Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Clarify the Process for the Qualification of the Customer Large Trade Discount, 70198-70199 [2011-29111]

Download as PDF 70198 Federal Register / Vol. 76, No. 218 / Thursday, November 10, 2011 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2011–29112 Filed 11–9–11; 8:45 am] of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65690; File No. SR–CBOE– 2011–103] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Clarify the Process for the Qualification of the Customer Large Trade Discount November 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 28, 2011, the Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Customer Large Trade Discount. 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. jlentini on DSK4TPTVN1PROD with NOTICES 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, 3 See Securities Exchange Act Release No. 65491 (October 6, 2011), 76 FR 63680 (October 13, 2011) (SR–CBOE–2011–093). 4 See Exchange Fees Schedule, Section 18. 19 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. VerDate Mar<15>2010 16:38 Nov 09, 2011 1. Purpose The Exchange recently amended its Fees Schedule to clarify the process for the qualification of a customer order for the Customer Large Trade Discount (the ‘‘Discount’’), which is intended to cap fees on large customer trades (the quantity of contracts necessary for a large customer trade to qualify for the Discount varies by product).3 The Exchange now proposes to amend the Fees Schedule once again to further clarify the process for qualification of a customer order for the Discount. Currently, to qualify for the Discount, an entire customer order quantity must be tied to a single order ID either within the CBOEdirect system or in FBW or PULSe or in the front end system used to transmit the order (provided the Exchange is granted access to effectively audit such front end system). The order must be entered in its entirety on one system so that the Exchange can clearly identify the total size of the order.4 There is a minor contradiction in the wording in regards to the entry of a customer order large enough to qualify for the Discount (a ‘‘Large Customer Order’’) entered into a front end system, which may be a non-CBOE system (a system used by a broker) that is used to enter orders. Under the current language, the entire order quantity must be tied to a single order ID within the front end system used to transmit the order. However, in the parenthetical that follows, the language states that the order must be entered in its entirety on one system; it does not state that the order has to be transmitted from that system. It has come to the Exchange’s attention that some brokers receive Large Customer Orders from customers and enter those Large Customer Orders into their front end systems, but then telephone or otherwise transmit those orders to the CBOE trading floor. This process would qualify the Large Customer Order for the Discount under the parenthetical (since the Large Customer Order is entered in its entirety into the front end system), but technically would not qualify the Large Customer Order for the Discount under the previous sentence, since it is the telephone call, and not the front end Jkt 226001 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 system itself, that transmits that order to the Exchange. The Exchange therefore proposes to eliminate this contradiction in the language by clarifying that, to qualify for the Discount, an entire customer order quantity must be tied to a single order ID within the front end system that is used to enter and/or transmit the order. This clarifies that, if a broker receives a Large Customer Order from a customer, enters it into their own front end system, and then telephones the order into the Exchange, the Large Customer Order will still qualify for the Discount. Any party that requests that an order entered in this process be granted the Discount will still have to grant the Exchange access to effectively audit the front end system, and will have to submit a customer large trade discount request which identifies all necessary trade-related information to the Exchange within 3 business days of the transactions.5 The proposed rule change would clear up any confusion regarding the entry and qualification of Large Customer Orders and thereby make it easier for brokers to ensure that their Large Customer Orders qualify for the Discount. The proposed change is to take effect on November 1, 2011. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act,6 in general, and furthers the objectives of Section 6(b)(5) 7 of the Act in particular, in that it is designed to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. By clarifying the process for the qualification of Large Customer Orders for the Discount and eliminating a contradiction in the Fees Schedule language regarding such process, the proposed rule change eliminates confusion, thereby removing an impediment to and perfecting the mechanism of a free and open market system. The clarification of this process will also make it easier for CBOE to administer the Discount and ensure that it is appropriately assessed when it is applicable. 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 5 See Note 4. U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). 6 15 E:\FR\FM\10NON1.SGM 10NON1 Federal Register / Vol. 76, No. 218 / Thursday, November 10, 2011 / Notices 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 8 and subparagraph (f)(2) of Rule 19b–4 9 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 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: jlentini on DSK4TPTVN1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–CBOE–2011–103 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–2011–103. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro/shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing will also 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 No. SR–CBOE– 2011–103 and should be submitted on or before December 1, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2011–29111 Filed 11–9–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65688; File No. SR– NASDAQ–2011–146] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Modify Rule 7034 Regarding Low Latency Network Connections November 4, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 2 thereunder, notice is hereby given that on October 31, 2011, The NASDAQ Stock Market LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘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. CFR 200.30–3(a)(12). 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, pursuant to Section 19(b)(1) of the Act 3 and Rule 19b–4 thereunder,4 proposes to modify Exchange Rule 7034 entitled ‘‘CoLocation Services’’ to establish a program for offering low latency network connections and to establish the initial fees for such connections. The Exchange also proposes administrative modifications to Exchange Rule 7034. The text of the proposed rule change is available on the Exchange’s Web site at https:// www.nasdaq.cchwallstreet.com, at the principal office of the Exchange, on the Commission’s Web site at https:// www.sec.gov, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Low Latency Network Connection Option The purpose of the proposed rule change is to modify Exchange Rule 7034, which governs the Exchange’s program for co-location services, to offer new options for low latency network telecommunication connections and to establish the initial fees for such connections. As its initial offering, the Exchange proposes to offer point-topoint telecommunication connectivity from the co-location facility to select major financial trading and co-location venues in the New York and New Jersey metropolitan areas, Toronto, and Chicago. 10 17 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b–4(f)(2). VerDate Mar<15>2010 16:38 Nov 09, 2011 1 15 Jkt 226001 PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 70199 3 15 4 17 E:\FR\FM\10NON1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 10NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 76, Number 218 (Thursday, November 10, 2011)]
[Notices]
[Pages 70198-70199]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-29111]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65690; File No. SR-CBOE-2011-103]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Clarify the Process for the Qualification of 
the Customer Large Trade Discount

