Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to The Customized Option Pricing Service, 63265-63267 [2013-24769]
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Federal Register / Vol. 78, No. 205 / Wednesday, October 23, 2013 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–70705; File No. SR–CBOE–
2013–097]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating to The
Customized Option Pricing Service
October 17, 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 October
4, 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
Chicago Board Options Exchange,
Incorporated (the ‘‘Exchange’’ or
‘‘CBOE’’) proposes to: (i) Make available
historical Customized Option Pricing
Service (‘‘COPS’’) data and (ii) revise the
description of COPS. 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.
emcdonald on DSK67QTVN1PROD with NOTICES
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to: (i) Make available, through
CBOE’s affiliate Market Data Express,
LLC (‘‘MDX’’), historical COPS data and
(ii) revise the description of COPS.3
Background
COPS provides subscribers with an
‘‘end-of-day’’ file 4 of valuations for
Flexible Exchange (‘‘FLEX’’) 5 options
and certain over-the-counter (‘‘OTC’’)
options (‘‘COPS Data’’). COPS Data is
available for internal use and internal
distribution by subscribers
(‘‘Subscribers’’). MDX offers COPS Data
for sale to all market participants.
COPS Data consists of indicative 6
values for three categories of
‘‘customized’’ options. The first category
of options is all open series of FLEX
options listed on any exchange that
offers FLEX options for trading.7 The
second category is OTC options that
have the same degree of customization
as FLEX options. The third category
includes options with strike prices
expressed in percentage terms. Values
for such options are expressed in
percentage terms and are theoretical
values.8
The fees that MDX charges for COPS
Data are set forth on the Price List on
the MDX Web site
(www.marketdataexpress.com). MDX
currently charges a fee per option per
day for COPS Data. The amount of the
fee is reduced based on the number of
3 The Exchange submitted proposed rule changes
in 2012 to establish COPS and COPS fees. See
Securities Exchange Act Release No. 67813
(September 10, 2012), 77 FR 56903 (September 14,
2012) and Securities Exchange Act Release No.
67928 (September 26, 2012), 77 FR 60161 (October
2, 2012). The service was originally named
‘‘Customized Option Valuation Service’’ but is now
referred to as the ‘‘Customized Option Pricing
Service’’.
4 An end of day file refers to data that is
distributed prior to the opening of the next trading
day.
5 FLEX options are exchange traded options that
provide investors with the ability to customize
basic option features including size, expiration
date, exercise style, and certain exercise prices.
6 ‘‘Indicative’’ values are indications of potential
market prices only and as such are neither firm nor
the basis for a transaction.
7 Current FLEX options open interest spans over
2,000 series on over 300 different underlying
securities.
8 These values are theoretical in that they are
indications of potential market prices for options
that have not traded (i.e. do not yet exist). Market
participants sometimes express option values in
percentage terms rather than in dollar terms
because they find it is easier to assess the change,
or lack of change, in the marketplace from one day
to the next when values are expressed in percentage
terms.
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63265
options purchased. A subscriber pays
$1.25 per option per day for each option
purchased up to 50 options, $1.00 per
option per day for each option
purchased from 51 to 100 options, $0.75
per option per day for each option
purchased from 101 to 500 options, and
$0.50 per option per day for each option
purchased over 500 options.
Historical COPS Data
The Exchange proposes to make
available, through MDX, historical
COPS data (‘‘Historical COPS Data’’).
Historical COPS Data consists of COPS
Data that is over one month old (i.e.,
copies of the ‘‘end-of-day’’ COPS file
that are over one month old). Market
participants would also be able to
purchase Historical COPS Data through
the MDX Web site. All market
participants would be charged the same
fees for Historical COPS Data. The
Exchange will file a separate proposed
rule change to establish the fees to be
charged by MDX for Historical COPS
Data.
COPS Description
COPS Data is currently available only
for internal use and internal distribution
by Subscribers. Pursuant to a written
subscriber agreement between MDX and
a Subscriber, a Subscriber may not act
as a vendor and distribute the Data
externally. The Exchange proposes to
make COPS Data and Historical COPS
Data (collectively, the ‘‘Data’’) available
to Subscribers for internal use and
internal distribution only. The Exchange
also proposes to make COPS Data and
Historical COPS Data available to
‘‘Customers’’ who, pursuant to a written
vendor agreement between MDX and a
Customer, may distribute the Data
externally (i.e., act as a vendor) and/or
use and distribute the Data internally.
