Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule, 45279-45282 [2013-17974]

Download as PDF Federal Register / Vol. 78, No. 144 / Friday, July 26, 2013 / Notices The Program of Environment Safety and Health (PESH) in the Division of Polar Programs (GEO/PLR), in accordance with § 671.17, is giving notice that an emergency relating to considerations of the safety of human life or of ships, aircraft or other equipment and facilities of high value, or the protection of the environment caused hazardous waste to be stored in at South Pole Station for more than 15 months. Hazardous waste in the form of batteries, regulated medical waste, noncontrolled medicines, laboratory chemical waste, contaminated laboratory glassware, gas cylinders, light bulbs and paint cans, with an aggregate of approximately 2000 lbs. net weight, was segregated and packaged for removal from the station. The waste was to be removed in February 2013, at the end of 2012–2013 austral summer season. The unusual warming and melting of the ice runway at McMurdo Station resulted in reduced flight availability to the South Pole in late January and early February. Compatibility issues related to flying hazardous cargo and passengers further reduced the available flights to removing the hazardous waste material. During the final week of the season, the temperature conditions resulted in the formation of ground level contrails. The resulting hazy conditions and extremely low visibility prevented safe airplane loading operations. Potential damage to the airplane and/or harm to human life were the considerations which prevented the hazardous waste from leaving the station. During the early part of the 2013– 2104 austral summer season, the priority will be to remove the South Pole hazardous waste to McMurdo Station, where it will be removed from the continent. SUMMARY: FOR FURTHER INFORMATION CONTACT: Polly A. Penhale at (703) 292–7420. Nadene G. Kennedy, Division of Polar Programs. [FR Doc. 2013–17964 Filed 7–25–13; 8:45 am] [Release No. 34–70014; File No. SR–CBOE– 2013–072] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule July 22, 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 July 11, 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 Substance of the Proposed Rule Change The Exchange proposes to amend its 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’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change BILLING CODE 7555–01–P tkelley on DSK3SPTVN1PROD with NOTICES Dr. SECURITIES AND EXCHANGE COMMISSION 1. Purpose The Exchange proposes to amend its Fees Schedule. First, the Exchange 1 15 2 17 VerDate Mar<15>2010 18:54 Jul 25, 2013 Jkt 229001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00111 Fmt 4703 Sfmt 4703 45279 proposes to eliminate the $200-permonth Hybrid Quoting Infrastructure User Fee, which is assessed to Trading Permit Holders (‘‘TPHs’’) to help cover the costs associated with hardware and maintenance services to third-party vendors that provide quoting software used by TPHs to trade on the Exchange’s Hybrid Trading System (‘‘Hybrid’’). This elimination will allow TPHs to avoid paying this fee, and may encourage more market participants to trade on CBOE. The Exchange also proposes to make an amendment to the Fees Schedule regarding Clearing Trading Permit Holder Proprietary Facilitation fees. On April 10, 2013, the Exchange amended its Fees Schedule to, in part, make more clear the fact that the Exchange will assess no Clearing Trading Permit Holder Proprietary transaction fees for certain types of facilitation orders (as defined in Footnote 11 of the Fees Schedule), including those executed via the Exchange’s Automated Execution Mechanism (‘‘AIM’’), in certain classes.3 However, regular (non-AIM) electronic Clearing Trading Permit Holder Proprietary facilitation orders remained subject to transaction fees. The Exchange hereby proposes to cease assessing transaction fees on such orders.4 This will mean that electronic Clearing Trading Permit Holder Proprietary Facilitation orders will be assessed no fees regardless of whether they are executed via AIM or the Exchange’s regular electronic mechanism (placing such executions on the same footing with regard to fees). Next, the Exchange proposes to amend its Fees Schedule with regard to fees for SPXPM. On February 19, 2013, the Exchange adopted a set of fees for the trading of SPXPM.5 The Customer SPXPM fees were set at the same rates as the Customer SPX fees. However, SPXPM trades on the Exchange’s Hybrid System, while SPX trades on the Exchange’s Hybrid 3.0 trading platform. As such, SPXPM is eligible to trade on AIM, while SPX currently does not trade on AIM. Therefore, the Exchange proposes to create separate lines for 3 See Securities Exchange Act Release No. 69422 (April 22, 2013), 78 FR 25112 (April 29, 2013) (SR– CBOE–2013–042). 4 As such, along with amending the Equity Options Rate Table, the ETF and ETN Options Rate Table, and the Index Options Rate Table—All Index Products Excluding SPX, SPXW, SPXpm, SRO, OEX, XEO, VIX and VOLATILITY INDEXES, to reflect this change, the Exchange also proposes to amend Footnote 11 to state that no Clearing Trading Permit Holder Proprietary transaction fees will be assessed for facilitation orders electronically (including via AIM). 