Document ID: SEC-2016-1862-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2016-10-18T04:00Z

[Federal Register Volume 81, Number 201 (Tuesday, October 18, 2016)]
[Notices]
[Pages 71772-71774]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25085]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79086; File No. SR-CBOE-2016-072]

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

October 12, 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

[[Page 71773]]

September 30, 2016, Chicago Board Options Exchange, Incorporated (the 
``Exchange'' or ``CBOE'') 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 the Fees Schedule. The text of the 
proposed rule change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), 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, effective October 
3, 2016. Specifically, the Exchange proposes to increase the 
transaction fee for Professional Customers and Voluntary Professionals 
(``W'' origin code) (``Professionals'') for all manual transactions in 
all penny and non-penny equity, index (excluding Underlying Symbol List 
A \3\), ETF and ETN option classes from $0.00 per contract to $0.12 per 
contract. The Exchange recently reduced this fee from $0.25 per 
contract to $0.00 per contract, which amount was comparable to the 
amount assessed to similar transactions for Professionals at another 
exchange.\4\ Upon further review of manual transaction fees, the 
Exchange proposes to increase the fee to restore a more competitive 
balance among Professionals and broker-dealers (which pay manual 
transaction fees in varying amounts \5\) with respect to manual 
transactions on the Exchange's trading floor. The Exchange notes the 
proposed $0.12 fee is lower than the $0.25 fee assessed to 
Professionals for manual transactions prior to September 1, 2016. 
Additionally, the proposed change is consistent with the approximate 
average transaction fee amount assessed to market-makers for manual 
transactions.\6\
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    \3\ See CBOE Fees Schedule, Footnote 34.
    \4\ See Securities Exchange Act Release No. 34-78786 (September 
8, 2016), 81 FR 63242 (September 14, 2016) (SR-CBOE-2016-066).
    \5\ See CBOE Fees Schedule, Equity, ETF and ETN, and Index 
Options Rate Tables.
    \6\ See CBOE Fees Schedule, Liquidity Provider Sliding Scale for 
the transaction fees for market-makers based on volume thresholds.
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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.\7\ Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \8\ 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,\9\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes it is reasonable to increase the transaction 
fee for Professionals for manual transactions in all penny and non-
penny equity, index (excluding Underlying Symbol List A), ETF and ETN 
options classes to $0.12 per contract because it is lower than the 
$0.25 fee assessed to Professionals for manual transactions prior to 
September 1, 2016. Additionally, the proposed fee is consistent with 
the approximate average transaction fee amount assessed to market-
makers for manual transactions. The Exchange believes it is equitable 
and not unfairly discriminatory to propose to increase the manual 
transaction fee only for Professionals because it is designed to create 
a more competitive balance between Professionals (who have trading 
characteristics akin to broker-dealers) and broker-dealers for open 
outcry trades. With respect to manual transactions, Professionals often 
participate on trades in a similar manner as broker-dealers, and 
therefore the Exchange believes it is reasonable for Professionals to 
pay a transaction fee for those trades so they can compete on more 
equal footing for participation on those trades.\10\ Additionally, 
because the proposed fee is lower than the $0.25 fee Professionals were 
assessed for manual transactions prior to September 1, 2016, the 
Exchange believes the proposed fee change will continue to attract a 
greater number of Professional orders for those classes, which may 
create greater trading opportunities that benefit all market 
participants. The Exchange lastly notes assessing a different fee 
amount for manual executions than for electronic executions is 
equitable and not unfairly discriminatory because the Exchange has 
expended considerable resources to develop its electronic trading 
platforms and recoups the costs of such expenditures through electronic 
transaction fees.
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    \10\ See CBOE Rule 1.1(fff) and (ggg) (including Interpretation 
and Policy .01 to paragraph (ggg)) for the definition of 
Professionals.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe the proposed rule change will impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act. The Exchange does not believe the proposed 
rule change will impose any burden on intramarket competition not 
necessary or appropriate in furtherance of the purposes of the Act 
because, while increasing the transaction rate to $0.12 for manual 
executions in penny and non-penny equity, index (excluding Underlying 
Symbol List A), ETF and ETN option classes only applies to 
Professionals, broker-dealers currently pay transaction fees when 
trading as parties to those executions. The proposed change is designed 
to create a more competitive balance between Professionals and broker-
dealers for open outcry trading. The Exchange does not believe the 
proposed rule change will impose any burden on intermarket competition 
that is not necessary or

[[Page 71774]]

appropriate in furtherance of the purposes of the Act because the 
proposed changes only affect trading on CBOE. To the extent that the 
proposed changes make CBOE a more attractive marketplace for market 
participants at other exchanges, such market participants are welcome 
to become CBOE market participants.

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 \11\ and paragraph (f) of Rule 19b-4 \12\ 
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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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-CBOE-2016-072 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-CBOE-2016-072. 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-CBOE-2016-072 and should be 
submitted on or before November 8, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-25085 Filed 10-17-16; 8:45 am]
 BILLING CODE 8011-01-P