Document ID: SEC-2013-1257-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2013-07-09T04:00Z

[Federal Register Volume 78, Number 131 (Tuesday, July 9, 2013)]
[Notices]
[Pages 41158-41161]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16380]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69916; File No. SR-CBOE-2013-065]

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

July 2, 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 June 24, 2013, Chicago Board Options Exchange, Incorporated 
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule

[[Page 41159]]

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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the Fees Schedule of its CBOE Stock 
Exchange. 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 the CBSX Fees Schedule. First, CBSX 
proposes to establish a separate fees structure for transactions in 
AMD, BAC, MU, NOK and SIRI (the ``Select Symbols'') that is different 
than the fees for transactions in all other symbols (all fees discussed 
in this proposed rule change apply to transactions in securities priced 
$1 or greater; CBSX does not propose to amend any fees for transactions 
in securities priced less than $1). Currently, transactions in all 
securities (including the Select Symbols) are subject to the following 
fees structure:

----------------------------------------------------------------------------------------------------------------
                       Execution type                                                Rate
----------------------------------------------------------------------------------------------------------------
Maker (adds less than 0.08% of TCV of liquidity in one day)  $0.0018 per share.
 (1)(5).
Maker (adds at least 0.08% but less than 0.16% of TCV of     $0.0017 per share.
 liquidity in one day) (1)(5).
Maker (adds at least 0.16% but less than 0.24% of TCV of     $0.0016 per share.
 liquidity in one day) (1)(5).
Maker (adds at least 0.24% but less than 0.42% of TCV of     $0.0015 per share.
 liquidity in one day) (1)(5).
Maker (adds 0.42% or more of TCV of liquidity in one day)    $0.0014 per share.
 (1)(5).
Taker (removes 9,999,999 shares or less of liquidity in one  $0.0015 rebate per share.
 day (1) or less than 85% Execution Rate).
Taker (removes 10,000,000 shares or more of liquidity in     $0.0017 rebate per share.
 one day (1) and equal to or greater than 85% Execution
 Rate).
Maker (adds liquidity using a silent order)................  $0.0018 per share.
Taker (removes silent order liquidity).....................  $0.0014 rebate per share.
Maker (adds liquidity using a silent-mid or silent-post-mid  $0.0008 per share.
 order).
Taker (removes silent-mid or silent-post-mid liquidity)....  $0.0004 rebate per share.
----------------------------------------------------------------------------------------------------------------

    CBSX hereby proposes to except the Select Symbols out of this 
structure. Instead, CBSX proposes to assess a fee of $0.0050 per share 
for Maker transactions in the Select Symbols (including to a Maker who 
adds liquidity using a silent, silent-mid or silent-post-mid order) and 
provide a rebate of $0.0045 per share for Taker transactions in the 
Select Symbols (including to a Taker who removes silent, silent-mid or 
silent-post-mid liquidity). CBSX proposes this change due to the 
liquidity profiles of the Select Symbols. The NBBO market width in the 
Select Symbols is most often $0.01, and the proposed fee and rebate 
structure for the Select Symbols is designed to get close to 
synthesizing a midpoint between the NBBO. For example, say the market 
in a select symbol is 3.15-3.16. In the case of the proposed pricing in 
the Select Symbols, a participant would be able to buy the displayed 
offer at 3.16 and receive a $0.0045 rebate per share, which is similar 
to the economics of a midpoint execution. The ``Select Symbols'' will 
be defined in the proposed new Footnote 6 to the Fees Schedule.
    CBSX does not propose to amend fees for all other symbols (all 
symbols except for the Select Symbols), with the exception of fees and 
rebates related to silent, silent-mid and silent-post-mid orders. 
Currently, CBSX provides a rebate of $0.0014 per share for Taker orders 
that remove silent order liquidity, and $0.0004 per share for Taker 
orders that remove silent-mid or silent-post-mid liquidity. CBSX 
proposes to increase these rebates to $0.0015 per share. This 
normalizes the Taker rebate for orders that remove silent, silent-mid, 
or silent-post-mid liquidity with the regular Taker rebate (for a Taker 
who removes 9,999,999 shares of liquidity in one day or less than 85% 
Execution Rate). In conjunction with this rebate increase, CBSX 
proposes to increase the fee for a Maker that adds liquidity using a 
silent-mid or silent-post-mid order to $0.0018 per share in order to 
help offset the increases in the rebate for Taker orders that remove 
silent, silent-mid, or silent-post-mid liquidity. The fee for a Maker 
that adds liquidity using a silent order is already $0.0018 per share.
    The proposed changes are to take effect on July 1, 2013.
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.\3\ Specifically, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\4\ 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. The Exchange believes that the proposed 
fees and rebates for the Select Symbols are reasonable because the 
amount of the proposed Maker fee is merely $0.0005 greater than the 
amount of the proposed Taker rebate, and because the NBBO market width 
in the Select Symbols in the Select Symbols is often $0.01, and the 
proposed fee and rebate structure for the Select Symbols is designed to 
get close

