Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule, 3841-3847 [2016-01200]
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Federal Register / Vol. 81, No. 14 / Friday, January 22, 2016 / Notices
authorizing the product, a certification
of compliance with 39 U.S.C. 3633(a),
and an application for non-public
treatment of certain materials. It also
filed supporting financial workpapers.
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
II. Notice of Commission Action
FOR FURTHER INFORMATION CONTACT:
The Commission establishes Docket
No. CP2016–96 for consideration of
matters raised by the Notice.
The Commission invites comments on
whether the Postal Service’s filing is
consistent with 39 U.S.C. 3632, 3633, or
3642, 39 CFR part 3015, and 39 CFR
part 3020, subpart B. Comments are due
no later than January 25, 2016. The
public portions of the filing can be
accessed via the Commission’s Web site
(https://www.prc.gov).
The Commission appoints Curtis E.
Kidd to serve as Public Representative
in this docket.
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
III. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket
No. CP2016–96 for consideration of the
matters raised by the Postal Service’s
Notice.
2. Pursuant to 39 U.S.C. 505, Curtis E.
Kidd is appointed to serve as an officer
of the Commission to represent the
interests of the general public in this
proceeding (Public Representative).
3. Comments are due no later than
January 25, 2016.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
Table of Contents
I. Introduction
On January 15, 2016, the Postal
Service filed notice that it has entered
into an additional Global Reseller
Expedited Package Services 2 (GREPS 2)
negotiated service agreement
(Agreement).1
To support its Notice, the Postal
Service filed a copy of the Agreement,
a copy of the Governors’ Decision
authorizing the product, a certification
of compliance with 39 U.S.C. 3633(a),
and an application for non-public
treatment of certain materials. It also
filed supporting financial workpapers.
II. Notice of Commission Action
New Postal Product
III. Ordering Paragraphs
Postal Regulatory Commission.
ACTION: Notice.
It is ordered:
1. The Commission establishes Docket
No. CP2016–97 for consideration of the
matters raised by the Postal Service’s
Notice.
2. Pursuant to 39 U.S.C. 505,
Christopher C. Mohr is appointed to
serve as an officer of the Commission to
represent the interests of the general
public in this proceeding (Public
Representative).
3. Comments are due no later than
January 26, 2016.
BILLING CODE 7710–FW–P
POSTAL REGULATORY COMMISSION
AGENCY:
The Commission is noticing a
recent Postal Service filing concerning
an additional Global Reseller Expedited
Package Services 2 negotiated service
agreement. This notice informs the
public of the filing, invites public
comment, and takes other
administrative steps.
DATES: Comments are due: January 26,
2016.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
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SUMMARY:
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1 Notice of United States Postal Service of Filing
a Functionally Equivalent Global Reseller
Expedited Package 2 Negotiated Service Agreement,
January 15, 2016 (Notice).
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By the Commission.
Stacy L. Ruble,
Secretary.
[FR Doc. 2016–01280 Filed 1–21–16; 8:45 am]
BILLING CODE 7710–FW–P
[Release No. 34–76923; File No. SR–CBOE–
2016–002)
[Docket No. CP2016–97; Order No. 3035]
[FR Doc. 2016–01180 Filed 1–21–16; 8:45 am]
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
SECURITIES AND EXCHANGE
COMMISSION
I. Introduction
II. Notice of Commission Action
III. Ordering Paragraphs
The Commission establishes Docket
No. CP2016–97 for consideration of
matters raised by the Notice.
The Commission invites comments on
whether the Postal Service’s filing is
consistent with 39 U.S.C. 3632, 3633, or
3642, 39 CFR part 3015, and 39 CFR
part 3020, subpart B. Comments are due
no later than January 26, 2016. The
public portions of the filing can be
accessed via the Commission’s Web site
(https://www.prc.gov).
The Commission appoints
Christopher C. Mohr to serve as Public
Representative in this docket.
By the Commission.
Ruth Ann Abrams,
Acting Secretary.
3841
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Fees
Schedule
January 15, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that, on January
4, 2016, Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’) filed with the Securities
and Exchange Commission
(‘‘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/CBOELegalRegulatory
Home.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
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to make a
number of changes to its Fees Schedule,
effective January 4, 2016.
Market-Maker Affiliate Volume Plan
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The Exchange proposes to adopt the
Market-Maker Affiliate Volume Plan
(‘‘AVP’’). Specifically, under AVP, if a
Trading Permit Holder (‘‘TPH’’)
Affiliate 3 of a Market-Maker (including
a Designated Primary Market-Maker
(‘‘DPM’’) or Lead Market-Maker
(‘‘LMM’’)) qualifies under the Volume
Incentive Program (‘‘VIP’’), that MarketMaker will also qualify for a discount on
that Market-Maker’s Liquidity Provider
Sliding Scale (‘‘Sliding Scale’’)
transaction fees. By way background
[sic], under VIP, the Exchange credits
each Trading Permit Holder the per
contract amount set forth in the VIP
table resulting from each public
customer (‘‘C’’ origin code) order
transmitted by that TPH (with certain
exceptions) which is executed
electronically on the Exchange in all
underlying symbols excluding
Underlying Symbol List A, DJX, XSP,
XSPAM, credit default options, credit
default basket options and mini-options,
provided the TPH meets certain volume
thresholds in a month.4 Currently, VIP
consists of four (4) tiers with the
following thresholds; 0%–0.75%, above
0.75%–1.50%, above 1.50%–3.00% and
above 3%. The Exchange proposes to
provide that if a Market-Maker’s
Affiliate reaches Tier 2, Tier 3 or Tier
4 of VIP, that Market-Maker will receive
a discount on their Sliding Scale
Market-Maker transaction fees of 10%,
15% or 20%, respectively.5 Below is a
table demonstrating the proposed
program.
3 ‘‘Affiliate’’ is defined as having at least 75%
common ownership between the two entities as
reflected on each entity’s Form BD, Schedule A.
4 Currently, excluded from the VIP credit are
options in Underlying Symbol List A, DJX, XSP,
XSPAM, credit default options, credit default basket
options, mini-options, QCC trades, public customer
to public customer electronic complex order
executions, and executions related to contracts that
are routed to one or more exchanges in connection
with the Options Order Protection and Locked/
Crossed Market Plan referenced in Rule 6.80 (see
CBOE Fees Schedule, Volume Incentive Program).
5 The discount will be on transaction fees only
(i.e., the rates charged pursuant to the Liquidity
Provider Sliding Scale). Other fees, such as the
Index License Surcharge, will not be discounted.
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clarifies this point and alleviates
potential confusion. The Exchange notes
Tier
VIP Thresholds
no substantive changes are being made
by this clarification.
Next, the Exchange proposes to
1 .......... 0.00%–0.75% .........
0
2 .......... Above 0.75%–
10 exclude from the Access Credit, MarketMaker Trading Permits used for
1.50%.
3 .......... Above 1.50%–
15 appointments in the Russell 2000 Index
(‘‘RUT’’). The Exchange notes that the
3.00%.
4 .......... Above 3.00% ..........
20 proposed exclusion is similar to the
exclusion of other proprietary and
The Exchange believes AVP will
exclusive products. The Exchange notes
incentivize the routing of orders to
the Exchange’s proprietary, exclusivelyCBOE by TPHs that have both Marketlisted products are often collectively
Maker and agency operations, as well as excluded from certain programs,
incent Market-Makers to tighten market
including the Access Credit, because the
widths due to the reduced costs the
Exchange has expended considerable
incentives will provide. The Exchange
resources developing and maintaining
notes that in the options industry, many those products and therefore desires not
options orders are routed by
to give a credit related to those products
consolidators, which are firms that have in order to recoup those expenditures.
both order router and Market-Maker
Similar to the products currently
operations. The Exchange is aware not
excluded from the Access Credit, RUT
only of the importance of providing
is no longer listed on any other
credits on the order routing side in
exchange (other than C2). As such, the
order to encourage the submission of
Exchange proposes to exclude Marketorders, but also of the operations costs
Maker Trading Permits used for RUT
on the Market-Maker side. The
appointments from the Access Credit.
