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, 14317-14318 [2014-05455]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 79, Number 49 (Thursday, March 13, 2014)]
[Notices]
[Pages 14317-14318]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-05455]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71663; File No. SR-CBOE-2014-018]


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

March 7, 2014.
    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 March 4, 2014, 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.
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    \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

    CBOE 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'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 Exchange proposes to amend the CBSX Fees Schedule in connection 
with a planned business and market reorganization regarding CBSX. One 
effect of this proposed change will be to simplify transaction fees. 
Currently, for transactions in securities priced $1 or greater, there 
are a variety of fee and rebate tiers depending at least partly on the 
liquidity that a market participant adds to or removes from CBSX.\3\ 
Fee amounts can also depend on the type of order being utilized or 
order liquidity being removed, as well as the products being traded.\4\ 
For transactions in securities priced less than $1, CBSX assesses 
different fee amounts depending on whether the market participant is a 
Maker or a Taker. CBSX now proposes to cease offering a Maker-Taker 
pricing structure that may distinguish fee and rebate amounts based 
upon amount of liquidity added or removed by the market participant, 
the product being traded, or whether the trade adds liquidity using a 
silent, silent-mid, or silent-post-mid order, or removes silent, 
silent-mid, or silent-post-mid liquidity. Instead, the Exchange 
proposal would simplify its pricing. For transactions in securities 
priced $1 or greater, whether Maker or Taker, CBSX will assess a fee of 
$0.0030 per share. For transactions in securities priced less than $1, 
whether Maker or Taker, CBSX will assess a fee of 0.30% of the dollar 
value of the transaction. Along with aiding in preparation for a 
planned business and market reorganization regarding CBSX, the Exchange 
believes that the proposed simplified fee structure may make it easier 
for market participants to determine which fees apply to their 
transactions.
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    \3\ See CBSX Fees Schedule, section 2.
    \4\ See CBSX Fees Schedule, section 2. While CBSX offers 
different pricing for products classified as the ``Select Symbols'', 
there currently are no products listed as ``Select Symbols''.
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    CBSX also proposes to eliminate its Inactivity Fee.\5\ The 
Inactivity Fee is applied to CBSX Trading Permit Holders that do not 
transact a certain amount of shares on CBSX. CBSX no longer believes 
that this fee is necessary, and therefore proposes to eliminate it.
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    \5\ The Inactivity Fee is charged to any CBSX Trading Permit 
Holder that trades less than an average of 100,000 shares per day 
over a calendar month period. This fee will be calculated monthly. 
The amount of this fee is $5,000 per month. A CBSX Trading Permit 
Holder may not be assessed this fee until the calendar month 
following the first full calendar month after the effective date of 
the Trading Permit. If a CBSX Trading Permit Holder incurs this fee 
for a calendar month period but trades at least an average of 
200,000 shares per day over the following calendar month period, 
then the Exchange will rescind the Inactivity Fee.
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    In conjunction with these proposed changes, CBSX proposes to clean 
up its Fees Schedule. Footnotes 1, 4, 5 and 6 to the transaction fees 
will no longer be applicable, and therefore CBSX proposes to delete 
them. Current footnotes 2 and 3 will become footnotes 1 and 2, 
respectively. Due to the deletion of section 5, the Inactivity Fee, all 
sections afterwards will be re-numbered (current section 6 becomes 
section 5, current section 7 becomes section 6, current section 8 
becomes section 7, and current section 9 becomes section 8).
 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 the Section 6(b)(5) \7\ 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 Section 6(b)(4) of the Act,\8\ which requires that 
Exchange rules provide for the equitable allocation of reasonable

[[Page 14318]]

dues, fees, and other charges among its Trading Permit Holders and 
other persons using its facilities. Additionally, the Exchange believes 
the proposed rule change is consistent with the Section 6(b)(5) \9\ 
requirement that the rules of an exchange not be designed to permit 
unfair discrimination between customers, issuers, brokers, or dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ Id.
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    The Exchange believes that the proposed new fees structure, for 
transactions priced $1 or greater and for those priced less than $1, is 
reasonable because the amounts are similar to those assessed by other 
exchanges or by CBSX,\10\ and is consistent with those limits set by 
Regulation NMS.\11\ Further, the Exchange believes that the proposed 
simplified fee structure may make it easier for market participants to 
determine which fees apply to their transactions. The Exchange believes 
that the proposed new fees structure is equitable and not unfairly 
discriminatory because it will apply to all market participants and 
will not distinguish fee and rebate amounts based upon whether the 
market participant is a Maker or Taker, the amount of liquidity added 
or removed by the market participant, the product being traded, or 
whether the trade adds liquidity using a silent, silent-mid, or silent-
post-mid order, or removes silent, silent-mid, or silent-post-mid 
liquidity.
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    \10\ BATS Exchange, Inc. (``BATS'') assesses a fee of $0.0030 
per share that removes liquidity for all securities priced $1.00 or 
above (see BATS Fee Schedule). For Taker transactions in securities 
priced less than $1, CBSX already assesses a fee of 0.30% of the 
dollar value of the transaction; CBSX merely proposes to assess the 
same fee amount for the Maker side of such transactions.
    \11\ See 17 CFR 242.610(c)(1)-(2).
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    The Exchange believes that the elimination of the Inactivity Fee is 
reasonable because market participants that would otherwise have 
qualified to be assessed the fee now will not be assessed the fee. The 
Exchange believes that this elimination is equitable and not unfairly 
discriminatory because it will apply to all market participants, and 
nobody will be assessed the Inactivity Fee.
    The Exchange believes that cleaning up the Fees Schedule by 
deleting no-longer-relevant footnotes and amending the numbering of 
sections due to the deletion of the Inactivity Fee will eliminate 
potential confusion and make the Fees Schedule easier to read, thereby 
removing impediments to and perfecting the mechanism of a free and open 
market and a national market system.

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. CBSX does not believe that the 
proposed rule change will impose any burden on intramarket competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act because the proposed changes apply to all CBSX market 
participants equally. CBSX does not believe that the proposed rule 
change will impose any burden on intermarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act 
because the proposed changes only apply to trading on CBSX. To the 
extent that the proposed changes may make CBSX a more attractive 
trading venue to market participants at other exchanges, such market 
participants may elect to become CBSX 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 \12\ and paragraph (f) of Rule 19b-4 \13\ 
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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. 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-2014-018 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2014-018. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml 
). Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE., Washington, 
DC 20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of 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-2014-018 and should be 
submitted on or before April 3, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-05455 Filed 3-12-14; 8:45 am]
BILLING CODE 8011-01-P