Document ID: SEC-2018-1433-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe C2 Exchange, Inc.
Posted Date: 2018-09-17T04:00Z

[Federal Register Volume 83, Number 180 (Monday, September 17, 2018)]
[Notices]
[Pages 46983-46984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-20072]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84078; File No. SR-C2-2018-018]

Self-Regulatory Organizations; Cboe C2 Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change Relating 
To Amend Its Fees Schedule

September 11, 2018.
    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 4, 2018 Cboe C2 Exchange, Inc. (the ``Exchange'' or 
``C2'') 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

    Cboe C2 Exchange, Inc. (the ``Exchange'' or ``C2 Options'') 
proposes to amend its Fees Schedule.
    The text of the proposed rule change is also available on the 
Exchange's website (http://www.c2exchange.com/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 
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 
September 4, 2018.
    The Exchange first proposes to reduce fees for Public Customer, 
Market-Maker and Non-Customer, Non-Market Maker orders that remove 
liquidity in Penny Classes. Particularly, the Exchange proposes to 
reduce the Penny Class Remove rate for Public Customers (which orders 
yield fee code PC) from $0.49 per contract to $0.43 per contract and 
reduce the Penny Class Remove rate for Market-Maker and Non-Customer, 
Non-Market Maker orders (which orders yield fee codes PR and PP, 
respectively) from $0.50 per contract to $0.49 per contract.
    The Exchange also proposes to reduce the current rebates given to 
Market Maker and Non-Customer, Non-Market Maker orders that add 
liquidity in Penny Classes. Specifically, the Exchange proposes reduce 
the Penny Class Add rebate for Market-Maker orders (which orders yield 
fee code PM) from $0.45 per contract to $0.41 per contract. The 
Exchange also proposes to reduce the Penny Class Add rebate for Non-
Customer, Non-Market Maker orders (which orders yield fee code PN) from 
$0.40 per contract to $0.36 per contract.
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.\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 TPHs and other persons using its facilities. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \5\ requirement that

[[Page 46984]]

the rules of an exchange not be designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed fee changes to reduce 
transaction fees for orders that remove liquidity in Penny Classes is 
reasonable because the respective market participants would pay lower 
fees for these transactions. The Exchange believes the proposed rule 
change is equitable and not unfairly discriminatory because similarly 
situated market participants would be paying the same fees.
    The Exchange believes that reducing the rebates for Market-Maker 
and Non-Customer, Non-Market Maker orders that add liquidity in Penny 
Classes is reasonable because it still provides these market 
participants an opportunity to receive rebates for these transactions 
(now just a smaller amount). The Exchange believes the proposed rule 
change is equitable and not unfairly discriminatory because similarly 
situated market participants receive the same rebate.
    Additionally, the Exchange believes that it is equitable and not 
unfairly discriminatory to assess lower fees and provide higher rebates 
to Public Customers as compared to other market participants because 
Public Customer order flow enhances liquidity on the Exchange for the 
benefit of all market participants. Specifically, Public 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 believes it's 
appropriate to provide a higher rebate to Market-Makers who add 
liquidity as compared to Non-Customer, Non-Market Makers because 
Market-Makers are valuable market participants that provide liquidity 
in the marketplace and incur costs that other market participants do 
not incur.

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

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition that are not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange does not 
believe that the proposed rule change will impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because, while different fees 
and rebates are assessed to different market participants in some 
circumstances, these different market participants have different 
obligations and different circumstances as discussed above. The 
Exchange believes this proposal will not cause an unnecessary burden on 
intermarket competition because the Exchange does not believe that the 
proposed changes represent a significant departure from previous 
pricing offered by the Exchange or pricing offered by the Exchange's 
competitors. Market Participants may opt to disfavor the Exchange's 
pricing if they believe that alternatives offer them better value. To 
the extent that the proposed changes make C2 a more attractive 
marketplace for market participants at other exchanges, such market 
participants are welcome to become C2 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 \6\ and paragraph (f) of Rule 19b-4 \7\ 
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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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 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 [email protected]. Please include 
File Number SR-C2-2018-018 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-C2-2018-018. 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 website (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 website 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 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.
    Persons submitting comments are cautioned that we do not redact or 
edit personal identifying information from comment submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-C2-2018-018 
and should be submitted on or before October 9, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-20072 Filed 9-14-18; 8:45 am]
BILLING CODE 8011-01-P