Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Exchange Fees for Fiscal Year 2011, 2934-2938 [2011-919]

Download as PDF 2934 Federal Register / Vol. 76, No. 11 / Tuesday, January 18, 2011 / Notices 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–Phlx– 2011–04 and should be submitted on or before February 8, 2011. comments on the proposed rule change from interested persons. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Elizabeth M. Murphy, Secretary. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, CBOE 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. CBOE has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements. [FR Doc. 2011–901 Filed 1–14–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63701; File No. SR–CBOE– 2010–116] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Exchange Fees for Fiscal Year 2011 January 11, 2011. 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 December 29, 2010, the Chicago Board Options Exchange, Incorporated (‘‘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 CBOE. The Exchange has designated the proposal as one establishing or changing a due, fee, or other charge imposed by CBOE under Section 19(b)(3)(A) of the Act 3 and Rule 19b– 4(f)(2) thereunder.4 The Commission is publishing this notice to solicit I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) proposes to amend its Fees Schedule to make various changes for Fiscal Year 2011. The text of the proposed rule change is available on the Exchange’s Web site (http://www.cboe.org/legal), at the Exchange’s Office of the Secretary and at the Commission. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to amend the CBOE Fees Schedule to make various fee changes. The proposed changes are the product of the Exchange’s annual budget review. The fee changes were approved by the Exchange’s Board of Directors pursuant to CBOE Rule 2.22 and will take effect on January 3, 2011. The Exchange proposes to amend the following fees: Clearing Trading Permit Holder Proprietary Sliding Scale: The Clearing Trading Permit Holder Proprietary Sliding Scale reduces a Clearing Trading Permit Holder’s (‘‘CTPH’’) per contract transaction fee based on the number of contracts the CTPH trades in a month. The Exchange proposes to replace the existing Clearing Trading Permit Holder Proprietary Sliding Scale with: (1) A Multiply-Listed Options Fee Cap for CTPH Proprietary Orders, and (2) a CBOE Proprietary Products Sliding Scale for CTPH Proprietary Orders, as further described below. Multiply-Listed Options Fee Cap: The Exchange proposes to cap CTPH Proprietary transaction fees in all products except options on OEX, XEO, SPX, and volatility indexes,5 in the aggregate, at $75,000 per month per CTPH, except that any AIM Execution Fees incurred by a CTPH would not count towards the cap (AIM Execution Fees are described below). A CTPH would continue to pay any AIM Execution Fees after reaching the cap in a month. AIM Execution Fees would be excluded from the proposed fee cap because the AIM Execution Fee is a discounted fee ($.05 per contract) and therefore the Exchange believes those fees should not count towards the cap. The proposed fee cap is similar to a ‘‘Firm Related Equity Option Cap’’ in place at NASDAQ OMX PHLX, LLC.6 The Exchange believes the proposed fee cap would create an incentive for CTPHs to continue to send order flow to the Exchange. CBOE Proprietary Products Sliding Scale: The Exchange proposes to adopt a CBOE Proprietary Products Sliding Scale that would reduce the standard CTPH Proprietary transaction fee in OEX, XEO, SPX, and volatility indexes (‘‘CBOE Proprietary Products’’) 7 provided a CTPH reaches certain volume thresholds in multiply-listed options on the Exchange in a month as described below. Specifically, the standard CTPH Proprietary transaction fee in CBOE Proprietary Products would be reduced to the fees shown in the following table for CTPHs that execute at least 375,000 contracts but less than 1,500,000 contracts in multiply-listed options on the Exchange in a month, excluding contracts executed in AIM that incurred the AIM Execution Fee (the AIM Execution Fee is described below).8 CBOE proprietary product contracts per month First ................................................. mstockstill on DSKH9S0YB1PROD with NOTICES Tiers First 750,000 .......................................................................................... 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(2). 5 OEX is the symbol for options on the S&P 100 index, XEO is the symbol for European-Style options on the S&P 100 index and SPX is the symbol for options on the S&P 500 index. Volatility 1 15 VerDate Mar<15>2010 16:24 Jan 14, 2011 Jkt 223001 indexes include options on the CBOE Volatility Index (VIX). 6 NASDAQ OMX PHLX Firms are subject to a maximum fee of $75,000. See NASDAQ OMX PHLX, LLC Fee Schedule, Section II (Equity Options Fees). 7 The CTPH Proprietary transaction fee in CBOE Proprietary Products (as defined) is currently $.20 per contract and is proposed to be changed to $.25 per contract (as described below). PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 Rate 18 cents 8 Contracts executed in AIM that incurred the AIM Execution Fee would be excluded from the sliding scale for the same reason that AIM Execution Fees would not apply to the MultiplyListed Options Fee Cap; the Exchange believes it is appropriate to exclude such contracts from the proposed sliding scale because such contracts have already received a discounted transaction fee ($.05 per contract). E:\FR\FM\18JAN1.SGM 18JAN1 2935 Federal Register / Vol. 76, No. 11 / Tuesday, January 18, 2011 / Notices Tiers CBOE proprietary product contracts per month Second ............................................ Third ................................................ Next 250,000 ......................................................................................... Above 1,000,000 .................................................................................... If a CTPH reaches the aforementioned volume thresholds in multiply-listed options on the Exchange in a month, under the proposed sliding scale the first 750,000 contracts traded by the CTPH in a month in CBOE Proprietary Products would be assessed at $.18 per contract. The next 250,000 contracts traded in a month in CBOE Proprietary Products (up to 1,000,000 total contracts traded) would be assessed at $.05 per contract. All contracts above 1,000,000 contracts traded in a month in CBOE Proprietary Products would be assessed at $.02 per contract. The standard CTPH Proprietary transaction fee in CBOE Proprietary Rate Products would be reduced to the fees shown in the following table for CTPHs that execute 1,500,000 or more contracts in multiply-listed options on the Exchange in a month, excluding contracts executed in AIM that incurred the AIM Execution Fee: Tiers CBOE proprietary product contracts per month First ................................................. Second ............................................ mstockstill on DSKH9S0YB1PROD with NOTICES 5 cents 2 cents First 750,000 .......................................................................................... Above 750,000 ....................................................................................... If a CTPH reaches the 1,500,000 contract threshold in multiply-listed options on the Exchange in a month, under the proposed sliding scale the first 750,000 contracts traded by the CTPH in a month in CBOE Proprietary Products would be assessed at $.15 per contract. All contracts above 750,000 contracts traded in a month in CBOE Proprietary Products would be assessed at $.01 per contract. A CTPH that executes less than 375,000 contracts in multiply-listed options on the Exchange in a month would not be eligible for the CBOE Proprietary Products Sliding Scale and would pay the standard CTPH Proprietary transaction fee for CBOE Proprietary Products. Due to the Exchange’s obligation to pay license fees on the CBOE Proprietary Products, Surcharge Fees 9 applicable to the CBOE Proprietary Products would also continue to apply in addition to the standard CTPH Proprietary transaction fee and the rates on the sliding scale. As is the case with the existing CTPH Proprietary Sliding Scale, the proposed Multiply-Listed Options Fee Cap and CBOE Proprietary Products Sliding Scale would apply to Clearing Trading Permit Holder proprietary orders (‘‘F’’ origin code), except for orders of joint back-office (‘‘JBO’’) participants. The Exchange would also aggregate the fees and contracts of a Clearing Trading Permit Holder and its affiliates in the same manner as it does under the existing CTPH Proprietary Sliding Scale.10 9 See CBOE Fees Schedule, Section 1 Index Options, and Footnote 14. 10 See CBOE Fees Schedule, Footnote 11. Each CTPH would be responsible for notifying the Exchange’s TPH Department of all of its affiliations so that fees and contracts of the CTPH and its affiliates may be aggregated for purposes of the fee VerDate Mar<15>2010 16:24 Jan 14, 2011 Jkt 223001 Clearing Trading Permit Holder Proprietary Transaction Fee: The Exchange currently charges $.20 per contract for Clearing Trading Permit Holder Proprietary transactions in index options (including ETF, ETN and HOLDRs options). The Exchange proposes to increase the Clearing Trading Permit Holder Proprietary transaction fee to $.25 per contract for OEX, XEO, SPX and volatility indexes. This rate would be subject to the proposed CBOE Proprietary Products Sliding Scale for CTPH Proprietary orders. AIM Execution Fee: The Exchange currently charges an AIM Execution Fee of $.20 per contract to certain brokerdealer orders executed in the Automated Improvement Mechanism (‘‘AIM’’) 11 that were initially entered into AIM as the contra party to an Agency Order. 12 cap and sliding scale. The Exchange would aggregate the fees and trading activity of separate CTPHs for the purposes of the fee cap and sliding scale if there is at least 75% common ownership between the CTPHs as reflected on each CTPH’s Form BD, Schedule A. A Clearing Trading Permit Holder’s fees and contracts executed pursuant to a CMTA agreement (i.e., executed by another clearing firm and then transferred to the Clearing Trading Permit Holder’s account at the OCC) would be aggregated with the Clearing Trading Permit Holder’s non-CMTA fees and contracts for purposes of the fee cap and sliding scale. 11 AIM is an electronic auction system that exposes certain orders electronically in an auction to provide such orders with the opportunity to receive an execution at an improved price. AIM is governed by CBOE Rule 6.74A. 12 See Securities Exchange Act Release No. 59379 (February 10, 2009), 74 FR 7713 (February 19, 2009). The existing AIM Execution Fee applies to broker-dealer orders (orders with ‘‘B’’ origin code), non-Trading Permit Holder market-maker orders (orders with ‘‘N’’ origin code), orders from specialists in the underlying security (orders with ‘‘Y’’ origin code) and certain orders with ‘‘F’’ origin code (orders from OCC members that are not CBOE PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 Rate 15 cents 1 cent The Exchange proposes to amend the AIM Execution Fee to (i) reduce the fee from $.20 per contract to $.05 per contract, and (ii) apply the fee to all orders (all origin codes) in all products, except OEX, XEO, SPX and volatility indexes, executed in AIM that were initially entered into AIM as the contra party to an Agency Order. The proposed fee would apply to such executions instead of the applicable standard transaction fee except if the applicable standard transaction fee is lower than $.05 per contract, in which case the applicable standard transaction fee would apply.13 Applicable standard transaction fees would apply to AIM executions in OEX, XEO, SPX and volatility indexes. The proposed AIM Execution Fee is similar to the fee charged by NASDAQ OMX PHLX to an ‘‘Initiating Order’’ that is contra-side to a ‘‘PIXL Order’’ in the PIXL Auction.14 Floor Brokerage Fees: The Exchange currently charges floor brokers executing orders in volatility index options $.02 per contract and $.01 per contract for crossed orders. The Exchange proposes to increase these Trading Permit Holders). See CBOE Fees Schedule, Footnote 16. 13 For example, public customer orders (‘‘C’’ origin code) pay no transaction fee in equity options and QQQQ options and thus such orders would pay no transaction fee (would not pay the AIM Execution Fee) for such AIM transactions. Transaction fees for certain public customer orders in certain ETF, ETN and HOLDRs options are currently waived and thus such orders would pay no transaction fee (would not pay the AIM Execution Fee) for such AIM transactions. See CBOE Fees Schedule, Footnotes 8 and 9. 14 NASDAQ OMX PHLX assesses a fee of $.05 per contract to an Initiating Order when the Initiating Order executes against a PIXL Order in the PIXL Auction. See NASDAQ OMX PHLX, LLC Fee Schedule, Section IV, PIXL Pricing. E:\FR\FM\18JAN1.SGM 18JAN1 2936 Federal Register / Vol. 76, No. 11 / Tuesday, January 18, 2011 / Notices mstockstill on DSKH9S0YB1PROD with NOTICES fees to $.03 per contract and $.015 per contract for crossed orders.15 PAR Official Fees: The Exchange proposes to establish PAR Official Fees.16 These fees would apply to all orders executed by a PAR Official, except for customer orders (‘‘C’’ origin code) that are not directly routed to the trading floor (an order that is directly routed to the trading floor is directed to a PAR Official for manual handling by use of a field on the order ticket). Such orders would be charged $.02 per contract and, like floor brokerage fees, a discounted rate of $.01 per contract would apply for crossed orders. The purpose of the proposed fee is to help offset the Exchange’s costs of providing PAR Official services (e.g., salaries, etc). As noted above, the Exchange would not charge the fee to public customer orders except for any customer order that is directly routed to the trading floor. The Exchange believes it is reasonable to charge the fee to a customer that specifically requests order handling by a PAR Official. PAR Official Fees would be charged to the order originating firm unless the originating firm cannot be identified, in which case the fees would be charged to the executing firm on the trade record. Volatility Index Surcharge Fee: The Exchange currently charges a surcharge fee of $.08 per contract on all nonpublic customer 17 transactions in volatility index options. The Exchange proposes to increase the surcharge fee for volatility index options to $.10 per contract. The surcharge fee is assessed to help the Exchange recoup license fees the Exchange pays to index licensors for the right to list volatility index options for trading and is similar to surcharge fees charged by other exchanges. Linkage Fee: Currently, when the Exchange receives a customer order that 15 The Exchange proposes to delete DXL options (options based on 1/10th the value of the Dow Jones Industrial Average) from Section 3 of the Fees Schedule and delete all other references to DXL from the Fees Schedule because DXL options are no longer listed on CBOE. 16 A PAR Official is an Exchange employee or independent contractor whom the Exchange may designate as being responsible for (i) operating the PAR workstation in a Designated Primary MarketMaker (‘‘DPM’’) trading crowd with respect to the classes of options assigned to him/her; (ii) when applicable, maintaining the book with respect to the classes of options assigned to him/her; and (iii) effecting proper executions of orders placed with him/her. The PAR Official may not be affiliated with any Trading Permit Holder that is approved to act as a Market-Maker. See CBOE Rule 7.12. 