Exchange believes AVP allows the
The Exchange also proposes to
Exchange to provide further relief to the incorporate the description of the
Market-Maker side via the discount.
Access Credit within a single Affiliate
Additionally, the Exchange believes
Volume Plan table, as both the Access
AVP will attract more volume and
Credit and discount on Market-Maker
liquidity to the Exchange, which will
fees under AVP are based upon a
benefit all Exchange participants
Market-Maker Affiliate reaching certain
through increased opportunities to trade tiers within VIP. The Exchange believes
as well as enhancing price discovery.
the proposed table alleviates potential
confusion and makes the Fees Schedule
Market-Maker Trading Permit Credits
easier to read.
Currently, Footnote 24 provides that if
Floor Broker Trading Permit Rebates
a Market-Maker or its affiliate receive a
credit under VIP, that Market-Maker
Footnote 25, which governs rebates on
will receive a credit on its Market-Maker Floor Broker Trading Permits, currently
Trading Permit fees corresponding to
provides that any Floor Broker that
the VIP tier reached (10% Market-Maker executes a certain average of customer
open-outcry contracts per day over the
Trading Permit fee credit for reaching
course of a calendar month in all
Tier 2 of the VIP, 20% Market-Maker
underlying symbols excluding
Trading Permit fee credit for reaching
Underlying Symbol List A (except RUT),
Tier 3 of the VIP, and 30% MarketDJX, XSP, XSPAM, mini-options and
Maker Trading Permit fee credit for
subcabinet trades, will receive a rebate
reaching Tier 4 of the VIP) (‘‘Access
on that Floor Broker’s Trading Permit
Credit’’). This credit does not apply to
Holder’s Floor Broker Trading Permit
Market-Maker Trading Permits used for
Fees. The Exchange notes that although
appointments in SPX, SPXpm, VIX,
RUT had previously been added to
OEX and XEO. The Exchange proposes
‘‘Underlying Symbol List A’’, it had
to make certain amendments to
continued to include RUT in the
Footnote 24.
First, the Exchange proposes to clarify calculation of the qualifying volume for
that a Market-Maker will receive an
the rebate of Floor Broker Trading
Access Credit if its Affiliate, not the
Permit fees. The Exchange now seeks to
Market-Maker itself, reaches certain VIP exclude RUT volume from the
tiers (i.e., eliminate ‘‘or its’’ from ‘‘If a
calculation, similar to the exclusion of
Market-Maker or its Affiliate . . .’’ [sic]
all other products in Underlying Symbol
As noted above, VIP credits are limited
List A. As discussed above, the
to TPHs executing customer orders. As
Exchange’s proprietary, exclusivelysuch, Market-Maker orders would not be listed products are often collectively
eligible to count towards the qualifying
excluded from certain programs because
tiers or receive VIP credits. The
the Exchange has expended
Exchange believes the proposed change
considerable resources developing and
AVP
Transaction
fee discount
(%)
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maintaining these products. Similar to
the products currently excluded from
the calculation of qualifying volume for
the Floor Broker Trading Permit rebates,
RUT is no longer listed on any other
exchange (other than C2) and the
Exchange therefore proposes to exclude
it from the qualifying calculation.
NDX and MNX Fees
The Exchange next proposes to
increase the Nasdaq-100 Index (‘‘NDX’’)
and mini-NDX Index (‘‘MNX’’) Index
License Surcharge. Currently, the
Exchange assesses an Index License
Surcharge for NDX and MNX of $0.15
per contract for all non-customer orders.
The Exchange now proposes to increase
the NDX and MNX Surcharge from
$0.15 to 0.25 per contract in order to
recoup the increased costs associated
with the NDX and MNX license. The
Exchange will still be subsidizing the
costs of the NDX and MNX license.
Additionally, like other proprietary
index products, the Exchange proposes
to except NDX and MNX from VIP and
from the Marketing Fee.
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VIX License Index Surcharge
The Exchange proposes to waive
through March 2016 the VIX Index
License Surcharge of $0.10 per contract
for Clearing Trading Permit Holder
Proprietary (‘‘Firm’’) (origin codes ‘‘F’’
or ‘‘L’’) VIX orders that have a premium
of $0.10 or lower and have series with
an expiration of less than seven (7)
calendar days. Particularly, the
Exchange is attempting to reduce
transaction costs on expiring, lowpriced VIX options in order to
encourage Firms to seek to close and/or
roll over such positions close to
expiration at low premium levels,
including facilitating customers to do
so, in order to free up capital and
encourage additional trading. Currently,
Firms are less likely to engage in such
activity because the transaction fees are
often equivalent [sic] or even exceed the
premium level, making such
transactions economically unattractive.
The Exchange believes that the [sic]
lowering costs for VIX options trading
with a premium of $0.00–$0.10 and for
series with an expiration of less than 7
days will encourage the closing, rolling
and trading of such options and new
series, as well. The Exchange proposes
to waive the surcharge through March
2016, at which time the Exchange will
evaluate whether the wavier [sic] has in
fact prompted Firms to close and roll
over positions close to expiration at low
premium levels.
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VIX Customer Transaction Fees
The Exchange proposes to reduce the
amount of VIX customer (origin code
‘‘C’’) transactions [sic] fees [sic] orders
with a premium of $0.11 to $0.99 from
$0.27 per contract to $0.25 per contract
and orders with a premium of above
$1.00 from $.048 per contract to $0.45
per contract. The Exchange believes that
the lowered costs for VIX options will
encourage the trading of such options.
Hybrid 3.0 Surcharge
The Exchange assesses a Hybrid 3.0
Execution Fee of $0.20 per contract for
all electronic executions in Hybrid 3.0
classes (with some exceptions).6 The
Exchange proposes to increase this fee
to $0.21 per contract. The Exchange
notes that it continually invests in the
Hybrid 3.0 system and the proposed
increase will help the Exchange recoup
such expenditures.
RUI, RLV and RLG Fees
On October 20, 2015, the Exchange
began trading options on three FTSE
Russell Indexes (i.e., Russell 1000 Index
(‘‘RUI’’), Russell 1000 Value Index
(‘‘RLV’’) and Russell 1000 Growth Index
(‘‘RLG’’)). In order to promote and
encourage trading of RUI, RLV and RLG,
the Exchange had waived all transaction
fees (including the Floor Brokerage Fee,
Index License Surcharge and CFLEX
Surcharge Fee) for RUI, RLV and RLG
transactions through December 31,
2015. In order to continue to promote
trading of these new options classes, the
Exchange proposes to extend the fee
waiver of RUI, RLV and RLG through
March 31, 2016.
Large Customer Trade Discount
The Customer Large Trade Discount
program (the ‘‘Discount’’) provides a
discount in the form of a cap on the
quantity of customer (‘‘C’’ origin code’’
[sic]) contracts that are assessed
transactions fees in certain options
classes. The Discount table in the Fees
Schedule sets forth the quantity of
contracts necessary for a large customer
trade to qualify for the Discount, which
6 See CBOE Fees Schedule. Particularly, all
electronic executions in Hybrid 3.0 classes shall be
assessed the Hybrid 3.0 Execution Surcharge,
except to [sic]: (i) Orders in SPX options in the SPX
electronic book for those SPX options that are
executed during opening rotation on the final
settlement date of VIX options and futures which
have the expiration [sic] that contribute to the VIX
settlement calculation, (ii) executions by marketmakers against orders in the complex order auction
(COA) and Simple Auction Liaison (SAL) systems
in their appointed classes, (iii) executions by
market-makers against orders in the electronic book,
Hybrid Agency Liaison (HAL) and the complex
order book in their appointed classes, and (iv)
orders executed by a floor broker using a PAR
terminal.
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3843
varies by product. Currently, under the
‘‘Products’’ section in the Discount
table, the following S&P products for
which the Discount is in effect are
listed: ‘‘SPX, SPXw, SPXpm, SRO.’’
Customer transaction fees for each of
these products are currently only
charged up to the first 15,000 contracts.
