Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule, 10846-10848 [2017-02997]
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Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices
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continues to be concerned about
potential unfair competition and
conflicts of interest between an
exchange’s self-regulatory obligations
and its commercial interest when the
exchange is affiliated with one of its
members, for the reasons discussed
below, the Commission believes that it
is consistent with the Act to permit
NES, in its capacity as a facility of each
of the ISE Exchanges, to route options
orders inbound to each of the NASDAQ
Exchanges, subject to the limitations
and conditions described above.30
The Commission believes that these
limitations and conditions will mitigate
its concerns about potential conflicts of
interest and unfair competitive
advantage. In particular, the
Commission believes that a nonaffiliated SRO’s oversight of NES,31
combined with a non-affiliated SRO’s
monitoring of NES’s compliance with
each of the NASDAQ Exchange’s rules
and quarterly reporting to each
NASDAQ Exchange, will help to protect
the independence of Nasdaq’s, BX’s,
and Phlx’s regulatory responsibilities
with respect to NES. The Commission
also believes that the Exchanges’ rules
are designed to ensure that NES cannot
use any information advantage it may
have because of its affiliation with
Nasdaq, BX, or Phlx, respectively.32
Nasdaq’s proposal to adopt Nasdaq Rule 2140,
restricting affiliations between Nasdaq and its
members); 53382 (February 27, 2006), 71 FR 11251
(March 6, 2006) (SR–NYSE–2005–77) (order
approving the combination of the New York Stock
Exchange, Inc. and Archipelago Holdings, Inc.);
58673 (September 29, 2008), 73 FR 57707 (October
3, 2008) (SR–Amex–2008–62 and SR–NYSE–2008–
60) (order approving the combination of NYSE
Euronext and the American Stock Exchange LLC);
59135 (December 22, 2008), 73 FR 79954 (December
30, 2008) (SR–ISE–2008–85) (order approving the
purchase by ISE Holdings of an ownership interest
in Direct Edge Holdings LLC); 59281 (January 22,
2009), 74 FR 5014 (January 28, 2009) (SR–NYSE–
2008–120) (order approving a joint venture between
NYSE and BIDS Holdings L.P.); 58375 (August 18,
2008), 73 FR 49498 (August 21, 2008) (File No. 10–
182) (order granting the exchange registration of
BATS Exchange, Inc.); 61698 (March 12, 2010), 75
FR 13151 (March 18, 2010) (File Nos. 10–194 and
10–196) (order granting the exchange registration of
EDGX Exchange, Inc. and EDGA Exchange, Inc.);
and 62716 (August 13, 2010), 75 FR 51295 (August
19, 2010) (File No. 10–198) (order granting the
exchange registration of BATS–Y Exchange, Inc.).
30 The Commission notes that these limitations
and conditions are consistent with those previously
approved by the Commission for other exchanges.
See, e.g., Securities Exchange Act Release Nos.
67256 (June 26, 2012), 77 FR 39277 (July 2, 2012)
(SR–BX–2012–030) (order approving rules relating
to the establishment of the BX options market) at
39281–39282; 69233, supra note 12; 69232, supra
note 14; 69229, supra note 14; and the ISE
Exchange Routing Orders, supra note 4.
31 This oversight will be accomplished through
the 17d–2 Agreement and the RSA.
32 See supra note 27 and accompanying text.
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V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,33 that the
proposed rule changes (SR–BX–2016–
068; SR–NASDAQ–2016–169; SR–Phlx–
2016–120), each as modified by their
respective Amendment No. 1, be, and
hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–02993 Filed 2–14–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80003; File No. SR–CBOE–
2017–011]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Fees
Schedule
February 9, 2017.
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 January
27, 2017, 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.
