Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 8.3 Relating to Appointment Costs, 3203-3205 [2016-00905]
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Federal Register / Vol. 81, No. 12 / Wednesday, January 20, 2016 / Notices
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–
BATS–2015–124 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BATS–2015–124. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at 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–BATS–
2015–124, and should be submitted on
or before February 10, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.50
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–00896 Filed 1–19–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76895; File No. SR–CBOE–
2015–121]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 8.3
Relating to Appointment Costs
January 13, 2016.
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 December
31, 2015, 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 and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b-4(f)(6) thereunder.4 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
CBOE Rule 8.3 relating to the
appointment costs for options on the
Russell 2000 Index (‘‘RUT options’’) and
P.M.-Settled options on the Standard &
Poor’s 500 (‘‘SPXPM options’’). The text
of the proposed rule change is provided
below.
(additions are underlined; deletions
are [bracketed])
*
*
*
*
*
Chicago Board Options Exchange,
Incorporated
Rules
*
*
*
*
*
Rule 8.3. Appointment of MarketMakers
(a)–(b) No change.
(c) Market-Maker Appointments.
Absent an exemption by the Exchange,
an appointment of a Market-Maker
confers the right to quote electronically
and in open outcry in the MarketMaker’s appointed classes during
Regular Trading Hours as described
below. Subject to paragraph (e) below, a
Market-Maker may change its appointed
classes upon advance notification to the
Exchange in a form and manner
prescribed by the Exchange.
(i) Hybrid Classes. Subject to
paragraphs (c)(iv) and (e) below, a
Market-Maker can create a Virtual
Trading Crowd (‘‘VTC’’) appointment,
which confers the right to quote
electronically during Regular Trading
Hours in an appropriate number of
Hybrid classes (as defined in Rule
1.1(aaa)) selected from ‘‘tiers’’ that have
been structured according to trading
volume statistics, except for the AA tier.
All classes within a specific tier will be
assigned an ‘‘appointment cost’’
depending upon its tier location. The
following table sets forth the tiers and
related appointment costs.
Appointment
cost
Hybrid Option Classes
AA ...........................
tkelley on DSK4VPTVN1PROD with NOTICES
Tier
• Options on the CBOE Volatility Index (VIX) .........................................................................................
• Options on the iShares Russell 2000 Index Fund (IWM) ....................................................................
• Options on the NASDAQ 100 Index (NDX) ..........................................................................................
• Options on the S&P 100 (OEX) ............................................................................................................
• Options on Standard & Poor’s Depositary Receipts (SPY) .................................................................
• Options on the Russell 2000 Index (RUT) ...........................................................................................
• Options on the S&P 100 (XEO) ............................................................................................................
• Morgan Stanley Retail Index Options (MVR) .......................................................................................
• Options on the iPath S&P 500 VIX Short-Term Futures Index ETN (VXX) ........................................
• P.M.-Settled options on the Standard & Poor’s 500 (SPXPM) ............................................................
Hybrid Classes 1–60 ................................................................................................................................
Hybrid Classes 61–120 ............................................................................................................................
Hybrid Classes 121–345 ..........................................................................................................................
Hybrid Classes 346–570 ..........................................................................................................................
A*
B*
C*
D*
............................
............................
............................
............................
50 17
2 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
3 15
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CFR 240.19b–4.
U.S.C. 78s(b)(3)(A)(iii).
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3203
4 17
E:\FR\FM\20JAN1.SGM
CFR 240.19b–4(f)(6).
20JAN1
.499
.25
.50
.40
.25
[.25].50
.10
.25
.10
[1.0].50
.10
.05
.04
.02
3204
Federal Register / Vol. 81, No. 12 / Wednesday, January 20, 2016 / Notices
Appointment
cost
Tier
Hybrid Option Classes
E* ............................
F* ............................
Hybrid Classes 571–999 ..........................................................................................................................
All Remaining Hybrid Classes ..................................................................................................................
.01
.001
* Excludes Tier AA.
1. Purpose
The purpose of this rule change is to
amend CBOE Rule 8.3 relating to the
appointment costs for options on RUT
options and SPXPM options. CBOE
proposes to assign an appointment cost
of .50 to each of RUT options and
SPXPM options, effective February 1,
2016.
While the appointment costs of Tier
AA classes are not subject to quarterly
rebalancing under Rule 8.3(c)(iv), the
Exchange regularly reviews the
appointment costs of Tier AA classes to
ensure that they continue to be
appropriate.5 The Exchange determines
appointment costs of Tier AA classes
based on several factors, including, but
not limited to, competitive forces and
trading volume. After evaluating these
factors, the Exchange has determined to
assign an appointment cost of .50 to
each of RUT options and SPXPM
options.