The Exchange proposes to raise the
quantity of SPX, SPXw, SPXpm, and
SRO contracts necessary for a large
customer trade to qualify for the
Discount from 15,000 contracts per
order to 20,000 contracts per order. The
purpose of the proposed rule change is
to moderate the discount level for
customer (C) orders in the SPX product
group in view of its mature and
established position in the industry. The
Exchange additionally proposes to raise
the quantity of VIX contracts necessary
for a large customer trade to qualify for
the Discount. Specially [sic], the
Exchange proposes to raise the
threshold from 10,000 contracts per
order to 15,000 contracts per order. The
purpose of the proposed change is to
moderate the discount level for
customer (C) orders in VIX in light of
the increased sizes of qualifying
Discount VIX orders.
RUT Tier Appointment Surcharge
CBOE Rule 8.3(e) provides that the
Exchange may establish one or more
types of tier appointments. In
accordance with CBOE Rule 8.3(e), a tier
appointment is an appointment to trade
one or more options classes that must be
held by a Market-Maker to be eligible to
act as a Market-Maker in the options
class or options classes subject to that
appointment. CBOE currently maintains
a tier appointment for Market-Maker
Trading Permit Holders trading in RUT,
as it does for SPX and VIX. Currently,
the Exchange has a Tier Appointment
Surcharge for SPX and VIX, but not
RUT. The Exchange notes that it has
expended considerable resources
developing and maintaining its
proprietary, exclusively-listed products.
To help recoup costs of the license and
for further development and
maintenance of RUT options, the
Exchange is now proposing to also
establish a RUT Tier Appointment fee.
Specifically, the Exchange proposes to
adopt a RUT Tier Appointment fee of
$1,000 per month, which will be
assessed to any Market-Maker Trading
Permit Holder that either (a) has a RUT
Tier Appointment at any time during a
calendar month and trades at least 100
RUT options contracts electronically
while that appointment is active; or (b)
trades at least 1,000 RUT options
contracts in open outcry during a
calendar month. The Exchange notes
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that the proposed criteria is the same as
it is for the VIX Tier Appointment fee.
Additionally, similar to what’s provided
in the Fees Schedule for the SPX and
VIX Tier Appointment fees, the
Exchange proposes to state, consistent
with Rule 8.3(e), that each RUT Tier
Appointment may only be used with
one designated Market-Maker Trading
Permit. Additionally, the Exchange
proposes to state that in order for a
Market-Maker Trading Permit to be used
to act as an electronic Market-Maker in
RUT, the Trading Permit Holder must
obtain a RUT Tier Appointment for that
Market-Maker Trading Permit.
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Extended Trading Hour Fees
In order to promote and encourage
trading during the Extended Trading
Hours (‘‘ETH’’) session, the Exchange
currently waives ETH Trading Permit
and Bandwidth Packet fees for one (1)
of each initial Trading Permits and one
(1) of each initial Bandwidth Packet, per
affiliated TPH. The Exchange notes that
waiver is set to expire December 31,
2015. The Exchange also waives fees
through December 31, 2015 for a CMI
and FIX login ID if the CMI and/or FIX
login ID is related to a waived ETH
Trading Permit and/or waived
Bandwidth packet. In order to continue
to promote trading during ETH, the
Exchange wishes to extend these
waivers through July 2016.
Floor Broker Workstation
The Exchange proposes raising the
Floor Broker Workstation (‘‘FBW’’) and
FBW2 fee from $400 per month (per
login ID) to $450 per month (per login
ID). The total amount charged by the
Exchange’s vendor that provides the
FBW (and FBW2) is more than $450 per
month (per login ID) for FBW and FBW2
and the Exchange has been subsidizing
those costs for FBW and FBW2 users. As
such, the Exchange proposes increasing
the FBW fee to $450 per month (per
login ID), which still includes a subsidy
for FBW users (though smaller).
Additionally, the Exchange notes that
for every FBW login a TPH has, the
FBW2 monthly fee is currently waived
through December 2015 on a one-to-one
basis. The Exchange waived the FBW2
fee on a one-to-one basis because it had
anticipated new features being launched
on FBW2 by the end of the year and the
Exchange wanted to encourage FBW
users to begin (or continue)
transitioning to FBW2 logins while
waiting for the new features.
Additionally, the Exchange wanted to
provide additional time to become
acclimated to FBW2 while at the same
time being able to use FBW login IDs.
The Exchange notes that certain new
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features on FBW2 have still not
launched. As such, the Exchange wishes
to extend the FBW2 monthly fee waiver
on a one-to-one basis through March 31,
2016. The Exchange therefore proposes
to delete now outdated language in the
Fees Schedule and provide that for
every FBW login a TPH has, the FBW2
fee will be waived for the months of
January 2016 through March 2016 on a
one-to-one basis.
QCC Cleanup
The Exchange proposes to correct an
inadvertent omission to the Fees
Schedule with respect to a recent
change to Qualified Contingent Cross
(‘‘QCC’’) 7 order fees. On November 16,
2015, the Exchange proposed to increase
the transaction fee for all non-customer
QCC orders from $0.15 per contract to
$0.17 per contract.8 The Exchange notes
that the QCC transaction fee rate is
located in two tables in the Fees
Schedule (i.e., the QCC Rate Table and
the Clearing Trading Permit Holder Fee
Cap Table (‘‘Fee Cap Table’’)). While the
Exhibit 5 to SR–CBOE–2015–105
reflected the QCC fee increase in the
QCC Rate Table, the Exchange
inadvertently omitted to make the
corresponding increase to the rate listed
in the Fee Cap table. Accordingly, the
Exchange proposes to update the rate
listed for QCC orders from $0.15 per
contract to $0.17 per contract in the Fee
Cap Table to avoid potential confusion
and maintain a clear and consistent Fees
Schedule.
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
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 facilitation [sic] transactions in
7 A QCC order is comprised of an order to buy
or sell at least 1,000 contracts (or 10,000 minioption contracts) that is identified as being part of
a qualified contingent trade, coupled with a contraside order or orders totaling an equal number of
contracts.
8 See Securities Exchange Act Release No. 76498
(November 20, 2015), 80 FR 228 (November 27,
2015) (SR–CBOE–2015–105).
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
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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,11 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 adopting
the Affiliate Volume Plan is reasonable
because it will allow qualifying MarketMakers to receive a credit on their
Market-Maker Sliding Scale transaction
fees. The Exchange believes that this
proposed change is equitable and not
unfairly discriminatory because MarketMakers are valuable market participants
that provide liquidity in the
marketplace and incur costs that other
market participants do not incur. For
example, Market-Makers have a number
of obligations, including quoting
obligations that other market
participants do not have. Additionally,
the Exchange notes that incentivizing a
Market-Maker Affiliate to achieve higher
tiers on the VIP, can result in greater
customer liquidity, and the resulting
increased volume benefits all market
participants (including Market-Makers
or their affiliates who do not achieve the
higher tiers on the VIP; indeed, this
increased volume may allow them to
reach these tiers). Further, other options
exchanges also provide credits to
Market-Makers if a Market-Maker’s
affiliate adds a certain amount of
customer liquidity to that exchange.12
The Exchange also notes that the credits
under AVP are available to all MarketMakers who qualify.
The Exchange believes that it is
reasonable, equitable and not unfairly
discriminatory to exclude Market-Maker
Trading Permits used for appointments
in RUT from the Access Credit because
the Exchange has expended
considerable resources maintaining RUT
as a proprietary and exclusively-listed
product and therefore desires not to give
a credit related in order to recoup those
expenditures. Additionally, the
Exchange notes that Trading Permits
used for appointments in other
proprietary and exclusively listed
products are excluded from receiving
credits under the Access Credit program
11 15
U.S.C. 78f(b)(4).
e.g., NYSE Arca, Inc. (‘‘Arca’’) Options Fees
and Charges, specifically the table describing the
Market Maker Monthly Posting Credit Super Tier,
under which transaction volume from a Market
Maker’s affiliates count towards the Market Maker’s
ability to qualify for higher credit tiers.
12 See
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as well. Similarly, the Exchange
believes it’s reasonable to exclude RUT
from the qualifying calculation for the
Floor Broker Trading Permit rebates
because other Underlying Symbol List A
products are also excepted from
counting towards the qualifying
threshold volumes.
