Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule, 10647-10649 [2013-03394]
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Federal Register / Vol. 78, No. 31 / Thursday, February 14, 2013 / Notices
by which the Commission should either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–ICC–2012–23).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–03391 Filed 2–13–13; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68887; File No. SR–CBOE–
2013–017]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Fees
Schedule
February 8, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
1, 2013, Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
sroberts on DSK5SPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange is proposing to amend
the Fees Schedule. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission.
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
6 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
17:16 Feb 13, 2013
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
in the third tier will be decreased from
$0.12 per contract to $0.11 per contract,
and the credit in the fourth tier will
decrease from $0.18 to $0.14 per
contract. Going forward, the relative
volume thresholds and credit amounts
will be as follows:
Percentage thresholds of
national customer volume in
multiply-listed options
classes (monthly)
Per contract
credit
Jkt 229001
1. Purpose
The Exchange proposes to amend its
Fees Schedule. Specifically, the
Exchange proposes to amend its Volume
Incentive Program (‘‘VIP’’), through
which the Exchange credits each
Trading Permit Holder (‘‘TPH’’) the per
contract amount resulting from each
public customer (‘‘C’’ origin code) order
transmitted by that TPH which is
executed electronically on the Exchange
in all multiply-listed option classes
(excluding Qualified Contingent Cross
(‘‘QCC’’) trades and executions related
to contracts that are routed to one or
more exchanges in connection with the
Options Order Protection and Locked/
Crossed Market Plan referenced in Rule
6.80), provided the TPH meets certain
volume thresholds in a month. The
proposed changes are to take effect on
February 1, 2013.
First, the Exchange proposes to
change the different fee tier thresholds
in the VIP. Currently, qualification for
the different fee rates at different tiers in
the VIP is based on a TPH’s percentage
of national customer volume in
multiply-listed options monthly. The
current qualification tiers are set to, in
ascending order, 0 through 0.75%,3
above 0.75% through 2.25%, above
2.25% through 3.50%, above 3.50%
through 5.00%, and above 5.00%. The
purpose of the change is to eliminate the
fifth qualification tier and adjust the
threshold percentages for tier one
through tier four. The Exchange is
proposing to amend the tiers to be, in
ascending order, 0 through 0.75%,
above 0.75% through 2.00%, above
2.00% through 2.75%, and above
2.75%. Lowering the upper thresholds
in the second and third tiers, along with
the corresponding lower thresholds in
the third and fourth tiers, allows for a
greater number or participants to
achieve a higher payment in the VIP
Program.
The Exchange also proposes to change
the amounts of the credits in the tiers of
the VIP. The credit in the second tier
will be increased from $0.07 per
contract to $0.10 per contract, the credit
The purpose of increasing the credit in
the second tier and decreasing the
credits in the third and fourth tiers is to
rationalize the opportunity to receive a
credit under the VIP across a broader set
of participants. Lowering the credit in
the third and fourth tiers allows the
Exchange to make up for lowering the
thresholds in tier two through tier four.
Next, the Exchange is proposing to
eliminate the VIP credit of $0.10 per
contract at every tier in VIP. Currently
this $0.10 credit is given at every tier,
including the $0.00 tier, on each leg, for
customer, complex multiply-listed
options contracts, when executed
electronically against a non-public
customer origin. The Exchange is
proposing to eliminate this additional
credit. Eliminating this credit allows the
Exchange to make up for threshold and
credit adjustments as proposed above.
Finally, the Exchange is proposing to
add to the notes on the VIP table. The
Exchange is proposing to amend the
section of the ‘‘Notes’’ on the VIP table
to state that the VIP payment will be
calculated from the first executed
contract at the applicable threshold per
contract credit. Stated in a different
way, VIP payments will be made at the
highest achieved tier for each contract
executed in that month. Under the
current VIP, VIP payments are made for
the number of applicable contracts
executed in each tier. For example, if
TPH Firm XYZ executes 2.50% of the
total national customer volume in the
month of April, XYZ would receive a
$0.00 credit for the contracts at 0.75%
of the market and below, a credit of
$0.10 4 for the contracts above 0.75%
through 2.00% of the market, and $0.11
for each contract above 2.00% of the
market through the total 2.50% of the
market. In the proposed VIP Program,
XYZ will receive a credit of $0.11 for
each contract executed in the month of
3 Each tier is based on the percentage of total
national customer volume in multiply-listed
options monthly.