5 See Securities Exchange Act Release No. 69025 (March 4, 2013), 78 FR 15076 (March 8, 2013) (SR– CBOE–2013–025). E:\FR\FM\26JYN1.SGM 26JYN1 45280 Federal Register / Vol. 78, No. 144 / Friday, July 26, 2013 / Notices Customer rates in SPXPM on the Specified Proprietary Index Options Rate Table—SPX, SPXW, SPXpm, SRO, OEX, XEO, VIX and VOLATILITY INDEXES and remove SPXPM from those lines listing SPX rates in order to eliminate any potential confusion about where SPXPM can trade. The rate amounts for SPXPM AIM trades will be listed as the same as for other SPXPM trades (as they are now; $0.44 per contract for SPXpm Premium > or = $1 and $0.35 per contract for SPXpm Premium < $1). The AIM Agency/ Primary and AIM Contra columns, which reference the AIM Agency/ Primary and AIM Contra Execution Fees, as well as delineate which securities (and types of transactions) are eligible for AIM executions, will be modified to state ‘‘SPXpm and VIX Only’’ to demonstrate that SPXPM is eligible for AIM executions. tkelley on DSK3SPTVN1PROD with NOTICES 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.6 Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(4) of the Act,7 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. The Exchange believes that the elimination of the Hybrid Quoting Infrastructure User Fee is reasonable because it will prevent market participants to whom the fee would otherwise apply from having to pay the fee. This change is equitable and not unfairly discriminatory because it will apply to all market participants. The Exchange believes that the proposed change to cease assessing transaction fees on regular (non-AIM) electronic Clearing Trading Permit Holder Proprietary facilitation orders is reasonable because Clearing Trading Permit Holders who would otherwise have had to pay for such transactions now will not be required to do so. The Exchange believes that this proposed change is equitable and not unfairly discriminatory because it will place regular electronic (non-AIM) Clearing Trading Permit Holder Proprietary facilitation orders on the same footing (with regards to fees) as Clearing Trading Permit Holder Proprietary 6 15 7 15 facilitation orders executed in AIM. Further, the Exchange believes that it is equitable and not unfairly discriminatory to permit Clearing Trading Permit Holders to execute Proprietary Facilitation orders electronically for free and not give this opportunity to other market participants because Clearing Trading Permit Holders have a number of obligations (such as membership with the Options Clearing Corporation), significant regulatory burdens, and financial obligations, that other market participants do not need to take on. Finally, this proposed change applies to all regular electronic (non-AIM) Clearing Trading Permit Holder Proprietary facilitation orders equally. The Exchange believes that the clarification regarding SPXPM and its eligibility for AIM executions is consistent with the Section 6(b)(5) 8 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 facilitation 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. Making the Fees Schedule more clear that SPXPM trades on AIM will remove any potential confusion, thereby removing an impediment 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. The Exchange also believes that assessing Customer transactions in SPXPM (Premium < $1) a fee of $0.35 per contract is consistent with Section 6(b)(4) of the Act,9 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. The Exchange believes this is reasonable, as well as equitable and not unfairly discriminatory, because it is the same amount as is assessed to Customer transactions in SPX (Premium < $1) (SPX and SPXPM are based on the same underlying index, the S&P 500). The Exchange believes that assessing a higher fee for Customer transactions in SPXPM options whose premium is greater than or equal to $1.00 than for Customer transactions in SPXPM U.S.C. 78f(b). U.S.C. 78f(b)(4). VerDate Mar<15>2010 18:54 Jul 25, 2013 8 15 9 15 Jkt 229001 PO 00000 U.S.C. 78f(b)(5). U.S.C. 78f(b)(4). Frm 00112 Fmt 4703 Sfmt 4703 options whose premium is less than $1.00 is equitable and not unfairly discriminatory because nearly all options based on the S&P 500 Index are priced at well above $1.00. However, most Customers, at the end of an expiration cycle, desire to continue to hold options based on the S&P 500 Index (including both SPX and SPXPM), and because it is the end of an expiration cycle, such options are priced very low. The Exchange therefore offers lower pricing for Customer SPX and SPXPM options in order to encourage such trading and thus encourage Customers to open SPX and SPXPM options positions in the next cycle. As these new positions will almost certainly be priced above $1.00, offering the lower pricing for SPXPM options whose premium is below $1.00 therefore benefits market participants trading SPXPM options whose premium is at or above $1.00 by encouraging Customers to open up those positions (thereby providing greater liquidity). Further, other options based on the S&P 500 Index, such as SPX, offer higher pricing for options with a premium of greater than or equal to $1.00 than for those with a premium of less than $1.00. The