Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend CBOE Stock Exchange Transaction Fees, 62877-62879 [2011-26137]
Download as PDF
<![CDATA[
Federal Register / Vol. 76, No. 196 / Tuesday, October 11, 2011 / Notices
by the dealer for a particular transaction
is identical to the par amount for a
particular transaction reported by the
broker. In a Net Position Match Mode,
trade input that matches in all other
respects will be compared only if the
aggregate par amount for one or more
transactions in eligible securities
reported to have been sold or purchased
by the dealer equals the aggregate par
amount for one or more transactions
reported by the broker. Currently, no
participants have elected to have their
transactions governed in Exact Match
Mode. FICC believes there is no need to
provide participants with a choice of
match mode because MBSD’s system
already attempts to find an exact match
for trade input and, only if an exact
match is not found, will the system
revert to Net Position Match Mode. This
change will require the deletion of
subpart (a) of Article II, Rule 3, Section
4 and conforming changes to the
definitions (in Article I) and in Article
II, Rule 3, Sections 3 and 4 to reflect that
Net Position Match Mode will be the
only available match mode.
Given that FICC believes these rules
have no utility for MBSD’s participants,
MBSD proposed to eliminate these
rules. FICC believes elimination of these
rules will also promote efficiency.
MBSD is currently undertaking a rewrite
of its internal software applications and
operating systems to promote efficiency
and streamline its operations. Approval
of the elimination of these rules will
allow MBSD to avoid writing
unnecessary coding during the rewrite
process.
mstockstill on DSK4VPTVN1PROD with NOTICES
III. Discussion
Section 17A(b)(3)(F) of the Act 5
requires, among other things, that the
rules of a clearing agency be designed to
remove impediments to and perfect the
mechanism of a national system for the
prompt and accurate clearance and
settlement of securities transactions.
The Commission believes that because
the proposed rule change removes
outdated rules that no longer have
utility for participants and conserves
resources by avoiding the writing of
unnecessary code during MBSD’s
software rewrite process, it is consistent
with the requirements of Section
17A(b)(3)(F) of the Act.
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposal is
consistent with the requirements of the
Act and in particular with the
requirements of Section 17A of the Act 6
5 15
6 15
U.S.C. 78q–1(b)(3)(F).
U.S.C. 78q–1.
VerDate Mar<15>2010
20:47 Oct 07, 2011
Jkt 226001
and the rules and regulations
thereunder.
It Is Therefore Ordered, pursuant to
Section 19(b)(2) of the Act,7 that the
proposed rule change (File No. SR–
FICC–2011–06) be, and hereby is,
approved.8
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.9
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–26136 Filed 10–7–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65480; File No. SR–CBOE–
2011–091]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend CBOE Stock
Exchange Transaction Fees
October 4, 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
September 30 2011, the Chicago Board
Options Exchange, Incorporated
(‘‘Exchange’’ or ‘‘CBOE’’) 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 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
CBOE Stock Exchange (‘‘CBSX’’)
transaction fees. The text of the
proposed rule change is available on the
Exchange’s Web site (https://www.cboe.
org/legal), at the Exchange’s Office of
the Secretary, and at the Commission.
7 15
U.S.C. 78s(b)(2).
approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
9 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
8 In
PO 00000
Frm 00123
Fmt 4703
Sfmt 4703
62877
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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
CBSX proposes to modify its fees for
transactions in securities priced $1 or
greater. The Exchange proposes to adopt
a Maker fee of $0.0017 per share and a
Taker rebate of $0.0015 per share. For a
Maker that adds more than two million
shares of liquidity to CBSX in a single
day, the Exchange proposes a fee of
$0.0015 per share. This lower rate will
be calculated on a daily basis. Market
participants who share a trading
acronym or MPID may aggregate their
trading activity for purposes of this rate.
Qualification for this rate will require
that a market participant appropriately
indicate his trading acronym and/or
MPID in the appropriate field on the
order. CBSX will promulgate an
information circular to direct market
participants on how to accurately
qualify and aggregate their trading
activity in order to receive this reduced
rate. CBSX also proposes to change the
language on the Fees Schedule
describing the execution type for
transactions in securities priced below
$1 from ‘‘Single-sided execution’’ to
‘‘Maker or Taker’’ in order to achieve
consistency on the Fee Schedule and
make clear that such fee applies to
either the Maker or the Taker in
transactions in securities priced below
$1.