BILLING CODE 8011–01–P
VerDate Mar<15>2010
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.
10647
4 For sake of the example, credit amounts being
applied are the proposed credit changes as
mentioned above.
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0%–0.75% ............................
Above 0.75%–2.00% ............
Above 2.00%–2.75% ............
Above 2.75 ...........................
E:\FR\FM\14FEN1.SGM
14FEN1
$0.00
0.10
0.11
0.14
10648
Federal Register / Vol. 78, No. 31 / Thursday, February 14, 2013 / Notices
sroberts on DSK5SPTVN1PROD with NOTICES
April. The purpose of the proposed
change is to provide a greater incentive
to direct greater customer trade volume
to the Exchange to achieve a greater
monthly percentage and receive a
greater credit for all executed contracts
at the greatest level achieved.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.5 Specifically,
the Exchange believes the proposed rule
change is consistent with Section 6(b)(4)
of the Act,6 which provides that
Exchange rules may 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 that the
proposed changes to amend the fee tier
thresholds in the VIP are reasonable.
Specifically, decreasing the upper
thresholds in the second and third tiers,
and thus the corresponding lower
thresholds in third and fourth tiers, is
reasonable because the slight changes
are designed to provide TPHs a greater
ability to reach higher tiers. These
changes are equitable and not unfairly
discriminatory because they will be
applied to all TPHs. The Exchange
believes that the proposed changes to
increase the credit in the second tier of
the VIP and decrease the credits in the
third and fourth tiers each are
reasonable. In the case of the increase in
the credit for the second tier, the change
will allow TPHs who reach the
percentage threshold in that tier to
receive an increased credit for doing so.
In the case of the decrease in the credit
for the third and fourth tiers, the change
will still allow TPHs who reach the
percentage threshold in that tier to
receive a credit which is higher than
such TPH would receive in the tier
immediately below it. These changes are
equitable and not unfairly
discriminatory because they will be
applied to all TPHs.
The proposed changes to eliminate
the VIP credit of $0.10 per contract at
every tier in VIP is reasonable given the
other proposed lower threshold and
credits in the VIP. Though the Exchange
is eliminating the additional credit,
through the proposed changes, TPHs
have a greater ability to reach higher
tiers. Thus, eliminating the fee [sic] is
reasonable when coupled with the other
5 15
6 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
VerDate Mar<15>2010
17:16 Feb 13, 2013
Jkt 229001
changes to the VIP. The elimination of
this credit is equitable and not unfairly
discriminatory as it applies to all TPHs.
Finally, the Exchange believes that
amending the Notes Section of the VIP
is reasonable because it allows TPHs to
receive a greater credit by applying the
greatest credit obtained to all trades
done in that particular month. This
change is equitable and not unfairly
discriminatory because it will be
applied to all TPHs.
Moreover, the purpose of all of the
proposed changes is to encourage the
sending and electronic execution of
customer multiply-listed options
volume to the Exchange. This increased
volume creates greater trading
opportunities that benefit all market
participants (including TPHs that do not
reach the higher-credit tiers in the VIP).
Further, the increased volume and
improved trading opportunities will
provide such TPHs with a better
opportunity to reach the higher-credit
tiers in the VIP.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. To the extent
that some of the changes to the VIP may
attract greater trading volume to CBOE
(and away from other exchanges), the
Exchange does not believe the proposed
changes will impose any burden on
intermarket competition. The Exchange
notes that, should the proposed changes
make CBOE more attractive for trading,
market participants trading on other
exchanges can always elect to become
TPHs on CBOE. Further, the Exchange
exists in a competitive marketplace, and
to the extent that these proposed
changes make other exchanges less
competitive with CBOE, market
participants trading on those other
exchanges can elect to trade on CBOE.