Exchange believes that it is equitable and not unfairly discriminatory to offer a higher fee for Customer SPXPM transactions (Premium < $1) than for CBOE MarketMaker/DPM/e-DPM/LMM and Clearing Trading Permit Holder Proprietary SPXPM transactions (Premium < $1) because those market participants undertake certain obligations with respect to trading at CBOE, such as quoting obligations (for CBOE MarketMakers/DPMs/e-DPMs/LMMs) and membership with the Options Clearing Corporation, significant regulatory burdens, and financial obligations, (for Clearing Trading Permit Holders) that Customers do not undertake. The Exchange believes that it is equitable and not unfairly discriminatory to offer a lower Customer fee for SPXPM transactions (Premium < $1) than for similar transactions by Joint BackOffice, Broker-Dealer, Non-Trading Permit Holder Market-Maker, Professional, and Voluntary Professional market participants because such market participants often seek to trade with Customers. Further, the lower fee for Customers will encourage more Customer trading, which provides more liquidity and trading opportunities (with this preferred trading partner) for these other market participants. Also, Customers are often not as sophisticated market participants, and there is a long history of permitting preferential pricing E:\FR\FM\26JYN1.SGM 26JYN1 Federal Register / Vol. 78, No. 144 / Friday, July 26, 2013 / Notices tkelley on DSK3SPTVN1PROD with NOTICES treatment of Customers in the options industry (indeed, in a number of places, the Exchange Fees Schedule offers lower pricing for Customers than for other market participants). Finally, the Exchange believes that it is equitable and not unfairly discriminatory to assess a higher fee for Customer SPXPM transactions (Premium < $1) than for Customer transactions in other index products (including non-proprietary index products) (Premium < $1) because the Exchange has expended significant resources developing SPXPM and desires to recoup some of such costs. 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 rule change to eliminate the Hybrid Quoting Infrastructure User Fee will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because it applies to all CBOE market participants. The Exchange does not believe that the proposed rule change to cease assessing transaction fees on regular (non-AIM) electronic Clearing Trading Permit Holder Proprietary facilitation orders will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because it places regular (non-AIM) electronic Clearing Trading Permit Holder Proprietary facilitation orders on the same footing (with regards to fees) as Clearing Trading Permit Holder Proprietary facilitation orders executed in AIM. Further, Clearing Trading Permit Holders have a number of obligations (such as membership with the Options Clearing Corporation), significant regulatory burdens, and financial obligations, that other market participants do not need to take on. Finally, this proposed change applies to all regular electronic (non-AIM) Clearing Trading Permit Holder Proprietary facilitation orders equally. The Exchange does not believe that the proposed clarification regarding SPXPM fees will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because it merely clarifies the Fees Schedule and also applies equally. Further, the Exchange does not believe that assessing Customer transactions in SPXPM (Premium < $1) a higher fee than for CBOE Market-Maker/DPM/e-DPM/LMM VerDate Mar<15>2010 18:54 Jul 25, 2013 Jkt 229001 and Clearing Trading Permit Holder Proprietary SPXPM transactions (Premium < $1) will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because those market participants undertake certain obligations with respect to trading at CBOE, such as quoting obligations (for CBOE Market-Makers/DPMs/e-DPMs/ LMMs) and membership with the Options Clearing Corporation, significant regulatory burdens, and financial obligations, (for Clearing Trading Permit Holders) that Customers do not undertake. The Exchange does not believe that assessing Customer transactions in SPXPM (Premium < $1) a lower fee than for similar transactions by Joint Back-Office, Broker-Dealer, Non-Trading Permit Holder MarketMaker, Professional, and Voluntary Professional market participants because such market participants often seek to trade with Customers. Further, the lower fee for Customers will encourage more Customer trading, which provides more liquidity and trading opportunities (with this preferred trading partner) for these other market participants. Also, Customers are often not as sophisticated market participants, and there is a long history of permitting preferential pricing treatment of Customers in the options industry (indeed, in a number of places, the Exchange Fees Schedule offers lower pricing for Customers than for other market participants). The Exchange does not believe that the proposed rule changes to eliminate the Hybrid Quoting Infrastructure User Fee and to cease assessing transaction fees on regular (non-AIM) electronic Clearing Trading Permit Holder Proprietary facilitation orders will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because they may encourage other exchanges to adopt fee changes that will provide more attractive pricing on such exchanges (thereby enhancing intermarket competition). Further, all the proposed rule changes apply only to trading on CBOE. Indeed, the Exchange does not believe that assessing Customer transactions in SPXPM (Premium < $1) a fee of $0.35 per contract will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because SPXPM is only traded on CBOE. To the extent that market participants on other exchanges may be attracted to CBOE due to the proposed changes, such market participants may PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 45281 always elect to become CBOE market participants. 