Customers would be subject to the same
fees that Subscribers pay for internal use
and internal distribution of the Data.
Customers would not be charged any
fees initially for their external
distribution of the Data. The Exchange
would file a proposed rule change to
establish the fees to be charged to
Customers by MDX for external
distribution of the Data.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.9 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
9 15
E:\FR\FM\23OCN1.SGM
U.S.C. 78f(b).
23OCN1
63266
Federal Register / Vol. 78, No. 205 / Wednesday, October 23, 2013 / Notices
emcdonald on DSK67QTVN1PROD with NOTICES
6(b)(5) 10 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.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5)11 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers
because the Data would be available to
all of MDX’s Customers and Subscribers
on an equivalent basis.
In adopting Regulation NMS, the
Commission granted self-regulatory
organizations and broker-dealers
increased authority and flexibility to
offer new and unique market data to the
public. It was believed that this
authority would expand the amount of
data available to consumers, and also
spur innovation and competition for the
provision of market data. The Exchange
believes that this proposal is in keeping
with those principles by promoting
increased transparency through the
dissemination of useful data and also by
clarifying its availability to market
participants. The Exchange believes the
proposal to allow Customers of the Data
to distribute the Data externally would
help further the dissemination of the
Data.
Additionally, the Exchange is making
a voluntary decision to make this data
available. The Exchange is not required
by the Act in the first instance to make
the Data available. Further, Historical
COPS Data consists of COPS Data that
is over one month old, so no new data
would be made available by the
introduction of the Historical COPS
Data product.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. To the
contrary, the Exchange believes the
proposed rule change is pro-competitive
in that it would allow the Exchange,
through MDX, to disseminate COPS data
on a voluntary basis. COPS is voluntary
10 15
U.S.C. 78f(b)(5).
11 Id.
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18:13 Oct 22, 2013
Jkt 232001
on the part of the Exchange, which is
not required to offer such services, and
voluntary on the part of prospective
subscribers that are not required to use
it. The Exchange notes there are at least
a small number of market data vendors
that produce option value data that is
similar to COPS data and market data
users may elect to buy these other
products if they choose.12 The Options
Clearing Corporation (‘‘OCC’’) also
produces FLEX option value data that is
similar to the FLEX option value data
that is included in COPS.13 The
Exchange believes that COPS helps
attract new users and new order flow to
the Exchange, thereby improving the
Exchange’s ability to compete in the
market for options order flow and
executions.
change should be approved or
disapproved.
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.
Paper Comments
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
A. Significantly affect the protection
of investors or the public interest;
B. Impose any significant burden on
competition; and
C. Become operative for 30 days from
the date on which it was filed, or such
shorter time as the Commission may
designate, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 14 and Rule 19b–4(f)(6) 15
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
All submissions should refer to File
Number SR–CBOE–2013–097. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml ). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of 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–
2013–097 and should be submitted on
or before November 13, 2013.
12 These vendors include SuperDerivatives,
Markit, Prism, and Bloomberg’s BVAL service.
13 The OCC makes this data available on its Web
site at https://www.theocc.com/webapps/flexreports.
14 15 U.S.C. 78s(b)(3)(A).
15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
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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 rule-comments@
sec.gov. Please include File Number SR–
CBOE–2013–097 on the subject line.
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
E:\FR\FM\23OCN1.SGM
23OCN1
Federal Register / Vol. 78, No. 205 / Wednesday, October 23, 2013 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–24769 Filed 10–22–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–70709; File No. SR–OCC–
2013–803]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of No Objection to Advance Notice
Filing To Reflect Enhancements in
OCC’s System for Theoretical Analysis
and Numerical Simulations as Applied
to Longer-Tenor Options
October 17, 2013.
On June 4, 2013, The Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) advance
notice SR–OCC–2013–803 (‘‘Advance
Notice’’) pursuant to Section 806(e)(1) of
the Payment, Clearing, and Settlement
Supervision Act of 2010 (‘‘Clearing
Supervision Act’’ or ‘‘Title VIII’’) 1 and
Rule 19b–4(n)(1)(i) under the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’).2 The Advance Notice was
published for comment in the Federal
Register on July 9, 2013.3 The
Commission did not receive any
comments on the Advance Notice
publication. This publication serves as a
notice of no objection to the Advance
Notice.