The Exchange does not believe the
proposed changes will impose any
burden on intramarket competition.
Though the proposed changes only
benefit TPHs that meet the VIP
thresholds, the purpose of all of the
proposed changes is to encourage the
sending and electronic execution of
customer multiply-listed options
volume to the Exchange. This increased
volume creates greater trading
opportunities that benefit all market
participants (including TPHs that do not
reach the higher-credit tiers in the VIP).
Further, the proposed changes apply to
all TPHs.
The Exchange does not believe that
the proposed changes to eliminate the
PO 00000
Frm 00057
Fmt 4703
Sfmt 4703
VIP credit of $0.10 per contract at every
tier in VIP will impose any burden on
intermarket competition because the
change is minimal and the VIP program
already gives a credit to qualifying
TPHs. Further, to the extent that any
change in intramarket competition may
result from this change, such possible
change is justifiable and offset because
the changes to such fees are designed to
attract greater customer order flow to
the Exchange. This would bring greater
liquidity to the market, which benefits
all market participants. The Exchange
does not believe that the elimination of
the additional $0.10 credit will cause
any unnecessary burden on intermarket
competition because the changes are
minimal and only apply to certain TPHS
that qualify for the VIP.
The Exchange also notes that it
operates in a highly-competitive market
in which market participants can
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive. The
proposed rule change reflects a
competitive pricing structure designed
to incent market participants to direct
their order flow to the Exchange, and
the Exchange believes that such
structure will help the Exchange remain
competitive with those fees and rebates
assessed by other venues.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 7 and paragraph (f) 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.
7 15
8 17
E:\FR\FM\14FEN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
14FEN1
Federal Register / Vol. 78, No. 31 / Thursday, February 14, 2013 / Notices
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 rulecomments@sec.gov. Please include File
Number SR–CBOE–2013–017 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
the most significant parts of such
statements.
[Release No. 34–68885; File No. SR–BYX–
2013–006]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Self-Regulatory Organizations; BATS
Y-Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend Pilot Program
Related To Trading Pauses Due to
Extraordinary Market Volatility
Paper Comments
February 8, 2013.
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
30, 2013, BATS–Y Exchange, Inc.
(‘‘BYX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange has
designated this proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6)(iii)
thereunder,4 which renders it effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
sroberts on DSK5SPTVN1PROD with NOTICES
All submissions should refer to File
Number SR–CBOE–2013–017. 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 also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CBOE–
2013–017, and should be submitted on
or before March 7, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–03394 Filed 2–13–13; 8:45 am]
BILLING CODE 8011–01–P
9 17
VerDate Mar<15>2010
17:16 Feb 13, 2013
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is proposing to extend
a pilot program previously approved by
the Commission related to Rule 11.18,
entitled ‘‘Trading Halts Due to
Extraordinary Market Volatility.’’
The text of the proposed rule change
is available at the Exchange’s Web site
at https://www.batstrading.com, at the
principal office of the Exchange, 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
1 15
U.S.C.78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.196–4(f)(6)(iii).
2 17
CFR 200.30–3(a)(12).
Jkt 229001
10649
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Frm 00058
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Sfmt 4703
1. Purpose
The purpose of this filing is to extend
the effectiveness of the Exchange’s rule
related to individual stock circuit
breakers, which is contained in Rule
11.18(d) and Interpretation and Policy
.05 to Rule 11.18. The rule, explained in
further detail below, is currently
operating as a pilot program set to
expire on February 4, 2013.