[[Page 41160]]

to synthesizing a midpoint between the NBBO. The Exchange notes that 
the proposed fees for the Select Symbols do not violate the limitation 
on access fees described in Rule 610 of Regulation NMS as the $0.0050 
per share proposed fee is a Maker fee, and Rule 610(c)(1)'s prohibition 
of fees greater than $0.0030 applies to orders that execute against a 
quotation (Taker orders).\5\
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4).
    \5\ 17 CFR 242.610. The relevant section of Rule 610(c) states: 
``(c) Fees for access to quotations. A trading center shall not 
impose, nor permit to be imposed, any fee or fees for the execution 
of an order against a protected quotation of the trading center or 
against any other quotation of the trading center that is the best 
bid or best offer of a national securities exchange, the best bid or 
best offer of The Nasdaq Stock Market, Inc., or the best bid or best 
offer of a national securities association other than the best bid 
or best offer of The Nasdaq Stock Market, Inc. in an NMS stock that 
exceed or accumulate to more than the following limits: (1) If the 
price of a protected quotation or other quotation is $1.00 or more, 
the fee or fees cannot exceed or accumulate to more than $0.003 per 
share;''
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    The Exchange believes that offering a different fee and rebate 
structure for the Select Symbols is equitable and not unfairly 
discriminatory because the liquidity profiles of the Select Symbols are 
different from those for other symbols. The NBBO market width in the 
Select Symbols in the Select Symbols is often $0.01, and the proposed 
fee and rebate structure for the Select Symbols is designed to get 
close to synthesizing a midpoint between the NBBO. Further, the 
proposed fee and rebate structure for the Select Symbols is intended to 
incentivize the trading on the Select Symbols. Finally, the proposed 
fees and rebates for the Select Symbols will apply equally to all 
market participants.
    The Exchange believes that it is reasonable to increase, for all 
other symbols, the rebate for a Taker who removes silent order 
liquidity from $0.0014 per share to $0.0015 per share and for a Taker 
who removes silent-mid or silent-post-mid liquidity from $0.0004 per 
share to $0.0015 per share because this will allow such Takers to 
receive a greater rebate for such activity. The Exchange believes this 
is equitable and not unfairly discriminatory because it will set the 
rebate for a Taker who removes silent order liquidity and silent-mid or 
silent-post-mid liquidity at the same amount, as well as the same 
amount as the regular Taker rebate (for a Taker who removes 9,999,999 
shares of liquidity in one day or less than 85% Execution Rate). 
Further, this rebate will apply equally for all market participants.
    The Exchange believes that it is reasonable to increase, for all 
other symbols, the fee for a Maker who adds liquidity using a silent-
mid or silent-post-mid order to $0.0018 per share because this amount 
is within the range of other Maker fees assessed by CBSX. Further, this 
increase is necessary in order to offset the above-mentioned increase 
in the rebate for a Taker who removes silent-mid or silent-post-mid 
liquidity. CBSX believes that this increase is equitable and not 
unfairly discriminatory because it will make the amount of the fee for 
a Maker who adds liquidity using a silent-mid or silent-post-mid order 
the same as the amount of the fee for a Maker who adds liquidity using 
a silent order. Further, this fee will apply equally for all market 
participants.

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

    CBSX 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 CBSX market participants. CBSX does not believe that the 
proposed rule change will impose any burden on intermarket competition 
because these changes apply solely to trading on CBSX. To the extent 
that the proposed new fees structure for the Select Symbols or the 
changes to fees and rebates for orders involving silent, silent-mid and 
silent-post-mid liquidity may make CBSX a more attractive trading venue 
for market participants on other exchanges, such market participants 
may elect to become CBSX market participants. Indeed, these changes may 
enhance competition by encouraging other exchanges to amend their fees 
to provide more attractive fees and rebate structures for their 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 rule-comments@sec.gov. Please include 
File Number SR-CBOE-2013-065 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-2013-065. 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 20549-1090, 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

[[Page 41161]]

available publicly. All submissions should refer to File Number SR-
CBOE-2013-065, and should be submitted on or before July 30, 2013.

    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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16380 Filed 7-8-13; 8:45 am]
BILLING CODE 8011-01-P