charges. NYSE Arca, Inc. categorizes its options 
transaction fees for Customers, Firms and Broker-Dealers as either 
electronic or manual. See NYSE Arca Options Fees Schedule, Trade 
Related Charges.
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    The Exchange believes that the elimination of the separate section 
of the Fees Schedule listing transaction fees in QQQQ and SPY options 
and the subsequent addition of a single line listing the fee for 
customer transactions in QQQQ options as $0.00 furthers the objectives 
of Section 6(b)(5) \10\ of the Act in particular in that it is designed 
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, by making the Fees Schedule easier 
to read, thereby eliminating any potential investor confusion.
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    \10\ 15 U.S.C. 78f(b)(5).
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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 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

    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

    The proposed rule change is designated by the Exchange as 
establishing or changing a due, fee, or other charge, thereby 
qualifying for effectiveness on filing pursuant to Section 19(b)(3)(A) 
of the Act \11\ and subparagraph (f)(2) of Rule 19b-4 \12\ 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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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-2011-096 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-2011-096. 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 offices 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-2011-096, and should be submitted on or before 
November 4, 2011.

[[Page 63973]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-26530 Filed 10-13-11; 8:45 am]
BILLING CODE 8011-01-P