Document ID: SEC-2016-1647-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: C2 Options Exchange
Posted Date: 2016-09-14T04:00Z

[Federal Register Volume 81, Number 178 (Wednesday, September 14, 2016)]
[Notices]
[Pages 63233-63235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22026]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78785; File No. SR-C2-2016-017]

Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule 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, 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 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.c2exchange.com/Legal/), 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. Particularly, the 
Exchange proposes to amend Taker fees for simple, non-complex orders in 
all equity, multiply-listed index, ETF and ETN options classes (except 
Russell 2000 Index (``RUT'')) in both penny and non-penny classes. The 
Taker fees would be increased by $0.02 per contract in penny classes 
and by $0.02 for customers (``C'' origin code) and by $0.05 for all 
other origin codes in non-penny classes. Specifically, the Exchange 
proposes to adopt the following rates. Listed rates are per contract.

----------------------------------------------------------------------------------------------------------------
                                                                    Penny classes               Non-penny
                                                             ---------------------------------------------------
                                                                Current      Proposed     Current      Proposed
----------------------------------------------------------------------------------------------------------------
Public Customer.............................................          .47          .49          .83          .85
C2 Market-Maker.............................................          .48          .50          .85          .90
All Other Origins (Professional Customer, Firm, Broker/               .48          .50          .88          .93
 Dealer, non-C2 Market-Maker, JBO, etc.)....................
Trades on the Open..........................................      ($0.00)      ($0.00)      ($0.00)      ($0.00)
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[[Page 63234]]

The Exchange notes that the proposed Taker fee amounts are the same as, 
or in line with, the amounts currently assessed for simple, non-complex 
orders in equity, multiply-listed index, ETF and ETN options classes 
assessed at other Exchanges.\3\
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    \3\ See e.g., NYSE Arca Options Fee Schedule, which lists, for 
electronic executions in Penny Pilot issues, (1) Customer Taker fee 
of $0.49, (2) Market-Maker Taker fee of $0.50, and (3) Firm and 
Broker Dealer Taker fee of $0.50; and for electronic executions in 
non-Penny Pilot issues, (1) Customer Taker fee of $0.85, (2) Market-
Maker Taker fee of $1.08, and (3) Firm and Broker Taker fee of 
$1.08.
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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.\4\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \5\ 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 the 
Section 6(b)(5) \6\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange also 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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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ Id.
    \7\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed increase to Taker fees for 
simple, non-complex orders in all equity, multiply-listed index, ETF 
and ETN options classes (except RUT) are reasonable because the 
proposed fee amounts are the same as, or in line with, the amounts 
assessed for similar transactions at other exchanges.\8\
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    \8\ See supra note 3.
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    The Exchange believes that it is equitable and not unfairly 
discriminatory to assess lower fees to Public Customers as compared to 
other market participants because Public Customer order flow enhances 
liquidity on the Exchange for the benefit of all market participants. 
Specifically, Public Customer liquidity benefits all market 
participants by providing more trading opportunities, which attracts 
Market-Makers. An increase in the activity of these market participants 
in turn facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants. 
Additionally, the proposed fee change applying to Public Customers will 
be applied equally to all Public Customers.
    The Exchange believes that it is equitable and not unfairly 
discriminatory to assess lower fees in non-penny classes to Market-
Makers as compared to other market participants other than Public 
Customers because Market-Makers, unlike other C2 market participants, 
take on a number of obligations, including quoting obligations, that 
other market participants do not have. Further, these lower fees 
offered to Market-Makers are intended to incent Market-Makers to quote 
and trade more on the Exchange, thereby providing more trading 
opportunities for all market participants. Finally, all fee amounts 
listed as applying to Market-Makers will be applied equally to all 
Market-Makers.
    Similarly, the Exchange believes it is equitable and not unfairly 
discriminatory to assess higher fees to all other origins (i.e., 
Professional Customer, Firm, Broker/Dealer, non-C2 Market-Maker, JBO, 
etc.) in non-penny classes. Particularly, the Exchange notes that it 
believes it's equitable and not unfairly discriminatory to assess a 
higher fee than it does of Market-Makers, because these market 
participants do not have the same obligations, such as quoting, as 
Market-Makers do. The Exchange believes it's equitable and not unfairly 
discriminatory to assess a higher fee than it does to Public Customers, 
because, as described above, there is a history of providing 
preferential pricing to Public Customers as Public Customer liquidity 
benefits all market participants by providing more trading 
opportunities. The Exchange notes that the proposed fee amounts listed 
for non-penny classes will also be applied equally to each of these 
market participants (i.e., Professional Customers, Firms, Broker/
Dealers, non-C2 Market-Makers, JBOs, etc. will be assessed the same 
amount). It should also be noted that all fee amounts described herein 
are intended to attract greater order flow to the Exchange, which 
should therefore serve to benefit all Exchange market participants.

B. Self-Regulatory Organization's Statement on Burden on Competition

    C2 does not believe that the proposed rule changes will impose any 
burden on competition that are 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 different fees are assessed to 
different market participants in some circumstances, these different 
market participants have different obligations and different 
circumstances as discussed above. The Exchange believes this proposal 
will not cause an unnecessary burden on intermarket competition because 
the proposed Taker fee amounts are similar to fees assessed at other 
exchanges for similar transactions.\9\ To the extent that the proposed 
changes make C2 a more attractive marketplace for market participants 
at other exchanges, such market participants are welcome to become C2 
market participants.
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    \9\ See supra note 3.
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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 \10\ and paragraph (f) of Rule 19b-4 \11\ 
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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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f).

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[[Page 63235]]

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-C2-2016-017 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-C2-2016-017. 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 such 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-C2-2016-017, and should be 
submitted on or before October 5, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-22026 Filed 9-13-16; 8:45 am]
 BILLING CODE 8011-01-P