Document ID: SEC-2013-1486-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: C2 Options Exchange, Inc.
Posted Date: 2013-08-20T04:00Z

[Federal Register Volume 78, Number 161 (Tuesday, August 20, 2013)]
[Notices]
[Pages 51259-51261]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-20195]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70194; File No. SR-C2-2013-030]

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

August 14, 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 August 1, 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 and II 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.
---------------------------------------------------------------------------

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

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, 
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.\3\ More 
specifically, the Exchange is proposing to make changes to the section 
``Regulatory Fees.'' Currently under the Exchange's Regulatory Fees, 
the Exchange charges a $100 session fee to registered persons at the 
Exchange for a continuing education (``CE'') requirement that is 
outlined in Exchange Rule 9.3A.\4\ The Exchange is now proposing to add 
a $60 session fee for those individuals that only have the Proprietary 
Trader (``Series 56'') registration.
---------------------------------------------------------------------------

    \3\ See Exchange Rule 2.21 [sic], which states, ``fee [sic] 
payable by Participants shall be fixed form [sic] time to time by 
the Exchange.''
    \4\ See Exchange Rules Chapter 9 which states, ``The rules 
contained in CBOE Chapter IX, as such rules may be in effect from 
time to time, shall apply to C2 and are hereby incorporated into 
this Chapter.'' See also, Securities Exchange Act Release No. 61152 
(December 10, 2009), 74 FR 66699, 66709-10 (December 16, 2009) (In 
the Matter of the Application of C2 Options Exchange, Incorporated 
for Registration as a National Securities Exchange Findings, 
Opinion, and Order of the Commission (File No. 10-191). In the 
Order, the Commission granted C2's request for exemption, pursuant 
to Section 36 of the Securities Exchange Act of 1934 (the ``Act''), 
from the rule filing requirements of Section 19(b) of the Act with 
respect to the rules that C2 proposed to incorporate by reference. 
The exemption was conditioned upon C2 providing written notice to 
its members whenever CBOE proposes to change a rule that C2 has 
incorporated by reference. In the Order, the Commission stated its 
belief that ``this exemption is appropriate in the public interest 
and consistent with the protection of investors because it will 
promote more efficient use of Commission and SRO resources by 
avoiding duplicative rule flings based on simultaneous changes to 
identical rules sought by more than one SRO.'' C2 satisfied this 
requirement with respect to the recently amended 9.3A by posting a 
copy of the CBOE rule filing (SR-CBOE-2013-076) on C2's rule filing 
Web site at the same time the CBOE rule filing was posted to the 
CBOE rule filing Web site. The C2 rule filing Web site is located 
at: http://www.c2exchange.com/Legal/RuleFilings.aspx. By posting 
CBOE rule filings to C2's rule filing Web site that amend C2's rule 
by reference, the Exchange provides its members with notice of the 
proposed rule change so that they have an opportunity to comment on 
it.
---------------------------------------------------------------------------

    Exchange Rule 3.4 requires Permit Holders that are individuals 
(``PHIs'') and associated persons of Permit Holders to take a 
qualification examination to register with the Exchange.\5\ In 
addition, Exchange Rule 3.4.03 requires each person in an associated 
person status to satisfy the CE requirements set forth in Rule 9.3A. 
Exchange Rule 9.3A requires all PHIs to complete the Regulatory Element 
of the CE program beginning with the occurrence of ``their second 
registration anniversary date and every three years thereafter or as 
otherwise prescribed by the Exchange.'' \6\ Recently, the Exchange 
amended Rule 9.3A to enumerate the different CE programs offered by the 
Exchange including the S501 Series 56 Proprietary Trader Continuing 
Education Program (``S501'').\7\ The Exchange is now proposing to 
outline the necessary fees associated with the Regulatory Element of 
the S501.
---------------------------------------------------------------------------

    \5\ See Exchange Rule 3.4(a)(1).
    \6\ See Exchange Rule 9.3A(a).
    \7\ See Securities Exchange Act Release No. 34-70027 (July 23, 
2013) (SR-CBOE-2013-076) (immediately effective rule change to 
specify the different CE requirements for registered persons based 
upon their registration with the Exchange).
---------------------------------------------------------------------------

