Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the CBOE Stock Exchange Fees Schedule, 12402-12405 [2013-04100]

Download as PDF 12402 Federal Register / Vol. 78, No. 36 / Friday, February 22, 2013 / Notices marketable retail orders. To the extent that the Program may raise Manning and best execution issues for broker-dealers, these issues are already presented by the existing practices of OTC market makers. The exemption being granted today is limited to a one-year pilot. The Exchange has stated that ‘‘sub-penny trading and pricing could potentially result in undesirable market behavior,’’ and, therefore, it will ‘‘monitor the Program in an effort to identify and address any such behavior.’’ 41 Furthermore, the Exchange has represented that it ‘‘will produce data throughout the pilot, which will include statistics about participation, the frequency and level of price improvement provided by the Program, and any effects on the broader market structure.’’ 42 The Commission expects to review the data and observations of the Exchange before determining whether and, if so, how to extend the exemption from the Sub-Penny Rule.43 V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,44 that the proposed rule change (SR–NASDAQ– 2012–129) be, and hereby is, approved on a one-year pilot basis. It is also hereby ordered that, pursuant to Rule 612(c) of Regulation NMS, the Exchange is given a limited exemption from Rule 612 of Regulation NMS allowing it to accept and rank orders priced equal to or greater than $1.00 per share in increments of $0.001, in the manner described in the proposed rule change above, on a one-year pilot basis coterminous with the effectiveness of the proposed rule change. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.45 Kevin O’Neill, Deputy Secretary. [FR Doc. 2013–04096 Filed 2–21–13; 8:45 am] sroberts on DSK5SPTVN1PROD with NOTICES BILLING CODE 8011–01–P 41 See Request for Sub-Penny Rule Exemption, supra note 6, at 3, n.6. 42 See supra note 28 and accompanying text. 43 In particular, the Commission expects the Exchange to observe how maker/taker transaction charges, whether imposed by the Exchange or by VerDate Mar<15>2010 16:18 Feb 21, 2013 Jkt 229001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68941; File No. SR–CBOE– 2013–022] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the CBOE Stock Exchange Fees Schedule February 15, 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 12, 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. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to amend the Fees Schedule of its CBOE Stock Exchange (‘‘CBSX’’). 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. other markets, might impact the use of the Program. Market distortions could arise where the size of a transaction rebate, whether for providing or taking liquidity, is greater than the size of the minimum increment permitted by the Program ($0.001 per share). PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to make a number of changes to the CBSX Fees Schedule. First, the Exchange proposes to amend the reference in Section 10 of the CBSX Fees Schedule to CBOEdirect to refer to CBOE Command, as the manner through which CBSX Traders connect to the CBSX System is now called CBOE Command. Second, CBSX proposes eliminate the distinction between Sponsored Users and non-Sponsored Users as they relate to CBOE Command Connectivity Charges. Currently, Sponsored Users are charged twice the regular monthly fees for such charges, with the types and amounts of such fees described in the chart below: Description Network Access Port (1 Gbps) Network Access Port (10 Gbps) ............ Network Access Port (Disaster Recovery) ...... CMI Login ID .... FIX Login ID ..... Regular monthly fee Sponsored user monthly fee $250 $500 1,000 2,000 250 100 100 500 200 200 Going forward, the Exchange proposes to assess to Sponsored Users and all other non-Trading Permit Holders the same CBOE Command Connectivity Charges as are assessed to Trading Permit Holders (‘‘TPHs’’), and to state that all such fees apply to non-TPHs as well as TPHs. The purpose of the proposed change is to simplify the Exchange’s fees structure for connectivity to the Exchange and have a standard set of connectivity fees that apply to both TPHs and non-TPHs. CBSX also proposes to amend the manner in which it determines which fee tiers apply for Maker transactions in securities priced $1 or greater. Currently, fees for such transactions are assessed depending on the amount of shares of liquidity that a Maker adds in one day, with the fee amount lowering based on a Maker adding higher levels of liquidity in one day. The current tiers 44 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12); 17 CFR 200.30– 3(a)(83). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 45 17 E:\FR\FM\22FEN1.SGM 22FEN1 12403 Federal Register / Vol. 78, No. 36 / Friday, February 22, 2013 / Notices and fees for such transactions are as follows: Execution type Maker Maker Maker Maker Maker (adds (adds (adds (adds (adds Rate 4,999,999 shares or less of liquidity in one day) .......................................................................................... 5,000,000–9,999,999 shares of liquidity in one day) .................................................................................... 10,000,000–14,999,999 shares of liquidity in one day) ................................................................................ 15,000,000–24,999,999 shares of liquidity in one day) ................................................................................ 