Document ID: SEC-2013-0807-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2013-04-29T04:00Z

[Federal Register Volume 78, Number 82 (Monday, April 29, 2013)]
[Notices]
[Pages 25112-25115]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-10014]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69422; File No. SR-CBOE-2013-042]

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

April 22, 2013.
    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 April 10, 2013, 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

[[Page 25113]]

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 make a number of technical and superficial 
changes to its Fees Schedule. No substantive changes to Exchange fees 
are proposed herein.
    First, HOLDRs options are no longer traded on the Exchange, so the 
Exchange proposes to remove all references to such options. As such, 
references to HOLDRs options in the ETF, ETN and HOLDRs Options Rate 
Table, the Customer Large Trade Discount table, and Footnotes 6, 8 and 
9 will be deleted. The ETF, ETN and HOLDRs Options Rate Table will now 
be called the ETF and ETN Options Rate Table, the Customer Large Trade 
Discount table will refer to ``ETF and ETN Options'', and applicable 
sections of footnotes 8 and 9 will simply say ``ETF and ETN options''.
    Next, the Exchange proposes to re-name the Proprietary Index 
Options Rate Table--SPX, SPXW, SPXpm, SRO, OEX, XEO, VIX and VOLATILITY 
INDEXES the ``Specified Proprietary Index Options Rate Table--SPX, 
SPXW, SPXpm, SRO, OEX, XEO, VIX and VOLATILITY INDEXES'' (the 
``Specified Index Options Rate Table''). The addition of the word 
``Specified'' is intended to clarify that not all proprietary index 
options are subject to this rate table (those not specified are subject 
to the Index Options Rate Table--All Index Products Excluding SPX, 
SPXW, SPXpm, SRO, OEX, XEO, VIX and VOLATILITY INDEXES (the ``Other 
Index Options Rate Table'')).
    Footnote 20 describes the CFLEX AIM Response fee. However, on the 
Equity Options Rate Table, the ETF and ETN Options Rate Table, the 
Specified Index Options Rate Table, the Other Index Options Rate Table, 
and the Mini-Options Rate Table, this fee is merely listed as the CFLEX 
AIM fee. The Exchange proposes to add the word ``Response'' and list 
the fee in all the above-mentioned rate tables as the CFLEX AIM 
Response fee in order to more accurately display the fee's name.
    Next, the Exchange proposes to make more clear the fact that the 
Exchange will assess no Clearing Trading Permit Holder Proprietary 
transaction fees for certain types of facilitation orders (as defined 
in Footnote 11 of the Fees Schedule) in certain classes.\3\ As such, 
the Exchange proposes to add to the Equity Options Rate Table, the ETF 
and ETN Options Rate Table, and the Other Index Options Rate Table a 
line that lists the Clearing Trading Permit Holder Proprietary 
Facilitation fees as being assessed a fee of $0.00 per contract for 
manual, AIM Agency/Primary, AIM Contra, QCC and CFLEX AIM Response 
transactions (regular electronic Clearing Trading Permit Holder 
Proprietary facilitation transactions are assessed a $0.25 per-contract 
fee, like other Clearing Trading Permit Holder Proprietary 
transactions, as they are not subject to the waiver), per the language 
currently in Footnote 11. On all such rate tables, the new line will 
include a reference to Footnote 11.