The proposed fee change for
transactions in securities priced at $1 or
greater is intended to encourage
increased trading activity and liquidity
on CBSX, which would benefit all
market participants. By encouraging
market participants to hit a threshold of
executing at least two million shares a
day (at which point such market
participants would receive the lower
Maker fee for all shares executed by the
market participant that day), the
Exchange incentivizes market
E:\FR\FM\11OCN1.SGM
11OCN1
62878
Federal Register / Vol. 76, No. 196 / Tuesday, October 11, 2011 / Notices
participants who may be able to meet
that threshold to add more volume and
liquidity to the CBSX marketplace. This
increased volume and liquidity would
benefit all CBSX market participants,
including those who do not trade at that
level, by providing them with more
opportunities for execution. If the lower
rate did not exist for market participants
who execute at least two million shares
a day, even those market participants
who do not hit that threshold will not
receive the benefit of this added volume
and liquidity. The threshold is applied
on a daily basis in order to encourage
market participants to add volume and
liquidity on a consistent basis. The
Exchange seeks market participants who
will be active on CBSX on a regular
basis, as the liquidity that such largervolume participants provide will be
attractive to all investors and benefit all
market participants.
The proposed rule change is to take
effect October 1, 2011.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the Act 3
in general, and furthers the objectives of
Section 6(b)(4) 4 of the Act in particular,
in that it is designed to provide for the
equitable allocation of reasonable dues,
fees, and other charges among CBOE
Trading Permit Holders and other
persons using Exchange facilities. The
proposed Maker fees of $0.0017 per
share or $0.0015 per share for a Maker
that adds more than two million shares
of liquidity in a single day and Taker
Rebate of $0.0015 are reasonable
because they are within the range of fees
assessed for similar transactions in
securities priced $1 or greater on other
exchanges.5 The fees are equitable and
not unfairly discriminatory because they
will apply to all market participants,
and all market participants will have the
opportunity to qualify for the reduced
rate for a Maker that adds more than two
million shares of liquidity in a single
day.
Further, the reduced fee for market
participants that execute at least two
million shares a day is equitable and not
3 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
5 See NASDAQ OMX BX, Inc. (‘‘BX’’) Fee
Schedule regarding trading of shares executed at or
above $1.00. The BX rebate for removing liquidity
is $0.0005 per share, or $0.0014 per share for MPIDs
removing greater than 3.5 million shares per day or
adding greater than 25,000 shares per day. The
proposed CBSX rebate is $0.0015 per share. The BX
fee for adding liquidity is $0.0018 per share, or
$0.0015 for MPIDs meeting BX’s Qualified Liquidity
Provider Program criteria. The proposed CBSX fee
is $0.0017 per share, or $0.0015 per share for a
Maker that adds more than two million shares of
liquidity in a single day.
mstockstill on DSK4VPTVN1PROD with NOTICES
4 15
VerDate Mar<15>2010
20:47 Oct 07, 2011
Jkt 226001
unfairly discriminatory because it will
encourage market participants to trade
on CBSX and bring greater liquidity to
CBSX, which will benefit all market
participants. By encouraging market
participants to hit a threshold of
executing at least two million shares a
day (at which point such market
participants would receive the lower
Maker fee for all shares executed by the
market participant that day), the
Exchange incentivizes market
participants who may be able to meet
that threshold to add more volume and
liquidity to the CBSX marketplace. This
increased volume and liquidity would
benefit all CBSX market participants,
including those who do not trade at that
level, by providing them with more
opportunities for execution. Orders that
provide liquidity increase the likelihood
that members seeking to access liquidity
will have their orders filled. If the lower
rate did not exist for market participants
who execute at least two million shares
a day, even those market participants
who do not hit that threshold will not
receive the benefit of this added volume
and liquidity. Applying the two million
share threshold on a daily basis will
encourage these larger-volume market
participants to add volume and liquidity
on a consistent basis, and the resulting
consistently-available executions will
benefit all market participants. As such,
the Exchange believes that it is
reasonable and equitable to use pricing
incentives, such as a lower fee for
creating large amounts of liquidity, to
encourage market participants to
increase their participation in the
market.
Finally, changing the language on the
Fees Schedule describing the execution
type for transactions in securities priced
below $1 from ‘‘Single-sided execution’’
to ‘‘Maker or Taker’’ furthers the
objectives of Section 6(b)(5) 6 of the Act
in particular in that the change is
designed to 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 by achieving
consistency in the language of the Fees
Schedule, thereby eliminating any
potential confusion.
