Document ID: SEC-2012-0392-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2012-03-12T04:00Z

[Federal Register Volume 77, Number 48 (Monday, March 12, 2012)]
[Notices]
[Pages 14576-14578]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5905]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66520; File No. SR-CBOE-2012-021]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Make an Amendment Regarding the Administrative 
Fee Related to the Marketing Fee

March 6, 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 March 1, 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 and II below, which Items have been prepared by the 
Exchange. The Exchange has filed the proposal pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(3) thereunder,\4\ 
which renders the proposal effective upon filing with the Commission. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(3).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to make an amendment regarding the 
administrative fee related to the marketing fee. 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

[[Page 14577]]

the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In SR-CBOE-2007-95, the Exchange imposed an administrative fee of 
0.45% of the Exchange's marketing fee in order to offset the costs of 
administering the marketing fee program and also to provide funds to an 
association of members (now Trading Permit Holders) (the 
``Association'') \5\ for its costs and expenses in supporting CBOE's 
marketing fee program and in seeking to bring flow to CBOE.\6\ In that 
filing, the Exchange stated that it intended to ``allocate each month 
approximately 40% of the funds collected through the administrative fee 
to CBOE to offset CBOE's overall costs in administering the (marketing 
fee) program; the balance (approximately 60%) collected by this fee 
would be allocated to the Association.'' \7\ The Exchange also noted 
that it intended to monitor the funds raised by the administrative fee, 
and may propose amendments to the fee as appropriate, so that the fee 
provides funds to the Association to cover its costs and expenses.\8\
---------------------------------------------------------------------------

    \5\ The Association is technically known as the DPM (Designated 
Primary Market-Maker) Association; however, its activities are not 
limited to assisting only DPM organizations. Through its business 
development activities, the Association seeks to bring order flow to 
CBOE for the benefit of all CBOE liquidity providers.
    \6\ See Securities Exchange Act Release No. 56289 (August 20, 
2007), 72 FR 49030 (August 27, 2007) (SR-CBOE-2007-95).
    \7\ Id.
    \8\ Id.
---------------------------------------------------------------------------

    In recent months, the amounts collected for the marketing fee have 
dropped, and as a result, the amount collected through the 
administrative fee has dropped as well. As such, the amount of the 
administrative fee allocated to the Association has also dropped, to a 
level below which the Association requires to operate effectively. At 
current collection levels for the administrative fee, the Association 
requires greater than approximately 60% of the administrative fee in 
order to continue to operate effectively. The Exchange therefore 
proposes to revise its previous statement that the Exchange intends to 
``allocate each month approximately 40% of the funds collected through 
the administrative fee to CBOE to offset CBOE's overall costs in 
administering the (marketing fee) program'' and allocate the remainder 
(approximately 60%) to the Association. Instead, the Exchange hereby 
proposes to allocate to the Association the amount of the funds 
collected through the administrative fee that is necessary to 
effectively operate the Association (which may, in a given month, 
include all of the funds collected through the administrative fee), and 
allocate the remainder of the funds collected through the 
administrative fee to offset CBOE's overall costs in administering the 
marketing fee program. The proposed possible re-allocations considered 
in this proposal will of course not affect the Exchange's ability to 
continue to fund its regulatory services or engage in its self-
regulatory responsibilities.
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.\9\ Specifically, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\10\ which provides that 
Exchange rules may provide for the equitable allocation of reasonable 
dues, fees, and other charges among its Trading Permit Holders and 
other persons using its facilities. The proposed change is reasonable 
because there is no change to the actual amount of the administrative 
fee. The proposed change is equitable and not unfairly discriminatory 
because ensuring that the Association has enough funds to operate 
effectively will allow the Association to engage in business 
development activities to bring order flow to the Exchange. Such order 
flow provides greater liquidity and more trading opportunities for all 
market participants.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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.

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 proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and subparagraph (f)(3) of Rule 19b-4 
\12\ thereunder because it is concerned solely with the administration 
of the Exchange. 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 C.F.R. 240.19b-4(f)(3).
---------------------------------------------------------------------------

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-2012-021 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-2012-021. 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

[[Page 14578]]

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; 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-2012-021 and should be submitted on or before April 
2, 2012.
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-5905 Filed 3-9-12; 8:45 am]
BILLING CODE 8011-01-P