17 The Surcharge Fee applies to all non-public customer transactions (i.e. CBOE and non-Trading Permit Holder market-maker, Clearing Trading Permit Holder and broker-dealer), including voluntary professionals and professionals. See CBOE Fees Schedule, Section 1 (Index Options) and Footnote 14. VerDate Mar<15>2010 16:24 Jan 14, 2011 Jkt 223001 has an original size of 1,000 or more contracts that is routed, in whole or in part, to one or more exchanges in connection with the Options Order Protection and Locked/Crossed Market Plan, the Exchange charges $.35 per contract executed on another exchange in addition to the customary CBOE execution charges.18 The Exchange proposes to reduce the qualifying customer order size from 1,000 or more contracts to 500 or more contracts. The purpose of this Linkage Fee is to pass through some of the transaction costs incurred by the Exchange associated with the execution of customer orders at away markets. The Exchange believes it is appropriate to pass through some of these costs to these larger non-brokerdealer customer orders that are more akin to broker-dealer orders. Facility Fees: The Exchange proposes to amend the following facility fees in Section 8 of the Fees Schedule: Booth Fees: The Exchange currently charges $185 per month for use of a perimeter booth on the trading floor. The Exchange proposes to increase this fee to $195 per month. The fee for an OEX booth is proposed to be increased from $330 per month to $550 per month, equaling the rate charged for DJX and MNX booths. The fee for VIX booths is also proposed to be increased to $550 per month due to high demand for booth space for VIX options, which recently moved into a larger pit on the trading floor. The $550 per month fee for booths by the OEX book is proposed to be eliminated because there are no longer such booths due to the relocation of the OEX pit.19 Forms and Form Storage Fees: The Exchange currently charges a fee of $10 per month for cabinet space at the Exchange used by trading permit holders to store paper forms such as trade order forms. The Exchange proposes to increase this fee to $11 per month. The Exchange has provided trading permit holders with boxes of 5part and 2-part paper trade order forms for many years at no charge. The Exchange proposes to charge trading permit holders $50 per box to recoup the cost of making these forms available to trading permit holders. Access Badge Fees: The Exchange proposes to increase certain fees for access badges. These fees have not 18 See CBOE Fees Schedule, Section 20. See, also, Securities Exchange Act Release No. 62793 (August 30, 2010), 75 FR 54408 (September 7, 2010). 19 The Exchange also proposes a clarifying change to Section 8(b) of the Fees Schedule. The Exchange proposes to change ‘‘Arbitrage Phone Positions’’ to ‘‘SPX Arbitrage Phone Positions’’ to clarify that this fee applies to booths that are adjacent to or near the SPX pit. PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 changed in approximately ten years. The monthly fees for access badges would increase from $110 to $120 for Floor Managers and from $55 to $60 for clerks. In addition, the Exchange proposes to amend the following charges per occurrence: (1) The fee for issuance of a badge would increase from $15 to $16.50, (2) the fee to replace a badge would increase from $15 to $16.50, (3) the fee for failure to return an access badge would increase from $75 to $82.50, (4) the fee for a temporary badge for a non-trading permit holder would increase from $10 to $11, and (5) the fee for a temporary badge for a trading permit holder would increase from $10 to $11 (the first three badges per year are free of charge). Coat Room Services Fee: The Exchange charges trading permit holders $15 per month for coat room services. The Exchange proposes to increase the fee to $25 per month to help the Exchange recoup increased costs for making this service available to trading permit holders. Telecommunication Fees: The Exchange proposes to increase certain telecommunication fees. These fees have not changed in over seven years. The Exchange proposes the following changes to Section 8(F) of the Fees Schedule: Monthly fees: a. Exchangefone Maintenance— Increase from $52.00 to $57.00. b. Single Line Maintenance—Increase from $10.50 t0 $11.50. c. PhoneMail with Outcall & Pager— Increase from $17.00 to $18.75. d. Intra-Floor Lines—Increase from $52.50 to $57.75. e. Voice Circuits—Increase from $14.40 to $16.00. f. Data Circuits at Local Carrier (entrance)—Increase from $14.40 to $16.00. g. Lines Between Local Carrier and Communications Center—Increase from $11.60 to $12.75. h. Lines Direct From Local Carrier to Trading Floor—Increase from $11.60 to $12.75. i. Lines Between Communications Center and Trading Floor—Increase from $11.60 to $12.75. Fees for installation, relocation and removal of lines: j. Data Circuits at In-House Frame: i. Lines Between Local Carrier and Communications Center—The installation fee would increase from $200 to $550 and would include the removal fee. The existing removal fee of $100 would be eliminated. ii. Lines Direct From Local Carrier to Trading Floor—The installation fee would increase from $350 to $725 and E:\FR\FM\18JAN1.SGM 18JAN1 mstockstill on DSKH9S0YB1PROD with NOTICES Federal Register / Vol. 76, No. 11 / Tuesday, January 18, 2011 / Notices would include the removal fee. The existing removal fee of $200 would be eliminated. The relocation fee of $425 would be increased to $625. iii. Lines Between Communications Center and Trading Floor—The installation fee would increase from $350 to $725 and would include the removal fee. The existing removal fee of $200 would be eliminated. The relocation fee of $425 would be increased to $625. iv. [sic] The Exchange currently charges a $350 installation fee for electrician services connected to the installation of a tether on the trading floor for a market-maker hand held terminal. The Exchange proposes to increase this fee to $450. The Exchange proposes to charge $900 for installation of a tether in index pits due to the higher costs associated with installing tethers in those larger pits. The fee for relocation of a tether would remain unchanged at $200 regardless of location. Trading Floor Terminal Rental Fees: The Exchange proposes to increase fees for rental of trading floor terminals to help the Exchange offset increased costs. The Exchange currently charges $200 per month per login ID for use of a Floor Broker Workstation (FBW). The FBW is a system for electronically entering and managing orders on the Exchange floor. The Exchange proposes to increase this fee to $225 per month per login ID. The Exchange charges trading permit holders $35 per month for Satellite TV on the trading floor. The Exchange proposes to increase this fee to $50 per month. The Exchange charges $100 per month for use of a PAR Workstation. PAR Workstations are touch screen terminals designed to allow electronic representation of orders routed to it. The Exchange proposes to increase this fee to $125 per month. Co-Location Fees: The Exchange provides cabinet space in CBOE’s building for trading permit holders to place their network and quoting engine hardware, to help trading permit holders meet their need for high performance processing and low latency. Trading permit holders also receive power, cooling, security and assistance with installation and connection of the equipment to the Exchange’s servers. For these services, the Exchange currently charges trading permit holders a co-location fee of $10 per ‘‘U’’ (1.75 inches) of shelf space and $20 per U for sponsored users, in increments of 4 U (7 inches). To bring its fees more in line with the current market for co-location services, the VerDate Mar<15>2010 16:24 Jan 14, 2011 