November 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 28, 2011, the Chicago Board Options Exchange, 
Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities 
and Exchange Commission (the ``Commission'') the proposed rule change 
as described in Items I, II, and III below, which Items have been 
prepared by the Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend its Customer Large Trade Discount. 
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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange recently amended its Fees Schedule to clarify the 
process for the qualification of a customer order for the Customer 
Large Trade Discount (the ``Discount''), which is intended to cap fees 
on large customer trades (the quantity of contracts necessary for a 
large customer trade to qualify for the Discount varies by product).\3\ 
The Exchange now proposes to amend the Fees Schedule once again to 
further clarify the process for qualification of a customer order for 
the Discount.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 65491 (October 6, 
2011), 76 FR 63680 (October 13, 2011) (SR-CBOE-2011-093).
---------------------------------------------------------------------------

    Currently, to qualify for the Discount, an entire customer order 
quantity must be tied to a single order ID either within the CBOEdirect 
system or in FBW or PULSe or in the front end system used to transmit 
the order (provided the Exchange is granted access to effectively audit 
such front end system). The order must be entered in its entirety on 
one system so that the Exchange can clearly identify the total size of 
the order.\4\ There is a minor contradiction in the wording in regards 
to the entry of a customer order large enough to qualify for the 
Discount (a ``Large Customer Order'') entered into a front end system, 
which may be a non-CBOE system (a system used by a broker) that is used 
to enter orders. Under the current language, the entire order quantity 
must be tied to a single order ID within the front end system used to 
transmit the order. However, in the parenthetical that follows, the 
language states that the order must be entered in its entirety on one 
system; it does not state that the order has to be transmitted from 
that system. It has come to the Exchange's attention that some brokers 
receive Large Customer Orders from customers and enter those Large 
Customer Orders into their front end systems, but then telephone or 
otherwise transmit those orders to the CBOE trading floor. This process 
would qualify the Large Customer Order for the Discount under the 
parenthetical (since the Large Customer Order is entered in its 
entirety into the front end system), but technically would not qualify 
the Large Customer Order for the Discount under the previous sentence, 
since it is the telephone call, and not the front end system itself, 
that transmits that order to the Exchange.
---------------------------------------------------------------------------

    \4\ See Exchange Fees Schedule, Section 18.
---------------------------------------------------------------------------

    The Exchange therefore proposes to eliminate this contradiction in 
the language by clarifying that, to qualify for the Discount, an entire 
customer order quantity must be tied to a single order ID within the 
front end system that is used to enter and/or transmit the order. This 
clarifies that, if a broker receives a Large Customer Order from a 
customer, enters it into their own front end system, and then 
telephones the order into the Exchange, the Large Customer Order will 
still qualify for the Discount. Any party that requests that an order 
entered in this process be granted the Discount will still have to 
grant the Exchange access to effectively audit the front end system, 
and will have to submit a customer large trade discount request which 
identifies all necessary trade-related information to the Exchange 
within 3 business days of the transactions.\5\
---------------------------------------------------------------------------

    \5\ See Note 4.
---------------------------------------------------------------------------

    The proposed rule change would clear up any confusion regarding the 
entry and qualification of Large Customer Orders and thereby make it 
easier for brokers to ensure that their Large Customer Orders qualify 
for the Discount.
    The proposed change is to take effect on November 1, 2011.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\6\ in general, and furthers the objectives of Section 6(b)(5) \7\ 
of the Act in particular, in that it is designed to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest. By clarifying the process for the qualification of Large 
Customer Orders for the Discount and eliminating a contradiction in the 
Fees Schedule language regarding such process, the proposed rule change 
eliminates confusion, thereby removing an impediment to and perfecting 
the mechanism of a free and open market system. The clarification of 
this process will also make it easier for CBOE to administer the 
Discount and ensure that it is appropriately assessed when it is 
applicable.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 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

[[Page 70199]]

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 \8\ and subparagraph (f)(2) of Rule 19b-4 \9\ thereunder. At 
any time within 60 days of the filing of the proposed rule change, the 
Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 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 email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2011-103 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-2011-103. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro/shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing will also 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 No. SR-CBOE-2011-103 and should be 
submitted on or before December 1, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-29111 Filed 11-9-11; 8:45 am]
BILLING CODE 8011-01-P

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