25 million shares or more of liquidity in one day) ......................................................................................... CBSX proposes to cease determining such rates using nominal volume thresholds. Instead, CBSX proposes to use relative thresholds by calculating a CBSX Trader’s per-share Maker fees, using the Maker’s percentage of total consolidated volume (calculated as the volume reported by all exchanges and $0.0018 $0.0017 $0.0016 $0.0015 $0.0014 sroberts on DSK5SPTVN1PROD with NOTICES (adds (adds (adds (adds (adds VerDate Mar<15>2010 Rate less than 0.08% of TCV of liquidity in one day) ............................................................................................ at least 0.08% but less than 0.16% of TCV of liquidity in one day) ............................................................. at least 0.16% but less than 0.24% of TCV of liquidity in one day) ............................................................. at least 0.24% but less than 0.42% of TCV of liquidity in one day) ............................................................. 0.42% or more of TCV of liquidity in one day) .............................................................................................. The current nominal ‘‘amount of shares’’ thresholds and proposed ‘‘percentage of TCV’’ thresholds are intended to correspond (i.e. 4,999,999 shares or less of liquidity generally corresponds with .08% of TCV, etc., based on current TCV levels), and CBSX does not propose to change the amounts of the per-share rates at each tier. The purpose of the change to move away from basing the fee tiers on nominal shares per day to a relative percentage of TCV is to control and account for changes in national industry-wide volume. To correspond with this proposed change, CBSX proposes to adopt the definition of ‘‘TCV’’ (as defined above) as Footnote 5 to Section 2 of the CBSX Fees Schedule. CBSX also proposes to amend Footnote 1 to Section 2 to account for the use of percentage of TCV to determine per-share fees for Maker transactions in securities priced $1 or greater. The proposed new Footnote 1 will read: ‘‘These rates apply to all transactions in securities priced $1 or greater made by the same market participant in any day in which such participant adds (for Makers) or removes (for Takers) the established amount of shares (or percentage of TCV, as applicable) or more of liquidity that is determined in the chart above for each tier. Market participants who share a trading acronym or MPID may aggregate their trading activity for purposes of these rates. Qualification for these rates will require that a market participant appropriately indicate his trading acronym and/or MPID in the appropriate field on the order.’’ 16:18 Feb 21, 2013 Jkt 229001 CBSX also proposes to make two other changes to its Fees Schedule. First, in the ‘‘Execution Type’’ column of the first Maker fee tier listed in Section 2, CBSX proposes to move an end-parentheses so that footnotes referenced in that area are all outside of the parentheses, as such footnotes are in all other boxes in the ‘‘Execution Type’’ column. Second, CBSX proposes to delete Section 3 (‘‘Market Data’’) from its Fees Schedule. Section 3 currently states: ‘‘Market Data Infrastructure Fee: This fee is charged monthly to participants who receive market data from a third party market data vendor through CBSX’s market data infrastructure. The Exchange will pass-through to participants receiving the data the total costs incurred by the Exchange to provide the market data infrastructure. The amount of the fee is equal to the Exchange’s total costs divided by the number of participants receiving the data. Due to certain fixed costs incurred by the Exchange, each participant receiving the data as of February 15, 2010 will be obligated to pay the fee through June 30, 2010, even if such participant terminates its receipt of the data prior to June 30, 2010.’’ CBSX no longer provides the service being described in Section 3, meaning that CBSX market participants can no longer receive CBSX-related market data from a third party market data vendor through CBSX’s market data infrastructure. As such, CBSX proposes to delete Section 3 from its Fees Schedule. In conjunction with this deletion, each of Sections 4–8 will now PO 00000 Frm 00114 Fmt 4703 share. share. share. share. share. trade reporting facilities to a consolidated transaction reporting plan) (‘‘TCV’’). As such, the proposed tiers and fees are as follows: Execution type Maker Maker Maker Maker Maker per per per per per Sfmt 4703 $0.0018 $0.0017 $0.0016 $0.0015 $0.0014 per per per per per share. share. share. share. share. be renumbered as Sections 3–7, respectively. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.3 Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(4) of the Act,4 which requires that Exchange rules provide for the equitable allocation of reasonable dues, fees, and other charges among its Trading Permit Holders and other persons using its facilities. Eliminating, for the purpose of CBOE Command Connectivity Charges, the distinction between Sponsored Users and stating that these fees apply to both TPHs and non-TPHs is reasonable because it will allow Sponsored Users and other non-TPHs to pay half the amount that Sponsored Users are currently assessed for such fees and ensure that TPHs and nonTPHs pay the same amounts in connectivity fees. The proposed change is equitable and not unfairly discriminatory because it will allow Sponsored Users and non-TPHs to be assessed the same amounts as TPHs. The Exchange believes that converting the qualification for the different fee tiers for Maker transactions in securities priced $1 or greater from measuring by nominal amount of shares to measuring by relative percentage of TCV is reasonable because it allows CBSX to control and account for changes in 3 15 4 15 E:\FR\FM\22FEN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(4). 