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 also available on the
Exchange’s Web site (https://
www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
33 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
34 17
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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
Marketing Fee program, effective
February 1, 2017. By way of background
the Marketing Fee is assessed on certain
transactions of Market-Makers resulting
from (i) customer orders from payment
accepting firms, or (ii) customer orders
that have designated a ‘‘Preferred
Market-Maker’’ (‘‘PMM’’) under CBOE
Rule 8.13. The funds collected via this
Marketing Fee are then put into pools
controlled by DPMs and PMMs. The
DPM or PMM controlling a certain pool
of funds can then determine the order
flow provider(s) to which the funds
should be directed in order to encourage
such order flow provider(s) to send
orders to the Exchange. On each order,
an order flow provider can designate the
Preferred Market-Maker to which the
funds generated from the order sent by
the order flow provider should be
allocated (a ‘‘Preferred order’’).
The Exchange proposes to expand the
Marketing Fee program to Lead MarketMakers (‘‘LMMs’’). Under the proposed
rule change, LMMs would be given
access to the Marketing Fee funds
generated from those orders on which
the LMM was preferred (i.e., designated)
and those funds would be collected by
CBOE and disbursed by CBOE according
to the instructions of the LMM. The
Exchange notes that expanding the
Marketing Fee program to LMMs allows
LMMs to amass a pool of funds with
which to use to incent order flow
providers to send order flow to the
Exchange. This increased order flow
would benefit all market participants on
the Exchange. The Exchange also notes
that as with DPMs and PMMs, an LMM
may have access to the Marketing Fee
funds generated from a Preferred order
regardless of whether that LMM has an
appointment in the class in which the
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Preferred order is received and
executed.
The Exchange also proposes to make
certain clarifications to Footnote 6 of the
Fees Schedule, which governs the
Marketing Fee program. The Exchange
notes that it inadvertently only
references Market-Makers and DPMs as
being subject to the fee, even though
LMMs, like DPMs, are also MarketMakers and the fee has therefore always
applied (i.e., all orders with origin code
‘‘M’’ are subject to the fee in accordance
with above). As such, the Exchange
proposes to explicitly note in the first
line that the Marketing Fee is assessed
to transactions of ‘‘Market-Makers
(including DPMs and LMMs)’’ and
thereafter refer only to ‘‘Market-Makers’’
in the Footnote, instead of ‘‘MarketMakers and DPMs’’ since MarketMakers is defined as including DPMs
and LMMs. The Exchange notes this is
not a substantive change, but rather a
change to make this point clear in the
Fees Schedule to avoid potential
confusion. The Exchange next proposes
to include a reference to ‘‘DPMs under
CBOE Rule 8.80’’ in the first sentence to
explicitly note that customer orders may
also have a designated DPM (i.e., the
DPM may be given access to Marketing
Fee funds generated from a Preferred
order on which it was designated). In
order to avoid potential confusion, the
Exchange also proposes to add a new
term, ‘‘Preferenced Market-Makers.’’
Preferenced Market-Makers will refer
collectively to any DPM, PMM or LMM
that is designated on a Preferred order
(which the Exchange also proposes to
rename as a ‘‘Preferenced order’’ for
consistency).3 The Exchange believes
using the general term ‘‘Preferred
Market-Maker’’ for designated DPMs,
PMMs or LMMs can be confused with
PMMs under CBOE Rule 8.13. The
Exchange believes the proposed change
therefore, provides clarity in the rules
and makes the Fees Schedule easier to
read.
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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
3 The Commission notes that the Exchange’s new
text in footnote 6 of the Fees Schedule refers in
several places to ‘‘DPM or Preferenced MarketMaker.’’ Though the term ‘‘Preferenced MarketMaker’’ includes DPMs (as well as LMMs and
PMMs), use of the phrase ‘‘DPM or Preferenced
Market-Maker’’ recognizes that DPMs also may be
given access to marketing fee funds collected on
orders preferenced to them in any class in addition
to funds collected from non-preferenced orders in
the DPM’s assigned classes.
