Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend the Fees Schedule, 11243-11245 [2013-03570]
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Federal Register / Vol. 78, No. 32 / Friday, February 15, 2013 / Notices
regulations thereunder applicable to a
national securities exchange.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,36 that the
proposed rule change (SR–NYSEArca–
2012–138) be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.37
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–03490 Filed 2–14–13; 8:45 am]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68901; File No. SR–CBOE–
2013–018]
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 11, 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.
mstockstill on DSK4VPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of 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.
36 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
37 17
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1. Purpose
The Exchange is proposing to amend
its Fee Schedule. Specifically, the
Exchange is proposing to increase the
threshold in which it waives customer
transaction fees, implement a $0.25
marketing fee for trading in SPY and
QQQ options, and eliminate the
complex order surcharge.
First, the Exchange is proposing to
increase the threshold at which the
Exchange waives the customer
transaction fee in ‘‘ETF, ETN and
HOLDRs Options.’’ Currently, the
Exchange waives transaction fees for
customer orders of 99 contracts or less
in transactions in ETFs, ETNs, and
HOLDRs options. Any order that is 100
contracts or more is charged a fee of
$0.18. The Exchange is proposing to
increase this threshold and waive
transaction fees for customer orders of
249 contracts or less in these options.
The Exchange will charge any leg of a
complex orders in these options that
exceeds 249 even if the leg is only
partially executed below the 249
threshold. For orders 250 contracts and
above, the Exchange will continue to
charge a fee of $0.18. Corresponding
edits will also be made to Footnote 9 in
the Fees Schedule to reflect the change.
Raising the threshold for which the
Exchange will waive transaction fees
will allow customers who engage in
ETF, ETN and HOLDRs options trading
the opportunity to pay lower fees for
larger transactions and provide greater
incentives for such trading. In addition,
increasing this threshold will encourage
more interaction with Exchange
customers and encourage the direction
of customer ETF, ETN and HOLDRs
options orders to the Exchange.
Next, the Exchange is proposing to
implement a $0.25 marketing fee for
electronic trading in SPY and QQQ
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Sfmt 4703
11243
options. Currently, the Marketing Fee
assessed on all Penny Pilot ExchangeTraded Fund (‘‘ETF’’) options is $0.25
per contract, with the exception of SPY
and QQQ. The Exchange only charges a
$0.25 fee per contract in SPY and QQQ
options for qualifying complex orders
that trade via the Exchange Complex
Order Book against individual leg
markets. The Exchange is proposing to
amend the Fees Schedule to assess this
$0.25 fee per contract on all qualifying
orders whether simple or complex. This
change will place SPY and QQQ on the
same footing regarding the Marketing
Fee as other options in the Penny Pilot
classes. Other exchanges assess their
marketing fees on SPY and QQQ.3 To
correspond with this proposed change,
the Exchange also proposes to eliminate
the ‘‘Notes’’ section of the ‘‘Marketing
Fee’’ table of the Fees Schedule to
reflect this change.4
Finally, the Exchange is proposing to
eliminate the surcharge on complex
orders. Currently, the Exchange has a
$0.10 surcharge per contract for the
electronic execution leg of a complex
order in multiply-listed options that
executes against a customer complex
order. This surcharge is in addition to
the other transaction fees. The Exchange
is proposing to eliminate this surcharge.
Eliminating the surcharge for complex
orders will allow Trading Permit
Holders (‘‘TPHs’’) who engage in
complex order trading the opportunity
to pay lower fees for such transactions
and provide greater incentives for such
trading. In addition, eliminating the
$0.10 surcharge will encourage more
interaction with Exchange customers.
Thus, the proposed changes are
designed to attract greater order flow to
the Exchange. This would bring greater
liquidity to the market, which benefits
all market participants. The propose
changes are to take effect on February 1,
2013
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
3 See Section II, ‘‘Payment for Order Flow Fees,’’
of the Nasdaq OMX PHLX (‘‘Phlx’’) Fee Schedule.
4 The ‘‘Notes’’ section of the ‘‘Marketing Fee’’
table reads ‘‘The marketing fee will not be assessed
on electronic transactions in SPY and QQQ, except
for electronic transactions resulting from AIM and
complex orders that trade in either COA or COB
(excluding complex orders that trade against the leg
markets, on which the marketing fee will not be
assessed). The marketing fee will continue to be
assessed on open outcry transactions in SPY and
QQQ.’’ Because the Exchange proposes to assess the
Marketing Fee to SPY and QQQ in the same manner
as it applies to other Penny Pilot classes the SPYand QQQ-specific specifications set out in the
‘‘Notes’’ section are no longer relevant and can be
deleted.