22FEN1 12404 Federal Register / Vol. 78, No. 36 / Friday, February 22, 2013 / Notices sroberts on DSK5SPTVN1PROD with NOTICES national industry-wide volume. The Exchange believes that the change is equitable and not unfairly discriminatory because it will be applied to all CBSX Traders. The change merely switches out the measuring stick to use one that accounts for changes in industry-wide volume. Further, other exchanges also measure volume using percentage of TCV.5 The Exchange believes that (1) Amending the reference in Section 10 of the CBSX Fees Schedule to CBOEdirect to accurately refer to CBOE Command, (2) moving the end-parentheses in the first Maker row of the ‘‘Execution Type’’ column of Section 2 of the CBSX Fees Schedule, (3) deleting Section 3 from the CBSX Fees Schedule, and correspondingly (4) re-numbering each of Sections 4–8 as Sections 3–7, respectively, are all consistent with the Section 6(b)(5) 6 requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, 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. Providing the correct reference to the manner through which CBSX Traders connect to the CBSX System, placing the footnotes in consistent places in Section 2, deleting a Section that refers to a service which is no longer provided by CBSX, and re-numbering the following sections on the CBSX Fees Schedule due to that deletion, will all serve to eliminate any potential confusion, thereby removing impediments to and perfecting the mechanism of a free and open market and a national market system, and, in general, protecting investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition CBSX 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. Eliminating, for the purpose of CBOE Command Connectivity Charges, the distinction between Sponsored Users and stating that these fees apply to both TPHs and non-TPHs will relieve any possible 5 See BATS Exchange, Inc. (‘‘BATS’’) Fee Schedule, section on Equities Pricing. 6 15 U.S.C. 78f(b)(5). VerDate Mar<15>2010 16:18 Feb 21, 2013 Jkt 229001 burden on intramarket competition because it will ensure that TPHs and non-TPHs will be paying the same fee amounts. The Exchange believes that the proposed change will not impose any burden on intermarket competition, or have an impact on intermarket competition, because the proposed changes apply merely to connections to CBSX, and each exchange has different manners and structures for connectivity. Further, to the extent that the elimination of separate higher fees for Sponsored Users and the statement that the regular fees apply to both TPHs and non-TPHs could attract market participants connecting to other exchanges to connect to CBSX, market participants trading on other exchanges can always elect to do so. The Exchange believes that converting the qualification for the different fee tiers for Maker transactions in securities priced $1 or greater from measuring by nominal amount of shares to measuring by relative percentage of TCV will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe this change imposes a significant burden on intramarket competition, as it applies to all CBSX Traders. The Exchange does not believe this change impose [sic] a significant burden on intermarket competition because it will put CBSX on an more even competitive footing with other exchanges that already use percentage of TCV to determine fees.7 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 8 and paragraph (f) 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. 7 See BATS Fee Schedule, section on Equities Pricing. 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b–4(f). PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 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–2013–022 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–2013–022. 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 20549–1090 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 offices 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– 2013–022, and should be submitted on or before March 15, 2013. E:\FR\FM\22FEN1.SGM 22FEN1 Federal Register / Vol. 78, No. 36 / Friday, February 22, 2013 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–04100 Filed 2–21–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68942; File No. SR–FINRA– 2013–015] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Section 4 of Schedule A to the FINRA By-Laws To Adopt a Waiver Process for the Continuing Membership Application Fee and Amend NASD Rules 1013 and 1017 To Provide for a Refund of the Application Fee for the Withdrawal of a New Member or Continuing Membership Application February 15, 2013. sroberts on DSK5SPTVN1PROD with NOTICES Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 5, 2013, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as constituting a ‘‘non-controversial’’ rule change under paragraph (f)(6) of Rule 19b–4 under the Act,3 which renders the proposal effective upon receipt of this filing by the Commission. 