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 not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
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 proposed rule change is
designated by the Exchange as
establishing or changing a due, fee, or
other charge, thereby qualifying for
effectiveness on filing pursuant to
Section 19(b)(3)(A) of the Act 7 and
subparagraph (f)(2) of Rule 19b–4 8
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:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rule-comments@
sec.gov. Please include File Number SR–
CBOE–2011–091 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–2011–091. 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 (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
7 15
6 15
PO 00000
U.S.C. 78f(b)(5).
Frm 00124
Fmt 4703
8 17
Sfmt 4703
E:\FR\FM\11OCN1.SGM
U.S.C. 78s(b)(3)(A).
C.F.R. 240.19b–4(f)(2).
11OCN1
Federal Register / Vol. 76, No. 196 / Tuesday, October 11, 2011 / Notices
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
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–
2011–091 and should be submitted on
or before November 1, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–26137 Filed 10–7–11; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–65482; File No. SR–C2–
2011–028]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated:
Notice of Filing and Immediate
Effectiveness of Proposed Rule
ChangeRelating to PULSe Fees
mstockstill on DSK4VPTVN1PROD with NOTICES
October 4, 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 October
3, 2011, C2 Options Exchange,
Incorporated (‘‘Exchange’’ or ‘‘C2’’) 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 Exchange.
The Exchange has designated this
proposal as one establishing or changing
a due, fee, or other charge imposed by
the Exchange under Section
19(b)(3)(A)(ii) of the Act 3 and Rule 19b–
4(f)(2) thereunder.4 The Commission is
publishing this notice to solicit
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)(ii).
4 17 CFR 240.19b–4(f)(2).
1 15
VerDate Mar<15>2010
20:47 Oct 07, 2011
Jkt 226001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is proposing to amend
its Fees Schedule as it relates to the
PULSe workstation. The text of the
proposed rule change is available on the
Exchange’s Web site (https://www.
c2exchange.com), 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, 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 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, Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
9 17
comments on the proposed rule change
from interested persons.
1. Purpose
The purpose of this proposed rule
change is to adopt a PULSe routing fee
for executions of orders on C2 that
originate from non-Trading Permit
Holder (‘‘TPH’’) PULSe workstations.
The Exchange is also proposing some
non-substantive changes to the fees
schedule text to clarify the existing
operation of the Routing Intermediary
fee. These changes, which are described
in more detail below, will be effective
October 3, 2011.5
By way of background, the PULSe
workstation is a front-end order entry
system designed for use with respect to
orders that may be sent to the trading
systems of C2. In addition, the PULSe
workstation provides a user with the
capability to send options orders to
other U.S. options exchanges and stock
orders to other U.S. stock exchanges and
trading centers (‘‘away market
routing’’).6 To use the away-market
5 See e-mail from Jennifer M. Lamie, Assistant
Secretary, C2, to Steve L. Kuan, Attorney, Division
of Trading and Markets, Commission, on October 3,
2011.
6 For a more detailed description of the PULSe
workstation and its other functionalities, see, e.g.,
Securities Exchange Act Release Nos. 63246
(November 4, 2010), 75 FR 69478 (November 12,
2010) (SR–C2–2010–007) and 65279 (September 7,
PO 00000
Frm 00125
Fmt 4703
Sfmt 4703
62879
routing functionality, a C2 TPH must
either be a PULSe Routing Intermediary
or establish a relationship with a third
party PULSe Routing Intermediary. A
‘‘PULSe Routing Intermediary’’ is a C2
TPH that has connectivity to, and is a
member of, other options and/or stock
exchanges and trading centers. If a TPH
sends an order from the PULSe
workstation, the PULSe Routing
Intermediary will route that order to the
designated market on behalf of the
entering TPH.7
The first purpose of this proposed
rule change is to adopt a C2 Routing fee.
This fee would be payable by a TPH that
makes the PULSe workstation available
to non-TPHs and would only be
applicable for routing to C2 from such
non-TPH PULSe workstations. The fee
would be $0.02 per contract or share
equivalent for the first 1 million
contracts or share equivalent executed
in a month on C2 that originate from
non-TPH PULSe workstations made
available by the TPH, and $0.03 per
contract or share equivalent for each
additional contract or share equivalent
executed on C2 in the same month from
the non-TPH PULSe workstations made
available by the TPH.8
2011), 76 FR 56824 (September 14, 2011) (SR–C2–
2011–020).
