Document ID: SEC-2014-2092-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2014-12-12T05:00Z

[Federal Register Volume 79, Number 239 (Friday, December 12, 2014)]
[Notices]
[Pages 73940-73942]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29180]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73788; File No. SR-CBOE-2014-089]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Revise the Sales Value Fee

December 8, 2014.
    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 November 25, 2014, 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 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 amend its Fees Schedule, effective 
November 28, 2014. Specifically, the Exchange proposes to enable the 
Exchange to collect the Sales Value Fee \3\ (the ``Fee'') directly from 
Trading Permit Holders (``TPHs'') when the Fee is due pursuant to an 
on-floor position transfer between unaffiliated TPHs. In addition, the 
Exchange proposes to remove obsolete language related to the CBOE Stock 
Exchange, LLC (``CBSX'').\4\ Finally, the Exchange proposes to remove 
the regulatory review process related to the Position Transfer Fee.
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    \3\ Pursuant to Section 31 of the Securities Exchange Act of 
1934, CBOE pays transaction fees to the SEC based on the volume of 
securities that are executed on the Exchange. The Sales Value Fee is 
the mechanism by which CBOE assesses the transaction fees to each 
TPH.
    \4\ Trading ended on CBSX on April 30, 2014. See Securities 
Exchange Act Release No. 34-71880 (April 4, 2014) (Notice) (SR-CBOE-
2014-036).
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    Currently, the Sales Value Fee is collected indirectly from TPHs 
through their clearing firms by OCC on behalf of CBOE. The OCC does not 
collect the Fee when an on-floor position transfer \5\ takes place. The 
Exchange is proposing to collect the Fee directly from TPHs when there 
is an on-floor position transfer between unaffiliated TPHs. TPHs will 
be considered affiliated if one of the TPHs has ``control'' under Rule 
1.1(k) over another TPH.\6\
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    \5\ See Rule 6.49A.
    \6\ The term ``affiliate'' of or a person ``affiliated with'' 
another person means a person who, directly or indirectly, controls, 
is controlled by, or is under common control with, such other 
person. See Rule 1.1(j).
     The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person, unless such 
power is solely the result of an official position with such person. 
Any person who owns beneficially, directly or indirectly, more than 
20% of the voting power in the election of directors of a 
corporation, or more than 25% of the voting power in the election of 
directors of any other corporation which directly or through one or 
more affiliates owns beneficially more than 25% of the voting power 
in the election of directors of such corporation, shall be presumed 
to control such corporation. See Rule 1.1(k).
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    In addition, the Fees Schedule currently indicates that the Fee is 
assessed by CBOE to each TPH for the sale of securities when a sale in 
non-option securities occurs on CBSX with respect to which CBOE is 
obligated to pay a fee to the SEC under Section 31 of the Exchange Act 
or a sell order in non-option securities that is routed for execution 
at a market other than on CBSX, resulting in a covered sale on that 
market and an obligation of the routing broker providing Routing 
Services for CBSX to pay the related sales fee of that market. As noted 
above, CBSX is no longer active; therefore, the Exchange proposes to 
clarify that the Fee will be assessed by CBOE to TPHs for sales of 
securities when a sale in option securities occurs with respect to 
which CBOE is obligated to pay a fee to the SEC under Section 31 of the 
Exchange Act or when a sell order in option securities is routed for 
execution at a market other than CBOE, resulting in a covered sale on 
that market and an obligation of the routing broker providing Routing 
Services for CBOE, as described in CBOE Rule 6.14B, to pay the related 
sales fee of that market.
    Finally, the Exchange currently provides a service to TPHs seeking 
to make an off-floor position transfer pursuant to Rule 6.49A whereby a 
TPH can solicit CBOE to perform a ``regulatory review'' of the 
potential transfer to determine whether the proposed transfer meets the 
off-floor

[[Page 73941]]

position transfer provisions of Rule 6.49A. The Exchange currently 
charges the initiating TPH a fee of $.02 per contract for the 
``regulatory review'' with a cap of $25,000. The Exchange is proposing 
to eliminate the ``regulatory review'' program, as well as the 
associated fee.
    The Exchange is seeking an effective date of November 28, 2014 in 
order to sync the fee change with the CBOE billing cycle. For example, 
position transfers that occur on Friday, November 28, 2014 will settle 
on Monday, December 1, 2014. CBOE billing is applied upon settlement; 
therefore, on-floor position transfers that are subject to a Sales 
Value Fee that trade on November 28th will settle on December 1st and 
be assessed the Sales Value Fee during the December billing cycle.
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.\7\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \8\ 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 facilitation 
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. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \9\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange also believes the proposed rule 
change is consistent with Section 6(b)(4) of the Act,\10\ which 
requires that Exchange rules provide for the equitable allocation of 
reasonable dues, fees, and other charges among its Trading Permit 
Holders and other persons using its facilities.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ Id.
    \10\ 15 U.S.C. 78f(b)(4).
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    In particular, the Exchange believes that the proposed 
clarifications to the Fees Schedule will make the Fees Schedule easier 
to read and alleviate potential confusion. The alleviation of potential 
confusion will remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, 
protect investors and the public interest. The Fee allows the Exchange 
to recoup transaction fees that the Exchange pays to the SEC pursuant 
to Section 31 of the Securities Exchange Act, and the Exchange incurs 
the Section 31 fees because of the trading activity of TPHs. Therefore, 
the Exchange believes that it is reasonable and equitable to assess the 
Fee to TPHs. Additionally, the Exchange does not believe the proposed 
change is unfairly discriminatory as it applies equally to all TPHs 
that are performing on-floor position transfers between unaffiliated 
entities.

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. CBOE 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 the proposed changes apply to all TPHs. The Exchange 
does not believe the proposed rule change will impose any burden on 
intermarket competition because it only applies to position transfers 
occurring on CBOE.

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 \11\ and paragraph (f) of Rule 19b-4 \12\ 
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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 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-2014-089 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.

All submissions should refer to File Number SR-CBOE-2014-089. 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 Street 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 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-2014-089 and should be 
submitted on or before January 2, 2015.

[[Page 73942]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29180 Filed 12-11-14; 8:45 am]
BILLING CODE 8011-01-P