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 FINRA is proposing to amend Section 4 of Schedule A to the FINRA By-Laws to adopt a waiver process for the continuing membership application fee where FINRA determines that the application is proposing less significant changes that do not require substantial staff review. The proposed rule change also would amend NASD Rules 1013 (New Member Application and Interview) and 1017 (Application for 10 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 1 15 VerDate Mar<15>2010 16:18 Feb 21, 2013 Jkt 229001 Approval of Change in Ownership, Control, or Business Operations) to provide for a refund of the application fee (less a $500 processing fee) if a new member applicant or continuing membership applicant withdraws an application within 30 days after filing the application. The text of the proposed rule change is available on FINRA’s Web site at https://www.finra.org, at the principal office of FINRA 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, FINRA 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. FINRA 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 Effective July 23, 2012, FINRA amended Section 4 of Schedule A to its By-Laws to, among other things, assess a new fee for continuing membership applications (‘‘CMAs’’).4 In light of comments raised on the CMA fee, FINRA proposes to amend Section 4 of Schedule A to the FINRA By-Laws to adopt a waiver process for the CMA fee where FINRA determines that the CMA is proposing less significant changes that do not require substantial staff review.5 The proposed rule change also would amend NASD Rules 1013 (New Member Application and Interview) and 1017 (Application for Approval of Change in Ownership, Control, or Business Operations) to refund the requisite application fee (less $500, 4 See Securities Exchange Act Release No. 67240 (June 22, 2012), 77 FR 38694 (June 28, 2012) (Notice of Filing and Immediate Effectiveness of File No. SR–FINRA–2012–031). On July 23, 2012, FINRA also made available a new Form CMA for optional use by continuing membership applicants; applicants were required to use Form CMA effective August 27, 2012. See Securities Exchange Act Release No. 67484 (July 23, 2012), 77 FR 44298 (July 27, 2012) (Notice of Filing and Immediate Effectiveness of SR–FINRA–2012–036). 5 See also Letter from Philip Shaikun, Associate Vice President and Associate General Counsel, FINRA, to Elizabeth M. Murphy, Secretary, SEC, dated August 3, 2012, in response to comments on SR–FINRA–2012–031 (indicating FINRA’s intent to consider a waiver program for the CMA fee). PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 12405 which shall be retained by FINRA as a processing fee) if an applicant withdraws a new membership application (‘‘NMA’’) or CMA within 30 days after filing the application. CMA Fee Waiver NASD Rule 1017 provides parameters for changes in a member’s ownership, control, or business operations that would require a CMA,6 and NASD Rule 1012 (General Provisions) requires an applicant filing a CMA to submit an application fee pursuant to Schedule A to the FINRA By-Laws. Section 4(i) of Schedule A to the FINRA By-Laws assesses applicants a CMA fee ranging from $5,000 to $100,000 depending on the number of registered persons associated (or to be associated) with the applicant and the type of change in ownership, control, or business operations being contemplated (merger, material change, ownership change, transfer of assets, or acquisition). For instance, the fee structure assesses a member with only one to ten registered persons a fee ranging between $5,000 and $7,500, depending on the type of CMA, whereas a member with 301 to 500 registered persons is assessed a fee ranging between $10,000 and $30,000 depending on the type of CMA. This tiered fee structure recognizes that more complex changes and larger applicants generally require additional staff resources. The proposed rule change would provide FINRA with flexibility to grant a waiver of the CMA fee for those applications that propose less significant changes to a member firm’s 6 NASD Rule 1017(a) (Events Requiring an Application) requires a member to file an application for approval of any of the following changes to its ownership, control, or business operations: (1) A merger of the member with another member, unless both are members of the NYSE or the surviving entity will continue to be a member of the NYSE; (2) a direct or indirect acquisition by the member of another member, unless the acquiring member is a member of the NYSE; (3) direct or indirect acquisitions or transfers of 25 percent or more in the aggregate of the member’s assets, or any asset, business, or line of operation that generates revenues comprising 25 percent or more in the aggregate of the member’s earnings measured on a rolling 36-month basis, unless both the seller and the acquirer are members of the NYSE; (4) a change in the equity ownership or partnership capital of the member that results in one person or entity directly or indirectly owning or controlling 25 percent or more of the equity or partnership capital; or (5) a material change in business operations as defined in NASD Rule 1011(k) (Material Change in Business Operations). NASD Rule 1011(k) defines a ‘‘material change in business operations’’ as including, but not limited to: (1) Removing or modifying a membership agreement restriction; (2) market making, underwriting, or acting as a dealer for the first time; and (3) adding business activities that require a higher minimum net capital under SEA [sic] Rule 15c3–1. E:\FR\FM\22FEN1.SGM 22FEN1