Jkt 223001 Exchange proposes to increase these fees to $20 per U and $40 per U for Sponsored Users. DPM’s and Firm Designated Examining Authority Fee: The Exchange charges DPMs and firms for which the Exchange is the Designated Examining Authority (‘‘DEA’’), a fee of $.40 per $1,000 of gross revenue as reported on quarterly FOCUS reports filed by such trading permit holders. The fee is subject to a minimum fee of $1,000 per month for Clearing Trading Permit Holders and $275 for non-Clearing Trading Permit Holders. The Exchange proposes to increase this fee, which has not changed in many years, from $.40 per $1,000 of gross revenue to $.50 per $1,000 of gross revenue. CBOEdirect Connectivity Charges: The Exchange proposes to increase three monthly fees related to connectivity to CBOEdirect to bring the fees more in line with the current market for similar services. The Exchange charges trading permit holders a $40 per month Network Access Port Fee ($80 per month for Sponsored Users) and a $40 per month FIX Port Fee ($80 per month for Sponsored Users) for network hardware the Exchange provides to trading permit holders for access to the Exchange’s network. The Exchange proposes to increase each fee to $80 per month ($160 per month for Sponsored Users). The Exchange charges trading permit holders a $40 per month CMI Client Application Server Fee ($80 per month for Sponsored Users) for server hardware that enables trading permit holders to connect to CBOE’s two Application Protocol Interfaces: CMI (CBOE Market Interface) and Financial Information Exchange (FIX). The Exchange proposes to increase this fee to $80 per month ($160 per month for Sponsored Users). Hybrid Fees: The Exchange provides certain hardware (e.g., servers) and related maintenance services to third party vendors that provide trading permit holders with quoting software used by trading permit holders to trade on the Hybrid Trading System. The Exchange charges trading permit holders a Quoting Infrastructure User Fee of $150 per month to help the Exchange recover its costs in facilitating trading permit holder’s receipt of these third party services. The Exchange proposes to increase this fee to $200 per month to help offset increased costs. TickerXpress (‘‘TX’’) is an Exchange service that supplies market data to Exchange market-makers trading on the Hybrid Trading System. Currently, the Exchange charges trading permit holders receiving ‘‘enhanced’’ TX market data a fee of $300 per month. Enhanced PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 2937 market data is data that has been processed so that it can be used by market-makers utilizing quoting software. The Exchange proposes to increase this fee to $350 per month to help offset the Exchange’s increased costs in providing this data to Exchange trading permit holders.20 Miscellaneous Changes: The Exchange proposes the following housekeeping changes to its Fees Schedule. The Exchange proposes to amend footnotes 8 and 9 of the Fees Schedule to delete references to the effective dates of two fee waiver programs described therein that are still ongoing. The Exchange proposes to amend Section 1 and footnote 8 of the Fees Schedule to change references to ‘‘SPDR’’ to ‘‘SPY’’. The reason for this change is to clarify that Section 1 and footnote 8 apply to options on the SPDR S&P 500 ETF Trust (ticker symbol SPY) and not to other options listed on the Exchange that include ‘‘SPDR’’ in their name (e.g., options on SPDR Gold Shares). The Exchange proposes to amend Section 15 of the Fees Schedule to delete a sentence relating to the Market Data Infrastructure Fee that is now outdated. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (‘‘Act’’),21 in general, and furthers the objectives of Section 6(b)(4) 22 of the Act in particular, in that it is designed to 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 the proposed Multiply-Listed Options Fee Cap and CBOE Proprietary Products Sliding Scale for CTPH Proprietary orders and AIM Execution Fee would allow the Exchange to remain competitive with similar programs at other exchanges. The Exchange believes the other proposed fee changes are equitable and reasonable in that in general they are intended to help the Exchange recover its costs of providing various products and services to trading permit holders and other persons using its facilities. 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 20 The Exchange also proposes to amend Section 17 of the Fees Schedule to delete a reference to an effective date of April 1, 2007. 21 15 U.S.C. 78f(b). 22 15 U.S.C. 78f(b)(4). E:\FR\FM\18JAN1.SGM 18JAN1 2938 Federal Register / Vol. 76, No. 11 / Tuesday, January 18, 2011 / Notices necessary or appropriate in furtherance of purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to 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 23 and subparagraph (f)(2) of Rule 19b–4 24 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. 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: mstockstill on DSKH9S0YB1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CBOE–2010–116 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–2010–116. This file number should be included on the subject line if e-mail 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 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the CBOE. 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–2010–116 and should be submitted on or before February 8, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–919 Filed 1–14–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63694; File No. SR–BX– 2011–001] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the BOX Trading Rules Regarding Voluntary Withdrawal From Trading Options Classes in Which They Are Appointed January 11, 2011. 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 7, 2011, NASDAQ OMX BX, Inc. (the ‘‘Exchange’’) 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 prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule from interested persons. 25 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 23 15 U.S.C. 78s(b)(3)(A). 24 17 CFR 240.19b–4(f)(2). VerDate Mar<15>2010 16:24 Jan 14, 2011 1 15 Jkt 223001 PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Chapter VI, Section 4 (Appointment of Market Makers) of the Rules of the Boston Options Exchange Group, LLC (‘‘BOX’’) to permit the Exchange and Market Makers greater flexibility in handling Market Makers’ voluntary withdrawal from trading options classes in which they are appointed. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission’s Public Reference Room and also on the Exchange’s Internet Web site at http:// nasdaqomxbx.cchwallstreet.com/ NASDAQOMXBX/Filings/. 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 self-regulatory organization 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 self-regulatory organization 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 Chapter VI, Section 4(f) of the BOX Rules (Appointment of Market Makers) to eliminate the requirement that a Market Maker provide three business days’ notice if they wish to withdraw from trading an options class in which they are appointed. The proposed rule change will provide that Boston Options Exchange Regulation, LLC (‘‘BOXR’’) (i) may determine an appropriate minimum amount of prior notice required for Market Makers to withdraw from trading; and (ii) has the authority to place other conditions on Market Maker withdrawal as may be appropriate in the interests of maintaining fair and orderly markets. Chapter VI, Section 4(f) of the BOX Trading Rules currently provides that a Market Maker may voluntarily withdraw from trading an options class that is within their appointment by providing BOX with three business days’ written notice of such withdrawal. The proposed rule change will eliminate E:\FR\FM\18JAN1.SGM 18JAN1