The Exchange believes clarifying in
Footnote 24 that only a Market-Maker
Affiliate (as opposed to the MarketMaker itself) can receive an Access
Credit alleviates potential confusion.
The Exchange also believes
incorporating into a single table both
details of the Access Credit and credits
available to Market-Makers under AVP
alleviates potential confusion and
maintains clarity in the Fees Schedule.
The alleviation of potential confusion
serves 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.
The Exchange believes increasing the
NDX and MNX Index License Surcharge
Fee from $0.15 to $0.25 per contract is
reasonable because the Exchange still
pays more for the NDX and MNX
license than the amount of the proposed
NDX Index License Surcharge Fee
(meaning that the Exchange will be
subsidizing the costs of the NDX and
MNX license). Additionally, the
Exchange notes that another Exchange
also assesses $0.25 per contract for NDX
and MNX transactions.13 This increase
is equitable and not unfairly
discriminatory because all nonCustomer market participants will be
assessed the same increased NDX and
MNX Index License Surcharge. Not
applying the NDX and MNX Index
License Surcharge Fee to customer
orders is equitable and not unfairly
discriminatory because this is designed
to attract customer NDX and MNX
orders, which increases liquidity and
provides greater trading opportunities to
all market participants.
The Exchange believes that excluding
NDX and MNX from VIP is reasonable
because the VIP is a credit program, and
excluding MNX and NDX from the VIP
does not impose any extra fee for NDX
and MNX trades, it just prevents them
from incurring a credit (or counting
towards incurring credits). As such,
qualifying market participants trading
NDX and MNX will merely be required
to pay regular transaction fees. The
Exchange believes excepting NDX and
MNX from VIP is equitable and not
unfairly reasonable because other
13 See NASDAQ OMX PHLX LLC (‘‘PHLX’’)
Pricing Schedule, Section II, Multiply Listed
Options Fees, Options Surcharge in MNX and NDX.
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Jkt 238001
proprietary index products are also
excepted from VIP. Similarly, the
Exchange believes it’s reasonable to
except NDX and MNX [sic] the
Marketing Fee because other proprietary
index products are excepted from those
same items. This is equitable and not
unfairly discriminatory for the same
reason; it seems equitable to except
NDX and MNX from items on the Fees
Schedule from which other proprietary
products are also excepted.
The Exchange believes it’s reasonable
to waive the VIX Index License
Surcharge for Clearing Trading Permit
Holder Proprietary VIX orders that have
a premium of $0.10 or lower and have
series with an expiration of less than 7
calendar days because the Exchange
wants to encourage Firms to roll and
close over positions close to expiration
at low premium levels. The Exchange
notes that without the waiver, firms are
less likely to engage in these
transactions, as opposed to other VIX
transactions, due to the associated
transaction costs. The Exchange believes
it’s equitable and not unfairly
discriminatory to limit the waiver to
Clearing Trading Permit Holder
Proprietary orders because they
contribute capital to facilitate the
execution of VIX customer orders with
a premium of $0.10 or lower and series
with an expiration of less than 7 days.
Finally, the Exchange believes it’s
reasonable, equitable and not unfairly
discriminatory to provide that the
surcharge will be waived through March
2016, as it gives the Exchange time to
evaluate if the wavier [sic] is in fact
having the desired effect of encouraging
these transactions and because it applies
to all Clearing Trading Permit Holders.
The proposal to reduce VIX customer
transactions [sic] is reasonable because
it allows customers to pay less for these
transactions than they are currently
paying. The proposed change to
customer VIX options transaction fees is
also equitable and not unfairly
discriminatory because it applies
uniformly to all customers and because
this is designed to attract customer VIX
orders, which increases liquidity and
provides greater trading opportunities to
all market participants.
The Exchange believes it’s reasonable
to increase the Hybrid 3.0 Surcharge
because it is merely an increase of $0.01
per contract, and the Exchange uses this
fee to cover the costs of operating the
Hybrid 3.0 system. The Exchange
believes that this proposed increase is
also reasonable, equitable and not
unfairly discriminatory because it
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3845
applies to all Hybrid 3.0 executions,14
and because the increased fee will help
cover the costs of operating the Hybrid
3.0 system.
The Exchange believes it is
reasonable, equitable and not unfairly
discriminatory to extend the waiver of
all transaction fees for RUI, RLV and
RLG transasctions [sic], including the
Floor Brokerage fee, the License Index
Surcharge and CFLEX Surcharge Fee,
because it promotes and encourages
trading of these products which are still
new and applies to all TPHs.
The Exchange believes that raising the
discount threshold for VIX and SPX
(including SPXw), SPXPM and SROs is
reasonable because customers will still
be receiving a discount for large trades
that they would not otherwise receive.
This change is equitable and not
unfairly discriminatory because all
customers whose large trades qualify for
the Discount will still receive it. The
Exchange believes it’s equitable and not
unfairly discriminatory to raise the
threshold higher for the SPX product
group because the SPX product group
has reached a mature and established
level since its introduction while other
products, such as VIX, have not.
The Exchange believes that
establishing a RUT Tier Appointment
fee is reasonable because the Exchange
maintains a similar fee for other
exclusively-listed proprietary products
for which there is a tier appointment.15
The Exchange notes that the proposed
Tier Appointment fee is less than the
Tier Appointment fees assessed for SPX
and VIX.16 The Exchange believes it is
equitable and not unfairly
discriminatory to not assess the fee
unless a Market-Maker trades at least
100 RUT contracts electronically while
that appointment is active because those
that do not regularly trade RUT will not
be assessed the fee. Specifically, the
RUT Tier Appointment fee is intended
to be assessed to Market-Makers who act
as Market-Makers in RUT, not those
who submit an occasional order
electronically in RUT. More specifically,
the 100-contract threshold achieves this
purpose because it is a sufficiently small
number of contracts and yet leaves some
small room for accidental or minor RUT
trades. Because Market-Maker Trading
Permit Holders have an appointment to
trade in open outcry in all options
classes traded on the Hybrid Trading
System (including RUT) pursuant to
Exchange Rule 8.3(c)(ii), the Exchange
14 With the exception of those listed in Footnote
21 of the Fees Schedule.
15 See CBOE Fees Schedule, SPX and VIX Tier
Appointment Fees.
16 Id.
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Federal Register / Vol. 81, No. 14 / Friday, January 22, 2016 / Notices
believes it is also equitable and not
unfairly discriminatory to not assess the
Tier Appointment fee unless a MarketMaker trades at least 1,000 RUT options
contracts in open outcry during a
calendar month. The Exchange believes
this requirement again allows for
minimum open outcry activity in RUT
without having to pay an additional fee.
This proposed change is also equitable
and not unfairly discriminatory because
it will be assessed uniformly to all
Market-Makers that meet either of the
above criteria and because it allows the
Exchange to recoup expenditures
related to the maintenance of a
proprietary and exclusively listed
product.
The Exchange believes extending the
waiver of ETH Trading Permit and
Bandwidth Packet fees for one of each
type of Trading Permit and Bandwidth
Packet, per affiliated TPH through July
31, 2016 is reasonable, equitable and not
unfairly discriminatory, because it
promotes and encourages trading during
the ETH session and applies to all ETH
TPHs. The Exchange believes it’s also
reasonable, equitable and not unfairly
discriminatory to waive fees for Login
IDs related to waived Trading Permits
and/or Bandwidth Packets in order to
promote and encourage ongoing
participation in ETH and also applies to
all ETH TPHs.
Increasing the FBW and FBW2 fee
from $400 per month (per login ID) to
$450 per month (per login ID) is
reasonable because the total amount
charged by the Exchange’s vendor that
provides the FBW (and FBW2) is more
than $450 per month (per login ID) for
FBW and FBW2 and the Exchange
simply wants to reduce the extent to
which the Exchange subsidizes such
costs. This change is equitable and not
unfairly discriminatory because all
market participants who desire to use
the FBW and FBW2 will be assessed the
same fee.
The Exchange believes it is reasonable
to extend the waiver of FBW2 fees for
each FBW login a TPH has through
March 2016 because it encourages users
to use and become familiar with the
updated FBW2 login IDs while waiting
for certain features to be implemented
on FBW2. The Exchange believes the
proposed changes are equitable and not
unfairly discriminatory because it
applies to all users of FBW2.