I. Description of the Advance Notice
On December 14, 2012, the
Commission issued an order approving
a proposed rule change and a notice of
no objection to an advance notice,
collectively (‘‘December 14, 2012
Action’’), through which OCC proposed
16 17
CFR 200.30–3(a)(12).
U.S.C. 5465(e)(1).
2 17 CFR 240.19b–4(n)(1)(i). OCC is a designated
financial market utility and is required to file
advance notices with the Commission. See 12
U.S.C. 5465(e). OCC also filed the proposal in this
Advance Notice as a proposed rule change under
Section 19(b)(1) of the Exchange Act and Rule 19b–
4 thereunder, which was published for comment in
the Federal Register on June 14, 2013. 15 U.S.C.
78s(b)(1); 17 CFR 240.19b–4. See Release No. 69723
(June 10, 2013), 78 FR 36002 (June 14, 2013) (SR–
OCC–2013–08). OCC withdrew the proposed rule
change on August 27, 2013. Prior to the date of
withdrawal, the Commission did not receive any
comments on the proposed rule change. On October
10, 2013, OCC re-filed the proposal in this Advance
Notice as a proposed rule change under Section
19(b)(1) of the Exchange Act and Rule 19b–4
thereunder.
3 Release No. 69925 (July 3, 2013), 78 FR 41161
(July 9, 2013) (SR–OCC–2013–803) (‘‘Notice’’).
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1 12
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18:13 Oct 22, 2013
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to establish a legal and operational
framework for OCC to clear certain OTC
index options on the S&P 500 Index
(‘‘OTC S&P 500 Index Options’’).4 OCC
is prohibited from clearing OTC S&P
500 Index Options until the
Commission approves and OCC
implements certain enhancements to
OCC’s System for Theoretical Analysis
and Numerical Simulations (‘‘STANS’’)
as applied to all options,5 including
over-the-counter (‘‘OTC’’) options that
OCC is otherwise permitted to clear,
with at least three years of residual
tenor (‘‘Risk Management Proposal’’).6
This Advance Notice is the Risk
Management Proposal. By this Advance
Notice, OCC is enhancing STANS by: (i)
Including daily OTC indicative
quotations; (ii) introducing variations in
implied volatility; and (iii) introducing
a valuation adjustment.
STANS is a margin system that OCC
uses to calculate clearing-level margin.7
Through this Risk Management
Proposal, OCC is enhancing STANS in
the following ways:
(i) Daily OTC Indicative Quotations.
According to OCC, STANS uses a daily
dataset of market prices to value each
portfolio.8 OCC is enhancing this daily
dataset of market prices by including
daily OTC indicative quotations.9 OCC
will obtain daily OTC indicative
quotations from a third-party service
provider who obtains it through a daily
poll of OTC derivatives dealers.10
(ii) Variations in Implied Volatility.
According to OCC, STANS currently
uses a two-day risk horizon which
assumes that implied volatilities of
option contracts do not change during
4 Release No. 68434 (December 14, 2012), 77 FR
75243 (December 19, 2012) (SR–OCC–2012–14,
AN–OCC–2012–01).
5 OCC represents that its Risk Management
Proposal is part of OCC’s ongoing efforts to test and
improve its risk management operations with
respect to all longer-tenor options that OCC
currently clears. See December 14, 2012 Action,
supra note 4, 77 FR at 75243. OCC states it intends
to use its STANS margin system to calculate margin
requirements on the same basis as for exchangelisted options cleared by OCC. See Notice, supra
note 3, 78 FR at 41161.
6 Release No. 68434 (December 14, 2012), 77 FR
75243 (December 19, 2012) (SR–OCC–2012–14,
AN–OCC–2012–01).
7 According to OCC, STANS calculates margin by
determining the minimum expected liquidating
value of each account using a large number of
projected price scenarios created by large-scale
Monte Carlo simulations. See Notice, supra note 3,
78 FR at 41161.
8 See Notice, supra note 3, 78 FR at 41161.
9 Id.
10 OCC selected a third-party service provider
rather than having the OTC derivatives dealers
provide the information directly to OCC to avoid
unnecessarily duplicating reporting that is already
being done in the OTC markets. See Notice, supra
note 3, 78 FR at 41161–62.
