Document ID: SEC-2013-0199-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: C2 Options Exchange, Inc.
Posted Date: 2013-02-01T00:00Z

[Federal Register Volume 78, Number 22 (Friday, February 1, 2013)]
[Notices]
[Pages 7474-7476]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-02147]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68741; File No. SR-C2-2013-002]

Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Related to Pre-Opening Information

January 28, 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 January 17, 2013, the C2 Options Exchange, Incorporated 
(``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 Exchange has designated the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of 
the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend Rule 6.11, Openings (and 
sometimes Closings), regarding the dissemination of certain pre-opening 
information. The text of the proposed rule change is available on the 
Exchange's Web site (http://www.c2exchange.com/Legal/RuleFilings.aspx), 
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 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 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to update the provisions of Rule 6.11 
regarding the dissemination of certain pre-opening information. In 
relevant part, the current provisions of Rule 6.11(a)(2) provide that, 
during the pre-opening period, at specified intervals of time that will 
be announced to Participants,\5\ the C2 System will disseminate to 
Participants \6\ information about resting orders in the book that 
remain from the prior business day and any orders and quotes submitted 
before the opening, including the expected opening price (``EOP'') and 
expected opening size (``EOS'') given the current resting orders and 
quotes. The purpose of the proposed rule change is to update the text 
to provide that such pre-opening information will be disseminated to 
all users that have elected to receive such information (and to remove 
the existing reference to such pre-opening information being 
disseminated to Participants). As revised, the rule text will reflect 
that any user--whether or not a Participant--may receive pre-opening 
information.\7\ This revision will

[[Page 7475]]

update the rule text to accurately reflect the Exchange's current 
practice of making such pre-opening information available to any 
user.\8\
---------------------------------------------------------------------------

    \5\ Pursuant to Rule 6.11.02, all pronouncements regarding 
determinations by the Exchange pursuant to Rule 6.11 and the 
Interpretations and Policies thereunder will be announced to 
Participants via Regulatory Circular.
    \6\ The term ``Participant'' means a Permit Holder. The term 
``Permit Holder'' means the Exchange recognized holder of a Trading 
Permit. A Permit Holder is also known as a Trading Permit Holder 
under the C2 Bylaws. Permit Holders are deemed ``members'' under the 
Act. See C2 Rule 1.1, Definitions.
    \7\ The Exchange is also proposing to replace a reference from 
the specified intervals of time being ``announced to Participants'' 
to being ``determined by the Exchange.'' The Exchange notes that all 
pronouncements regarding determinations by the Exchange pursuant to 
Rule 6.11 and the Interpretations and Policies there under will be 
announced to Participants via Regulatory Circular. See C2 Rule 
6.11.02; see also note 5, supra. The Exchange also notes that 
Regulatory Circulars are publically available on the Exchange's Web 
site (www.c2exchange.com).
    \8\ Users may elect to receive the pre-opening data via Market 
Data Express, LLC (``MDX,'' an affiliate of C2). MDX currently makes 
the data available as part of the BBO Data Feed for C2 listed 
options at no additional charge. See SR-C2-2013-001.
---------------------------------------------------------------------------

    The Exchange believes that the dissemination of this pre-opening 
information to all users that elect to receive such information 
increases opportunities for all types of market participants (e.g., 
public customers, broker-dealers and market-makers) to participate in 
opening rotations. This broader participation could lead to more robust 
competition because more users may participate in opening rotations, 
which may result in better prices for customers.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the Act and the rules and regulations under the Act, in general, 
and furthers the objectives of Section 6(b)(5),\9\ in particular, in 
that it is 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 facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanisms of a free and open market and a national market system, 
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change will update the rule text to accurately 
reflect the Exchange's current practice of making pre-opening 
information available to any user--whether or not a Participant. The 
Exchange believes that the dissemination of the pre-opening information 
to all users that elect to receive such information increases 
opportunities for all types of market participants (e.g., public 
customers, broker-dealers and market-makers) to participate in opening 
rotations. This broader participation could lead to more robust 
competition because more users may participate in opening rotations, 
which may result in better prices for customers.

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. As noted above, the Exchange 
believes that the dissemination of the pre-opening information to all 
users that elect to receive such information increases opportunities 
for all types of participants (e.g., public customers, broker-dealers 
and market-makers) to participate in opening rotations. This broader 
participation could lead to more robust competition because more users 
may participate in opening rotations, which may result in better prices 
for customers. The Exchange also believes that the data will help 
attract new users and new order flow to the Exchange, thereby improving 
the Exchange's ability to compete in the market for options order flow 
and executions. Finally, the Exchange notes that at least one other 
exchange, the NASDAQ Options Market (``NOM''), makes similar 
information about pre-opening information available to non-members.\10\
---------------------------------------------------------------------------

    \10\ NOM disseminates certain pre-opening order imbalance 
information every five seconds for a period of time prior to the 
open and this information is made available via subscription. See 
NOM Chapter VI, Section 8(b)(1) and Chapter XV, Section 4(e); see 
also http://www.nasdaqtrader.com/trader.aspx?id=openclose.
---------------------------------------------------------------------------

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 
proposal.

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

    Because the proposed rule change does not (i) Significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6)(iii) thereunder.\12\ At any time within 60 days of the filing 
of such 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
---------------------------------------------------------------------------

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-C2-2013-002 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-C2-2013-002. 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-

[[Page 7476]]

2013-002 and should be submitted on or before February 22, 2013.
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02147 Filed 1-31-13; 8:45 am]
BILLING CODE 8011-01-P