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    \3\ See CBOE Fees Schedule, Footnote 11 for more details.
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    Next, the Broker-Dealer line on the Equity Options Rate Table, the 
ETF and ETN Options Rate Table, the Specified Index Options Rate Table, 
the Other Index Options Rate Table, the Mini-Options Rate Table and the 
Credit Default Options and Credit Default Basket Options Rate Table 
(together, the ``Rate Tables'') contains an erroneous reference to 
Footnote 11 (such reference being erroneous because Footnote 11 does 
not apply to Broker-Dealers. As such, the Exchange proposes to delete 
such references.
    The Exchange's Hybrid 3.0 Execution Fee applies to products traded 
on the Hybrid 3.0 system. Occasionally, the Exchange receives questions 
regarding to which products that fee applies. As such, the Exchange 
proposes to amend the line on the Specified Index Options Rate Table 
listing the Hybrid 3.0 Execution Fee to state that it applies to SPX 
and SPXQ only (as those are the products traded on Hybrid 3.0).
    The Exchange instituted a CFLEX AIM Credit for some orders executed 
via a CFLEX AIM auction from November 1, 2012 through December 31, 2012 
(the ``CFLEX AIM Credit'').\4\ As it is now past December 31, 2012, the 
CFLEX AIM Credit has expired. As such, the Exchange proposes to delete 
references to it from the Equity Options, ETF and ETN Options, and 
Other Index Options Rate Tables. The Exchange also proposes to delete 
the text of Footnote 28 (which describes the CFLEX AIM Credit) and 
merely label such footnote as ``Reserved.'' Next, the Exchange no 
longer operates under a structure in which persons or organizations own 
seats on the Exchange and therefore could lease seats out to other 
parties. As such, there are no longer lessees or lessors on the 
Exchange, and the reference in the ``Individual'' line on Trading 
Permit Holder Application Fees table to ``/Lessee/Lessor'' is obsolete 
and no longer relevant, and thus the Exchange proposes to delete such 
reference.
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    \4\ See Securities Exchange Act Release No. 68169 (November 6, 
2012), 77 FR 67703 (November 13, 2012) (Sr-CBOE-2012-105).
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    The Exchange's Options Regulatory Fee (``ORF'') is listed as being 
$0.0065 per contract through December 31, 2012 and $0.0085 per contract 
effective January 2, 2013. As these dates have passed and the ORF is 
now simply $0.0085 per contract, the Exchange proposes to delete the 
reference to the ORF being $0.0065 per contract through December 31, 
2012 and the January 2, 2013 effective date of the $0.0085 per contract 
ORF.
    The Notes for the Exchange's Non-Standard Booth Rental Fee state 
that ``Effective April 1, 2012, a Trading Permit Holder (``TPH'') 
organization will pay the fees per square foot on a monthly basis for 
use of a non-standard booth.'' Since April 1, 2012 has passed, the 
Exchange proposes to eliminate the reference to such date and merely 
have the sentence read ``A Trading Permit Holder (``TPH'') organization 
will pay the fees per square foot on a monthly basis for use of a non-
standard booth.''
    The Notes to the Exchange's CMI and FIX Login ID fees state that 
CMI and FIX Login ID fees are waived through September 30, 2012 for CMI 
and FIX Login IDs used to access the CFLEX system. As September 30, 
2012 has