Agencies

[Federal Register Volume 76, Number 11 (Tuesday, January 18, 2011)]
[Notices]
[Pages 2934-2938]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-919]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63701; File No. SR-CBOE-2010-116]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Related to Exchange Fees for Fiscal Year 2011

January 11, 2011.
    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 December 29, 2010, the Chicago Board Options Exchange, 
Incorporated (``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 CBOE. The Exchange has designated the proposal as one establishing 
or changing a due, fee, or other charge imposed by CBOE under Section 
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) thereunder.\4\ 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).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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

    Chicago Board Options Exchange, Incorporated (``CBOE'' or 
``Exchange'') proposes to amend its Fees Schedule to make various 
changes for Fiscal Year 2011. The text of the proposed rule change is 
available on the Exchange's Web site (http://www.cboe.org/legal), at 
the Exchange's Office of the Secretary and at the Commission.

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

    In its filing with the Commission, CBOE 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. CBOE 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to amend the CBOE Fees 
Schedule to make various fee changes. The proposed changes are the 
product of the Exchange's annual budget review. The fee changes were 
approved by the Exchange's Board of Directors pursuant to CBOE Rule 
2.22 and will take effect on January 3, 2011. The Exchange proposes to 
amend the following fees:
    Clearing Trading Permit Holder Proprietary Sliding Scale: The 
Clearing Trading Permit Holder Proprietary Sliding Scale reduces a 
Clearing Trading Permit Holder's (``CTPH'') per contract transaction 
fee based on the number of contracts the CTPH trades in a month. The 
Exchange proposes to replace the existing Clearing Trading Permit 
Holder Proprietary Sliding Scale with: (1) A Multiply-Listed Options 
Fee Cap for CTPH Proprietary Orders, and (2) a CBOE Proprietary 
Products Sliding Scale for CTPH Proprietary Orders, as further 
described below.
    Multiply-Listed Options Fee Cap: The Exchange proposes to cap CTPH 
Proprietary transaction fees in all products except options on OEX, 
XEO, SPX, and volatility indexes,\5\ in the aggregate, at $75,000 per 
month per CTPH, except that any AIM Execution Fees incurred by a CTPH 
would not count towards the cap (AIM Execution Fees are described 
below). A CTPH would continue to pay any AIM Execution Fees after 
reaching the cap in a month. AIM Execution Fees would be excluded from 
the proposed fee cap because the AIM Execution Fee is a discounted fee 
($.05 per contract) and therefore the Exchange believes those fees 
should not count towards the cap. The proposed fee cap is similar to a 
``Firm Related Equity Option Cap'' in place at NASDAQ OMX PHLX, LLC.\6\ 
The Exchange believes the proposed fee cap would create an incentive 
for CTPHs to continue to send order flow to the Exchange.
---------------------------------------------------------------------------

    \5\ OEX is the symbol for options on the S&P 100 index, XEO is 
the symbol for European-Style options on the S&P 100 index and SPX 
is the symbol for options on the S&P 500 index. Volatility indexes 
include options on the CBOE Volatility Index (VIX).
    \6\ NASDAQ OMX PHLX Firms are subject to a maximum fee of 
$75,000. See NASDAQ OMX PHLX, LLC Fee Schedule, Section II (Equity 
Options Fees).
---------------------------------------------------------------------------

    CBOE Proprietary Products Sliding Scale: The Exchange proposes to 
adopt a CBOE Proprietary Products Sliding Scale that would reduce the 
standard CTPH Proprietary transaction fee in OEX, XEO, SPX, and 
volatility indexes (``CBOE Proprietary Products'') \7\ provided a CTPH 
reaches certain volume thresholds in multiply-listed options on the 
Exchange in a month as described below.
---------------------------------------------------------------------------

    \7\ The CTPH Proprietary transaction fee in CBOE Proprietary 
Products (as defined) is currently $.20 per contract and is proposed 
to be changed to $.25 per contract (as described below).
---------------------------------------------------------------------------

    Specifically, the standard CTPH Proprietary transaction fee in CBOE 
Proprietary Products would be reduced to the fees shown in the 
following table for CTPHs that execute at least 375,000 contracts but 
less than 1,500,000 contracts in multiply-listed options on the 
Exchange in a month, excluding contracts executed in AIM that incurred 
the AIM Execution Fee (the AIM Execution Fee is described below).\8\
---------------------------------------------------------------------------

    \8\ Contracts executed in AIM that incurred the AIM Execution 
Fee would be excluded from the sliding scale for the same reason 
that AIM Execution Fees would not apply to the Multiply-Listed 
Options Fee Cap; the Exchange believes it is appropriate to exclude 
such contracts from the proposed sliding scale because such 
contracts have already received a discounted transaction fee ($.05 
per contract).

------------------------------------------------------------------------
                                   CBOE proprietary
             Tiers               product contracts per        Rate
                                         month
------------------------------------------------------------------------
First.........................  First 750,000.........  18 cents

[[Page 2935]]

 
Second........................  Next 250,000..........  5 cents
Third.........................  Above 1,000,000.......  2 cents
------------------------------------------------------------------------

    If a CTPH reaches the aforementioned volume thresholds in multiply-
listed options on the Exchange in a month, under the proposed sliding 
scale the first 750,000 contracts traded by the CTPH in a month in CBOE 
Proprietary Products would be assessed at $.18 per contract. The next 
250,000 contracts traded in a month in CBOE Proprietary Products (up to 
1,000,000 total contracts traded) would be assessed at $.05 per 
contract. All contracts above 1,000,000 contracts traded in a month in 
CBOE Proprietary Products would be assessed at $.02 per contract.
    The standard CTPH Proprietary transaction fee in CBOE Proprietary 
Products would be reduced to the fees shown in the following table for 
CTPHs that execute 1,500,000 or more contracts in multiply-listed 
options on the Exchange in a month, excluding contracts executed in AIM 
that incurred the AIM Execution Fee:

------------------------------------------------------------------------
                                   CBOE proprietary
             Tiers               product contracts per        Rate
                                         month
------------------------------------------------------------------------
First.........................  First 750,000.........  15 cents
Second........................  Above 750,000.........  1 cent
------------------------------------------------------------------------

