Document ID: SEC-2010-0244-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2010-02-10T05:00Z

[Federal Register: February 10, 2010 (Volume 75, Number 27)]
[Notices]               
[Page 6764-6765]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10fe10-143]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61489; File No. SR-CBOE-2010-008]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Inc.; Notice of Filing of Proposed Rule Change Relating to Co-location 
Service Fees

February 4, 2010.
    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 January 28, 2010, Chicago Board Options Exchange, Inc. (``CBOE'' or 
the ``Exchange'') 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 CBOE. 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 
Proposed Rule Change

    Chicago Board Options Exchange, Inc. (``CBOE'' or ``Exchange'') 
proposes to amend its Fees Schedule relating to co-location service 
fees. The text of the proposed rule change is availableon the 
Exchange's Web site (http://www.cboe.org/legal), at the Exchange's 
principal office, 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, CBOE 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. CBOE 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
    For a monthly fee, the Exchange provides members with cabinet space 
in CBOE's building for placement of network and server hardware. The 
fee is

[[Page 6765]]

$10 per month per ``U'' of shelf space (which is equal to 1.75 
inches).\3\ A member also receives power, cooling, security and 
assistance with installation and connection of the equipment to the 
Exchange's servers, at no additional charge. This ``co-location 
service'' provides members with close physical proximity to the 
Exchange's electronic trading system, which helps meet their need for 
high performance processing and low latency.
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    \3\ See Securities Exchange Act Release No. 57191 (January 24, 
2008), 73 FR 5611 (January 30, 2008). The fee for a Sponsored User 
is $20 per month per ``U''. See Securities Exchange Act Release No. 
58189 (July 18, 2008), 73 FR 43274 (July 24, 2008).
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    The co-location service is available to any member that requests 
the service and pays the monthly fee.\4\ The Exchange believes that for 
the foreseeable future it has sufficient space to accommodate all 
members who may request the co-location service. Other than the co-
location service, the Exchange does not provide any co-locating member 
with any advantage over any other co-locating member or any non-co-
locating member with respect to access to the Exchange's trading 
system. The Exchange's systems are designed to minimize, to the extent 
possible, any advantage for one member over another. The foregoing 
statements apply equally to both inbound and outbound data.
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    \4\ A member using the co-location service may also pay certain 
CBOEdirect Connectivity Charges that are set forth in Section 16 of 
the Fees Schedule. These fees are charged for member connectivity to 
CBOEdirect regardless of whether or not a member is using the co-
location service. These fees include a $40 per month ``CMi 
Application Server'' fee for server hardware used to connect to the 
CBOE CMi API, a $40 per month ``Network Access Port'' fee for use of 
the CMi API and a $40 per month ``FIX Port'' fee for use of the FIX 
API. See Securities Exchange Act Release No. 57191, supra footnote 
1. Each of the foregoing fees are $80 per month for a Sponsored 
User. See Securities Exchange Act Release No. 58189, supra footnote 
1.
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    The Exchange proposes to clarify its Fees Schedule relating to co-
location fees in a couple of respects. First, the Exchange proposes to 
move the co-location fees from Section 17 of the Fees Schedule (Hybrid 
Fees) to Section 8 (Facility Fees) because these fees are more 
accurately described as facility fees. Second, the Exchange proposes to 
clarify that the co-location fees are charged in increments of 4 ``U'' 
(which is equal to 7 inches) because the cabinet space is available in 
4 U increments.
2. Statutory Basis
    By clarifying the Exchange's fees for its co-location service and 
providing a fuller description of the service, the Exchange believes 
the proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934,\5\ in general, and furthers the 
objectives of Section 6(b)(4) \6\ of the Act in particular, in that it 
is designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among its members and other persons using its 
facilities. In addition, the Exchange believes the proposed rule change 
furthers the objectives of Section 6(b)(5) \7\ of the Act in that it is 
designed to promote just and equitable principles of trade, 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.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 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 that is not necessary or appropriate in 
furtherance of 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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2010-008 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-2010-008. 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-2010-008 and should be 
submitted on or before March 3, 2010.

    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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-2955 Filed 2-9-10; 8:45 am]
BILLING CODE 8011-01-P