The Exchange believes that correcting
an inadvertent failure to update the QCC
rate change in the Fee Cap table (in
addition to the QCC Rate Table, where
it is currently provided for) will
alleviate potential confusion and
maintain clarity in the Fees Schedule,
which serves to remove impediments to
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16:59 Jan 21, 2016
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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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule changes will impose
any burden on competition that are not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange 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, while different fees and rebates
are assessed to different market
participants in some circumstances,
these different market participants have
different obligations and different
circumstances (as described in the
‘‘Statutory Basis’’ section above). For
example, Clearing TPHs have clearing
obligations that other market
participants do not have. Market-Makers
have quoting obligations that other
market participants do not have. There
is a history in the options markets of
providing preferential treatment to
customers, as they often do not have as
sophisticated trading operations and
systems as other market participants,
which often makes other market
participants prefer to trade with
customers. Further, the Exchange fees
and rebates, both current and those
proposed to be changed, are intended to
encourage market participants to bring
increased volume to the Exchange
(which benefits all market participants),
while still covering Exchange costs
(including those associated with the
upgrading and maintenance of Exchange
systems).
The Exchange does not believe that
the proposed rule changes 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 are
intended to promote competition and
better improve the Exchange’s
competitive position and make CBOE a
more attractive marketplace in order to
encourage market participants to bring
increased volume to the Exchange
(while still covering costs as necessary).
Further, the proposed changes only
affect trading on CBOE. To the extent
that the proposed changes make CBOE
a more attractive marketplace for market
participants at other exchanges, such
market participants are welcome to
become CBOE market participants.
PO 00000
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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
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 17 and paragraph (f) of Rule
19b–4 18 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–2016–002 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–2016–002. 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
17 15
18 17
E:\FR\FM\22JAN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
22JAN1
Federal Register / Vol. 81, No. 14 / Friday, January 22, 2016 / Notices
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–
2016–002 and should be submitted on
or before February 12, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–01200 Filed 1–21–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–31958; File No. 812–14449]
The Guardian Insurance & Annuity
Company, Inc., et al; Notice of
Application
January 15, 2016.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order approving the substitution of
certain securities pursuant to Section
26(c) of the Investment Company Act of
1940, as amended (the ‘‘1940 Act’’).
AGENCY:
The Guardian Insurance &
Annuity Company (the ‘‘Company’’),
The Guardian Separate Account K, The
Guardian Separate Account M, The
Guardian Separate Account N (each, a
‘‘Life Account’’) and The Guardian
Separate Account R (the ‘‘Annuity
Account’’ and together with the Life
Accounts, the ‘‘Accounts’’) (together,
the ‘‘Applicants’’).
SUMMARY OF APPLICATION: The
Applicants seek an order pursuant to
Section 26(c) of the 1940 Act approving
the substitution of shares issued by
certain investment portfolios (the
‘‘Existing Funds’’) of registered
mstockstill on DSK4VPTVN1PROD with NOTICES
APPLICANTS:
19 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
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investment companies with shares of
certain investment portfolios (the
‘‘Replacement Funds’’) of registered
investment companies, under certain
variable life insurance policies and
variable annuity contracts issued by the
Company (the ‘‘Contracts’’), each
funded through the Accounts.
FILING DATE: The application was filed
on April 24, 2015, and amended on
September 4, 2015, and November 10,
2015.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on February 9, 2016, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to Rule 0–5 under the
1940 Act, hearing requests should state
the nature of the writer’s interest, any
facts bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090;
Applicants: Richard T. Potter, The
Guardian Insurance & Annuity
Company, Inc., 7 Hanover Square, New
York, New York 10004.
FOR FURTHER INFORMATION CONTACT:
Elizabeth G. Miller, Senior Counsel, at
(202) 551–8707, or Holly L. Hunter-Ceci,
Branch Chief, at (202) 551–6825
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://www.sec.
gov/search/search.htm or by calling
(202) 551–8090.
Applicants’ Representations
1. The Company is a stock life
insurance company incorporated in the
State of Delaware. The Company is
wholly owned by The Guardian Life
Insurance Company of America, a
mutual life insurance company
organized in the State of New York
(‘‘Guardian Life’’). Guardian Life does
not issue the Contracts and does not
PO 00000
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3847
guarantee any benefits provided under
the Contracts.
2. Each Account is a ‘‘separate
account’’ as defined in Rule 0–1(e)
under the 1940 Act and is registered
with the Commission as a unit
investment trust under the 1940 Act.
The interests in each Account offered
through the Contracts have been
registered under the Securities Act of
1933 on Form N–4 for the variable
annuity Contracts offered under the
Annuity Account, and on Form N–6 for
the variable life insurance Contracts
offered under the Life Accounts. The
application sets forth the registration
statement file numbers for the Accounts.
Each Account was established by the
board of directors of the Company under
the laws of the State of Delaware as
follows:
Separate account
The Guardian
Account K.
The Guardian
Account M.
The Guardian
Account N.
The Guardian
Account R.
Separate
Separate
Separate
Separate
Date established
November 18,
1993.
February 27, 1997.
September 23,
1999.
March 12, 2003.
3. Each Account supports certain
Contracts issued by the Company. Each
Account consists of investment
divisions, each corresponding to a
registered open-end management
investment company or series of a
registered open-end management
investment company in which the
Account invests. The assets of each
Account equal to its reserves and other
liabilities are not chargeable with the
Company’s obligations except those
under Contracts issued through such
Account. Income, gains and losses,
whether or not realized, of each
Account are kept separate from other
income, gains or losses of the Company
and other separate accounts. The
income and capital gains or capital
losses of each investment division,
whether realized or unrealized, are
credited to or charged against the assets
held in that division according to the
terms of the applicable Contract,
without regard to the income, capital
gains or capital losses of the other
investment divisions of the Company.
4. The Contracts are flexible premium
or modified scheduled premium
variable life insurance policies and
variable annuity contracts. For so long
as a variable life insurance Contract
remains in force or a variable annuity
Contract has not yet been annuitized, a
Contract owner may transfer all or part
of their accumulation values among the
variable investment options under the
E:\FR\FM\22JAN1.SGM
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]]>Agencies
[Federal Register Volume 81, Number 14 (Friday, January 22, 2016)]
[Notices]
[Pages 3841-3847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01200]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76923; File No. SR-CBOE-2016-002)
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the Fees Schedule
January 15, 2016.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on January 4, 2016, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (``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
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
[[Page 3842]]
the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to make a number of changes to its Fees
Schedule, effective January 4, 2016.
Market-Maker Affiliate Volume Plan
The Exchange proposes to adopt the Market-Maker Affiliate Volume
Plan (``AVP''). Specifically, under AVP, if a Trading Permit Holder
(``TPH'') Affiliate \3\ of a Market-Maker (including a Designated
Primary Market-Maker (``DPM'') or Lead Market-Maker (``LMM''))
qualifies under the Volume Incentive Program (``VIP''), that Market-
Maker will also qualify for a discount on that Market-Maker's Liquidity
Provider Sliding Scale (``Sliding Scale'') transaction fees. By way
background [sic], under VIP, the Exchange credits each Trading Permit
Holder the per contract amount set forth in the VIP table resulting
from each public customer (``C'' origin code) order transmitted by that
TPH (with certain exceptions) which is executed electronically on the
Exchange in all underlying symbols excluding Underlying Symbol List A,
DJX, XSP, XSPAM, credit default options, credit default basket options
and mini-options, provided the TPH meets certain volume thresholds in a
month.\4\ Currently, VIP consists of four (4) tiers with the following
thresholds; 0%-0.75%, above 0.75%-1.50%, above 1.50%-3.00% and above
3%. The Exchange proposes to provide that if a Market-Maker's Affiliate
reaches Tier 2, Tier 3 or Tier 4 of VIP, that Market-Maker will receive
a discount on their Sliding Scale Market-Maker transaction fees of 10%,
15% or 20%, respectively.\5\ Below is a table demonstrating the
proposed program.