The Exchange believes increasing the
appointment cost for RUT options is
reasonable given its increase in trading
volume on the Exchange and other
competitive forces. For example, when
classes have higher volume, demand by
Market-Makers for appointments to
electronically quote in those classes
may increase, and thus it is appropriate
to charge a higher appointment cost for
that class.6 The Exchange notes that
even if a Market-Maker is unwilling to
pay the higher appointment cost to
maintain an appointment in RUT
options to quote electronically during
regular trading hours pursuant to Rule
8.3(c)(i) (for example, because it would
need an additional trading permit to
cover the cost or because it would need
to eliminate appointments in other
classes), the Market-Maker can continue
to have an appointment in the class to
trade open outcry.7
The Exchange believes that decreasing
the appointment cost for SPXPM
options is reasonable given its trading
volume and other competitive forces.
The Exchange believes the proposed
rule change will foster competition by
incentivizing more Market-Makers to
obtain an appointment in SPXPM due to
the lower appointment cost, which may
increase liquidity in the class, as well as
quote electronically in other Hybrid
option classes using the excess capacity
resulting from the decreased
appointment cost in SPXPM options.
The Exchange believes that the
appointment cost decrease for SPXPM
options will promote competition and
efficiency.
The Exchange will announce the new
appointment costs for RUT and SPXPM
options via Regulatory Circular at least
10 business days before February 1,
2016, which the Exchange believes
provides Market-Makers with sufficient
notice to update their appointments (if
necessary) via the appointments Web
5 The Exchange reviews the appointment costs of
classes in Tiers A through F every calendar quarter
pursuant to an evaluation of trading volume
statistics. The Exchange announces the quarterly
rebalance via Regulatory Circular at least 10
business days before the rebalancing takes effect.
See Rule 8.3(c)(iv).
6 This is demonstrated by the appointment costs
of classes in Tiers A through F, which are based
solely on trading volume—classes with higher
volume have higher appointment costs.
7 See Rule 8.3(c)(ii) (which provides all MarketMakers with an appointment to trade open outcry
in all Hybrid classes traded on the Exchange).
(ii)—(vi) No change.
(d)—(e) No change.
*
*
*
*
*
The text of the proposed rule change
is also 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.
tkelley on DSK4VPTVN1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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site or obtain an additional trading
permit (if necessary).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.9 Specifically, the
Exchange believes the proposed rule
change is consistent with the section
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.
Rebalancing of appointment costs
does not raise any new or unique issues.
The Exchange reviews and rebalances
appointment costs for Tier AA classes
regularly and Tier A through F classes
quarterly, both of which may result an
increase in appointment costs of some
classes and a decrease in appointment
costs of other classes. The Exchange
believes rebalancing appointment costs
of Tier AA classes based on trading
volume and other competitive forces
promotes just and equitable principles
of trade. The Exchange believes
increasing the appointment cost for RUT
options promotes competition and
efficiency by aligning the appointment
cost with the higher demand for
appointments in that class and
competitive forces related to that class.
8 The Exchange notes that this timeframe is
consistent with the deadline to announce quarterly
rebalancing under Rule 8.3(c)(iv), which may result
in an increase in appointment costs of some classes
and a decrease in appointment costs of other
classes.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
11 Id.
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Federal Register / Vol. 81, No. 12 / Wednesday, January 20, 2016 / Notices
The Exchange believes decreasing the
appointment cost for SPXPM options
promotes competition and efficiency by
incentivizing more Market-Makers to
obtain an appointment in SPXPM due to
the lower appointment cost, which may
increase liquidity in the class, as well as
quote electronically in other Hybrid
option classes using the excess capacity
resulting from the decreased
appointment cost in SPXPM options.
The Exchange believes this may result
in more liquidity and competitive
pricing, which ultimately benefits
investors. The proposed rule change
does not result in unfair discrimination,
as the revised appointment costs for
RUT and SPXPM options will apply to
all Market-Makers.
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. CBOE 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 it
will apply to all Market-Makers (and
only Market-Makers can have
appointments to quote electronically).
CBOE 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 rule change only
applies to CBOE’s Market-Maker
appointment process. The Exchange
believes the proposed rule change will
promote competition, as discussed
above.
tkelley on DSK4VPTVN1PROD with NOTICES
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
VerDate Sep<11>2014
18:12 Jan 19, 2016
Jkt 238001
Act 12 and Rule 19b–4(f)(6) 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.