7 The PULSe workstation offers the ability to
route orders to any market including, among others,
C2 affiliates Chicago Board Options Exchange,
Incorporated (‘‘CBOE’’) and CBOE Stock Exchange,
LLC (‘‘CBSX,’’ CBOE’s stock execution facility). To
the extent a C2 TPH that is also a CBOE/CBSX TPH
obtains a PULSe workstation through CBOE, it is
not necessary for that TPH to obtain a separate
PULSe workstation through CBOE or CBSX to route
orders to CBOE or CBSX, as applicable. See, e.g.,
SR–C2–2010–007, note 5, supra. It is also not
necessary for that TPH to utilize the services of a
Routing Intermediary to route orders to CBOE or
CBSX, as applicable. As such, to the extent a C2
TPH is also a CBOE TPH or a CBSX TPH, the
‘‘Away-Market Routing’’ and ‘‘Routing
Intermediary’’ fees detailed in the Exchange Fees
Schedule are not be applicable because the fees are
only applicable for away-market routing. The TPH
would not be away-market routing, but instead
would be submitting orders directly to C2 as a C2
TPH, CBOE as a CBOE TPH or CBSX as a CBSX
TPH, as applicable, where the TPH’s activity would
be subject to the transaction fee schedule of C2,
CBOE or CBSX, respectively. To the extent a C2
TPH is not a CBOE TPH or a CBSX TPH, the AwayMarket Routing and Routing Intermediary fees
would apply for the TPH’s executions on CBOE or
CBSX, as applicable.
8 The Exchange notes that CBOE is submitting a
similar rule change to introduce a ‘‘CBOE/CBSX
Routing’’ fee that will be applicable to CBOE TPHs
and CBSX TPHs. See SR–CBOE–2011–092. To the
extent that a C2 TPH making the non-TPH PULSe
workstations available is not also a CBOE TPH or
a CBSX TPH, routing from the non-TPH
workstations to CBOE or CBSX would not be
considered ‘‘CBOE/CBSX Routing’’ and, therefore,
would not be subject to that fee (it would instead
be considered ‘‘away-market routing’’ and subject to
the Away-Market Routing and Routing Intermediary
fees described above). To the extent that a C2 TPH
E:\FR\FM\11OCN1.SGM
Continued
11OCN1
]]>Agencies
[Federal Register Volume 76, Number 196 (Tuesday, October 11, 2011)]
[Notices]
[Pages 62877-62879]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-26137]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65480; File No. SR-CBOE-2011-091]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend CBOE Stock Exchange Transaction Fees
October 4, 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 September 30 2011, the Chicago Board Options Exchange, Incorporated
(``Exchange'' or ``CBOE'') 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
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 CBOE Stock Exchange (``CBSX'')
transaction fees. The text of the proposed rule change is available on
the Exchange's Web site (https://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, 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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
CBSX proposes to modify its fees for transactions in securities
priced $1 or greater. The Exchange proposes to adopt a Maker fee of
$0.0017 per share and a Taker rebate of $0.0015 per share. For a Maker
that adds more than two million shares of liquidity to CBSX in a single
day, the Exchange proposes a fee of $0.0015 per share. This lower rate
will be calculated on a daily basis. Market participants who share a
trading acronym or MPID may aggregate their trading activity for
purposes of this rate. Qualification for this rate will require that a
market participant appropriately indicate his trading acronym and/or
MPID in the appropriate field on the order. CBSX will promulgate an
information circular to direct market participants on how to accurately
qualify and aggregate their trading activity in order to receive this
reduced rate. CBSX also proposes to change the language on the Fees
Schedule describing the execution type for transactions in securities
priced below $1 from ``Single-sided execution'' to ``Maker or Taker''
in order to achieve consistency on the Fee Schedule and make clear that
such fee applies to either the Maker or the Taker in transactions in
securities priced below $1.