---------------------------------------------------------------------------
\3\ ``Affiliate'' is defined as having at least 75% common
ownership between the two entities as reflected on each entity's
Form BD, Schedule A.
\4\ Currently, excluded from the VIP credit are options in
Underlying Symbol List A, DJX, XSP, XSPAM, credit default options,
credit default basket options, mini-options, QCC trades, public
customer to public customer electronic complex order executions, and
executions related to contracts that are routed to one or more
exchanges in connection with the Options Order Protection and
Locked/Crossed Market Plan referenced in Rule 6.80 (see CBOE Fees
Schedule, Volume Incentive Program).
\5\ The discount will be on transaction fees only (i.e., the
rates charged pursuant to the Liquidity Provider Sliding Scale).
Other fees, such as the Index License Surcharge, will not be
discounted.
------------------------------------------------------------------------
AVP
Transaction
Tier VIP Thresholds fee
discount
(%)
------------------------------------------------------------------------
1......................... 0.00%-0.75%.................... 0
2......................... Above 0.75%-1.50%.............. 10
3......................... Above 1.50%-3.00%.............. 15
4......................... Above 3.00%.................... 20
------------------------------------------------------------------------
The Exchange believes AVP will incentivize the routing of orders to
CBOE by TPHs that have both Market-Maker and agency operations, as well
as incent Market-Makers to tighten market widths due to the reduced
costs the incentives will provide. The Exchange notes that in the
options industry, many options orders are routed by consolidators,
which are firms that have both order router and Market-Maker
operations. The Exchange is aware not only of the importance of
providing credits on the order routing side in order to encourage the
submission of orders, but also of the operations costs on the Market-
Maker side. The Exchange believes AVP allows the Exchange to provide
further relief to the Market-Maker side via the discount. Additionally,
the Exchange believes AVP will attract more volume and liquidity to the
Exchange, which will benefit all Exchange participants through
increased opportunities to trade as well as enhancing price discovery.
Market-Maker Trading Permit Credits
Currently, Footnote 24 provides that if a Market-Maker or its
affiliate receive a credit under VIP, that Market-Maker will receive a
credit on its Market-Maker Trading Permit fees corresponding to the VIP
tier reached (10% Market-Maker Trading Permit fee credit for reaching
Tier 2 of the VIP, 20% Market-Maker Trading Permit fee credit for
reaching Tier 3 of the VIP, and 30% Market-Maker Trading Permit fee
credit for reaching Tier 4 of the VIP) (``Access Credit''). This credit
does not apply to Market-Maker Trading Permits used for appointments in
SPX, SPXpm, VIX, OEX and XEO. The Exchange proposes to make certain
amendments to Footnote 24.
First, the Exchange proposes to clarify that a Market-Maker will
receive an Access Credit if its Affiliate, not the Market-Maker itself,
reaches certain VIP tiers (i.e., eliminate ``or its'' from ``If a
Market-Maker or its Affiliate . . .'' [sic] As noted above, VIP credits
are limited to TPHs executing customer orders. As such, Market-Maker
orders would not be eligible to count towards the qualifying tiers or
receive VIP credits. The Exchange believes the proposed change
clarifies this point and alleviates potential confusion. The Exchange
notes no substantive changes are being made by this clarification.
Next, the Exchange proposes to exclude from the Access Credit,
Market-Maker Trading Permits used for appointments in the Russell 2000
Index (``RUT''). The Exchange notes that the proposed exclusion is
similar to the exclusion of other proprietary and exclusive products.
The Exchange notes the Exchange's proprietary, exclusively-listed
products are often collectively excluded from certain programs,
including the Access Credit, because the Exchange has expended
considerable resources developing and maintaining those products and
therefore desires not to give a credit related to those products in
order to recoup those expenditures. Similar to the products currently
excluded from the Access Credit, RUT is no longer listed on any other
exchange (other than C2). As such, the Exchange proposes to exclude
Market-Maker Trading Permits used for RUT appointments from the Access
Credit.
The Exchange also proposes to incorporate the description of the
Access Credit within a single Affiliate Volume Plan table, as both the
Access Credit and discount on Market-Maker fees under AVP are based
upon a Market-Maker Affiliate reaching certain tiers within VIP. The
Exchange believes the proposed table alleviates potential confusion and
makes the Fees Schedule easier to read.
Floor Broker Trading Permit Rebates
Footnote 25, which governs rebates on Floor Broker Trading Permits,
currently provides that any Floor Broker that executes a certain
average of customer open-outcry contracts per day over the course of a
calendar month in all underlying symbols excluding Underlying Symbol
List A (except RUT), DJX, XSP, XSPAM, mini-options and subcabinet
trades, will receive a rebate on that Floor Broker's Trading Permit
Holder's Floor Broker Trading Permit Fees. The Exchange notes that
although RUT had previously been added to ``Underlying Symbol List A'',
it had continued to include RUT in the calculation of the qualifying
volume for the rebate of Floor Broker Trading Permit fees. The Exchange
now seeks to exclude RUT volume from the calculation, similar to the
exclusion of all other products in Underlying Symbol List A. As
discussed above, the Exchange's proprietary, exclusively-listed
products are often collectively excluded from certain programs because
the Exchange has expended considerable resources developing and
[[Page 3843]]
maintaining these products. Similar to the products currently excluded
from the calculation of qualifying volume for the Floor Broker Trading
Permit rebates, RUT is no longer listed on any other exchange (other
than C2) and the Exchange therefore proposes to exclude it from the
qualifying calculation.
NDX and MNX Fees
The Exchange next proposes to increase the Nasdaq-100 Index
(``NDX'') and mini-NDX Index (``MNX'') Index License Surcharge.
Currently, the Exchange assesses an Index License Surcharge for NDX and
MNX of $0.15 per contract for all non-customer orders. The Exchange now
proposes to increase the NDX and MNX Surcharge from $0.15 to 0.25 per
contract in order to recoup the increased costs associated with the NDX
and MNX license. The Exchange will still be subsidizing the costs of
the NDX and MNX license. Additionally, like other proprietary index
products, the Exchange proposes to except NDX and MNX from VIP and from
the Marketing Fee.
VIX License Index Surcharge
The Exchange proposes to waive through March 2016 the VIX Index
License Surcharge of $0.10 per contract for Clearing Trading Permit
Holder Proprietary (``Firm'') (origin codes ``F'' or ``L'') VIX orders
that have a premium of $0.10 or lower and have series with an
expiration of less than seven (7) calendar days. Particularly, the
Exchange is attempting to reduce transaction costs on expiring, low-
priced VIX options in order to encourage Firms to seek to close and/or
roll over such positions close to expiration at low premium levels,
including facilitating customers to do so, in order to free up capital
and encourage additional trading. Currently, Firms are less likely to
engage in such activity because the transaction fees are often
equivalent [sic] or even exceed the premium level, making such
transactions economically unattractive. The Exchange believes that the
[sic] lowering costs for VIX options trading with a premium of $0.00-
$0.10 and for series with an expiration of less than 7 days will
encourage the closing, rolling and trading of such options and new
series, as well. The Exchange proposes to waive the surcharge through
March 2016, at which time the Exchange will evaluate whether the wavier
[sic] has in fact prompted Firms to close and roll over positions close
to expiration at low premium levels.
VIX Customer Transaction Fees
The Exchange proposes to reduce the amount of VIX customer (origin
code ``C'') transactions [sic] fees [sic] orders with a premium of
$0.11 to $0.99 from $0.27 per contract to $0.25 per contract and orders
with a premium of above $1.00 from $.048 per contract to $0.45 per
contract. The Exchange believes that the lowered costs for VIX options
will encourage the trading of such options.
Hybrid 3.0 Surcharge
The Exchange assesses a Hybrid 3.0 Execution Fee of $0.20 per
contract for all electronic executions in Hybrid 3.0 classes (with some
exceptions).\6\ The Exchange proposes to increase this fee to $0.21 per
contract. The Exchange notes that it continually invests in the Hybrid
3.0 system and the proposed increase will help the Exchange recoup such
expenditures.