PO 00000
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63267
that period.11 OCC will introduce
variations in implied volatility in the
modeling of all longer-tenor options
under STANS.12 OCC plans to achieve
this by ‘‘incorporating, into the set of
risk factors whose behavior is included
in the econometric models underlying
STANS, time series of proportional
changes in implied volatilities for a
range of tenors and in-the-money and
out-of-the-money amounts
representative of the dataset provided
by OCC’s third-party service
provider.’’ 13
(iii) Valuation Adjustment. OCC
intends to enhance the portfolio net
asset value that STANS uses, by
introducing a valuation adjustment.14
According to OCC, the valuation
adjustment will be ‘‘based upon the
aggregate sensitivity of any longer-tenor
options in a portfolio to the overall level
of implied volatilities at three years and
five years and to the relationship
between implied volatility and exercise
prices at both the three- and five-year
tenors in order to allow for the
anticipated market impact of unwinding
a portfolio of longer-tenor options, as
well as for any differences in the quality
of data in OCC’s third party service
provider’s dataset, given that month-end
data may be subjected to more extensive
validation by the service provider than
daily data.’’ 15
II. Discussion and Commission
Findings
Although Title VIII does not specify a
standard of review for an advance
notice, the Commission believes that the
stated purpose of Title VIII is
instructive.16 The stated purpose of
Title VIII is to mitigate systemic risk in
the financial system and promote
financial stability by, among other
things, promoting uniform risk
management standards for systemicallyimportant financial market utilities
(‘‘FMUs’’) and strengthening the
liquidity of systemically important
FMUs.17
Section 805(a)(2) of the Clearing
Supervision Act 18 authorizes the
Commission to prescribe risk
management standards for the payment,
clearing, and settlement activities of
designated clearing entities and
financial institutions engaged in
designated activities for which it is the
supervisory agency or the appropriate
11 See
Notice, supra note 3, 78 FR at 41162.
12 Id.
13 Id.
14 Id.
15 Id.
16 See
12 U.S.C. 5461(b).
17 Id.
18 12
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U.S.C. 5464(a)(2).
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Agencies
[Federal Register Volume 78, Number 205 (Wednesday, October 23, 2013)]
[Notices]
[Pages 63265-63267]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-24769]
[[Page 63265]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70705; File No. SR-CBOE-2013-097]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to The Customized Option Pricing Service
October 17, 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 October 4, 2013, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Chicago Board Options Exchange, Incorporated (the ``Exchange'' or
``CBOE'') proposes to: (i) Make available historical Customized Option
Pricing Service (``COPS'') data and (ii) revise the description of
COPS. 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to: (i) Make available,
through CBOE's affiliate Market Data Express, LLC (``MDX''), historical
COPS data and (ii) revise the description of COPS.\3\
---------------------------------------------------------------------------
\3\ The Exchange submitted proposed rule changes in 2012 to
establish COPS and COPS fees. See Securities Exchange Act Release
No. 67813 (September 10, 2012), 77 FR 56903 (September 14, 2012) and
Securities Exchange Act Release No. 67928 (September 26, 2012), 77
FR 60161 (October 2, 2012). The service was originally named
``Customized Option Valuation Service'' but is now referred to as
the ``Customized Option Pricing Service''.
---------------------------------------------------------------------------
Background
COPS provides subscribers with an ``end-of-day'' file \4\ of
valuations for Flexible Exchange (``FLEX'') \5\ options and certain
over-the-counter (``OTC'') options (``COPS Data''). COPS Data is
available for internal use and internal distribution by subscribers
(``Subscribers''). MDX offers COPS Data for sale to all market
participants.
---------------------------------------------------------------------------
\4\ An end of day file refers to data that is distributed prior
to the opening of the next trading day.
\5\ FLEX options are exchange traded options that provide
investors with the ability to customize basic option features
including size, expiration date, exercise style, and certain
exercise prices.
---------------------------------------------------------------------------
COPS Data consists of indicative \6\ values for three categories of
``customized'' options. The first category of options is all open
series of FLEX options listed on any exchange that offers FLEX options
for trading.\7\ The second category is OTC options that have the same
degree of customization as FLEX options. The third category includes
options with strike prices expressed in percentage terms. Values for
such options are expressed in percentage terms and are theoretical
values.\8\
---------------------------------------------------------------------------
\6\ ``Indicative'' values are indications of potential market
prices only and as such are neither firm nor the basis for a
transaction.
\7\ Current FLEX options open interest spans over 2,000 series
on over 300 different underlying securities.
\8\ These values are theoretical in that they are indications of
potential market prices for options that have not traded (i.e. do
not yet exist). Market participants sometimes express option values
in percentage terms rather than in dollar terms because they find it
is easier to assess the change, or lack of change, in the
marketplace from one day to the next when values are expressed in
percentage terms.