The proposed fee change for transactions in securities priced at $1
or greater is intended to encourage increased trading activity and
liquidity on CBSX, which would benefit all market participants. By
encouraging market participants to hit a threshold of executing at
least two million shares a day (at which point such market participants
would receive the lower Maker fee for all shares executed by the market
participant that day), the Exchange incentivizes market
[[Page 62878]]
participants who may be able to meet that threshold to add more volume
and liquidity to the CBSX marketplace. This increased volume and
liquidity would benefit all CBSX market participants, including those
who do not trade at that level, by providing them with more
opportunities for execution. If the lower rate did not exist for market
participants who execute at least two million shares a day, even those
market participants who do not hit that threshold will not receive the
benefit of this added volume and liquidity. The threshold is applied on
a daily basis in order to encourage market participants to add volume
and liquidity on a consistent basis. The Exchange seeks market
participants who will be active on CBSX on a regular basis, as the
liquidity that such larger-volume participants provide will be
attractive to all investors and benefit all market participants.
The proposed rule change is to take effect October 1, 2011.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the Act
\3\ in general, and furthers the objectives of Section 6(b)(4) \4\ of
the Act in particular, in that it is designed to provide for the
equitable allocation of reasonable dues, fees, and other charges among
CBOE Trading Permit Holders and other persons using Exchange
facilities. The proposed Maker fees of $0.0017 per share or $0.0015 per
share for a Maker that adds more than two million shares of liquidity
in a single day and Taker Rebate of $0.0015 are reasonable because they
are within the range of fees assessed for similar transactions in
securities priced $1 or greater on other exchanges.\5\ The fees are
equitable and not unfairly discriminatory because they will apply to
all market participants, and all market participants will have the
opportunity to qualify for the reduced rate for a Maker that adds more
than two million shares of liquidity in a single day.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(4).
\5\ See NASDAQ OMX BX, Inc. (``BX'') Fee Schedule regarding
trading of shares executed at or above $1.00. The BX rebate for
removing liquidity is $0.0005 per share, or $0.0014 per share for
MPIDs removing greater than 3.5 million shares per day or adding
greater than 25,000 shares per day. The proposed CBSX rebate is
$0.0015 per share. The BX fee for adding liquidity is $0.0018 per
share, or $0.0015 for MPIDs meeting BX's Qualified Liquidity
Provider Program criteria. The proposed CBSX fee is $0.0017 per
share, or $0.0015 per share for a Maker that adds more than two
million shares of liquidity in a single day.
---------------------------------------------------------------------------
Further, the reduced fee for market participants that execute at
least two million shares a day is equitable and not unfairly
discriminatory because it will encourage market participants to trade
on CBSX and bring greater liquidity to CBSX, which will benefit all
market participants. By encouraging market participants to hit a
threshold of executing at least two million shares a day (at which
point such market participants would receive the lower Maker fee for
all shares executed by the market participant that day), the Exchange
incentivizes market participants who may be able to meet that threshold
to add more volume and liquidity to the CBSX marketplace. This
increased volume and liquidity would benefit all CBSX market
participants, including those who do not trade at that level, by
providing them with more opportunities for execution. Orders that
provide liquidity increase the likelihood that members seeking to
access liquidity will have their orders filled. If the lower rate did
not exist for market participants who execute at least two million
shares a day, even those market participants who do not hit that
threshold will not receive the benefit of this added volume and
liquidity. Applying the two million share threshold on a daily basis
will encourage these larger-volume market participants to add volume
and liquidity on a consistent basis, and the resulting consistently-
available executions will benefit all market participants. As such, the
Exchange believes that it is reasonable and equitable to use pricing
incentives, such as a lower fee for creating large amounts of
liquidity, to encourage market participants to increase their
participation in the market.
Finally, changing the language on the Fees Schedule describing the
execution type for transactions in securities priced below $1 from
``Single-sided execution'' to ``Maker or Taker'' furthers the
objectives of Section 6(b)(5) \6\ of the Act in particular in that the
change is designed to 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 by achieving consistency in
the language of the Fees Schedule, thereby eliminating any potential
confusion.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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 not necessary or appropriate in furtherance of
the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
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 proposed rule change is designated by the Exchange as
establishing or changing a due, fee, or other charge, thereby
qualifying for effectiveness on filing pursuant to Section 19(b)(3)(A)
of the Act \7\ and subparagraph (f)(2) of Rule 19b-4 \8\ 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 C.F.R. 240.19b-4(f)(2).
---------------------------------------------------------------------------
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 e-mail to rule-comments@sec.gov. Please include
File Number SR-CBOE-2011-091 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-2011-091. 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 (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
[[Page 62879]]
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 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-2011-091 and should be submitted on or before
November 1, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
---------------------------------------------------------------------------
\9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-26137 Filed 10-7-11; 8:45 am]
BILLING CODE 8011-01-P
