Document ID: SEC-2012-1302-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2012-08-08T04:00Z

[Federal Register Volume 77, Number 153 (Wednesday, August 8, 2012)]
[Notices]
[Pages 47453-47455]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19360]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67580; File No. SR-CBOE-2012-073]

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

August 2, 2012.
    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 July 26, 2012, the Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``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 comment 
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 for its CBOE Stock 
Exchange (``CBSX''). 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.

[[Page 47454]]

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    CBSX proposes to amend its Fees Schedule regarding transactions in 
securities priced $1 or greater. Currently, the highest Maker fee tier 
is for Makers who add 15 million or more shares of liquidity in one 
day, with the fee for such Makers being $0.0015 per share. The Exchange 
proposes to add a higher Maker tier, for those Makers who add 25 
million or more shares of liquidity in one day. Such Makers will be 
assessed a lower fee of $0.0014 per share. Makers who add 15,000,000--
24,999,999 shares of liquidity in one day will still be assessed the 
$0.0015 per share fee.
    As before, the different rates for different Maker tiers apply to 
all transactions in securities priced $1 or greater made by the same 
market participant in any day in which such participant adds the 
established amount of shares or more of liquidity that is determined 
for each tier. Market participants who share a trading acronym or MPID 
may aggregate their trading activity for purposes of these rates. 
Qualification for these rates will require that a market participant 
appropriately indicate his trading acronym and/or MPID in the 
appropriate field on the order.
    The Exchange proposes this higher tier with accompanying lower fee 
in order to incentivize market participants to add more liquidity to 
CBSX. The proposed change is to take effect on August 1, 2012.
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.\3\ Specifically, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\4\ which provides that 
Exchange rules may provide for the equitable allocation of reasonable 
dues, fees, and other charges among its Trading Permit Holders and 
other persons using its facilities. The proposed new Maker fee of 
$0.0014 per share for Makers who add 25 million or more shares of 
liquidity in one day is reasonable because the amount is lower than 
Makers who add that amount of shares in one day currently pay.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78(b)(4).
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    The reduced fee tier is equitable and not unfairly discriminatory 
because it will encourage market participants to trade on CBSX and 
bring greater liquidity to CBSX, which will benefit all market 
participants. By encouraging market participants to hit a threshold of 
executing greater amounts of shares a day (at which point such market 
participants would receive the corresponding lower Maker fees for all 
shares executed by the market participant that day), the Exchange 
incentivizes market participants who may be able to meet that threshold 
to add more volume and liquidity to the CBSX marketplace. This 
increased volume and liquidity would benefit all CBSX market 
participants, including those who do not trade at the higher levels, by 
providing them with more opportunities for execution. Orders that 
provide liquidity increase the likelihood that CBSX market participants 
seeking to access liquidity will have their orders filled. If the lower 
rates did not exist for market participants who execute increased 
amounts of shares a day, even those market participants who do not hit 
those thresholds would not receive the benefit of this added volume and 
liquidity. As such, the Exchange believes that it is reasonable and 
equitable to use pricing incentives, such as lower fees for creating 
large amounts of liquidity, to encourage market participants to 
increase their participation in the market.

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

    CBOE 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.

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) \5\ of the Act and paragraph (f) of Rule 19b-4 \6\ 
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.
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 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-2012-073 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-CBOE-2012-073. 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-CBOE-

[[Page 47455]]

2012-073 and should be submitted on or before August 29, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19360 Filed 8-7-12; 8:45 am]
BILLING CODE 8011-01-P