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15FEN1
mstockstill on DSK4VPTVN1PROD with NOTICES
11244
Federal Register / Vol. 78, No. 32 / Friday, February 15, 2013 / Notices
‘‘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.
In particular, the proposed change to
increase the threshold at which the
Exchange waives the transaction fee for
customer orders is reasonable because it
will allow customers who engage in
such trading to trade larger orders
without any electronic transaction fee. It
is equitable and not unfairly
discriminatory because, while
customers are assessed different, and
often lower, fee rates than other market
participants, this is a common practice
within the options marketplace, and
customers often do not have the
sophisticated trading algorithms and
systems that other market participants
often possess. Further, to the extent that
any change in intramarket competition
may result from the proposed change to
the threshold for waiving options
customer transaction fees, 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. Further, the
proposed change will be applied to all
customers equally.
Next, the proposed change to assess a
$0.25 marketing fee for all SPY and
QQQ options contracts is reasonable
because it puts trading in SPY and QQQ
options on the same footing regarding
the Marketing Fee as other options in
the Penny Pilot Classes. It is equitable
and not unfairly discriminatory because
it is applied to all TPHs equally and
puts TPHs trading SPY and QQQ on the
same footing, with regards to the
Marketing Fee, as other Penny Pilot
classes. Moreover, other exchanges
assess their marketing fees on SPY and
QQQ transactions.7
Finally, the proposed change to
eliminate the complex order surcharge
is reasonable because it will allow TPHs
who engage in complex order trading
the opportunity to pay lower fees for
such transactions. It is equitable and not
unfairly discriminatory because it is
applied to all TPHs equally and will no
5 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
7 See Section II, ‘‘Payment for Order Flow Fees,’’
of the Phlx Fee Schedule.
longer place non-customer market
participants on a different footing, with
regards to the complex order surcharge,
from customers.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule changes will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed changes to increase the
threshold for waiving the electronic
customer transaction fee will cause any
unnecessary burden on intramarket
competition because, while customers
are assessed different, and often lower,
fee rates than other market participants,
this is a common practice within the
options marketplace, and customers
often do not have the sophisticated
trading algorithms and systems that
other market participants often possess.
Further, to the extent that any change in
intramarket competition may result
from the proposed change to the
threshold for waiving options customer
transaction fees, 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 proposed
change will cause any unnecessary
burden on intermarket competition
because the changes are minimal.
Further, to the extent that this change
makes trading on CBOE more attractive
to customers or other market
participants on other exchanges, they
can always elect to send orders to
CBOE.
The Exchange does not believe the
proposed changes to assess a $0.25 fee
in SPY and QQQ options will cause any
unnecessary burden on intramarket
competition because it merely puts
these options classes on the same
footing regarding the Marketing Fee as
other options in the Penny Pilot Classes
and will be assessed to the same market
participants as other classes to which
the Marketing Fee is assessed. The
Exchange does not believe that the
proposed change will cause any
unnecessary burden on intermarket
competition because the fee is similar to
fees assessed at other exchanges assess
their marketing fees on these classes.8
Finally, the Exchange does not believe
the proposed changes to eliminate the
complex order surcharge will cause any
unnecessary burden on intramarket
competition because the change is
minimal and applies to a specific set of
orders. Further, it puts non-customer
market participants on the same footing,
with regards to the complex order
surcharge, as customers. Moreover, to
the extent that any change in
intramarket competition may result
from the proposed 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
proposed change will cause any
unnecessary burden on intermarket
competition because the changes are
very minimal and specific to certain
order types. Further, to the extent that
this change makes trading on CBOE
more attractive to market participants
on other exchanges, they can always
elect to send orders to CBOE.
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 changes 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 9 and paragraph (f) of Rule
19b–410 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.
6 15
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8 See Section II, ‘‘Payment for Order Flow Fees,’’
of the Phlx Fee Schedule.
PO 00000
Frm 00112
Fmt 4703
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9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
10 17
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Federal Register / Vol. 78, No. 32 / Friday, February 15, 2013 / Notices
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 rulecomments@sec.gov. Please include File
Number SR–CBOE–2013–018 on the
subject line.
