Document ID: SEC-2011-1519-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2011-10-06T04:00Z

[Federal Register Volume 76, Number 194 (Thursday, October 6, 2011)]
[Notices]
[Pages 62121-62122]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-25826]

[[Page 62121]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65454; File No. SR-CBOE-2011-090]

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

September 30, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 28, 2011, 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 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 Inactivity Fee on the CBOE Stock 
Exchange (``CBSX'') 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    CBSX imposes an inactivity fee of $5,000 per month on any CBSX 
Trading Permit Holder that trades less than an average of 100,000 
shares per day over a calendar month period. CBSX imposes this fee 
because CBSX may only issue a finite number of Trading Permits, and 
when permits are occupied by users that do not engage in meaningful 
trading on CBSX, this could occur at the expense of a potential permit 
holder that might be willing to add meaningful liquidity to the CBSX 
marketplace.
    CBSX proposes to delay the imposition of the Inactivity Fee on a 
CBSX Trading Permit Holder until the calendar month following the first 
full calendar month after the effective date of the Trading Permit. For 
example, if the effective date of a Trading Permit is August 15, then 
the Exchange may not impose the Inactivity Fee on the holder of that 
permit until October, since September is the first full calendar month 
after the Trading Permit's effective date. Under this proposal, all new 
CBSX Trading Permit Holders will have at least one calendar month to 
connect to CBSX before they may be assessed the Inactivity Fee.\3\ CBSX 
believes this grace period is appropriate because it takes 
approximately one month for new CBSX Trading Permit Holders to 
establish connectivity to CBSX before they may begin effecting 
transactions on CBSX. This proposal will accommodate new CBSX Trading 
Permit Holders during this connectivity phase in which they may be 
unable to trade at sufficient levels to avoid incurring the Inactivity 
Fee.
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    \3\ See e-mail from Jeff Dritz, Attorney, CBOE, to Steve Kuan, 
Special Counsel, Division of Trading and Markets, Commission, on 
September 30, 2011.
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    CBSX also proposes to provide a CBSX Trading Permit Holder that 
incurs the Inactivity Fee with an opportunity to have the fee 
withdrawn. If a CBSX Trading Permit Holder incurs the Inactivity Fee 
for a calendar month period but trades at least an average of 200,000 
shares per day (equal to the minimum trading level for the month plus 
the minimum trading level for the previous month for which the fee was 
incurred) over the following calendar month period, then CBSX will 
rescind the fee for the previous calendar month period. For example, if 
a CBSX Trading Permit Holder trades an average of 75,000 shares per day 
in August and the Exchange imposes the $5,000 Inactivity Fee on the 
holder, but the holder then trades an average of 250,000 shares per day 
in September, CBSX will rescind the Inactivity Fee for August. CBSX 
believes this provision is appropriate because it allows CBSX Trading 
Permit Holders to not be penalized for a single lower-volume month if 
they are able to ``make up'' for the volume during the following month.
    The proposed rule change will take effect on October 1, 2011.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
\4\ in general, and furthers the objectives of Section 6(b)(4) \5\ of 
the Act in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
CBSX Trading Permit Holders and other persons using CBSX facilities.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
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    The proposal to delay the imposition of the Inactivity Fee is 
reasonable because it provides new CBSX Trading Permit Holders with 
sufficient time to connect to CBSX without incurring the Inactivity 
Fee, during which time they are not yet able to engage in meaningful 
trading on CBSX. Additionally, this proposal is equitable and not 
unfairly discriminatory because it applies to all new CBSX Trading 
Permit Holders and provides each of them with at least one calendar 
month to connect to CBSX before being subject to the Inactivity Fee.\6\
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    \6\ See Note 3, supra.
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    The proposal to provide a CBSX Trading Permit Holder that incurs 
the Inactivity Fee with an opportunity to have the fee withdrawn is 
certainly reasonable because it creates a circumstance in which a CBSX 
Trading Permit Holder can avoid paying a fee. Further, this proposal is 
equitable and not unfairly discriminatory because it provides this 
opportunity to all CBSX Trading Permit Holders that incur the 
Inactivity Fee.

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 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.

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

[[Page 62122]]

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.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2011-090 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-2011-090. This file 
number should be included on the subject line if e-mail 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 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-2011-090 and should be 
submitted on or before October 27, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-25826 Filed 10-5-11; 8:45 am]
BILLING CODE 8011-01-P