Agencies

[Federal Register Volume 78, Number 36 (Friday, February 22, 2013)]
[Notices]
[Pages 12402-12405]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04100]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68941; File No. SR-CBOE-2013-022]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend the CBOE Stock Exchange Fees Schedule

February 15, 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 12, 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 proposes to amend the Fees Schedule of its CBOE Stock 
Exchange (``CBSX''). 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 make a number of changes to the CBSX Fees 
Schedule. First, the Exchange proposes to amend the reference in 
Section 10 of the CBSX Fees Schedule to CBOEdirect to refer to CBOE 
Command, as the manner through which CBSX Traders connect to the CBSX 
System is now called CBOE Command.
    Second, CBSX proposes eliminate the distinction between Sponsored 
Users and non-Sponsored Users as they relate to CBOE Command 
Connectivity Charges. Currently, Sponsored Users are charged twice the 
regular monthly fees for such charges, with the types and amounts of 
such fees described in the chart below:

------------------------------------------------------------------------
                                                              Sponsored
                  Description                     Regular        user
                                                monthly fee  monthly fee
------------------------------------------------------------------------
Network Access Port (1 Gbps)..................         $250         $500
Network Access Port (10 Gbps).................        1,000        2,000
Network Access Port (Disaster Recovery).......          250          500
CMI Login ID..................................          100          200
FIX Login ID..................................          100          200
------------------------------------------------------------------------

    Going forward, the Exchange proposes to assess to Sponsored Users 
and all other non-Trading Permit Holders the same CBOE Command 
Connectivity Charges as are assessed to Trading Permit Holders 
(``TPHs''), and to state that all such fees apply to non-TPHs as well 
as TPHs. The purpose of the proposed change is to simplify the 
Exchange's fees structure for connectivity to the Exchange and have a 
standard set of connectivity fees that apply to both TPHs and non-TPHs.
    CBSX also proposes to amend the manner in which it determines which 
fee tiers apply for Maker transactions in securities priced $1 or 
greater. Currently, fees for such transactions are assessed depending 
on the amount of shares of liquidity that a Maker adds in one day, with 
the fee amount lowering based on a Maker adding higher levels of 
liquidity in one day. The current tiers

[[Page 12403]]

and fees for such transactions are as follows:

------------------------------------------------------------------------
          Execution type                            Rate
------------------------------------------------------------------------
Maker (adds 4,999,999 shares or     $0.0018 per share.
 less of liquidity in one day).
Maker (adds 5,000,000-9,999,999     $0.0017 per share.
 shares of liquidity in one day).
Maker (adds 10,000,000-14,999,999   $0.0016 per share.
 shares of liquidity in one day).
Maker (adds 15,000,000-24,999,999   $0.0015 per share.
 shares of liquidity in one day).
Maker (adds 25 million shares or    $0.0014 per share.
 more of liquidity in one day).
------------------------------------------------------------------------

