Document ID: SEC-2012-0112-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2012-01-24T05:00Z

[Federal Register Volume 77, Number 15 (Tuesday, January 24, 2012)]
[Notices]
[Pages 3543-3544]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-1284]

[[Page 3543]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66174; File No. SR-CBOE-2012-003]

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

January 18, 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 January 5, 2012, the 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 the 
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's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and the 
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
    The Exchange proposes to amend its Fees Schedule's Volume Incentive 
Program (the ``Program''), which was implemented on January 1, 2012.\3\ 
The Program credits Trading Permit Holders (``TPHs'') certain per 
contract amounts resulting from each public customer (``C'' origin 
code) order transmitted by that TPH which is executed electronically on 
the Exchange in all multiply-listed option classes (excluding QCC 
trades), provided the TPH meets certain volume thresholds in a month. 
The volume thresholds are calculated based on the customer contracts 
per day (``CPD'') entered and executed over the course of the month.\4\ 
However, the description of the Program does not discuss the results of 
a circumstance in which there is a CBOE System outage or other 
interruption of electronic trading on CBOE. Any such interruption would 
prevent TPHs from electronically executing public customer orders in 
multiply-listed classes, which would in turn inhibit TPHs from 
executing enough of those orders to reach the volume thresholds that 
would allow them to qualify for the credit tiers. As such, the Exchange 
proposes to add a stipulation that in the event of a CBOE System outage 
or other interruption of electronic trading on CBOE, the Exchange will 
take into account, on a pro rata basis, the length of time of the 
interruption for purposes of calculating the contracts per day (the 
``Stipulation'').
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    \3\ See Securities Exchange Act Release No. 66054 (December 23, 
2011), 76 FR 82332 (December 30, 2011) (SR-CBOE-2011-120).
    \4\ See Exchange Fees Schedule, Section 21.
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    For example, consider a situation in which a month has twenty 
trading days, but a CBOE System outage occurs for one-half of one 
trading day, and a TPH electronically executes 1,980,000 public 
customer contracts during that month. Currently, without the 
Stipulation, the TPH's CPD for the month would be 99,000 (1,980,000 
public customer contracts divided by 20 trading days), which would not 
qualify the TPH for any credits under the Program (as the lowest ($0.05 
per contract) credit tier begins at 100,001 CPD). However, with the 
Stipulation, the Exchange would consider there to have been 19.5 
trading days in the month (accounting for the \1/2\ day during which 
there was a System outage that prevented electronic trading). The TPH's 
CPD for the month would then be 101,538 (1,980,000 public customer 
contracts divided by 19.5 trading days), and contracts 100,001 through 
101,538 (so, 1,538 contracts per day) would qualify for the $0.05 per 
contract rebate, so the TPH would receive a credit of $1499.50 (1,538 
contracts per day multiplied by 19.5 trading days in the month 
multiplied by $0.05 per contract credit).
    The purpose of this proposed change is to prevent a TPH from 
failing to meet a credit threshold if the reason for such failure was a 
CBOE electronic trading interruption.
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)(5) \6\ of 
the Act in particular, in that it is designed 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. Stipulating that in the event of a CBOE System outage or 
other interruption of electronic trading on CBOE, the Exchange will 
take into account, on a pro rata basis, the length of time of the 
interruption for purposes of calculating the contracts per day perfects 
the mechanism of a free and open market and protects investors by 
ensuring that TPHs are not prevented from receiving credits under the 
Program through no fault of their own.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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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 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

[[Page 3544]]

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 C.F.R. 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 email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2012-003 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-2012-003. 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 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 offices 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-2012-003, and should be submitted on or before 
February 14, 2012.
    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).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-1284 Filed 1-23-12; 8:45 am]
BILLING CODE 8011-01-P