---------------------------------------------------------------------------
\6\ See CBOE Fees Schedule. Particularly, all electronic
executions in Hybrid 3.0 classes shall be assessed the Hybrid 3.0
Execution Surcharge, except to [sic]: (i) Orders in SPX options in
the SPX electronic book for those SPX options that are executed
during opening rotation on the final settlement date of VIX options
and futures which have the expiration [sic] that contribute to the
VIX settlement calculation, (ii) executions by market-makers against
orders in the complex order auction (COA) and Simple Auction Liaison
(SAL) systems in their appointed classes, (iii) executions by
market-makers against orders in the electronic book, Hybrid Agency
Liaison (HAL) and the complex order book in their appointed classes,
and (iv) orders executed by a floor broker using a PAR terminal.
---------------------------------------------------------------------------
RUI, RLV and RLG Fees
On October 20, 2015, the Exchange began trading options on three
FTSE Russell Indexes (i.e., Russell 1000 Index (``RUI''), Russell 1000
Value Index (``RLV'') and Russell 1000 Growth Index (``RLG'')). In
order to promote and encourage trading of RUI, RLV and RLG, the
Exchange had waived all transaction fees (including the Floor Brokerage
Fee, Index License Surcharge and CFLEX Surcharge Fee) for RUI, RLV and
RLG transactions through December 31, 2015. In order to continue to
promote trading of these new options classes, the Exchange proposes to
extend the fee waiver of RUI, RLV and RLG through March 31, 2016.
Large Customer Trade Discount
The Customer Large Trade Discount program (the ``Discount'')
provides a discount in the form of a cap on the quantity of customer
(``C'' origin code'' [sic]) contracts that are assessed transactions
fees in certain options classes. The Discount table in the Fees
Schedule sets forth the quantity of contracts necessary for a large
customer trade to qualify for the Discount, which varies by product.
Currently, under the ``Products'' section in the Discount table, the
following S&P products for which the Discount is in effect are listed:
``SPX, SPXw, SPXpm, SRO.'' Customer transaction fees for each of these
products are currently only charged up to the first 15,000 contracts.
The Exchange proposes to raise the quantity of SPX, SPXw, SPXpm, and
SRO contracts necessary for a large customer trade to qualify for the
Discount from 15,000 contracts per order to 20,000 contracts per order.
The purpose of the proposed rule change is to moderate the discount
level for customer (C) orders in the SPX product group in view of its
mature and established position in the industry. The Exchange
additionally proposes to raise the quantity of VIX contracts necessary
for a large customer trade to qualify for the Discount. Specially
[sic], the Exchange proposes to raise the threshold from 10,000
contracts per order to 15,000 contracts per order. The purpose of the
proposed change is to moderate the discount level for customer (C)
orders in VIX in light of the increased sizes of qualifying Discount
VIX orders.
RUT Tier Appointment Surcharge
CBOE Rule 8.3(e) provides that the Exchange may establish one or
more types of tier appointments. In accordance with CBOE Rule 8.3(e), a
tier appointment is an appointment to trade one or more options classes
that must be held by a Market-Maker to be eligible to act as a Market-
Maker in the options class or options classes subject to that
appointment. CBOE currently maintains a tier appointment for Market-
Maker Trading Permit Holders trading in RUT, as it does for SPX and
VIX. Currently, the Exchange has a Tier Appointment Surcharge for SPX
and VIX, but not RUT. The Exchange notes that it has expended
considerable resources developing and maintaining its proprietary,
exclusively-listed products. To help recoup costs of the license and
for further development and maintenance of RUT options, the Exchange is
now proposing to also establish a RUT Tier Appointment fee.
Specifically, the Exchange proposes to adopt a RUT Tier Appointment fee
of $1,000 per month, which will be assessed to any Market-Maker Trading
Permit Holder that either (a) has a RUT Tier Appointment at any time
during a calendar month and trades at least 100 RUT options contracts
electronically while that appointment is active; or (b) trades at least
1,000 RUT options contracts in open outcry during a calendar month. The
Exchange notes
[[Page 3844]]
that the proposed criteria is the same as it is for the VIX Tier
Appointment fee. Additionally, similar to what's provided in the Fees
Schedule for the SPX and VIX Tier Appointment fees, the Exchange
proposes to state, consistent with Rule 8.3(e), that each RUT Tier
Appointment may only be used with one designated Market-Maker Trading
Permit. Additionally, the Exchange proposes to state that in order for
a Market-Maker Trading Permit to be used to act as an electronic
Market-Maker in RUT, the Trading Permit Holder must obtain a RUT Tier
Appointment for that Market-Maker Trading Permit.
Extended Trading Hour Fees
In order to promote and encourage trading during the Extended
Trading Hours (``ETH'') session, the Exchange currently waives ETH
Trading Permit and Bandwidth Packet fees for one (1) of each initial
Trading Permits and one (1) of each initial Bandwidth Packet, per
affiliated TPH. The Exchange notes that waiver is set to expire
December 31, 2015. The Exchange also waives fees through December 31,
2015 for a CMI and FIX login ID if the CMI and/or FIX login ID is
related to a waived ETH Trading Permit and/or waived Bandwidth packet.
In order to continue to promote trading during ETH, the Exchange wishes
to extend these waivers through July 2016.
Floor Broker Workstation
The Exchange proposes raising the Floor Broker Workstation
(``FBW'') and FBW2 fee from $400 per month (per login ID) to $450 per
month (per login ID). The total amount charged by the Exchange's vendor
that provides the FBW (and FBW2) is more than $450 per month (per login
ID) for FBW and FBW2 and the Exchange has been subsidizing those costs
for FBW and FBW2 users. As such, the Exchange proposes increasing the
FBW fee to $450 per month (per login ID), which still includes a
subsidy for FBW users (though smaller).
Additionally, the Exchange notes that for every FBW login a TPH
has, the FBW2 monthly fee is currently waived through December 2015 on
a one-to-one basis. The Exchange waived the FBW2 fee on a one-to-one
basis because it had anticipated new features being launched on FBW2 by
the end of the year and the Exchange wanted to encourage FBW users to
begin (or continue) transitioning to FBW2 logins while waiting for the
new features. Additionally, the Exchange wanted to provide additional
time to become acclimated to FBW2 while at the same time being able to
use FBW login IDs. The Exchange notes that certain new features on FBW2
have still not launched. As such, the Exchange wishes to extend the
FBW2 monthly fee waiver on a one-to-one basis through March 31, 2016.
The Exchange therefore proposes to delete now outdated language in the
Fees Schedule and provide that for every FBW login a TPH has, the FBW2
fee will be waived for the months of January 2016 through March 2016 on
a one-to-one basis.
QCC Cleanup
The Exchange proposes to correct an inadvertent omission to the
Fees Schedule with respect to a recent change to Qualified Contingent
Cross (``QCC'') \7\ order fees. On November 16, 2015, the Exchange
proposed to increase the transaction fee for all non-customer QCC
orders from $0.15 per contract to $0.17 per contract.\8\ The Exchange
notes that the QCC transaction fee rate is located in two tables in the
Fees Schedule (i.e., the QCC Rate Table and the Clearing Trading Permit
Holder Fee Cap Table (``Fee Cap Table'')). While the Exhibit 5 to SR-
CBOE-2015-105 reflected the QCC fee increase in the QCC Rate Table, the
Exchange inadvertently omitted to make the corresponding increase to
the rate listed in the Fee Cap table. Accordingly, the Exchange
proposes to update the rate listed for QCC orders from $0.15 per
contract to $0.17 per contract in the Fee Cap Table to avoid potential
confusion and maintain a clear and consistent Fees Schedule.
---------------------------------------------------------------------------
\7\ A QCC order is comprised of an order to buy or sell at least
1,000 contracts (or 10,000 mini-option contracts) that is identified
as being part of a qualified contingent trade, coupled with a
contra-side order or orders totaling an equal number of contracts.
\8\ See Securities Exchange Act Release No. 76498 (November 20,
2015), 80 FR 228 (November 27, 2015) (SR-CBOE-2015-105).
