Document ID: SEC-2016-1637-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2016-09-14T04:00Z

[Federal Register Volume 81, Number 178 (Wednesday, September 14, 2016)]
[Notices]
[Pages 63243-63245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22027]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78786; File No. SR-CBOE-2016-066]

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

September 8, 2016.
    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 1, 2016, 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 its Fees Schedule. 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 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 amend its Fees Schedule. Specifically, the 
Exchange proposes to (1) increase the payment to the Designated Primary 
Market-Maker(s) appointed in FTSE 100 Index (``UKXM'') and the China 50 
Index ``(FXTM'') and (2) eliminate the transaction fee for Professional 
Customers and Voluntary Professionals (``W'' origin code) 
(``Professionals'') for all manual transactions in all penny and non-
penny equity, index (excluding Underlying Symbol List A \3\), ETF and 
ETN options classes.
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    \3\ See CBOE Fees Schedule, Footnote 34.
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    Currently, the Exchange offers a compensation plan to the DPM(s) 
appointed in FXTM or UKXM to offset the initial DPM costs. More 
specifically, Footnote 43 to the Fees Schedule provides that DPM(s) 
appointed for an entire month in either FXTM or UKXM will receive a 
payment of $5,000 per class per month through December 31, 2016. The 
Payment was adopted to offset the initial DPM costs. The Exchange notes 
that the startup and ongoing costs to support these products still 
exceeds the current DPM payment. As such, the Exchange proposes to 
increase the payment to $7,500 per class per month in order to help 
offset the ongoing costs.
    Next, the Exchange proposes to reduce the transaction fee for 
Professionals for all manual transactions in all penny and non-penny 
equity, index (excluding Underlying Symbol List A), ETF and ETN options 
classes to $0.00 per contract. Currently, Professionals are assessed 
$0.25 per contract for manual executions in those

[[Page 63244]]

classes. The Exchange notes that the proposed change is consistent with 
the amount assessed to similar transactions for Professionals at 
another Exchange.\4\
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    \4\ See NYSE Arca Options Fees and Charges, Trade-Related 
Charges for Standard Options.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of section 6(b) of the Act.\5\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \6\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, 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. Additionally, 
the Exchange believes the proposed rule change is consistent with 
section 6(b)(4) of the Act,\7\ 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.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that it's reasonable to increase the FXTM and 
UKXM DPM payment because the initial setup and ongoing costs exceed the 
DPM payment. Additionally, the Exchange believes it is equitable and 
not unfairly discriminatory to compensate DPM(s) that are appointed for 
an entire month in either FXTM or UKXM because the DPM(s) incur costs 
when receiving and maintaining an appointment, and in the case of FXTM 
and UKXM, the Exchange believes it is appropriate to continue to 
provide and increase compensation to the DPM(s) to offset those costs.
    The Exchange believes it's reasonable to reduce the transaction fee 
for Professionals for all manual transactions in all penny and non-
penny equity, index (excluding Underlying Symbol List A), ETF and ETN 
options classes to $0.00 per contract because Professionals would not 
incur a fee for those transactions. The Exchange notes that Customers 
are also not charged transaction fees for these transactions. The 
Exchange believes it's equitable and not unfairly discriminatory to 
propose to reduce the transaction fee for Professionals only because it 
is designed to attract a greater number of Professional orders in these 
classes. This increased volume creates greater trading opportunities 
that benefit all market participants. Specifically, while only Customer 
and Professional orders are not charged a transaction fee for manual 
executions, an increase in Customer and Professional order flow will 
bring greater volume and liquidity, which benefit all market 
participants by providing more trading opportunities and tighter 
spreads. In addition, another Exchange also does not charge 
Professionals a transaction fee for manual executions for similar 
transactions.\8\ The Exchange lastly notes that assessing a different 
fee amount for manual executions than for electronic executions is 
equitable and not unfairly discriminatory because the Exchange has 
expended considerable resources to develop its electronic trading 
platforms and seeks to recoup the costs of such expenditures.
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    \8\ See supra note 4.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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. The Exchange does not 
believe that the proposed rule change will impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because, while only the DPM(s) 
appointed in UKXM and FXTM receive the increased DPM Payment, the 
DPM(s) have costs and obligations that other market participants do 
not. Additionally, while reducing the transaction rate to $0.00 for 
manual executions in penny and non-penny equity, index (excluding 
Underlying Symbol List A), ETF and ETN option classes only applies to 
Professionals, the proposed change is designed to encourage increased 
Professional options volume, which provides greater trading 
opportunities for all market participants. The Exchange 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 CBOE. To the extent that the proposed changes 
make CBOE a more attractive marketplace for market participants at 
other exchanges, such market participants are welcome to become CBOE 
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 \9\ 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. 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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    \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-2016-066 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2016-066. 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

[[Page 63245]]

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-2016-066 and should be 
submitted on or before October 5, 2016.

    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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Brent J. Fields,
Secretary.
[FR Doc. 2016-22027 Filed 9-13-16; 8:45 am]
BILLING CODE 8011-01-P