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–2015–121 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CBOE–2015–121. 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
12 15
13 17
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
Frm 00112
Fmt 4703
Sfmt 4703
3205
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–
2015–121 and should be submitted on
or before February 10, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–00905 Filed 1–19–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Pub. L. 94–409, that the
Securities and Exchange Commission
will hold a Closed Meeting on
Thursday, January 21, 2016 at 2:00 p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters also may be present.
The General Counsel of the
Commission, or her designee, has
certified that, in her opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (5), (7), 9(ii)
and (10), permit consideration of the
scheduled matter at the Closed Meeting.
Commissioner Piwowar, as duty
officer, voted to consider the items
listed for the Closed Meeting in closed
session.
The subject matter of the Closed
Meeting will be:
Institution and settlement of injunctive
actions;
Institution and settlement of
administrative proceedings;
Consideration of amicus participation;
Post-argument discussion; and
Other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
14 17
E:\FR\FM\20JAN1.SGM
CFR 200.30–3(a)(12).
20JAN1
]]>Agencies
[Federal Register Volume 81, Number 12 (Wednesday, January 20, 2016)]
[Notices]
[Pages 3203-3205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00905]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76895; File No. SR-CBOE-2015-121]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Rule 8.3 Relating to Appointment Costs
January 13, 2016.
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 December 31, 2015, 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 and II below, which Items have been prepared by the
Exchange. The Exchange filed the proposal as a ``non-controversial''
proposed rule change pursuant to section 19(b)(3)(A)(iii) of the Act
\3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend CBOE Rule 8.3 relating to the
appointment costs for options on the Russell 2000 Index (``RUT
options'') and P.M.-Settled options on the Standard & Poor's 500
(``SPXPM options''). The text of the proposed rule change is provided
below.
(additions are underlined; deletions are [bracketed])
* * * * *
Chicago Board Options Exchange, Incorporated
Rules
* * * * *
Rule 8.3. Appointment of Market-Makers
(a)-(b) No change.
(c) Market-Maker Appointments. Absent an exemption by the Exchange,
an appointment of a Market-Maker confers the right to quote
electronically and in open outcry in the Market-Maker's appointed
classes during Regular Trading Hours as described below. Subject to
paragraph (e) below, a Market-Maker may change its appointed classes
upon advance notification to the Exchange in a form and manner
prescribed by the Exchange.
(i) Hybrid Classes. Subject to paragraphs (c)(iv) and (e) below, a
Market-Maker can create a Virtual Trading Crowd (``VTC'') appointment,
which confers the right to quote electronically during Regular Trading
Hours in an appropriate number of Hybrid classes (as defined in Rule
1.1(aaa)) selected from ``tiers'' that have been structured according
to trading volume statistics, except for the AA tier. All classes
within a specific tier will be assigned an ``appointment cost''
depending upon its tier location. The following table sets forth the
tiers and related appointment costs.
------------------------------------------------------------------------
Hybrid Option
Tier Classes Appointment cost
------------------------------------------------------------------------
AA.............................. Options on .499
the CBOE
Volatility Index
(VIX).
Options on .25
the iShares
Russell 2000 Index
Fund (IWM).
Options on .50
the NASDAQ 100
Index (NDX).
Options on .40
the S&P 100 (OEX).
Options on .25
Standard & Poor's
Depositary
Receipts (SPY).
Options on [.25].50
the Russell 2000
Index (RUT).
Options on .10
the S&P 100 (XEO).
Morgan .25
Stanley Retail
Index Options
(MVR).
Options on .10
the iPath S&P 500
VIX Short-Term
Futures Index ETN
(VXX).
P.M.- [1.0].50
Settled options on
the Standard &
Poor's 500 (SPXPM).
A*.............................. Hybrid Classes 1-60 .10
B*.............................. Hybrid Classes 61- .05
120.
C*.............................. Hybrid Classes 121- .04
345.
D*.............................. Hybrid Classes 346- .02
570.
[[Page 3204]]
E*.............................. Hybrid Classes 571- .01
999.
F*.............................. All Remaining .001
Hybrid Classes.
------------------------------------------------------------------------
* Excludes Tier AA.
(ii)--(vi) No change.
(d)--(e) No change.
* * * * *
The text of the proposed rule change is also 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 this rule change is to amend CBOE Rule 8.3 relating
to the appointment costs for options on RUT options and SPXPM options.
CBOE proposes to assign an appointment cost of .50 to each of RUT
options and SPXPM options, effective February 1, 2016.
While the appointment costs of Tier AA classes are not subject to
quarterly rebalancing under Rule 8.3(c)(iv), the Exchange regularly
reviews the appointment costs of Tier AA classes to ensure that they
continue to be appropriate.\5\ The Exchange determines appointment
costs of Tier AA classes based on several factors, including, but not
limited to, competitive forces and trading volume. After evaluating
these factors, the Exchange has determined to assign an appointment
cost of .50 to each of RUT options and SPXPM options.