Paper Comments
mstockstill on DSK4VPTVN1PROD with NOTICES
• 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–2013–018. 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 CBOE’s
principal office. 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–
2013–018, and should be submitted on
or before March 8, 2013
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19:09 Feb 14, 2013
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–03570 Filed 2–14–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68870; File No. SR–
NYSEArca–2012–139]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Granting Approval of
Proposed Rule Change To List and
Trade First Trust Preferred Securities
and Income ETF Under NYSE Arca
Equities Rule 8.600
February 8, 2013.
I. Introduction
On December 6, 2012, NYSE Arca,
Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares
(‘‘Shares’’) of the First Trust Preferred
Securities and Income ETF (‘‘Fund’’)
under NYSE Arca Equities Rule 8.600.
The proposed rule change was
published in the Federal Register on
December 26, 2012.3 The Commission
received no comments on the proposal.
This order grants approval of the
proposed rule change.
II. Description of the Proposal
The Exchange proposes to list and
trade the Shares of the Fund pursuant
to NYSE Arca Equities Rule 8.600,
which governs the listing and trading of
Managed Fund Shares on the Exchange.
The Shares will be offered by First Trust
Exchange-Traded Fund III (‘‘Trust’’),
which is organized as a Massachusetts
business trust and is registered with the
Commission as an open-end
management investment company.4 The
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 68458
(December 18, 2012), 77 FR 76148 (‘‘Notice’’).
4 The Trust is registered under the Investment
Company Act of 1940 (‘‘1940 Act’’). On September
23, 2011, the Trust filed with the Commission a
registration statement on Form N–1A under the
Securities Act of 1933 and under the 1940 Act
relating to the Fund (File Nos. 333–176976 and
811–22245) (‘‘Registration Statement’’). In addition,
the Commission has issued an order granting
certain exemptive relief to the Trust under the 1940
Act. See Investment Company Act Release No.
30029 (April 10, 2012) (File No. 812–13795)
(‘‘Exemptive Order’’).
1 15
PO 00000
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Fmt 4703
Sfmt 4703
11245
investment adviser to the Fund is First
Trust Advisors L.P. (‘‘Adviser’’).
Stonebridge Advisors LLC will serve as
investment sub-adviser to the Fund
(‘‘Sub-Adviser’’) and will provide dayto-day portfolio management of the
Fund. First Trust Portfolios L.P.
(‘‘Distributor’’) will be the principal
underwriter and distributor of the
Fund’s Shares. Brown Brothers
Harriman & Co. will serve as
administrator, custodian, and transfer
agent for the Fund. The Exchange states
that each of the Adviser and SubAdviser is affiliated with a broker-dealer
and represents that each such Adviser
and Sub-Adviser has implemented a fire
wall with respect to its respective
broker-dealer affiliate regarding access
to information concerning the
composition of and changes to the
Fund’s portfolio.5
Description of the Fund
The Fund’s objective will be to
provide current income and total return.
Under normal market conditions,6 the
Fund will invest at least 80% of its net
assets (including investment
borrowings) in preferred securities
(‘‘Preferred Securities’’) and incomeproducing debt securities (‘‘Income
Securities’’).7 The Adviser represents
5 See Commentary .06 to NYSE Arca Equities
Rule 8.600. The Exchange represents that, in the
event (a) the Adviser or the Sub-Adviser becomes
newly affiliated with a broker-dealer, or (b) any new
adviser or sub-adviser becomes affiliated with a
broker-dealer, it will implement a fire wall with
respect to such broker-dealer regarding access to
information concerning the composition and/or
changes to the portfolio, and will be subject to
procedures designed to prevent the use and
dissemination of material, non-public information
regarding such portfolio.
6 The term ‘‘under normal market conditions’’
includes, but is not limited to, the absence of
extreme volatility or trading halts in the equity
markets or the financial markets generally;
operational issues causing dissemination of
inaccurate market information; or force majeure
type events such as systems failure, natural or manmade disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption, or any similar
intervening circumstance.
7 The Exchange states that the risks and potential
rewards of investing in the Fund may at times be
similar to the risks and potential rewards of
investing in both equity funds and bond funds.