    CBSX proposes to cease determining such rates using nominal volume 
thresholds. Instead, CBSX proposes to use relative thresholds by 
calculating a CBSX Trader's per-share Maker fees, using the Maker's 
percentage of total consolidated volume (calculated as the volume 
reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan) (``TCV''). As such, the 
proposed tiers and fees are as follows:

------------------------------------------------------------------------
          Execution type                            Rate
------------------------------------------------------------------------
Maker (adds less than 0.08% of TCV  $0.0018 per share.
 of liquidity in one day).
Maker (adds at least 0.08% but      $0.0017 per share.
 less than 0.16% of TCV of
 liquidity in one day).
Maker (adds at least 0.16% but      $0.0016 per share.
 less than 0.24% of TCV of
 liquidity in one day).
Maker (adds at least 0.24% but      $0.0015 per share.
 less than 0.42% of TCV of
 liquidity in one day).
Maker (adds 0.42% or more of TCV    $0.0014 per share.
 of liquidity in one day).
------------------------------------------------------------------------

    The current nominal ``amount of shares'' thresholds and proposed 
``percentage of TCV'' thresholds are intended to correspond (i.e. 
4,999,999 shares or less of liquidity generally corresponds with .08% 
of TCV, etc., based on current TCV levels), and CBSX does not propose 
to change the amounts of the per-share rates at each tier. The purpose 
of the change to move away from basing the fee tiers on nominal shares 
per day to a relative percentage of TCV is to control and account for 
changes in national industry-wide volume.
    To correspond with this proposed change, CBSX proposes to adopt the 
definition of ``TCV'' (as defined above) as Footnote 5 to Section 2 of 
the CBSX Fees Schedule. CBSX also proposes to amend Footnote 1 to 
Section 2 to account for the use of percentage of TCV to determine per-
share fees for Maker transactions in securities priced $1 or greater. 
The proposed new Footnote 1 will read: ``These rates apply to all 
transactions in securities priced $1 or greater made by the same market 
participant in any day in which such participant adds (for Makers) or 
removes (for Takers) the established amount of shares (or percentage of 
TCV, as applicable) or more of liquidity that is determined in the 
chart above for each tier. Market participants who share a trading 
acronym or MPID may aggregate their trading activity for purposes of 
these rates. Qualification for these rates will require that a market 
participant appropriately indicate his trading acronym and/or MPID in 
the appropriate field on the order.''
    CBSX also proposes to make two other changes to its Fees Schedule. 
First, in the ``Execution Type'' column of the first Maker fee tier 
listed in Section 2, CBSX proposes to move an end-parentheses so that 
footnotes referenced in that area are all outside of the parentheses, 
as such footnotes are in all other boxes in the ``Execution Type'' 
column.
    Second, CBSX proposes to delete Section 3 (``Market Data'') from 
its Fees Schedule. Section 3 currently states: ``Market Data 
Infrastructure Fee: This fee is charged monthly to participants who 
receive market data from a third party market data vendor through 
CBSX's market data infrastructure. The Exchange will pass-through to 
participants receiving the data the total costs incurred by the 
Exchange to provide the market data infrastructure. The amount of the 
fee is equal to the Exchange's total costs divided by the number of 
participants receiving the data. Due to certain fixed costs incurred by 
the Exchange, each participant receiving the data as of February 15, 
2010 will be obligated to pay the fee through June 30, 2010, even if 
such participant terminates its receipt of the data prior to June 30, 
2010.''
    CBSX no longer provides the service being described in Section 3, 
meaning that CBSX market participants can no longer receive CBSX-
related market data from a third party market data vendor through 
CBSX's market data infrastructure. As such, CBSX proposes to delete 
Section 3 from its Fees Schedule. In conjunction with this deletion, 
each of Sections 4-8 will now be renumbered as Sections 3-7, 
respectively.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\3\ Specifically, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\4\ which requires that 
Exchange rules provide for the equitable allocation of reasonable dues, 
fees, and other charges among its Trading Permit Holders and other 
persons using its facilities. Eliminating, for the purpose of CBOE 
Command Connectivity Charges, the distinction between Sponsored Users 
and stating that these fees apply to both TPHs and non-TPHs is 
reasonable because it will allow Sponsored Users and other non-TPHs to 
pay half the amount that Sponsored Users are currently assessed for 
such fees and ensure that TPHs and non-TPHs pay the same amounts in 
connectivity fees. The proposed change is equitable and not unfairly 
discriminatory because it will allow Sponsored Users and non-TPHs to be 
assessed the same amounts as TPHs.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that converting the qualification for the 
different fee tiers for Maker transactions in securities priced $1 or 
greater from measuring by nominal amount of shares to measuring by 
relative percentage of TCV is reasonable because it allows CBSX to 
control and account for changes in

