Document ID: SEC-2015-0465-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2015-03-18T04:00Z

[Federal Register Volume 80, Number 52 (Wednesday, March 18, 2015)]
[Notices]
[Pages 14185-14187]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-06109]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74491; File No. SR-CBOE-2015-025]

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

March 12, 2015.
    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 March 2, 2015, 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 its 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 March 
2, 2015. Currently, the Exchange assesses a $0.60 per contract fee for 
electronic executions by broker-dealers, non-Trading Permit Holders 
(``non-TPHs'') Market-Makers, Professionals/Voluntary Professionals and 
Joint Back-Offices (``JBOs'') in non-Penny Pilot equity, ETF, ETN and 
index options (excluding Underlying Symbol List A \3\) classes. The 
Exchange proposes increasing this transaction fee from $0.60 to $0.65 
per contract. The Exchange notes that this increase is in line with the 
amount assessed by another exchange for similar transactions.\4\
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    \3\ Underlying Symbol List A consists of OEX, XEO, SPX 
(including SPXW), SPXpm, SRO, VIX, VXST, Volatility Indexes and 
binary options.
    \4\ See NASDAQ OMX PHLX LLC (``PHLX'') Pricing Schedule, Section 
II, Multiply Listed Options Fees.
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    The Exchange also seeks to append Footnote 16 to ``Clearing Trading 
Permit Holder Proprietary'' rows in the equity, ETF, ETN, Index, 
Specified Proprietary Index Options and Mini-Options rate tables. 
Footnote 16 of the Fees Schedule provides that ``Broker-Dealer 
transaction fees apply to broker-dealer orders (orders with ``B'' 
origin code), non-Trading Permit Holder market-maker orders (orders 
with ``N'' origin code), orders from specialists in the underlying 
security (orders with ``Y'' origin code) and certain orders with ``F'' 
origin code (orders from OCC members that are not CBOE Trading Permit 
Holders).'' The Exchange believes appending Footnote 16 to the row in 
which the ``F'' origin code is listed clarifies that, in some 
instances, orders with the ``F'' origin code designation will be 
assessed Broker-Dealer transaction fees if the orders are from the 
Options Clearing Corporation (``OCC'') members that are not CBOE 
Trading Permit Holders (``TPHs''). The Exchange notes no substantive 
changes are being made by this change, rather the Exchange merely seeks 
to add further clarification and alleviate potential confusion.
    On January 2, 2015, the Exchange established an FBW fee for an 
updated version of FBW (``FBW2''), which the Exchange had anticipated 
making

[[Page 14186]]