On October 4, 2010, the Exchange
filed an immediately effective filing to
adopt various rule changes to bring BYX
Rules up to date with the changes that
had been made to the rules of BATS
Exchange, Inc., the Exchange’s affiliate,
while BYX’s Form 1 Application to
register as a national securities exchange
was pending approval. Such changes
included changes to the Exchange’s
Rule 11.18, on a pilot basis, to provide
for uniform market-wide trading pause
standards for individual securities in
the S&P 500® Index, the Russell 1000®
Index and specified Exchange Traded
Products that experience rapid price
movement.5 More recently, the
Exchange proposed expansion of the
pilot program to apply to all NMS
stocks.6 This expansion was approved
on June 23, 2011.7 The pilot program
relating to trading pause standards has
been extended five times since its
inception.8 The Exchange believes the
benefits to market participants from the
individual stock trading pause rule
should be continued on a pilot basis
until individual stocks become, on a
5 Securities Exchange Act Release No. 63097
(October 13, 2010), 75 FR 64767 (October 20, 2010)
(SR–BYX–2010–002).
6 Securities Exchange Act Release No. 64433 (May
6, 2011), 76 FR 27680 (May 12, 2011) (SR–BYX–
2011–011).
7 Securities Exchange Act Release No. 64735
(June 23, 2011), 76 FR 38243 (June 29, 2011) (File
Nos. SR–BATS–2011–016; SR–BYX–2011–011; SR–
BX–2011–025; SR–CBOE–2011–049; SR–CHX–
2011–09; SR–EDGA–2011–15; SR–EDGX–2011–14;
SR–FINRA–2011–023; SR–ISE–2011–028; SR–
NASDAQ–2011–067; SR–NYSE–2011–21; SR–
NYSEAmex–2011–32; SR–NYSEArca–2011–26; SR–
NSX–2011–06; SR–Phlx–2011–64).
8 Securities Exchange Act Release No. 63513
(December 9, 2010), 75 FR 78784 (December 16,
2010) (SR–BYX–2010–007); Securities Exchange
Act Release No. 64214 (April 6, 2011), 76 FR 20430
(April 12, 2011) (SR–BYX–2011–007); Securities
Exchange Act Release No. 65082 (August 9, 2011),
76 FR 50800 (August 16, 2011) (SR–BYX–2011–
018); Securities Exchange Act Release No. 66189
(January 19, 2012), 77 FR 3827 (January 25, 2012)
(SR–BYX–2012–001); Securities Exchange Act
Release No. 67522 (July 27, 2012), 77 FR 46134
(August 2, 2012) (SR–BYX–2012–015).
E:\FR\FM\14FEN1.SGM
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]]>Agencies
[Federal Register Volume 78, Number 31 (Thursday, February 14, 2013)]
[Notices]
[Pages 10647-10649]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-03394]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68887; File No. SR-CBOE-2013-017]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the Fees Schedule
February 8, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 1, 2013, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange is proposing to amend the Fees Schedule. The text of
the proposed rule change is available on the Exchange's Web site
(https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the
Exchange's Office of the Secretary, and at the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fees Schedule. Specifically, the
Exchange proposes to amend its Volume Incentive Program (``VIP''),
through which the Exchange credits each Trading Permit Holder (``TPH'')
the per contract amount resulting from each public customer (``C''
origin code) order transmitted by that TPH which is executed
electronically on the Exchange in all multiply-listed option classes
(excluding Qualified Contingent Cross (``QCC'') trades and executions
related to contracts that are routed to one or more exchanges in
connection with the Options Order Protection and Locked/Crossed Market
Plan referenced in Rule 6.80), provided the TPH meets certain volume
thresholds in a month. The proposed changes are to take effect on
February 1, 2013.
First, the Exchange proposes to change the different fee tier
thresholds in the VIP. Currently, qualification for the different fee
rates at different tiers in the VIP is based on a TPH's percentage of
national customer volume in multiply-listed options monthly. The
current qualification tiers are set to, in ascending order, 0 through
0.75%,\3\ above 0.75% through 2.25%, above 2.25% through 3.50%, above
3.50% through 5.00%, and above 5.00%. The purpose of the change is to
eliminate the fifth qualification tier and adjust the threshold
percentages for tier one through tier four. The Exchange is proposing
to amend the tiers to be, in ascending order, 0 through 0.75%, above
0.75% through 2.00%, above 2.00% through 2.75%, and above 2.75%.