Certain of the Preferred Securities in which the
Fund will invest will be traditional preferred stocks
that issue dividends that qualify for the dividend
received deduction under which ‘‘qualified’’
domestic corporations are able to exclude a
percentage of the dividends received from their
taxable income. Certain of the Preferred Securities
in which the Fund will invest will be preferred
stock that does not issue dividends that qualify for
the dividends received deduction for eligible
investors (‘‘non-DRD preferred stock’’) that do not
qualify for the dividends received deduction or
issue qualified dividend income. As described in
the Registration Statement, hybrid preferred
securities, another type of Preferred Securities, are
typically junior and fully subordinated liabilities of
E:\FR\FM\15FEN1.SGM
Continued
15FEN1
]]>Agencies
[Federal Register Volume 78, Number 32 (Friday, February 15, 2013)]
[Notices]
[Pages 11243-11245]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-03570]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68901; File No. SR-CBOE-2013-018]
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 11, 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 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to amend its Fee Schedule. Specifically,
the Exchange is proposing to increase the threshold in which it waives
customer transaction fees, implement a $0.25 marketing fee for trading
in SPY and QQQ options, and eliminate the complex order surcharge.
First, the Exchange is proposing to increase the threshold at which
the Exchange waives the customer transaction fee in ``ETF, ETN and
HOLDRs Options.'' Currently, the Exchange waives transaction fees for
customer orders of 99 contracts or less in transactions in ETFs, ETNs,
and HOLDRs options. Any order that is 100 contracts or more is charged
a fee of $0.18. The Exchange is proposing to increase this threshold
and waive transaction fees for customer orders of 249 contracts or less
in these options. The Exchange will charge any leg of a complex orders
in these options that exceeds 249 even if the leg is only partially
executed below the 249 threshold. For orders 250 contracts and above,
the Exchange will continue to charge a fee of $0.18. Corresponding
edits will also be made to Footnote 9 in the Fees Schedule to reflect
the change. Raising the threshold for which the Exchange will waive
transaction fees will allow customers who engage in ETF, ETN and HOLDRs
options trading the opportunity to pay lower fees for larger
transactions and provide greater incentives for such trading. In
addition, increasing this threshold will encourage more interaction
with Exchange customers and encourage the direction of customer ETF,
ETN and HOLDRs options orders to the Exchange.
Next, the Exchange is proposing to implement a $0.25 marketing fee
for electronic trading in SPY and QQQ options. Currently, the Marketing
Fee assessed on all Penny Pilot Exchange-Traded Fund (``ETF'') options
is $0.25 per contract, with the exception of SPY and QQQ. The Exchange
only charges a $0.25 fee per contract in SPY and QQQ options for
qualifying complex orders that trade via the Exchange Complex Order
Book against individual leg markets. The Exchange is proposing to amend
the Fees Schedule to assess this $0.25 fee per contract on all
qualifying orders whether simple or complex. This change will place SPY
and QQQ on the same footing regarding the Marketing Fee as other
options in the Penny Pilot classes. Other exchanges assess their
marketing fees on SPY and QQQ.\3\ To correspond with this proposed
change, the Exchange also proposes to eliminate the ``Notes'' section
of the ``Marketing Fee'' table of the Fees Schedule to reflect this
change.\4\
---------------------------------------------------------------------------
\3\ See Section II, ``Payment for Order Flow Fees,'' of the
Nasdaq OMX PHLX (``Phlx'') Fee Schedule.
\4\ The ``Notes'' section of the ``Marketing Fee'' table reads
``The marketing fee will not be assessed on electronic transactions
in SPY and QQQ, except for electronic transactions resulting from
AIM and complex orders that trade in either COA or COB (excluding
complex orders that trade against the leg markets, on which the
marketing fee will not be assessed). The marketing fee will continue
to be assessed on open outcry transactions in SPY and QQQ.'' Because
the Exchange proposes to assess the Marketing Fee to SPY and QQQ in
the same manner as it applies to other Penny Pilot classes the SPY-
and QQQ-specific specifications set out in the ``Notes'' section are
no longer relevant and can be deleted.
---------------------------------------------------------------------------
Finally, the Exchange is proposing to eliminate the surcharge on
complex orders. Currently, the Exchange has a $0.10 surcharge per
contract for the electronic execution leg of a complex order in
multiply-listed options that executes against a customer complex order.