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 10 and paragraph (f) of Rule 19b–4 11 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. If the Commission takes such action, the Commission will institute proceedings to determine whether the proposed rule change should be approved or disapproved. 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–2013–072 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–2013–072. 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 10 15 11 17 E:\FR\FM\26JYN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b-4(f). 26JYN1 45282 Federal Register / Vol. 78, No. 144 / Friday, July 26, 2013 / Notices 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 the 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– 2013–072, and should be submitted on or before August 16, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–17974 Filed 7–25–13; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #13669 and #13670] Pennsylvania Disaster #PA–00058 U.S. Small Business Administration. ACTION: Notice. AGENCY: This is a notice of an Administrative declaration of a disaster for the Commonwealth of Pennsylvania dated 07/16/2013. Incident: Severe Storms and Flooding. Incident Period: 06/27/2013 through 07/12/2013. Effective Date: 07/16/2013. Physical Loan Application Deadline Date: 09/16/2013. Economic Injury (EIDL) Loan Application Deadline Date: 04/16/2014. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing And Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, tkelley on DSK3SPTVN1PROD with NOTICES SUMMARY: U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Clearfield; Fayette; Jefferson. Contiguous Counties: Pennsylvania: Armstrong; Blair; Cambria; Cameron; Centre; Clarion; Clinton; Elk; Forest; Greene; Indiana; Somerset; Washington; Westmoreland. Maryland: Garrett. West Virginia: Monongalia; Preston. The Interest Rates are: For Physical Damage: Homeowners With Credit Available Elsewhere ...................... Homeowners Without Credit Available Elsewhere .............. Businesses With Credit Available Elsewhere ...................... Businesses Without Credit Available Elsewhere .............. Non-Profit Organizations With Credit Available Elsewhere ... Non-Profit Organizations Without Credit Available Elsewhere ..................................... For Economic Injury: Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere .............. Non-Profit Organizations Without Credit Available Elsewhere ..................................... VerDate Mar<15>2010 18:54 Jul 25, 2013 Jkt 229001 Primary Counties 2.875 Craig, Haskell, McIntosh, Ottawa. All other information in the original declaration remains unchanged. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) 4.000 2.875 Dated: July 16, 2013 Karen G. Mills, Administrator. [FR Doc. 2013–17943 Filed 7–25–13; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 13647 and # 13648] Oklahoma Disaster Number OK–00073 PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 SUMMARY: 2.875 (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) U.S. Small Business Administration. CFR 200.30–3(a)(12). Amendment 1. This is an Amendment of the Presidential Declaration of a Major Disaster for Public Assistance Only for the State of Oklahoma (FEMA—4117— DR), dated 06/28/2013. Incident: Severe Storms, Tornadoes and Flooding. Incident Period: 05/18/2013 through 06/02/2013. Effective Date: 07/18/2013. Physical Loan Application Deadline Date: 08/27/2013. Economic Injury (EIDL) Loan Application Deadline Date: 04/03/2014. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the President’s major disaster 3.750 declaration for Private Non-Profit 1.875 organizations in the State of OKLAHOMA, dated 06/28/2013, is 6.000 hereby amended to include the following areas as adversely affected by 4.000 the disaster. The number assigned to this disaster for physical damage is 13669 6 and for economic injury is 13670 0. The States which received an EIDL Declaration # are Pennsylvania; Maryland; West Virginia. AGENCY: 12 17 ACTION: James E. Rivera, Associate Administrator for Disaster Assistance. [FR Doc. 2013–17932 Filed 7–25–13; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 13586 and # 13587] Oklahoma Disaster Number OK–00071 U.S. Small Business Administration. ACTION: Amendment 5. AGENCY: This is an amendment of the Presidential declaration of a major disaster for the State of Oklahoma (FEMA—4117—DR), dated 05/20/2013. Incident: Severe Storms, Tornadoes and Flooding. Incident Period: 05/18/2013 through 06/02/2013. Effective Date: 07/12/2013. Physical Loan Application Deadline Date: 08/19/2013. SUMMARY: E:\FR\FM\26JYN1.SGM 26JYN1