Lowering the upper thresholds in the second and third tiers, along with
the corresponding lower thresholds in the third and fourth tiers,
allows for a greater number or participants to achieve a higher payment
in the VIP Program.
---------------------------------------------------------------------------
\3\ Each tier is based on the percentage of total national
customer volume in multiply-listed options monthly.
---------------------------------------------------------------------------
The Exchange also proposes to change the amounts of the credits in
the tiers of the VIP. The credit in the second tier will be increased
from $0.07 per contract to $0.10 per contract, the credit in the third
tier will be decreased from $0.12 per contract to $0.11 per contract,
and the credit in the fourth tier will decrease from $0.18 to $0.14 per
contract. Going forward, the relative volume thresholds and credit
amounts will be as follows:
------------------------------------------------------------------------
Percentage thresholds of national customer volume in Per contract
multiply-listed options classes (monthly) credit
------------------------------------------------------------------------
0%-0.75%................................................ $0.00
Above 0.75%-2.00%....................................... 0.10
Above 2.00%-2.75%....................................... 0.11
Above 2.75.............................................. 0.14
------------------------------------------------------------------------
The purpose of increasing the credit in the second tier and decreasing
the credits in the third and fourth tiers is to rationalize the
opportunity to receive a credit under the VIP across a broader set of
participants. Lowering the credit in the third and fourth tiers allows
the Exchange to make up for lowering the thresholds in tier two through
tier four.
Next, the Exchange is proposing to eliminate the VIP credit of
$0.10 per contract at every tier in VIP. Currently this $0.10 credit is
given at every tier, including the $0.00 tier, on each leg, for
customer, complex multiply-listed options contracts, when executed
electronically against a non-public customer origin. The Exchange is
proposing to eliminate this additional credit. Eliminating this credit
allows the Exchange to make up for threshold and credit adjustments as
proposed above.
Finally, the Exchange is proposing to add to the notes on the VIP
table. The Exchange is proposing to amend the section of the ``Notes''
on the VIP table to state that the VIP payment will be calculated from
the first executed contract at the applicable threshold per contract
credit. Stated in a different way, VIP payments will be made at the
highest achieved tier for each contract executed in that month. Under
the current VIP, VIP payments are made for the number of applicable
contracts executed in each tier. For example, if TPH Firm XYZ executes
2.50% of the total national customer volume in the month of April, XYZ
would receive a $0.00 credit for the contracts at 0.75% of the market
and below, a credit of $0.10 \4\ for the contracts above 0.75% through
2.00% of the market, and $0.11 for each contract above 2.00% of the
market through the total 2.50% of the market. In the proposed VIP
Program, XYZ will receive a credit of $0.11 for each contract executed
in the month of
[[Page 10648]]
April. The purpose of the proposed change is to provide a greater
incentive to direct greater customer trade volume to the Exchange to
achieve a greater monthly percentage and receive a greater credit for
all executed contracts at the greatest level achieved.
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\4\ For sake of the example, credit amounts being applied are
the proposed credit changes as mentioned above.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\5\ Specifically, the
Exchange believes the proposed rule change is consistent with Section
6(b)(4) of the Act,\6\ which provides that Exchange rules may provide
for the equitable allocation of reasonable dues, fees, and other
charges among its Trading Permit Holders and other persons using its
facilities.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed changes to amend the fee
tier thresholds in the VIP are reasonable. Specifically, decreasing the
upper thresholds in the second and third tiers, and thus the
corresponding lower thresholds in third and fourth tiers, is reasonable
because the slight changes are designed to provide TPHs a greater
ability to reach higher tiers. These changes are equitable and not
unfairly discriminatory because they will be applied to all TPHs. The
Exchange believes that the proposed changes to increase the credit in
the second tier of the VIP and decrease the credits in the third and
fourth tiers each are reasonable. In the case of the increase in the
credit for the second tier, the change will allow TPHs who reach the
percentage threshold in that tier to receive an increased credit for
doing so. In the case of the decrease in the credit for the third and
fourth tiers, the change will still allow TPHs who reach the percentage
threshold in that tier to receive a credit which is higher than such
TPH would receive in the tier immediately below it. These changes are
equitable and not unfairly discriminatory because they will be applied
to all TPHs.