    If a CTPH reaches the 1,500,000 contract threshold in multiply-
listed options on the Exchange in a month, under the proposed sliding 
scale the first 750,000 contracts traded by the CTPH in a month in CBOE 
Proprietary Products would be assessed at $.15 per contract. All 
contracts above 750,000 contracts traded in a month in CBOE Proprietary 
Products would be assessed at $.01 per contract.
    A CTPH that executes less than 375,000 contracts in multiply-listed 
options on the Exchange in a month would not be eligible for the CBOE 
Proprietary Products Sliding Scale and would pay the standard CTPH 
Proprietary transaction fee for CBOE Proprietary Products. Due to the 
Exchange's obligation to pay license fees on the CBOE Proprietary 
Products, Surcharge Fees \9\ applicable to the CBOE Proprietary 
Products would also continue to apply in addition to the standard CTPH 
Proprietary transaction fee and the rates on the sliding scale.
---------------------------------------------------------------------------

    \9\ See CBOE Fees Schedule, Section 1 Index Options, and 
Footnote 14.
---------------------------------------------------------------------------

    As is the case with the existing CTPH Proprietary Sliding Scale, 
the proposed Multiply-Listed Options Fee Cap and CBOE Proprietary 
Products Sliding Scale would apply to Clearing Trading Permit Holder 
proprietary orders (``F'' origin code), except for orders of joint 
back-office (``JBO'') participants. The Exchange would also aggregate 
the fees and contracts of a Clearing Trading Permit Holder and its 
affiliates in the same manner as it does under the existing CTPH 
Proprietary Sliding Scale.\10\
---------------------------------------------------------------------------

    \10\ See CBOE Fees Schedule, Footnote 11. Each CTPH would be 
responsible for notifying the Exchange's TPH Department of all of 
its affiliations so that fees and contracts of the CTPH and its 
affiliates may be aggregated for purposes of the fee cap and sliding 
scale. The Exchange would aggregate the fees and trading activity of 
separate CTPHs for the purposes of the fee cap and sliding scale if 
there is at least 75% common ownership between the CTPHs as 
reflected on each CTPH's Form BD, Schedule A. A Clearing Trading 
Permit Holder's fees and contracts executed pursuant to a CMTA 
agreement (i.e., executed by another clearing firm and then 
transferred to the Clearing Trading Permit Holder's account at the 
OCC) would be aggregated with the Clearing Trading Permit Holder's 
non-CMTA fees and contracts for purposes of the fee cap and sliding 
scale.
---------------------------------------------------------------------------

    Clearing Trading Permit Holder Proprietary Transaction Fee: The 
Exchange currently charges $.20 per contract for Clearing Trading 
Permit Holder Proprietary transactions in index options (including ETF, 
ETN and HOLDRs options). The Exchange proposes to increase the Clearing 
Trading Permit Holder Proprietary transaction fee to $.25 per contract 
for OEX, XEO, SPX and volatility indexes. This rate would be subject to 
the proposed CBOE Proprietary Products Sliding Scale for CTPH 
Proprietary orders.
    AIM Execution Fee: The Exchange currently charges an AIM Execution 
Fee of $.20 per contract to certain broker-dealer orders executed in 
the Automated Improvement Mechanism (``AIM'') \11\ that were initially 
entered into AIM as the contra party to an Agency Order. \12\
---------------------------------------------------------------------------

    \11\ AIM is an electronic auction system that exposes certain 
orders electronically in an auction to provide such orders with the 
opportunity to receive an execution at an improved price. AIM is 
governed by CBOE Rule 6.74A.
    \12\ See Securities Exchange Act Release No. 59379 (February 10, 
2009), 74 FR 7713 (February 19, 2009). The existing AIM Execution 
Fee applies to broker-dealer orders (orders with ``B'' origin code), 
non-Trading Permit Holder market-maker orders (orders with ``N'' 
origin code), orders from specialists in the underlying security 
(orders with ``Y'' origin code) and certain orders with ``F'' origin 
code (orders from OCC members that are not CBOE Trading Permit 
Holders). See CBOE Fees Schedule, Footnote 16.
---------------------------------------------------------------------------

    The Exchange proposes to amend the AIM Execution Fee to (i) reduce 
the fee from $.20 per contract to $.05 per contract, and (ii) apply the 
fee to all orders (all origin codes) in all products, except OEX, XEO, 
SPX and volatility indexes, executed in AIM that were initially entered 
into AIM as the contra party to an Agency Order. The proposed fee would 
apply to such executions instead of the applicable standard transaction 
fee except if the applicable standard transaction fee is lower than 
$.05 per contract, in which case the applicable standard transaction 
fee would apply.\13\ Applicable standard transaction fees would apply 
to AIM executions in OEX, XEO, SPX and volatility indexes. The proposed 
AIM Execution Fee is similar to the fee charged by NASDAQ OMX PHLX to 
an ``Initiating Order'' that is contra-side to a ``PIXL Order'' in the 
PIXL Auction.\14\
---------------------------------------------------------------------------

    \13\ For example, public customer orders (``C'' origin code) pay 
no transaction fee in equity options and QQQQ options and thus such 
orders would pay no transaction fee (would not pay the AIM Execution 
Fee) for such AIM transactions. Transaction fees for certain public 
customer orders in certain ETF, ETN and HOLDRs options are currently 
waived and thus such orders would pay no transaction fee (would not 
pay the AIM Execution Fee) for such AIM transactions. See CBOE Fees 
Schedule, Footnotes 8 and 9.
    \14\ NASDAQ OMX PHLX assesses a fee of $.05 per contract to an 
Initiating Order when the Initiating Order executes against a PIXL 
Order in the PIXL Auction. See NASDAQ OMX PHLX, LLC Fee Schedule, 
Section IV, PIXL Pricing.
---------------------------------------------------------------------------

    Floor Brokerage Fees: The Exchange currently charges floor brokers 
executing orders in volatility index options $.02 per contract and $.01 
per contract for crossed orders. The Exchange proposes to increase 
these

[[Page 2936]]

fees to $.03 per contract and $.015 per contract for crossed 
orders.\15\
---------------------------------------------------------------------------

    \15\ The Exchange proposes to delete DXL options (options based 
on 1/10th the value of the Dow Jones Industrial Average) from 
Section 3 of the Fees Schedule and delete all other references to 
DXL from the Fees Schedule because DXL options are no longer listed 
on CBOE.
---------------------------------------------------------------------------

    PAR Official Fees: The Exchange proposes to establish PAR Official 
Fees.\16\ These fees would apply to all orders executed by a PAR 
Official, except for customer orders (``C'' origin code) that are not 
directly routed to the trading floor (an order that is directly routed 
to the trading floor is directed to a PAR Official for manual handling 
by use of a field on the order ticket). Such orders would be charged 
$.02 per contract and, like floor brokerage fees, a discounted rate of 
$.01 per contract would apply for crossed orders. The purpose of the 
proposed fee is to help offset the Exchange's costs of providing PAR 
Official services (e.g., salaries, etc). As noted above, the Exchange 
would not charge the fee to public customer orders except for any 
customer order that is directly routed to the trading floor. The 
Exchange believes it is reasonable to charge the fee to a customer that 
specifically requests order handling by a PAR Official. PAR Official 
Fees would be charged to the order originating firm unless the 
originating firm cannot be identified, in which case the fees would be 
charged to the executing firm on the trade record.
---------------------------------------------------------------------------