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Section 6(b) of the Act.4 Specifically,
the Exchange believes the proposed rule
change 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 facilitating 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
Section 6(b)(4) of the Act,6 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 expanding the
Marketing Fee program to LMMs is
reasonable, equitable and not unfairly
discriminatory because it will allow
LMMs to amass a pool of funds with
which to use to incent order flow
providers to send order flow to the
Exchange. This increased order flow
would benefit all market participants on
the Exchange. Additionally, the
Exchange believes it is equitable and not
unfairly discriminatory to expand the
Marketing Fee program to LMMs
because, like PMMs under CBOE Rule
8.13, LMMs have increased obligations
that other market participants do not
such an heightened quoting standards.7
The Exchange also believes that
clarifying that the reference to ‘‘MarketMakers’’ in Footnote 6 actually includes
both DPMs and LMMs maintains clarity
in the Fees Schedule and avoids
potential confusion. Similarly, the
Exchange believes that clarifying that
customer orders may also designate a
DPM (who would then have access to
the Marketing Fees generated from that
Preferred order) alleviates potential
confusion. Lastly, the Exchange believes
introducing the term ‘‘Preferenced
Market-Maker’’ to denote any DPM,
PMM or LMM that is designated on a
Preferred (or as proposed,
‘‘Preferenced’’) order alleviates potential
confusion and makes the Fees Schedule
easier to read. The alleviation of
confusion removes impediments to and
perfects the mechanism of a free and
open market and a national market
4 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
6 15 U.S.C. 78f(b)(4).
7 See CBOE Rule 8.15 (Lead Market-Makers).
system, and, in general, to protects
investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule changes will impose
any burden on competition that are not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange 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, while the proposed change
allows LMMs to also amass a pool of
funds with which to use to incent order
flow providers to send order flow to the
Exchange, LMMs, like PMMs, have
heightened quoting standards.
Moreover, the proposed change
provides LMMs an opportunity to
incent order flow providers to send
order flow to the Exchange, which
benefits all market participants.
The Exchange does not believe that
the proposed rule change will impose
any burden on intermarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed change only
affects trading on CBOE. To the extent
that the proposed changes make CBOE
a more attractive marketplace for market
participants at other exchanges, such
market participants are welcome to
become CBOE 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 8 and paragraph (f) of Rule
19b–4 9 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
5 15
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8 15
9 17
E:\FR\FM\15FEN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
15FEN1
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Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices
change should be approved or
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2017–011 on the subject line.
Paper Comments
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• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE–2017–011. 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 (https://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 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–
2017–011 and should be submitted on
or before March 8, 2017.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–02997 Filed 2–14–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79999; File No. SR–ICEEU–
2017–002]
Self-Regulatory Organizations; ICE
Clear Europe Limited; Notice of Filing
of Proposed Rule Change To Revise
the ICE Clear Europe Clearing Rules
Relating to the Application of Default
Provisions in the Event of a Resolution
Proceeding
February 9, 2017.
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
25, 2017, ICE Clear Europe Limited
(‘‘ICE Clear Europe’’ or ‘‘Clearing
House’’) 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 primarily prepared by ICE
Clear Europe. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The principal purpose of the
proposed rule change is to modify the
ICE Clear Europe Clearing Rules
(‘‘Clearing Rules’’) to clarify the
application of certain default provisions
in the event of a resolution proceeding
with respect to the Clearing House or a
Clearing Member.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, ICE
Clear Europe 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. ICE
Clear Europe has prepared summaries,
set forth in sections A, B and C below,
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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of the most significant aspects of such
statements.
A. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
The purpose of the rule amendments
is to modify the ICE Clear Europe
Clearing Rules to clarify the application
of certain default-related provisions in
the context of resolution proceedings
with respect to the Clearing House or a
Clearing Member. Such proceedings can
arise under so-called special resolution
regimes that may apply under
applicable law to the Clearing House or
a Clearing Member in the event of
either’s failure or insolvency, as an
alternative to traditional bankruptcy or
insolvency proceedings in the relevant
jurisdiction. Such regimes include the
UK Banking Act 2009 and the EU Bank
Recovery and Resolution Directive (the
‘‘BRRD’’).3
In Rule 101, ICE Clear Europe
proposes amendments to the definition
of ‘‘Insolvency’’ and addition of new
defined terms ‘‘Resolution Step’’ and
‘‘Unprotected Resolution Step.’’ These
amendments are designed to distinguish
between insolvency and resolution
proceedings, and reflect and incorporate
certain limitations on the termination of
Contracts and exercise of default
remedies that apply under the terms of
an applicable special resolution regime.