The proposed changes to eliminate the VIP credit of $0.10 per
contract at every tier in VIP is reasonable given the other proposed
lower threshold and credits in the VIP. Though the Exchange is
eliminating the additional credit, through the proposed changes, TPHs
have a greater ability to reach higher tiers. Thus, eliminating the fee
[sic] is reasonable when coupled with the other changes to the VIP. The
elimination of this credit is equitable and not unfairly discriminatory
as it applies to all TPHs. Finally, the Exchange believes that amending
the Notes Section of the VIP is reasonable because it allows TPHs to
receive a greater credit by applying the greatest credit obtained to
all trades done in that particular month. This change is equitable and
not unfairly discriminatory because it will be applied to all TPHs.
Moreover, the purpose of all of the proposed changes is to
encourage the sending and electronic execution of customer multiply-
listed options volume to the Exchange. This increased volume creates
greater trading opportunities that benefit all market participants
(including TPHs that do not reach the higher-credit tiers in the VIP).
Further, the increased volume and improved trading opportunities will
provide such TPHs with a better opportunity to reach the higher-credit
tiers in the VIP.
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. To the extent that some of the
changes to the VIP may attract greater trading volume to CBOE (and away
from other exchanges), the Exchange does not believe the proposed
changes will impose any burden on intermarket competition. The Exchange
notes that, should the proposed changes make CBOE more attractive for
trading, market participants trading on other exchanges can always
elect to become TPHs on CBOE. Further, the Exchange exists in a
competitive marketplace, and to the extent that these proposed changes
make other exchanges less competitive with CBOE, market participants
trading on those other exchanges can elect to trade on CBOE.
The Exchange does not believe the proposed changes will impose any
burden on intramarket competition. Though the proposed changes only
benefit TPHs that meet the VIP thresholds, the purpose of all of the
proposed changes is to encourage the sending and electronic execution
of customer multiply-listed options volume to the Exchange. This
increased volume creates greater trading opportunities that benefit all
market participants (including TPHs that do not reach the higher-credit
tiers in the VIP). Further, the proposed changes apply to all TPHs.
The Exchange does not believe that the proposed changes to
eliminate the VIP credit of $0.10 per contract at every tier in VIP
will impose any burden on intermarket competition because the change is
minimal and the VIP program already gives a credit to qualifying TPHs.
Further, to the extent that any change in intramarket competition may
result from this change, such possible change is justifiable and offset
because the changes to such fees are designed to attract greater
customer order flow to the Exchange. This would bring greater liquidity
to the market, which benefits all market participants. The Exchange
does not believe that the elimination of the additional $0.10 credit
will cause any unnecessary burden on intermarket competition because
the changes are minimal and only apply to certain TPHS that qualify for
the VIP.
The Exchange also notes that it operates in a highly-competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive. The proposed rule change reflects a competitive pricing
structure designed to incent market participants to direct their order
flow to the Exchange, and the Exchange believes that such structure
will help the Exchange remain competitive with those fees and rebates
assessed by other venues.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \7\ and paragraph (f) 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.
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act.
[[Page 10649]]
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-2013-017 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2013-017. 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 also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2013-017, and should be
submitted on or before March 7, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-03394 Filed 2-13-13; 8:45 am]
BILLING CODE 8011-01-P