    \16\ A PAR Official is an Exchange employee or independent 
contractor whom the Exchange may designate as being responsible for 
(i) operating the PAR workstation in a Designated Primary Market-
Maker (``DPM'') trading crowd with respect to the classes of options 
assigned to him/her; (ii) when applicable, maintaining the book with 
respect to the classes of options assigned to him/her; and (iii) 
effecting proper executions of orders placed with him/her. The PAR 
Official may not be affiliated with any Trading Permit Holder that 
is approved to act as a Market-Maker. See CBOE Rule 7.12.
---------------------------------------------------------------------------

    Volatility Index Surcharge Fee: The Exchange currently charges a 
surcharge fee of $.08 per contract on all non-public customer \17\ 
transactions in volatility index options. The Exchange proposes to 
increase the surcharge fee for volatility index options to $.10 per 
contract. The surcharge fee is assessed to help the Exchange recoup 
license fees the Exchange pays to index licensors for the right to list 
volatility index options for trading and is similar to surcharge fees 
charged by other exchanges.
---------------------------------------------------------------------------

    \17\ The Surcharge Fee applies to all non-public customer 
transactions (i.e. CBOE and non-Trading Permit Holder market-maker, 
Clearing Trading Permit Holder and broker-dealer), including 
voluntary professionals and professionals. See CBOE Fees Schedule, 
Section 1 (Index Options) and Footnote 14.
---------------------------------------------------------------------------

    Linkage Fee: Currently, when the Exchange receives a customer order 
that has an original size of 1,000 or more contracts that is routed, in 
whole or in part, to one or more exchanges in connection with the 
Options Order Protection and Locked/Crossed Market Plan, the Exchange 
charges $.35 per contract executed on another exchange in addition to 
the customary CBOE execution charges.\18\ The Exchange proposes to 
reduce the qualifying customer order size from 1,000 or more contracts 
to 500 or more contracts. The purpose of this Linkage Fee is to pass 
through some of the transaction costs incurred by the Exchange 
associated with the execution of customer orders at away markets. The 
Exchange believes it is appropriate to pass through some of these costs 
to these larger non-broker-dealer customer orders that are more akin to 
broker-dealer orders.
---------------------------------------------------------------------------

    \18\ See CBOE Fees Schedule, Section 20. See, also, Securities 
Exchange Act Release No. 62793 (August 30, 2010), 75 FR 54408 
(September 7, 2010).
---------------------------------------------------------------------------

    Facility Fees: The Exchange proposes to amend the following 
facility fees in Section 8 of the Fees Schedule:
    Booth Fees: The Exchange currently charges $185 per month for use 
of a perimeter booth on the trading floor. The Exchange proposes to 
increase this fee to $195 per month. The fee for an OEX booth is 
proposed to be increased from $330 per month to $550 per month, 
equaling the rate charged for DJX and MNX booths. The fee for VIX 
booths is also proposed to be increased to $550 per month due to high 
demand for booth space for VIX options, which recently moved into a 
larger pit on the trading floor. The $550 per month fee for booths by 
the OEX book is proposed to be eliminated because there are no longer 
such booths due to the relocation of the OEX pit.\19\
---------------------------------------------------------------------------

    \19\ The Exchange also proposes a clarifying change to Section 
8(b) of the Fees Schedule. The Exchange proposes to change 
``Arbitrage Phone Positions'' to ``SPX Arbitrage Phone Positions'' 
to clarify that this fee applies to booths that are adjacent to or 
near the SPX pit.
---------------------------------------------------------------------------

    Forms and Form Storage Fees: The Exchange currently charges a fee 
of $10 per month for cabinet space at the Exchange used by trading 
permit holders to store paper forms such as trade order forms. The 
Exchange proposes to increase this fee to $11 per month. The Exchange 
has provided trading permit holders with boxes of 5-part and 2-part 
paper trade order forms for many years at no charge. The Exchange 
proposes to charge trading permit holders $50 per box to recoup the 
cost of making these forms available to trading permit holders.
    Access Badge Fees: The Exchange proposes to increase certain fees 
for access badges. These fees have not changed in approximately ten 
years. The monthly fees for access badges would increase from $110 to 
$120 for Floor Managers and from $55 to $60 for clerks. In addition, 
the Exchange proposes to amend the following charges per occurrence: 
(1) The fee for issuance of a badge would increase from $15 to $16.50, 
(2) the fee to replace a badge would increase from $15 to $16.50, (3) 
the fee for failure to return an access badge would increase from $75 
to $82.50, (4) the fee for a temporary badge for a non-trading permit 
holder would increase from $10 to $11, and (5) the fee for a temporary 
badge for a trading permit holder would increase from $10 to $11 (the 
first three badges per year are free of charge).
    Coat Room Services Fee: The Exchange charges trading permit holders 
$15 per month for coat room services. The Exchange proposes to increase 
the fee to $25 per month to help the Exchange recoup increased costs 
for making this service available to trading permit holders.
    Telecommunication Fees: The Exchange proposes to increase certain 
telecommunication fees. These fees have not changed in over seven 
years. The Exchange proposes the following changes to Section 8(F) of 
the Fees Schedule:
    Monthly fees:
    a. Exchangefone Maintenance--Increase from $52.00 to $57.00.
    b. Single Line Maintenance--Increase from $10.50 t0 $11.50.
    c. PhoneMail with Outcall & Pager--Increase from $17.00 to $18.75.
    d. Intra-Floor Lines--Increase from $52.50 to $57.75.
    e. Voice Circuits--Increase from $14.40 to $16.00.
    f. Data Circuits at Local Carrier (entrance)--Increase from $14.40 
to $16.00.
    g. Lines Between Local Carrier and Communications Center--Increase 
from $11.60 to $12.75.
    h. Lines Direct From Local Carrier to Trading Floor--Increase from 
$11.60 to $12.75.
    i. Lines Between Communications Center and Trading Floor--Increase 
from $11.60 to $12.75.
    Fees for installation, relocation and removal of lines:
    j. Data Circuits at In-House Frame:
    i. Lines Between Local Carrier and Communications Center--The 
installation fee would increase from $200 to $550 and would include the 
removal fee. The existing removal fee of $100 would be eliminated.
    ii. Lines Direct From Local Carrier to Trading Floor--The 
installation fee would increase from $350 to $725 and

