Document ID: SEC-2013-0933-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2013-05-20T04:00Z

[Federal Register Volume 78, Number 97 (Monday, May 20, 2013)]
[Notices]
[Pages 29406-29408]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-11896]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69569; File No. SR-CBOE-2013-049]

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

May 14, 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 May 1, 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 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 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

[[Page 29407]]

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 with regards to 
the fees assessed for Floor Broker Trading Permits. Specifically, the 
Exchange proposes to add to Footnote 25 the statement that any Floor 
Broker Trading Permit Holder that executes an average of 15,000 
customer open-outcry contracts per day (``CPD'') over the course of a 
calendar month in multiply-listed options classes will receive a rebate 
of $7,500 on that Floor Broker Trading Permit Holder's Floor Broker 
Trading Permit fees. The purpose of the proposed change is to encourage 
Floor Brokers to execute open-outcry customer trades in multiply-listed 
options, and the Exchange believes that giving Floor Brokers a break in 
their Floor Broker Trading Permit fees will provide such an incentive. 
The Exchange recognizes the competitive nature of maintaining a Floor 
Broker operation at CBOE and wants to provide a credit to Floor Brokers 
that engage in a significant amount of Floor Broker open outcry trading 
at CBOE.
    The Exchange also proposes to make a technical, non-substantive 
change to the ``Stock Portion of Stock-Option Strategy Orders'' table 
in its Fees Schedule. The ``Notes'' section of that table includes the 
statement ``The per share fee assessed to customers for the stock 
portion of stock-option strategy orders will be waived through August 
31, 2012.'' As August 31, 2012 is now in the past, the Exchange 
proposes to delete that statement.
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. Providing Floor Broker Trading Permit 
Holders who execute an average of 15,000 customer open-outcry contracts 
per day in multiply-listed options classes with a rebate of $7,500 on 
that Floor Broker Trading Permit Holder's Floor Broker Trading Permit 
fees is reasonable because it allows the qualifying Floor Brokers to 
pay lower Floor Broker Trading Permit fees than they otherwise would 
have. The Exchange believes that it is equitable and not unfairly 
discriminatory to offer such a rebate to Floor Brokers only, and only 
those who execute 15,000 contracts per day (of customer, open-outcry 
trading in multiply-listed options classes) because Floor Brokers serve 
an important function in facilitating the execution of orders via open 
outcry, which as a price-improvement mechanism, the Exchange wishes to 
encourage and support. Further, the proposed change is designed to 
encourage the execution of orders via open outcry, which should 
increase volume, which would benefit all market participants (including 
Floor Brokers who do not hit the 15,000 contracts-per-day threshold) 
trading via open outcry (and indeed, this increased volume could make 
it possible for some Floor Brokers to hit the 15,000 contracts-per-day 
threshold). Also, only Floor Brokers are assessed Floor Broker Trading 
Permit fees.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4).
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    The Exchange proposes limiting the rebate qualification to open 
outcry trading because Floor Brokers only engage in open outcry trading 
(at least in their capacities as Floor Brokers), and because, as 
previously stated, the Exchange wishes to support and encourage open-
outcry trading, which allows for price improvement and has a number of 
positive impacts on the market system. The Exchange proposes limiting 
the rebate qualification to customer orders because market participants 
generally prefer to trade against customer trades, and encouraging 
customer trading in this manner should provide such market participants 
with more customer orders with which to trade. Further, the options 
industry has a long history of promoting customer orders through 
rebates and other preferential fee structures. The Exchange proposes 
limiting the rebate qualification to multiply-listed options classes 
because the Exchange expended considerable resources developing its 
proprietary, singly-listed products and therefore does not desire to 
offer this rebate associated with such products.
    The Exchange believes the proposed rule change to delete the 
outdated statement in the ``Notes'' section of the ``Stock Portion of 
Stock-Option Strategy Orders'' table is consistent with the Section 
6(b)(5) \5\ 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 [sic] 
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. The proposed 
deletion would prevent 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)(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 the purposes of the Act. The Exchange does not believe 
that the proposed change will impose an unnecessary or inappropriate 
burden on intramarket competition because, while it is limited to Floor 
Brokers (and only those who hit the 15,000-contract-per-day threshold), 
Floor Brokers serve an important function in facilitating the execution 
of orders via open outcry, which as a price-improvement mechanism, the 
Exchange wishes to encourage and support. Further, the proposed change 
is designed to encourage the execution of orders via open outcry, which 
should increase volume, which would benefit all market participants 
(including Floor Brokers who do not hit the 15,000 contracts-per-day 
threshold) trading via open outcry (and indeed, this increased volume 
could make it possible for some Floor Brokers to hit the 15,000 
contracts-per-day threshold). Also, only Floor Brokers are assessed 
Floor Broker Trading Permit fees. The Exchange does not believe that 
the proposed change will impose an unnecessary or inappropriate burden 
on intermarket competition because it only applies to CBOE Floor 
Brokers. To the extent that this rebate proves attractive to Floor 
Brokers on other options exchanges, or its results prove attractive to 
market participants on other exchanges, such Floor Brokers

[[Page 29408]]

or market participants may elect to become Floor Brokers or market 
participants at 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 \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-2013-049 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-2013-049. 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 
available publicly. All submissions should refer to File Number SR-
CBOE-2013-049, and should be submitted on or before June 10, 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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-11896 Filed 5-17-13; 8:45 am]
BILLING CODE 8011-01-P