available shortly thereafter to all TPHs.\5\ The Exchange at that time 
also proposed adopting a fee waiver for the months of January and 
February 2015, as well as provide that, after March 1, 2015, the 
monthly fee for FBW2 login IDs would be waived for the first month.\6\ 
The Exchange notes that FBW2 has not yet become available to TPHs, but 
that it intends to make it available shortly. In light of this delay, 
the Exchange proposes to delete the now outdated language and extend 
the fee waiver for the months of March and April 2015. Additionally, 
the Exchange will provide that after May 1, 2015 (instead of March 1, 
2015) the monthly fee for FBW2 login IDs will be waived for the first 
month.\7\ The purpose of the proposed fee waivers is to give new users 
time to become familiar with and fully acclimated to the new FBW 
workstation functionality. The Exchange notes that after May 2015 (and 
absent an applicable fee waiver noted above), TPHs will be charged each 
of $400 for FBW and FBW2 (i.e., total of $800) if such users continue 
to use both FBW and FBW2.
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    \5\ See Securities Exchange Act Release No. 74134 (January 26, 
2015), 80 FR 20 (January 30, 2015) (SR-CBOE-2015-005). The adopted 
fee for FBW2 is the same as the existing FBW fee (i.e., $400 per 
month (per login ID).
    \6\ For example, if a user added a new login ID in March 2015, 
the user would have received a fee waiver for that login ID for 
March 2015.
    \7\ For example, if a user adds a new login ID in May 2015, the 
user would receive a fee waiver for that login ID for May 2015.
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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.\8\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \9\ 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 
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,\10\ 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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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78f(b)(4).
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    Increasing the fee for electronic executions by broker-dealers, 
non-TPHs, [sic] Market-Makers, Professionals/Voluntary Professionals 
and JBOs in non-Penny Pilot equity, ETF, ETN and Index options 
(excluding Underlying Symbol List A) classes is reasonable because the 
proposed fee amount is in line with the amount assessed by another 
exchange for similar transactions.\11\
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    \11\ See PHLX Pricing Schedule, Section II, Multiply Listed 
Options Fees.
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    The Exchange believes that this proposed change is equitable and 
not unfairly discriminatory because the Exchange will assess broker-
dealers, non-TPH Market-Makers, Professionals/Voluntary Professionals 
and JBOs the same electronic options transaction fees in non-Penny 
Pilot options classes. The Exchange notes that it does not assess 
Customers the electronic options transaction fees in non-Penny Pilot 
options because Customer order flow enhances liquidity on the Exchange 
for the benefit of all market participants. Specifically, Customer 
liquidity benefits all market participants by providing more trading 
opportunities, which attracts Market-Makers. An increase in the 
activity of these market participants in turn facilitates tighter 
spreads, which may cause an additional corresponding increase in order 
flow from other market participants. The Exchange notes that Market-
Makers are assessed lower electronic options transaction fees in non-
Penny Pilot options as compared to Professionals, JBOs, Broker Dealers 
and non-Trading Permit Holder Market-Makers because they have 
obligations to the market and regulatory requirements, which normally 
do not apply to other market participants (e.g., obligations to make 
continuous markets). Further, Market-Makers pay a $0.65 per contract 
Marketing Fee for many non-Penny Pilot transactions, which broker-
dealers, non-Trading Permit Holder Market-Makers, Professionals/
Voluntary Professionals and JBOs do not pay.\12\ Clearing Trading 
Permit Holder Proprietary orders are assessed lower options transaction 
fees in non-Penny Pilot options because they also have obligations, 
which normally do not apply to other market participants (e.g., must 
have higher capital requirements, clear trades for other market 
participants, must be members of OCC). Accordingly, the differentiation 
between electronic transaction fees for Customers, Market-Makers, 
Clearing Trading Permit Holders and other market participants 
recognizes the differing obligations and contributions made to the 
liquidity and trading environment on the Exchange by these market 
participants.
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    \12\ See CBOE Fees Schedule, Marketing Fee.
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    Assessing higher fees for transactions in electronic, non-Penny 
Pilot classes is equitable and not unfairly discriminatory because in 
non-Penny Pilot classes the spreads are naturally larger than in Penny 
Pilot classes, and these wider spreads allow for greater profit 
potential. Limiting this fee increase to electronic transactions is 
equitable and not unfairly discriminatory because electronic trading 
requires constant system development and maintenance.
    The Exchange always strives for clarity in its rules and Fees 
Schedule, so that market participants may best understand how rules and 
fees apply. The Exchange believes appending Footnote 16 to ``Clearing 
Trading Permit Holder Proprietary'' in the rates tables alleviates 
potential confusion. The alleviation of potential confusion will remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, protect investors and the 
public interest.
    Finally, the Exchange believes it is reasonable to provide a waiver 
for the months of March and April 2015 because it allows new users time 
to become familiar with and fully acclimated to the new FBW 
functionality and incentivizes the users to begin this process as soon 
as the new functionality becomes available. The Exchange believes it is 
reasonable to provide a waiver for the first month for a new login ID 
beginning May 1, 2015, because it allows a new user after April 2015 to 
fully acclimate to the new FBW functionality. Additionally, the 
Exchange notes it is merely extending existing waivers to correspond 
with a delayed launch of FBW2.

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, because, while the fee 
increase will apply only to certain market participants, market 
participants have different obligations and different circumstances (as 
described in the ``Statutory Basis'' section above). The Exchange does 
not believe that the proposed rule change relating to the FBW 2 fee 
waivers will impose any burden on competition that

[[Page 14187]]

is not necessary or appropriate in furtherance of the purposes of the 
Act, because it applies to all Trading Permit Holders. The Exchange 
believes this proposal will not cause an unnecessary burden on 
intermarket competition because the electronic non-Penny Pilot 
transaction fee and fee amount is similar to fees assessed at other 
exchanges.\13\ Additionally, the proposal relating to the FBW2 fee 
waivers 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.
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    \13\ See e.g., PHLX Pricing, Section II, Multiply Listed Options 
Fees.
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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 \14\ and paragraph (f) of Rule 19b-4 \15\ 
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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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-2015-025 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2015-025. 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-2015-025 and should be 
submitted on or before April 8, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-06109 Filed 3-17-15; 8:45 am]
 BILLING CODE 8011-01-P