Document ID: SEC-2011-1899-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: C2 Options Exchange, Inc.
Posted Date: 2011-12-08T05:00Z

[Federal Register Volume 76, Number 236 (Thursday, December 8, 2011)]
[Notices]
[Pages 76785-76786]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31482]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65874; File No. SR-C2-2011-037]

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

 December 2, 2011.
    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 November 23, 2011, the Chicago Board Options Exchange, 
Incorporated [sic] (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.
---------------------------------------------------------------------------

    \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.cboe.org/legal), 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 self-regulatory organization 
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
    On September 2, 2011, the Commission approved a proposed rule 
change filed by the Exchange to permit on a pilot basis the listing and 
trading on C2 of Standard & Poor's 500 Index (``S&P 500'') options with 
third-Friday-of-the-month (``Expiration Friday'') expiration dates for 
which the exercise settlement value will be based on the index value 
derived from the closing prices of component securities (``SPXPM'').\3\ 
On September 28, 2011, the Exchange filed an immediately-effective rule 
change to adopt fees associated with the anticipated trading of SPXPM 
(the ``Initial SPXPM Fees Filing'').\4\ The Exchange now proposes to 
amend those fees associated with the trading of SPXPM.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 34-65256 (September 
2, 2011), 76 FR 55969 (September 9, 2011) (SR-C2-2011-008).
    \4\ See Securities Exchange Act Release No. 34-65471 (October 3, 
2011), 76 FR 62491 (October 7, 2011) (SR-C2-2011-026).
---------------------------------------------------------------------------

    In the Initial SPXPM Fees Filing, the Exchange adopted an SPXPM 
Tier Appointment Fee of $4,000 which would be charged to any Market-
Maker Permit holder that has an appointment (registration) in SPXPM at 
any time during a calendar month, but the Exchange also waived that fee 
through November 30, 2011. The Exchange hereby proposes continuing that 
waiver for the month of December 2011. The purpose of this waiver 
extension is to allow more time for the SPXPM market to develop and 
allow and encourage Market-Makers to join in and elect for an SPXPM 
Tier Appointment.
    The Exchange also proposes to cease charging no transaction fee for 
SPXPM Trades on the Open (trades which occur upon the opening of 
trading). The Exchange did not intend to waive transaction fees for 
SPXPM Trades on the Open, and such waiver was unintentionally included 
in the Initial SPXPM Fees Filing. While the Exchange waives transaction 
fees for Trades on the Open in multiply-listed classes, the rationale 
for such a waiver does not apply to SPXPM Trades on the Open. C2 
multiply-listed options classes are traded using a Maker-Taker pricing 
model in which orders that take liquidity from the marketplace are 
charged a transaction fee and orders that provide liquidity to the 
market place receive a rebate. For this model, C2 is unable to charge 
for Trades on the Open because it is not possible to identify who is 
the Maker and who is the Taker. SPXPM utilizes a pricing model in which 
transactions fees are charged to Market-Makers, Professionals and 
customers, so differentiating Trades on the Open is not an issue and 
therefore such trades should be treated similarly to all other SPXPM 
transactions. Henceforth, transaction fees for SPXPM Trades on the Open 
will be assessed in the same manner as they are assessed for normal 
SPXPM transactions.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\5\ in general, and furthers the objectives of Section 6(b)(4) \6\ 
of the Act in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
C2 Trading Permit Holders and other persons using Exchange facilities. 
Continuing the waiver of the SPXPM Tier Appointment Fee is reasonable 
because it will allow Market-Makers with an SPXPM Tier Appointment to 
avoid paying the Tier Appointment Fee for another month, and is 
equitable and not unfairly discriminatory because all Market-Makers 
with an SPXPM Tier Appointment will be able to avoid paying the SPXPM 
Tier Appointment Fee for December 2011. Assessing transaction fees for 
SPXPM Trades on the Open is reasonable because the amount of the 
transaction fees will be the same as the amount of SPXPM transaction 
fees assessed during the rest of the trading day. Assessing transaction 
fees for SPXPM Trades on the Open is equitable and not unfairly 
discriminatory because the fees will be assessed equally to all parties 
within each class who qualify for the fees, just as they are during the 
rest of the trading day.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 not necessary or appropriate in furtherance of 
the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

[[Page 76786]]

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) 
of the Act \7\ and subparagraph (f)(2) of Rule 19b-4 \8\ 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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-C2-2011-037 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-C2-2011-037. 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 
a.m. and 3 p.m. Copies of such filing will also 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 No. SR-C2-2011-037 and should be 
submitted on or before December 29, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-31482 Filed 12-7-11; 8:45 am]
BILLING CODE 8011-01-P