---------------------------------------------------------------------------
\5\ The Exchange reviews the appointment costs of classes in
Tiers A through F every calendar quarter pursuant to an evaluation
of trading volume statistics. The Exchange announces the quarterly
rebalance via Regulatory Circular at least 10 business days before
the rebalancing takes effect. See Rule 8.3(c)(iv).
---------------------------------------------------------------------------
The Exchange believes increasing the appointment cost for RUT
options is reasonable given its increase in trading volume on the
Exchange and other competitive forces. For example, when classes have
higher volume, demand by Market-Makers for appointments to
electronically quote in those classes may increase, and thus it is
appropriate to charge a higher appointment cost for that class.\6\ The
Exchange notes that even if a Market-Maker is unwilling to pay the
higher appointment cost to maintain an appointment in RUT options to
quote electronically during regular trading hours pursuant to Rule
8.3(c)(i) (for example, because it would need an additional trading
permit to cover the cost or because it would need to eliminate
appointments in other classes), the Market-Maker can continue to have
an appointment in the class to trade open outcry.\7\
---------------------------------------------------------------------------
\6\ This is demonstrated by the appointment costs of classes in
Tiers A through F, which are based solely on trading volume--classes
with higher volume have higher appointment costs.
\7\ See Rule 8.3(c)(ii) (which provides all Market-Makers with
an appointment to trade open outcry in all Hybrid classes traded on
the Exchange).
---------------------------------------------------------------------------
The Exchange believes that decreasing the appointment cost for
SPXPM options is reasonable given its trading volume and other
competitive forces. The Exchange believes the proposed rule change will
foster competition by incentivizing more Market-Makers to obtain an
appointment in SPXPM due to the lower appointment cost, which may
increase liquidity in the class, as well as quote electronically in
other Hybrid option classes using the excess capacity resulting from
the decreased appointment cost in SPXPM options. The Exchange believes
that the appointment cost decrease for SPXPM options will promote
competition and efficiency.
The Exchange will announce the new appointment costs for RUT and
SPXPM options via Regulatory Circular at least 10 business days before
February 1, 2016, which the Exchange believes provides Market-Makers
with sufficient notice to update their appointments (if necessary) via
the appointments Web site or obtain an additional trading permit (if
necessary).\8\
---------------------------------------------------------------------------
\8\ The Exchange notes that this timeframe is consistent with
the deadline to announce quarterly rebalancing under Rule
8.3(c)(iv), which may result in an increase in appointment costs of
some classes and a decrease in appointment costs of other classes.
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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.\9\ Specifically, the Exchange believes the proposed rule change is
consistent with the section 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.
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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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Rebalancing of appointment costs does not raise any new or unique
issues. The Exchange reviews and rebalances appointment costs for Tier
AA classes regularly and Tier A through F classes quarterly, both of
which may result an increase in appointment costs of some classes and a
decrease in appointment costs of other classes. The Exchange believes
rebalancing appointment costs of Tier AA classes based on trading
volume and other competitive forces promotes just and equitable
principles of trade. The Exchange believes increasing the appointment
cost for RUT options promotes competition and efficiency by aligning
the appointment cost with the higher demand for appointments in that
class and competitive forces related to that class.
[[Page 3205]]
The Exchange believes decreasing the appointment cost for SPXPM options
promotes competition and efficiency by incentivizing more Market-Makers
to obtain an appointment in SPXPM due to the lower appointment cost,
which may increase liquidity in the class, as well as quote
electronically in other Hybrid option classes using the excess capacity
resulting from the decreased appointment cost in SPXPM options. The
Exchange believes this may result in more liquidity and competitive
pricing, which ultimately benefits investors. The proposed rule change
does not result in unfair discrimination, as the revised appointment
costs for RUT and SPXPM options will apply to all Market-Makers.
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. CBOE 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 it will apply to all Market-Makers (and only Market-
Makers can have appointments to quote electronically). CBOE 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 rule change
only applies to CBOE's Market-Maker appointment process. The Exchange
believes the proposed rule change will promote competition, as
discussed above.
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 \12\ and
Rule 19b-4(f)(6) \13\ thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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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 rule-comments@sec.gov. Please include
File Number SR-CBOE-2015-121 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2015-121. 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-2015-121 and should be
submitted on or before February 10, 2016.
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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-00905 Filed 1-19-16; 8:45 am]
BILLING CODE 8011-01-P