[[Page 25114]]

passed, the Exchange proposes to delete this note.
    The Exchange Fees Schedule has a Trading Permit Holder Transaction 
Fee Policies and Rebate Programs table that lists one fee, the Chicago 
Mercantile Exchange (CME) Members SPX and OEX Fees, which states that 
``Pursuant to an agreement between the CBOE and the CME, CME members 
are eligible to receive rebates from customer transaction fee rates on 
SPX and OEX transactions for their own account. Although CME members 
activity clears as customer trades and are charged customer rates, CME 
members will receive a transaction fee rebate of $.06 per contract when 
the premium is $1 or higher and $.03 when the premium is under $1, upon 
submission of an itemized rebate request (see policy below). CBOE 
Trading Permit Holders are also eligible for reduced fees on their CME 
S&P 500 and S&P 100 activity.'' The table then states that ``ALL REBATE 
REQUESTS MUST BE RECEIVED NO LATER THAN 60 DAYS AFTER THE MONTH-END TO 
WHICH THE TRADE RELATES AND INCLUDE TRANSACTION DETAIL AS REPORTED TO 
TRADE MATCH. REBATE REQUEST FORMS MAY BE OBTAINED BY CALLING DON PATTON 
AT (312) 786-7026.'' The agreement referenced between the CBOE and CME 
is no longer valid. As such, the fee listed and all other text in this 
table is no longer valid, and therefore the Exchange proposes to delete 
such table.
    Footnote 19 to the Exchange Fees Schedule reads, in part, ``The AIM 
Agency/Primary Fee applies to all broker-dealer, non-Trading Permit 
Holder market-maker, JBO participant, voluntary professional, and 
professional orders in all products, except volatility indexes, 
executed in AIM, SAM, FLEX AIM and FLEX SAM auctions, that were 
initially entered as a Agency/Primary Order.'' This is grammatically 
incorrect, and the Exchange proposes to amend the end of this sentence 
to read ``entered as an Agency/Primary Order.''
    The Exchange proposes to add (in two places) to the Customer line 
on the Linkage Fees table that such fees apply in addition to the 
customary CBOE execution charges. As this table only applies to Linkage 
fees and not other execution fees, the Exchange believes that this fact 
was already clear, but has elected to clarify due to a question 
received from a customer. Footnote 25 of the Exchange Fees Schedule 
states that ``An additional monthly fee of $2,000 per month will be 
assessed to any Floor Broker Trading Permit Holder that executes more 
than 20,000 VIX contracts during the month. If and to the extent that a 
Trading Permit Holder or TPH organization has more than one Floor 
Broker Trading Permit that is utilized to execute VIX options 
transactions, the VIX executions of that Trading Permit Holder or TPH 
organization shall be aggregated for purposes of determining this 
additional monthly fee and the Trading Permit Holder or TPH 
organization shall be charged a single $2,000 fee for the combined VIX 
executions through those Floor Broker Trading Permits if the executions 
exceed 20,000 contracts per month.'' The Exchange desires to make this 
more prominent, and therefore proposes to move it to the Trading Permit 
and Tier Appointment Fees table and title it the Floor Broker VIX 
Surcharge.
    Footnote 25 of the Exchange Fees Schedule also states that ``An 
additional monthly fee of $3,000 per month will be assessed to any 
Floor Broker Trading Permit Holder that executes more than 20,000 SPX 
contracts during the month. If and to the extent that a Trading Permit 
Holder or TPH organization has more than one Floor Broker Trading 
Permit that is utilized to execute SPX options transactions, the SPX 
executions of that Trading Permit Holder or TPH organization shall be 
aggregated for purposes of determining this additional monthly fee and 
the Trading Permit Holder or TPH organization shall be charged a single 
$3,000 fee for the combined SPX executions through those Floor Broker 
Trading permits if the executions exceed 20,000 contracts per month. 
For purposes of determining the 20,000 contracts per month threshold, 
SRO executions are excluded for purposes of the calculation of executed 
SPX contracts during the month.'' The Exchange desires to make this 
more prominent, and therefore proposes to move it to the Trading Permit 
and Tier Appointment Fees table and title it the Floor Broker SPX 
Surcharge.
    The Exchange noticed that the origin code ``B'' is erroneously 
listed as corresponding to the Floor Broker Trading Permit on the 
Trading Permit and Tier Appointment Fees table and therefore proposes 
to delete this listing. Also, the Exchange proposes to add ``Floor 
Broker'' as an origin to this table, as the table lists some fees that 
are applicable to floor brokers. Finally, the Exchange proposes to 
split up the ``Regulatory Fees'' table on the Fees Schedule (and add 
the word ``continued'' at the top of the 2nd portion of the table) in 
order to better fit such table on the Fees Schedule.
    The purpose of the changes proposed herein is to fix erroneous and 
obsolete references in the Exchange Fees Schedule and make the Fees 
Schedule more clear and less confusing for investors.
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.\5\ Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \6\ 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 
facilitating 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. 
Fixing erroneous and obsolete references in the Exchange Fees Schedule 
and making the Fees Schedule more clear and less confusing for 
investors is designed to eliminate potential investor confusion, 
thereby removing impediments to and perfecting the mechanism of a free 
and open market and a national market system, and, in general, 
protecting investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \7\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers, as this newly-cleaned-up Fees 
Schedule is available to all market participants.
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    \7\ Id.
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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 that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes that the 
proposed rule change will not impose an unnecessary burden on 
intramarket competition because no substantive changes were made to the 
Fees Schedule and the newly-cleaned-up Fees Schedule is available to 
all market participants. The Exchange believes that

[[Page 25115]]

the proposed rule change will not impose an unnecessary burden on 
intermarket competition because no substantive changes were made to the 
Fees Schedule and because this Fees Schedule only applies to Exchange 
fees. To the extent that the newly-cleaned-up Fees Schedule may be 
attractive to market participants on other exchanges, such market 
participants may always elect to become CBOE 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 \8\ and paragraph (f) of Rule 19b-4 \9\ 
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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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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-2013-042 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-2013-042. 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 St 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 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-2013-042, 
and should be submitted on or before May 20, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Elizabeth M. Murphy,
Secretary.
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    \10\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2013-10014 Filed 4-26-13; 8:45 am]
BILLING CODE 8011-01-P