This surcharge is in addition to the other transaction fees. The
Exchange is proposing to eliminate this surcharge. Eliminating the
surcharge for complex orders will allow Trading Permit Holders
(``TPHs'') who engage in complex order trading the opportunity to pay
lower fees for such transactions and provide greater incentives for
such trading. In addition, eliminating the $0.10 surcharge will
encourage more interaction with Exchange customers.
Thus, the proposed changes are designed to attract greater order
flow to the Exchange. This would bring greater liquidity to the market,
which benefits all market participants. The propose changes are to take
effect on February 1, 2013
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the
[[Page 11244]]
``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.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
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In particular, the proposed change to increase the threshold at
which the Exchange waives the transaction fee for customer orders is
reasonable because it will allow customers who engage in such trading
to trade larger orders without any electronic transaction fee. It is
equitable and not unfairly discriminatory because, while customers are
assessed different, and often lower, fee rates than other market
participants, this is a common practice within the options marketplace,
and customers often do not have the sophisticated trading algorithms
and systems that other market participants often possess. Further, to
the extent that any change in intramarket competition may result from
the proposed change to the threshold for waiving options customer
transaction fees, 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. Further, the
proposed change will be applied to all customers equally.
Next, the proposed change to assess a $0.25 marketing fee for all
SPY and QQQ options contracts is reasonable because it puts trading in
SPY and QQQ options on the same footing regarding the Marketing Fee as
other options in the Penny Pilot Classes. It is equitable and not
unfairly discriminatory because it is applied to all TPHs equally and
puts TPHs trading SPY and QQQ on the same footing, with regards to the
Marketing Fee, as other Penny Pilot classes. Moreover, other exchanges
assess their marketing fees on SPY and QQQ transactions.\7\
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\7\ See Section II, ``Payment for Order Flow Fees,'' of the Phlx
Fee Schedule.
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Finally, the proposed change to eliminate the complex order
surcharge is reasonable because it will allow TPHs who engage in
complex order trading the opportunity to pay lower fees for such
transactions. It is equitable and not unfairly discriminatory because
it is applied to all TPHs equally and will no longer place non-customer
market participants on a different footing, with regards to the complex
order surcharge, from customers.
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule changes will impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange does not believe
that the proposed changes to increase the threshold for waiving the
electronic customer transaction fee will cause any unnecessary burden
on intramarket competition because, while customers are assessed
different, and often lower, fee rates than other market participants,
this is a common practice within the options marketplace, and customers
often do not have the sophisticated trading algorithms and systems that
other market participants often possess. Further, to the extent that
any change in intramarket competition may result from the proposed
change to the threshold for waiving options customer transaction fees,
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 proposed change will cause any unnecessary burden on intermarket
competition because the changes are minimal. Further, to the extent
that this change makes trading on CBOE more attractive to customers or
other market participants on other exchanges, they can always elect to
send orders to CBOE.
The Exchange does not believe the proposed changes to assess a
$0.25 fee in SPY and QQQ options will cause any unnecessary burden on
intramarket competition because it merely puts these options classes on
the same footing regarding the Marketing Fee as other options in the
Penny Pilot Classes and will be assessed to the same market
participants as other classes to which the Marketing Fee is assessed.
The Exchange does not believe that the proposed change will cause any
unnecessary burden on intermarket competition because the fee is
similar to fees assessed at other exchanges assess their marketing fees
on these classes.\8\
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\8\ See Section II, ``Payment for Order Flow Fees,'' of the Phlx
Fee Schedule.
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Finally, the Exchange does not believe the proposed changes to
eliminate the complex order surcharge will cause any unnecessary burden
on intramarket competition because the change is minimal and applies to
a specific set of orders. Further, it puts non-customer market
participants on the same footing, with regards to the complex order
surcharge, as customers. Moreover, to the extent that any change in
intramarket competition may result from the proposed 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 proposed change will cause any unnecessary burden on intermarket
competition because the changes are very minimal and specific to
certain order types. Further, to the extent that this change makes
trading on CBOE more attractive to market participants on other
exchanges, they can always elect to send orders to CBOE.
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 changes 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 \9\ and paragraph (f) of Rule 19b-4\10\
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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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f).
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[[Page 11245]]
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-2013-018 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-2013-018. 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 CBOE's principal office. 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-2013-018, and should be
submitted on or before March 8, 2013
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-03570 Filed 2-14-13; 8:45 am]
BILLING CODE 8011-01-P