---------------------------------------------------------------------------
The fees that MDX charges for COPS Data are set forth on the Price
List on the MDX Web site (www.marketdataexpress.com). MDX currently
charges a fee per option per day for COPS Data. The amount of the fee
is reduced based on the number of options purchased. A subscriber pays
$1.25 per option per day for each option purchased up to 50 options,
$1.00 per option per day for each option purchased from 51 to 100
options, $0.75 per option per day for each option purchased from 101 to
500 options, and $0.50 per option per day for each option purchased
over 500 options.
Historical COPS Data
The Exchange proposes to make available, through MDX, historical
COPS data (``Historical COPS Data''). Historical COPS Data consists of
COPS Data that is over one month old (i.e., copies of the ``end-of-
day'' COPS file that are over one month old). Market participants would
also be able to purchase Historical COPS Data through the MDX Web site.
All market participants would be charged the same fees for Historical
COPS Data. The Exchange will file a separate proposed rule change to
establish the fees to be charged by MDX for Historical COPS Data.
COPS Description
COPS Data is currently available only for internal use and internal
distribution by Subscribers. Pursuant to a written subscriber agreement
between MDX and a Subscriber, a Subscriber may not act as a vendor and
distribute the Data externally. The Exchange proposes to make COPS Data
and Historical COPS Data (collectively, the ``Data'') available to
Subscribers for internal use and internal distribution only. The
Exchange also proposes to make COPS Data and Historical COPS Data
available to ``Customers'' who, pursuant to a written vendor agreement
between MDX and a Customer, may distribute the Data externally (i.e.,
act as a vendor) and/or use and distribute the Data internally.
Customers would be subject to the same fees that Subscribers pay for
internal use and internal distribution of the Data. Customers would not
be charged any fees initially for their external distribution of the
Data. The Exchange would file a proposed rule change to establish the
fees to be charged to Customers by MDX for external distribution of the
Data.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\9\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section
[[Page 63266]]
6(b)(5) \10\ 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. Additionally, the Exchange
believes the proposed rule change is consistent with the Section
6(b)(5)\11\ requirement that the rules of an exchange not be designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers because the Data would be available to all of MDX's Customers
and Subscribers on an equivalent basis.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
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In adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility to
offer new and unique market data to the public. It was believed that
this authority would expand the amount of data available to consumers,
and also spur innovation and competition for the provision of market
data. The Exchange believes that this proposal is in keeping with those
principles by promoting increased transparency through the
dissemination of useful data and also by clarifying its availability to
market participants. The Exchange believes the proposal to allow
Customers of the Data to distribute the Data externally would help
further the dissemination of the Data.
Additionally, the Exchange is making a voluntary decision to make
this data available. The Exchange is not required by the Act in the
first instance to make the Data available. Further, Historical COPS
Data consists of COPS Data that is over one month old, so no new data
would be made available by the introduction of the Historical COPS Data
product.
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. To the contrary, the Exchange
believes the proposed rule change is pro-competitive in that it would
allow the Exchange, through MDX, to disseminate COPS data on a
voluntary basis. COPS is voluntary on the part of the Exchange, which
is not required to offer such services, and voluntary on the part of
prospective subscribers that are not required to use it. The Exchange
notes there are at least a small number of market data vendors that
produce option value data that is similar to COPS data and market data
users may elect to buy these other products if they choose.\12\ The
Options Clearing Corporation (``OCC'') also produces FLEX option value
data that is similar to the FLEX option value data that is included in
COPS.\13\ The Exchange believes that COPS helps attract new users and
new order flow to the Exchange, thereby improving the Exchange's
ability to compete in the market for options order flow and executions.
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\12\ These vendors include SuperDerivatives, Markit, Prism, and
Bloomberg's BVAL service.
\13\ The OCC makes this data available on its Web site at https://www.theocc.com/webapps/flex-reports.
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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
Because the foregoing proposed rule change does not:
A. Significantly affect the protection of investors or the public
interest;
B. Impose any significant burden on competition; and
C. Become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \14\ and
Rule 19b-4(f)(6) \15\ 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.
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. 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-2013-097 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-2013-097. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of 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-2013-097 and should be
submitted on or before November 13, 2013.
[[Page 63267]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24769 Filed 10-22-13; 8:45 am]
BILLING CODE 8011-01-P