(Under the current Rules, an Insolvency
in turn constitutes an Event of Default
that permits the exercise of the default
rights and remedies specified in the
Rules.)
The definition of Insolvency has been
amended to exclude certain resolution
proceedings. Specifically, the
amendment removes the existing
provision that a Governmental
Authority exercising one or more of its
stabilization powers under the UK
Banking Act 2009 will constitute an
Insolvency. In addition, the
appointment of an Insolvency
Practitioner, which normally is an
Insolvency, will not constitute an
Insolvency if it is made in connection
with a Resolution Step that is not an
Unprotected Resolution Step, as defined
below. A Resolution Step involving a
Governmental Authority making an
order to transfer a person’s securities,
property, rights or liabilities (which may
be a feature of a resolution proceeding)
will also not constitute an Insolvency.
3 Directive 2014/59/EU of the European
Parliament and of the Council of 15 May 2014
establishing a framework for the recovery and
resolution of credit institutions and investment
firms.
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15FEN1
]]>Agencies
[Federal Register Volume 82, Number 30 (Wednesday, February 15, 2017)]
[Notices]
[Pages 10846-10848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02997]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80003; File No. SR-CBOE-2017-011]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the Fees Schedule
February 9, 2017.
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 January 27, 2017, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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 also available on the Exchange's Web site
(https://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 Marketing Fee program, effective
February 1, 2017. By way of background the Marketing Fee is assessed on
certain transactions of Market-Makers resulting from (i) customer
orders from payment accepting firms, or (ii) customer orders that have
designated a ``Preferred Market-Maker'' (``PMM'') under CBOE Rule 8.13.
The funds collected via this Marketing Fee are then put into pools
controlled by DPMs and PMMs. The DPM or PMM controlling a certain pool
of funds can then determine the order flow provider(s) to which the
funds should be directed in order to encourage such order flow
provider(s) to send orders to the Exchange. On each order, an order
flow provider can designate the Preferred Market-Maker to which the
funds generated from the order sent by the order flow provider should
be allocated (a ``Preferred order'').
The Exchange proposes to expand the Marketing Fee program to Lead
Market-Makers (``LMMs''). Under the proposed rule change, LMMs would be
given access to the Marketing Fee funds generated from those orders on
which the LMM was preferred (i.e., designated) and those funds would be
collected by CBOE and disbursed by CBOE according to the instructions
of the LMM. The Exchange notes that expanding the Marketing Fee program
to LMMs allows LMMs to amass a pool of funds with which to use to
incent order flow providers to send order flow to the Exchange. This
increased order flow would benefit all market participants on the
Exchange. The Exchange also notes that as with DPMs and PMMs, an LMM
may have access to the Marketing Fee funds generated from a Preferred
order regardless of whether that LMM has an appointment in the class in
which the
[[Page 10847]]
Preferred order is received and executed.