Agencies

[Federal Register Volume 78, Number 144 (Friday, July 26, 2013)]
[Notices]
[Pages 45279-45282]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-17974]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70014; File No. SR-CBOE-2013-072]


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

July 22, 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 July 11, 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its 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's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fees Schedule. First, the 
Exchange proposes to eliminate the $200-per-month Hybrid Quoting 
Infrastructure User Fee, which is assessed to Trading Permit Holders 
(``TPHs'') to help cover the costs associated with hardware and 
maintenance services to third-party vendors that provide quoting 
software used by TPHs to trade on the Exchange's Hybrid Trading System 
(``Hybrid''). This elimination will allow TPHs to avoid paying this 
fee, and may encourage more market participants to trade on CBOE.
    The Exchange also proposes to make an amendment to the Fees 
Schedule regarding Clearing Trading Permit Holder Proprietary 
Facilitation fees. On April 10, 2013, the Exchange amended its Fees 
Schedule to, in part, make more clear the fact that the Exchange will 
assess no Clearing Trading Permit Holder Proprietary transaction fees 
for certain types of facilitation orders (as defined in Footnote 11 of 
the Fees Schedule), including those executed via the Exchange's 
Automated Execution Mechanism (``AIM''), in certain classes.\3\ 
However, regular (non-AIM) electronic Clearing Trading Permit Holder 
Proprietary facilitation orders remained subject to transaction fees. 
The Exchange hereby proposes to cease assessing transaction fees on 
such orders.\4\ This will mean that electronic Clearing Trading Permit 
Holder Proprietary Facilitation orders will be assessed no fees 
regardless of whether they are executed via AIM or the Exchange's 
regular electronic mechanism (placing such executions on the same 
footing with regard to fees).
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 69422 (April 22, 
2013), 78 FR 25112 (April 29, 2013) (SR-CBOE-2013-042).
    \4\ As such, along with amending the Equity Options Rate Table, 
the ETF and ETN Options Rate Table, and the Index Options Rate 
Table--All Index Products Excluding SPX, SPXW, SPXpm, SRO, OEX, XEO, 
VIX and VOLATILITY INDEXES, to reflect this change, the Exchange 
also proposes to amend Footnote 11 to state that no Clearing Trading 
Permit Holder Proprietary transaction fees will be assessed for 
facilitation orders electronically (including via AIM).
---------------------------------------------------------------------------

    Next, the Exchange proposes to amend its Fees Schedule with regard 
to fees for SPXPM. On February 19, 2013, the Exchange adopted a set of 
fees for the trading of SPXPM.\5\ The Customer SPXPM fees were set at 
the same rates as the Customer SPX fees. However, SPXPM trades on the 
Exchange's Hybrid System, while SPX trades on the Exchange's Hybrid 3.0 
trading platform. As such, SPXPM is eligible to trade on AIM, while SPX 
currently does not trade on AIM. Therefore, the Exchange proposes to 
create separate lines for

[[Page 45280]]

Customer rates in SPXPM on the Specified Proprietary Index Options Rate 
Table--SPX, SPXW, SPXpm, SRO, OEX, XEO, VIX and VOLATILITY INDEXES and 
remove SPXPM from those lines listing SPX rates in order to eliminate 
any potential confusion about where SPXPM can trade. The rate amounts 
for SPXPM AIM trades will be listed as the same as for other SPXPM 
trades (as they are now; $0.44 per contract for SPXpm Premium > or = $1 
and $0.35 per contract for SPXpm Premium < $1). The AIM Agency/Primary 
and AIM Contra columns, which reference the AIM Agency/Primary and AIM 
Contra Execution Fees, as well as delineate which securities (and types 
of transactions) are eligible for AIM executions, will be modified to 
state ``SPXpm and VIX Only'' to demonstrate that SPXPM is eligible for 
AIM executions.