[[Page 2937]]

would include the removal fee. The existing removal fee of $200 would 
be eliminated. The relocation fee of $425 would be increased to $625.
    iii. Lines Between Communications Center and Trading Floor--The 
installation fee would increase from $350 to $725 and would include the 
removal fee. The existing removal fee of $200 would be eliminated. The 
relocation fee of $425 would be increased to $625.
    iv. [sic]
    The Exchange currently charges a $350 installation fee for 
electrician services connected to the installation of a tether on the 
trading floor for a market-maker hand held terminal. The Exchange 
proposes to increase this fee to $450. The Exchange proposes to charge 
$900 for installation of a tether in index pits due to the higher costs 
associated with installing tethers in those larger pits. The fee for 
relocation of a tether would remain unchanged at $200 regardless of 
location.
    Trading Floor Terminal Rental Fees: The Exchange proposes to 
increase fees for rental of trading floor terminals to help the 
Exchange offset increased costs. The Exchange currently charges $200 
per month per login ID for use of a Floor Broker Workstation (FBW). The 
FBW is a system for electronically entering and managing orders on the 
Exchange floor. The Exchange proposes to increase this fee to $225 per 
month per login ID.
    The Exchange charges trading permit holders $35 per month for 
Satellite TV on the trading floor. The Exchange proposes to increase 
this fee to $50 per month.
    The Exchange charges $100 per month for use of a PAR Workstation. 
PAR Workstations are touch screen terminals designed to allow 
electronic representation of orders routed to it. The Exchange proposes 
to increase this fee to $125 per month.
    Co-Location Fees: The Exchange provides cabinet space in CBOE's 
building for trading permit holders to place their network and quoting 
engine hardware, to help trading permit holders meet their need for 
high performance processing and low latency. Trading permit holders 
also receive power, cooling, security and assistance with installation 
and connection of the equipment to the Exchange's servers. For these 
services, the Exchange currently charges trading permit holders a co-
location fee of $10 per ``U'' (1.75 inches) of shelf space and $20 per 
U for sponsored users, in increments of 4 U (7 inches). To bring its 
fees more in line with the current market for co-location services, the 
Exchange proposes to increase these fees to $20 per U and $40 per U for 
Sponsored Users.
    DPM's and Firm Designated Examining Authority Fee: The Exchange 
charges DPMs and firms for which the Exchange is the Designated 
Examining Authority (``DEA''), a fee of $.40 per $1,000 of gross 
revenue as reported on quarterly FOCUS reports filed by such trading 
permit holders. The fee is subject to a minimum fee of $1,000 per month 
for Clearing Trading Permit Holders and $275 for non-Clearing Trading 
Permit Holders. The Exchange proposes to increase this fee, which has 
not changed in many years, from $.40 per $1,000 of gross revenue to 
$.50 per $1,000 of gross revenue.
    CBOEdirect Connectivity Charges: The Exchange proposes to increase 
three monthly fees related to connectivity to CBOEdirect to bring the 
fees more in line with the current market for similar services. The 
Exchange charges trading permit holders a $40 per month Network Access 
Port Fee ($80 per month for Sponsored Users) and a $40 per month FIX 
Port Fee ($80 per month for Sponsored Users) for network hardware the 
Exchange provides to trading permit holders for access to the 
Exchange's network. The Exchange proposes to increase each fee to $80 
per month ($160 per month for Sponsored Users). The Exchange charges 
trading permit holders a $40 per month CMI Client Application Server 
Fee ($80 per month for Sponsored Users) for server hardware that 
enables trading permit holders to connect to CBOE's two Application 
Protocol Interfaces: CMI (CBOE Market Interface) and Financial 
Information Exchange (FIX). The Exchange proposes to increase this fee 
to $80 per month ($160 per month for Sponsored Users).
    Hybrid Fees: The Exchange provides certain hardware (e.g., servers) 
and related maintenance services to third party vendors that provide 
trading permit holders with quoting software used by trading permit 
holders to trade on the Hybrid Trading System. The Exchange charges 
trading permit holders a Quoting Infrastructure User Fee of $150 per 
month to help the Exchange recover its costs in facilitating trading 
permit holder's receipt of these third party services. The Exchange 
proposes to increase this fee to $200 per month to help offset 
increased costs.
    TickerXpress (``TX'') is an Exchange service that supplies market 
data to Exchange market-makers trading on the Hybrid Trading System. 
Currently, the Exchange charges trading permit holders receiving 
``enhanced'' TX market data a fee of $300 per month. Enhanced market 
data is data that has been processed so that it can be used by market-
makers utilizing quoting software. The Exchange proposes to increase 
this fee to $350 per month to help offset the Exchange's increased 
costs in providing this data to Exchange trading permit holders.\20\
---------------------------------------------------------------------------

    \20\ The Exchange also proposes to amend Section 17 of the Fees 
Schedule to delete a reference to an effective date of April 1, 
2007.
---------------------------------------------------------------------------

    Miscellaneous Changes: The Exchange proposes the following 
housekeeping changes to its Fees Schedule. The Exchange proposes to 
amend footnotes 8 and 9 of the Fees Schedule to delete references to 
the effective dates of two fee waiver programs described therein that 
are still ongoing. The Exchange proposes to amend Section 1 and 
footnote 8 of the Fees Schedule to change references to ``SPDR'' to 
``SPY''. The reason for this change is to clarify that Section 1 and 
footnote 8 apply to options on the SPDR S&P 500 ETF Trust (ticker 
symbol SPY) and not to other options listed on the Exchange that 
include ``SPDR'' in their name (e.g., options on SPDR Gold Shares). The 
Exchange proposes to amend Section 15 of the Fees Schedule to delete a 
sentence relating to the Market Data Infrastructure Fee that is now 
outdated.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Securities Exchange Act of 1934 (``Act''),\21\ in 
general, and furthers the objectives of Section 6(b)(4) \22\ of the Act 
in particular, in that it is designed to 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 the proposed Multiply-Listed Options Fee Cap and CBOE 
Proprietary Products Sliding Scale for CTPH Proprietary orders and AIM 
Execution Fee would allow the Exchange to remain competitive with 
similar programs at other exchanges. The Exchange believes the other 
proposed fee changes are equitable and reasonable in that in general 
they are intended to help the Exchange recover its costs of providing 
various products and services to trading permit holders and other 
persons using its facilities.
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    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(4).
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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

[[Page 2938]]

necessary or appropriate in furtherance of purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to 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 \23\ and subparagraph (f)(2) of Rule 19b-4 \24\ 
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.
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    \23\ 15 U.S.C. 78s(b)(3)(A).
    \24\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2010-116 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-2010-116. This file 
number should be included on the subject line if e-mail 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 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the CBOE. 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-2010-116 and should be 
submitted on or before February 8, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-919 Filed 1-14-11; 8:45 am]
BILLING CODE 8011-01-P