Document ID: SEC-2013-1771-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: C2 Options Exchange, Inc.
Posted Date: 2013-10-22T04:00Z

[Federal Register Volume 78, Number 204 (Tuesday, October 22, 2013)]
[Notices]
[Pages 62885-62887]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-24544]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70574; File No. SR-C2-2013-036]

Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Amend the Fees Schedule

September 30, 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 September 25, 2013, 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, 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.c2exchange.com/Legal/), at the Exchange's Office of the Secretary, 
at the Commission's Public Reference Room, and on the Commission's Web 
site at http://www.sec.gov.

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. First, the 
Exchange proposes to remove the following language from Section 3 of 
its Fees Schedule:
    Because C2 intends to cease listing of SPXPM following the closing 
of trading on Friday, February 15, 2013, for any Market-Maker Permit 
used in February 2013 solely to act as a Market-Maker in SPXPM, C2 will 
credit back to the Market-Maker a pro-rated amount (corresponding to 
the portion of the month during which SPXPM is not listed on C2) of the 
Market-Maker Permit cost. This language is obsolete and no longer 
relevant, as the month of February 2013 has ended and SPXPM is no 
longer traded on the Exchange.
    The Exchange also proposes to make another amendment to Section 3 
of its Fees Schedule. Currently, Section 3 states that ``Trading 
Permits will be renewed automatically for the next month unless the 
Trading Permit Holder submits written notification to the Registration 
Services Department by the 25th day of the prior month (or the 
preceding business day if the 25th is not a business day) to cancel the 
Trading Permit effective at or prior to the end of the applicable 
month.'' The Exchange proposes to amend this statement to give Trading 
Permit Holders (``TPHs'') until 4 p.m. on the second-to-last business 
day of the prior month to cancel a Trading Permit. This will give TPHs 
more time to cancel Trading Permits before such permits renew.\3\
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    \3\ The proposed new language would read ``Trading Permits will 
be renewed automatically for the next month unless the Trading 
Permit Holder submits written notification to the Registration 
Services Department by 4 p.m. on the second-to-last business day of 
the prior month to cancel the Trading Permit effective at or prior 
to the end of the applicable month.''
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    Third, the Exchange proposes to adopt a one-time ``Responsible 
Person'' fee of $500 to the list of Application-Related Fees. A 
``Responsible Person'' is an individual designated by an organization 
that is the holder of a Trading Permit to represent the organization 
with respect to that Trading Permit in all matters relating to the 
Exchange. The Responsible Person must be a United States-based officer, 
director or management-level employee of the Permit Holder, who is 
responsible for the direct supervision and control of

[[Page 62886]]

Associated Persons of that Permit Holder.\4\ Each organization that is 
the holder of a Trading Permit must designate an individual as the 
Responsible Person for the Permit Holder. The Responsible Person must 
be affiliated with the Permit Holder.\5\ The Exchange conducts an 
investigation and review of each person who the holder of a Trading 
Permit has identified as the holder's Responsible Person. This 
investigation and review may include a fingerprint criminal background 
check and the individual's consent to the Exchange's jurisdiction over 
the individual. The Exchange proposes to assess this fee in order to 
cover the costs of this investigation and review. This fee will not be 
assessed for a Responsible Person who is also an Associated Person with 
the same Trading Permit Holder, as the same investigation and review is 
conducted for each Associated Person as is conducted for each 
Responsible Person. Since the investigation and review will not be 
conducted twice for a Responsible Person who is also an Associated 
Person, the Exchange does not propose to assess both fees in such a 
circumstance.
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    \4\ See C2 Rule 1.1.
    \5\ See C2 Rule 3.8.
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    Effective April 1, 2012, the Exchange added a clause to the Fees 
Schedule that waived Renewal fees for six months.\6\ The Renewal fee is 
assessed to organizations and sole proprietorships that were once C2 
Trading Permit Holders but gave up their trading permits, and now want 
to return. The Exchange proposed waiving the Renewal fee for a six-
month period beginning on April 1, 2012 in order to provide an 
incentive to former C2 Trading Permit Holders to return to C2. Because 
that six-month period ended on September 30, 2012, this language is now 
obsolete. The Exchange therefore proposes to delete the language 
stating ``These fees are waived for a six-month period beginning April 
1, 2012'' that applies to the Renewal fees.
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    \6\ See Securities Exchange Act Release No. 66651 (March 23, 
2012) 77 FR 19041 (March 29, 2012) (SR-C2-2012-010).
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    The Exchange also proposes to add the language ``after three 
months, all fees as assessed by the Exchange are considered final by 
the Exchange'' to the end of the Fees Schedule. This will serve to 
encourage Permit Holders to promptly review their Exchange invoices so 
that any disputed charges can be addressed in a timely manner while the 
information and data underlying those charges is still easily and 
readily available. Other exchanges include this language in their Fees 
Schedules.\7\
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    \7\ See Chicago Board Options Exchange, Incorporated (``CBOE'') 
Fees Schedule, Footnote 7.
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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.\8\ Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \9\ 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,\10\ 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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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed changes to remove obsolete 
language from the Fees Schedule will alleviate any potential investor 
confusion, thereby removing impediments to and perfecting the mechanism 
of a free and open market and a national market system, and, in 
general, protecting investors and the public interest.
    The Exchange believes that the proposal to amend Section 3 of the 
Fees Schedule to give TPHs until 4 p.m. on the second-to-last business 
day of the prior month to cancel a Trading Permit is reasonable because 
it will give TPHs more time to determine whether to cancel a Trading 
Permit. The Exchange believes that the proposed change is equitable and 
not unfairly discriminatory because it will apply to all TPHs.
    The Exchange believes the addition of the Responsible Person fee is 
reasonable because the amount of the fee is intended to cover the costs 
of the review and examination of Responsible Persons. The Exchange 
believes that this is equitable and not unfairly discriminatory because 
the fee will apply to all Responsible Person applicants (with the 
exception of those that are also Associated Person applicants.) The 
Exchange believes that it is equitable and not unfairly discriminatory 
to exempt Associated Person applicants with the same Permit Holder from 
the Responsible Person fee because the same investigation and review is 
conducted for each Associated Person as is conducted for each 
Responsible Person. Since the investigation and review will not be 
conducted twice for a Responsible Person who is also an Associated 
Person, the Exchange does not believe it would be equitable to assess 
both fees in such a circumstance.
    The Exchange believes that the proposed addition of the language 
``after three months, all fees as assessed by the Exchange are 
considered final by the Exchange'' to the end of the Fees Schedule is 
reasonable because this will serve to encourage Permit Holders to 
promptly review their Exchange invoices so that any disputed charges 
can be addressed in a timely manner while the information and data 
underlying those charges is still easily and readily available. The 
Exchange believes that this is equitable and not unfairly 
discriminatory because it will apply to all market participants. 
Further, other exchanges include this language in their Fees 
Schedules.\11\
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    \11\ See CBOE Fees Schedule, Footnote 7.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    C2 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 the proposed changes 
apply to all qualifying market participants equally. C2 does not 
believe that the proposed rule change 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 are 
all specific to C2 operations, fees and the C2 Fees Schedule. To the 
extent that such changes may make C2 a more attractive market to market 
participants at other exchanges, such market participants may elect to 
become C2 market participants.

[[Page 62887]]

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 \12\ and paragraph (f) of Rule 19b-4 \13\ 
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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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-C2-2013-036 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-C2-2013-036. 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-C2-2013-036 and should be 
submitted on or before November 12, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24544 Filed 10-21-13; 8:45 am]
BILLING CODE 8011-01-P