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    \5\ See Securities Exchange Act Release No. 69025 (March 4, 
2013), 78 FR 15076 (March 8, 2013) (SR-CBOE-2013-025).
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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.\6\ Specifically, the Exchange believes the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\7\ 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. The Exchange believes that the 
elimination of the Hybrid Quoting Infrastructure User Fee is reasonable 
because it will prevent market participants to whom the fee would 
otherwise apply from having to pay the fee. This change is equitable 
and not unfairly discriminatory because it will apply to all market 
participants.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed change to cease assessing 
transaction fees on regular (non-AIM) electronic Clearing Trading 
Permit Holder Proprietary facilitation orders is reasonable because 
Clearing Trading Permit Holders who would otherwise have had to pay for 
such transactions now will not be required to do so. The Exchange 
believes that this proposed change is equitable and not unfairly 
discriminatory because it will place regular electronic (non-AIM) 
Clearing Trading Permit Holder Proprietary facilitation orders on the 
same footing (with regards to fees) as Clearing Trading Permit Holder 
Proprietary facilitation orders executed in AIM. Further, the Exchange 
believes that it is equitable and not unfairly discriminatory to permit 
Clearing Trading Permit Holders to execute Proprietary Facilitation 
orders electronically for free and not give this opportunity to other 
market participants because Clearing Trading Permit Holders have a 
number of obligations (such as membership with the Options Clearing 
Corporation), significant regulatory burdens, and financial 
obligations, that other market participants do not need to take on. 
Finally, this proposed change applies to all regular electronic (non-
AIM) Clearing Trading Permit Holder Proprietary facilitation orders 
equally.
    The Exchange believes that the clarification regarding SPXPM and 
its eligibility for AIM executions is consistent with the Section 
6(b)(5) \8\ 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 facilitation 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. Making the Fees Schedule 
more clear that SPXPM trades on AIM will remove any potential 
confusion, thereby removing an impediment 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange also believes that assessing Customer transactions in 
SPXPM (Premium < $1) a fee of $0.35 per contract is consistent with 
Section 6(b)(4) of the Act,\9\ 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. The Exchange believes this is reasonable, as well as 
equitable and not unfairly discriminatory, because it is the same 
amount as is assessed to Customer transactions in SPX (Premium < $1) 
(SPX and SPXPM are based on the same underlying index, the S&P 500). 
The Exchange believes that assessing a higher fee for Customer 
transactions in SPXPM options whose premium is greater than or equal to 
$1.00 than for Customer transactions in SPXPM options whose premium is 
less than $1.00 is equitable and not unfairly discriminatory because 
nearly all options based on the S&P 500 Index are priced at well above 
$1.00. However, most Customers, at the end of an expiration cycle, 
desire to continue to hold options based on the S&P 500 Index 
(including both SPX and SPXPM), and because it is the end of an 
expiration cycle, such options are priced very low. The Exchange 
therefore offers lower pricing for Customer SPX and SPXPM options in 
order to encourage such trading and thus encourage Customers to open 
SPX and SPXPM options positions in the next cycle. As these new 
positions will almost certainly be priced above $1.00, offering the 
lower pricing for SPXPM options whose premium is below $1.00 therefore 
benefits market participants trading SPXPM options whose premium is at 
or above $1.00 by encouraging Customers to open up those positions 
(thereby providing greater liquidity). Further, other options based on 
the S&P 500 Index, such as SPX, offer higher pricing for options with a 
premium of greater than or equal to $1.00 than for those with a premium 
of less than $1.00.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that it is equitable and not unfairly 
discriminatory to offer a higher fee for Customer SPXPM transactions 
(Premium < $1) than for CBOE Market-Maker/DPM/e-DPM/LMM and Clearing 
Trading Permit Holder Proprietary SPXPM transactions (Premium < $1) 
because those market participants undertake certain obligations with 
respect to trading at CBOE, such as quoting obligations (for CBOE 
Market-Makers/DPMs/e-DPMs/LMMs) and membership with the Options 
Clearing Corporation, significant regulatory burdens, and financial 
obligations, (for Clearing Trading Permit Holders) that Customers do 
not undertake. The Exchange believes that it is equitable and not 
unfairly discriminatory to offer a lower Customer fee for SPXPM 
transactions (Premium < $1) than for similar transactions by Joint 
Back-Office, Broker-Dealer, Non-Trading Permit Holder Market-Maker, 
Professional, and Voluntary Professional market participants because 
such market participants often seek to trade with Customers. Further, 
the lower fee for Customers will encourage more Customer trading, which 
provides more liquidity and trading opportunities (with this preferred 
trading partner) for these other market participants. Also, Customers 
are often not as sophisticated market participants, and there is a long 
history of permitting preferential pricing