The Exchange also proposes to make certain clarifications to
Footnote 6 of the Fees Schedule, which governs the Marketing Fee
program. The Exchange notes that it inadvertently only references
Market-Makers and DPMs as being subject to the fee, even though LMMs,
like DPMs, are also Market-Makers and the fee has therefore always
applied (i.e., all orders with origin code ``M'' are subject to the fee
in accordance with above). As such, the Exchange proposes to explicitly
note in the first line that the Marketing Fee is assessed to
transactions of ``Market-Makers (including DPMs and LMMs)'' and
thereafter refer only to ``Market-Makers'' in the Footnote, instead of
``Market-Makers and DPMs'' since Market-Makers is defined as including
DPMs and LMMs. The Exchange notes this is not a substantive change, but
rather a change to make this point clear in the Fees Schedule to avoid
potential confusion. The Exchange next proposes to include a reference
to ``DPMs under CBOE Rule 8.80'' in the first sentence to explicitly
note that customer orders may also have a designated DPM (i.e., the DPM
may be given access to Marketing Fee funds generated from a Preferred
order on which it was designated). In order to avoid potential
confusion, the Exchange also proposes to add a new term, ``Preferenced
Market-Makers.'' Preferenced Market-Makers will refer collectively to
any DPM, PMM or LMM that is designated on a Preferred order (which the
Exchange also proposes to rename as a ``Preferenced order'' for
consistency).\3\ The Exchange believes using the general term
``Preferred Market-Maker'' for designated DPMs, PMMs or LMMs can be
confused with PMMs under CBOE Rule 8.13. The Exchange believes the
proposed change therefore, provides clarity in the rules and makes the
Fees Schedule easier to read.
---------------------------------------------------------------------------
\3\ The Commission notes that the Exchange's new text in
footnote 6 of the Fees Schedule refers in several places to ``DPM or
Preferenced Market-Maker.'' Though the term ``Preferenced Market-
Maker'' includes DPMs (as well as LMMs and PMMs), use of the phrase
``DPM or Preferenced Market-Maker'' recognizes that DPMs also may be
given access to marketing fee funds collected on orders preferenced
to them in any class in addition to funds collected from non-
preferenced orders in the DPM's assigned classes.
---------------------------------------------------------------------------
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.\4\ Specifically, the
Exchange believes the proposed rule change 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 facilitating
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
Section 6(b)(4) of the Act,\6\ 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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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
\6\ 15 U.S.C. 78f(b)(4).
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The Exchange believes expanding the Marketing Fee program to LMMs
is reasonable, equitable and not unfairly discriminatory because it
will allow LMMs to amass a pool of funds with which to use to incent
order flow providers to send order flow to the Exchange. This increased
order flow would benefit all market participants on the Exchange.
Additionally, the Exchange believes it is equitable and not unfairly
discriminatory to expand the Marketing Fee program to LMMs because,
like PMMs under CBOE Rule 8.13, LMMs have increased obligations that
other market participants do not such an heightened quoting
standards.\7\
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\7\ See CBOE Rule 8.15 (Lead Market-Makers).
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The Exchange also believes that clarifying that the reference to
``Market-Makers'' in Footnote 6 actually includes both DPMs and LMMs
maintains clarity in the Fees Schedule and avoids potential confusion.
Similarly, the Exchange believes that clarifying that customer orders
may also designate a DPM (who would then have access to the Marketing
Fees generated from that Preferred order) alleviates potential
confusion. Lastly, the Exchange believes introducing the term
``Preferenced Market-Maker'' to denote any DPM, PMM or LMM that is
designated on a Preferred (or as proposed, ``Preferenced'') order
alleviates potential confusion and makes the Fees Schedule easier to
read. The alleviation of confusion removes impediments to and perfects
the mechanism of a free and open market and a national market system,
and, in general, to protects investors and the public interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition that are not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange 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, while the proposed
change allows LMMs to also amass a pool of funds with which to use to
incent order flow providers to send order flow to the Exchange, LMMs,
like PMMs, have heightened quoting standards. Moreover, the proposed
change provides LMMs an opportunity to incent order flow providers to
send order flow to the Exchange, which benefits all market
participants.
The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed change only affects trading on CBOE. To the extent that the
proposed changes make CBOE a more attractive marketplace for market
participants at other exchanges, such market participants are welcome
to become CBOE 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 \8\ and paragraph (f) of Rule 19b-4 \9\
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
[[Page 10848]]
change should be approved or disapproved.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-CBOE-2017-011 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2017-011. 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 (https://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 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-2017-011 and should be
submitted on or before March 8, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02997 Filed 2-14-17; 8:45 am]
BILLING CODE 8011-01-P