    The Exchange has determined that these changes are necessary to 
administer the Series 56 CE program. Specifically, the $60 session fee 
will be used to fund the CE program administered to PHIs that have a 
Series 56 registration \8\ and are required to complete the S501. The 
$60 session fee is less than the $100 session fee (currently in the 
Exchange's fee schedule) for the S101 General Program for Series 7 
registered persons (``S101'') as the Series 7 examination is a more 
comprehensive examination, and, thus, the CE is more comprehensive as 
well. Thus, the Exchange believes the $60 fee is reasonable and 
proportional fee based upon the programming of the CE. In addition, the 
$60 fee will only be used for the administration of the CE versus

[[Page 51260]]

the S101 which utilizes the $100 fee for both development and 
administration. The costs associated with the development costs of the 
S501 are included in the examination fee.
---------------------------------------------------------------------------

    \8\ Both individuals that have successfully passed the Series 56 
examination and individuals that have had the examination waived by 
the Exchange are required to take the S501.
---------------------------------------------------------------------------

    Because the S501 CE element is separate and different from the CE 
already administered, the proposed change would put PHIs and associated 
persons of Permit Holders on notice of the associated fees. The 
proposed fee would allow the Exchange to fund the S501 which is more 
tailored to the Series 56 registration. Also, the Exchange believes 
other exchanges will be assessing the same fee for this CE program. The 
proposed changes are to take effect on August 19, 2013.
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.\9\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \10\ 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 facilitation 
[sic] 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) \11\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ Id.
---------------------------------------------------------------------------

    In particular, the proposed rule change is equitable and not 
unfairly discriminatory as it is allocated to all individuals with a 
Series 56 registration which is required under Exchange Rule 3.4(a)(1). 
In addition, the fee is reasonable as it [sic] lower than the 
previously assessed CE fee because the S501 is more limited than the 
S101, and the fee is only intended to recoup the costs of the 
administration of the program. Also, the Exchange believes other 
exchanges will be assessing the same fee for this CE program. The 
Exchange believes the proposed rule change will protect investors and 
the public interest by covering the administration of the program and 
allow the Exchange to tailor a CE fee for the Series 56. This allows 
the Exchange to better prevent fraudulent and manipulative acts and 
practices because the CE will properly educate PHIs in the topics of 
securities laws and other rules and help them to comply with those laws 
and rules.
    Finally, the Exchange also believes the proposed rule change is 
consistent with Section 6(b)(1) of the Act,\12\ which provides that the 
Exchange be organized and have the capacity to be able to carry out the 
purposes of the Act and to enforce compliance by the individuals with a 
Series 56 registration with the Act, the rules and regulations 
thereunder, and the rules of the Exchange. The proposed rule change is 
designed to fund the administration of the S501, and, more 
specifically, to help more closely cover the costs of educating 
individuals that hold a Series 56 registration. Thus, the proposed 
changes will help the Exchange to enforce compliance of its Permit 
Holders with the Act and Exchange rules.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

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

    C2 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. In particular, the proposed 
rule change will not impose any burden on intermarket competition as it 
will merely serve to aid the Exchange in fulfilling its obligations as 
a Self-Regulatory Organization by further funding the administration of 
the new CE. The proposed rule change will not impose any burden on 
intramarket competition as all PHIs and associated persons of Permit 
Holders are required to pass a qualification exam as outline [sic] in 
Rule 3.4(a)(1) and fulfill a CE requirement as outlined in Rule 9.3A. 
In addition, the Exchange believes other exchanges will be assessing 
the same fee for this CE program.

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 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)(ii) of the Act\13\ and subparagraph (f)(2) of Rule 19b-
4\14\ thereunder.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of this 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.

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-C2-2013-030 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-C2-2013-030. 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

[[Page 51261]]

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-C2-2013-030 and should be submitted on or before 
September 10, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20195 Filed 8-19-13; 8:45 am]
BILLING CODE 8011-01-P