[[Page 45281]]

treatment of Customers in the options industry (indeed, in a number of 
places, the Exchange Fees Schedule offers lower pricing for Customers 
than for other market participants). Finally, the Exchange believes 
that it is equitable and not unfairly discriminatory to assess a higher 
fee for Customer SPXPM transactions (Premium < $1) than for Customer 
transactions in other index products (including non-proprietary index 
products) (Premium < $1) because the Exchange has expended significant 
resources developing SPXPM and desires to recoup some of such costs.

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 rule change to eliminate the Hybrid Quoting 
Infrastructure User Fee will impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because it applies to all CBOE market participants. 
The Exchange does not believe that the proposed rule change to cease 
assessing transaction fees on regular (non-AIM) electronic Clearing 
Trading Permit Holder Proprietary facilitation orders will impose any 
burden on intramarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act because it places regular 
(non-AIM) electronic Clearing Trading Permit Holder Proprietary 
facilitation orders on the same footing (with regards to fees) as 
Clearing Trading Permit Holder Proprietary facilitation orders executed 
in AIM. Further, Clearing Trading Permit Holders have a number of 
obligations (such as membership with the Options Clearing Corporation), 
significant regulatory burdens, and financial obligations, that other 
market participants do not need to take on. Finally, this proposed 
change applies to all regular electronic (non-AIM) Clearing Trading 
Permit Holder Proprietary facilitation orders equally.
    The Exchange does not believe that the proposed clarification 
regarding SPXPM fees will impose any burden on intramarket competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act because it merely clarifies the Fees Schedule and also applies 
equally. Further, the Exchange does not believe that assessing Customer 
transactions in SPXPM (Premium < $1) a higher fee than for CBOE Market-
Maker/DPM/e-DPM/LMM and Clearing Trading Permit Holder Proprietary 
SPXPM transactions (Premium < $1) will impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because those market participants undertake certain 
obligations with respect to trading at CBOE, such as quoting 
obligations (for CBOE Market-Makers/DPMs/e-DPMs/LMMs) and membership 
with the Options Clearing Corporation, significant regulatory burdens, 
and financial obligations, (for Clearing Trading Permit Holders) that 
Customers do not undertake. The Exchange does not believe that 
assessing Customer transactions in SPXPM (Premium < $1) a lower fee 
than for similar transactions by Joint Back-Office, Broker-Dealer, Non-
Trading Permit Holder Market-Maker, Professional, and Voluntary 
Professional market participants because such market participants often 
seek to trade with Customers. Further, the lower fee for Customers will 
encourage more Customer trading, which provides more liquidity and 
trading opportunities (with this preferred trading partner) for these 
other market participants. Also, Customers are often not as 
sophisticated market participants, and there is a long history of 
permitting preferential pricing treatment of Customers in the options 
industry (indeed, in a number of places, the Exchange Fees Schedule 
offers lower pricing for Customers than for other market participants).
    The Exchange does not believe that the proposed rule changes to 
eliminate the Hybrid Quoting Infrastructure User Fee and to cease 
assessing transaction fees on regular (non-AIM) electronic Clearing 
Trading Permit Holder Proprietary facilitation orders will impose any 
burden on intermarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act because they may encourage 
other exchanges to adopt fee changes that will provide more attractive 
pricing on such exchanges (thereby enhancing intermarket competition). 
Further, all the proposed rule changes apply only to trading on CBOE. 
Indeed, the Exchange does not believe that assessing Customer 
transactions in SPXPM (Premium < $1) a fee of $0.35 per contract will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because SPXPM is 
only traded on CBOE. To the extent that market participants on other 
exchanges may be attracted to CBOE due to the proposed changes, such 
market participants may always elect to become CBOE market 
participants.

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 \10\ and paragraph (f) of Rule 19b-4 \11\ 
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. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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-2013-072 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-2013-072. 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

[[Page 45282]]

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 the 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-2013-072, and should be 
submitted on or before August 16, 2013.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-17974 Filed 7-25-13; 8:45 am]
BILLING CODE 8011-01-P
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