[[Page 12404]]

national industry-wide volume. The Exchange believes that the change is 
equitable and not unfairly discriminatory because it will be applied to 
all CBSX Traders. The change merely switches out the measuring stick to 
use one that accounts for changes in industry-wide volume. Further, 
other exchanges also measure volume using percentage of TCV.\5\
---------------------------------------------------------------------------

    \5\ See BATS Exchange, Inc. (``BATS'') Fee Schedule, section on 
Equities Pricing.
---------------------------------------------------------------------------

    The Exchange believes that (1) Amending the reference in Section 10 
of the CBSX Fees Schedule to CBOEdirect to accurately refer to CBOE 
Command, (2) moving the end-parentheses in the first Maker row of the 
``Execution Type'' column of Section 2 of the CBSX Fees Schedule, (3) 
deleting Section 3 from the CBSX Fees Schedule, and correspondingly (4) 
re-numbering each of Sections 4-8 as Sections 3-7, respectively, are 
all consistent with the Section 6(b)(5) \6\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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. 
Providing the correct reference to the manner through which CBSX 
Traders connect to the CBSX System, placing the footnotes in consistent 
places in Section 2, deleting a Section that refers to a service which 
is no longer provided by CBSX, and re-numbering the following sections 
on the CBSX Fees Schedule due to that deletion, will all serve to 
eliminate any potential confusion, thereby removing impediments to and 
perfecting the mechanism of a free and open market and a national 
market system, and, in general, protecting investors and the public 
interest.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    CBSX 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. Eliminating, for the purpose of 
CBOE Command Connectivity Charges, the distinction between Sponsored 
Users and stating that these fees apply to both TPHs and non-TPHs will 
relieve any possible burden on intramarket competition because it will 
ensure that TPHs and non-TPHs will be paying the same fee amounts. The 
Exchange believes that the proposed change will not impose any burden 
on intermarket competition, or have an impact on intermarket 
competition, because the proposed changes apply merely to connections 
to CBSX, and each exchange has different manners and structures for 
connectivity. Further, to the extent that the elimination of separate 
higher fees for Sponsored Users and the statement that the regular fees 
apply to both TPHs and non-TPHs could attract market participants 
connecting to other exchanges to connect to CBSX, market participants 
trading on other exchanges can always elect to do so.
    The Exchange believes that converting the qualification for the 
different fee tiers for Maker transactions in securities priced $1 or 
greater from measuring by nominal amount of shares to measuring by 
relative percentage of TCV will not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The Exchange does not believe this change imposes a 
significant burden on intramarket competition, as it applies to all 
CBSX Traders. The Exchange does not believe this change impose [sic] a 
significant burden on intermarket competition because it will put CBSX 
on an more even competitive footing with other exchanges that already 
use percentage of TCV to determine fees.\7\
---------------------------------------------------------------------------

    \7\ See BATS Fee Schedule, section on Equities Pricing.
---------------------------------------------------------------------------

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 \8\ and paragraph (f) 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).
---------------------------------------------------------------------------

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-2013-022 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-2013-022. 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 20549-1090 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 offices 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-2013-022, and should be submitted on or before March 15, 2013.


[[Page 12405]]


    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. 2013-04100 Filed 2-21-13; 8:45 am]
BILLING CODE 8011-01-P
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