---------------------------------------------------------------------------
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 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 facilitation
[sic] 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,\11\ 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.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes that adopting the Affiliate Volume Plan is
reasonable because it will allow qualifying Market-Makers to receive a
credit on their Market-Maker Sliding Scale transaction fees. The
Exchange believes that this proposed change is equitable and not
unfairly discriminatory because Market-Makers are valuable market
participants that provide liquidity in the marketplace and incur costs
that other market participants do not incur. For example, Market-Makers
have a number of obligations, including quoting obligations that other
market participants do not have. Additionally, the Exchange notes that
incentivizing a Market-Maker Affiliate to achieve higher tiers on the
VIP, can result in greater customer liquidity, and the resulting
increased volume benefits all market participants (including Market-
Makers or their affiliates who do not achieve the higher tiers on the
VIP; indeed, this increased volume may allow them to reach these
tiers). Further, other options exchanges also provide credits to
Market-Makers if a Market-Maker's affiliate adds a certain amount of
customer liquidity to that exchange.\12\ The Exchange also notes that
the credits under AVP are available to all Market-Makers who qualify.
---------------------------------------------------------------------------
\12\ See e.g., NYSE Arca, Inc. (``Arca'') Options Fees and
Charges, specifically the table describing the Market Maker Monthly
Posting Credit Super Tier, under which transaction volume from a
Market Maker's affiliates count towards the Market Maker's ability
to qualify for higher credit tiers.
---------------------------------------------------------------------------
The Exchange believes that it is reasonable, equitable and not
unfairly discriminatory to exclude Market-Maker Trading Permits used
for appointments in RUT from the Access Credit because the Exchange has
expended considerable resources maintaining RUT as a proprietary and
exclusively-listed product and therefore desires not to give a credit
related in order to recoup those expenditures. Additionally, the
Exchange notes that Trading Permits used for appointments in other
proprietary and exclusively listed products are excluded from receiving
credits under the Access Credit program
[[Page 3845]]
as well. Similarly, the Exchange believes it's reasonable to exclude
RUT from the qualifying calculation for the Floor Broker Trading Permit
rebates because other Underlying Symbol List A products are also
excepted from counting towards the qualifying threshold volumes.
The Exchange believes clarifying in Footnote 24 that only a Market-
Maker Affiliate (as opposed to the Market-Maker itself) can receive an
Access Credit alleviates potential confusion. The Exchange also
believes incorporating into a single table both details of the Access
Credit and credits available to Market-Makers under AVP alleviates
potential confusion and maintains clarity in the Fees Schedule. The
alleviation of potential confusion serves 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.
The Exchange believes increasing the NDX and MNX Index License
Surcharge Fee from $0.15 to $0.25 per contract is reasonable because
the Exchange still pays more for the NDX and MNX license than the
amount of the proposed NDX Index License Surcharge Fee (meaning that
the Exchange will be subsidizing the costs of the NDX and MNX license).
Additionally, the Exchange notes that another Exchange also assesses
$0.25 per contract for NDX and MNX transactions.\13\ This increase is
equitable and not unfairly discriminatory because all non-Customer
market participants will be assessed the same increased NDX and MNX
Index License Surcharge. Not applying the NDX and MNX Index License
Surcharge Fee to customer orders is equitable and not unfairly
discriminatory because this is designed to attract customer NDX and MNX
orders, which increases liquidity and provides greater trading
opportunities to all market participants.
---------------------------------------------------------------------------
\13\ See NASDAQ OMX PHLX LLC (``PHLX'') Pricing Schedule,
Section II, Multiply Listed Options Fees, Options Surcharge in MNX
and NDX.
---------------------------------------------------------------------------
The Exchange believes that excluding NDX and MNX from VIP is
reasonable because the VIP is a credit program, and excluding MNX and
NDX from the VIP does not impose any extra fee for NDX and MNX trades,
it just prevents them from incurring a credit (or counting towards
incurring credits). As such, qualifying market participants trading NDX
and MNX will merely be required to pay regular transaction fees. The
Exchange believes excepting NDX and MNX from VIP is equitable and not
unfairly reasonable because other proprietary index products are also
excepted from VIP. Similarly, the Exchange believes it's reasonable to
except NDX and MNX [sic] the Marketing Fee because other proprietary
index products are excepted from those same items. This is equitable
and not unfairly discriminatory for the same reason; it seems equitable
to except NDX and MNX from items on the Fees Schedule from which other
proprietary products are also excepted.
The Exchange believes it's reasonable to waive the VIX Index
License Surcharge for Clearing Trading Permit Holder Proprietary VIX
orders that have a premium of $0.10 or lower and have series with an
expiration of less than 7 calendar days because the Exchange wants to
encourage Firms to roll and close over positions close to expiration at
low premium levels. The Exchange notes that without the waiver, firms
are less likely to engage in these transactions, as opposed to other
VIX transactions, due to the associated transaction costs. The Exchange
believes it's equitable and not unfairly discriminatory to limit the
waiver to Clearing Trading Permit Holder Proprietary orders because
they contribute capital to facilitate the execution of VIX customer
orders with a premium of $0.10 or lower and series with an expiration
of less than 7 days. Finally, the Exchange believes it's reasonable,
equitable and not unfairly discriminatory to provide that the surcharge
will be waived through March 2016, as it gives the Exchange time to
evaluate if the wavier [sic] is in fact having the desired effect of
encouraging these transactions and because it applies to all Clearing
Trading Permit Holders.
The proposal to reduce VIX customer transactions [sic] is
reasonable because it allows customers to pay less for these
transactions than they are currently paying. The proposed change to
customer VIX options transaction fees is also equitable and not
unfairly discriminatory because it applies uniformly to all customers
and because this is designed to attract customer VIX orders, which
increases liquidity and provides greater trading opportunities to all
market participants.
The Exchange believes it's reasonable to increase the Hybrid 3.0
Surcharge because it is merely an increase of $0.01 per contract, and
the Exchange uses this fee to cover the costs of operating the Hybrid
3.0 system. The Exchange believes that this proposed increase is also
reasonable, equitable and not unfairly discriminatory because it
applies to all Hybrid 3.0 executions,\14\ and because the increased fee
will help cover the costs of operating the Hybrid 3.0 system.
---------------------------------------------------------------------------
\14\ With the exception of those listed in Footnote 21 of the
Fees Schedule.
---------------------------------------------------------------------------
The Exchange believes it is reasonable, equitable and not unfairly
discriminatory to extend the waiver of all transaction fees for RUI,
RLV and RLG transasctions [sic], including the Floor Brokerage fee, the
License Index Surcharge and CFLEX Surcharge Fee, because it promotes
and encourages trading of these products which are still new and
applies to all TPHs.
The Exchange believes that raising the discount threshold for VIX
and SPX (including SPXw), SPXPM and SROs is reasonable because
customers will still be receiving a discount for large trades that they
would not otherwise receive. This change is equitable and not unfairly
discriminatory because all customers whose large trades qualify for the
Discount will still receive it. The Exchange believes it's equitable
and not unfairly discriminatory to raise the threshold higher for the
SPX product group because the SPX product group has reached a mature
and established level since its introduction while other products, such
as VIX, have not.
The Exchange believes that establishing a RUT Tier Appointment fee
is reasonable because the Exchange maintains a similar fee for other
exclusively-listed proprietary products for which there is a tier
appointment.\15\ The Exchange notes that the proposed Tier Appointment
fee is less than the Tier Appointment fees assessed for SPX and
VIX.\16\ The Exchange believes it is equitable and not unfairly
discriminatory to not assess the fee unless a Market-Maker trades at
least 100 RUT contracts electronically while that appointment is active
because those that do not regularly trade RUT will not be assessed the
fee. Specifically, the RUT Tier Appointment fee is intended to be
assessed to Market-Makers who act as Market-Makers in RUT, not those
who submit an occasional order electronically in RUT. More
specifically, the 100-contract threshold achieves this purpose because
it is a sufficiently small number of contracts and yet leaves some
small room for accidental or minor RUT trades. Because Market-Maker
Trading Permit Holders have an appointment to trade in open outcry in
all options classes traded on the Hybrid Trading System (including RUT)
pursuant to Exchange Rule 8.3(c)(ii), the Exchange
[[Page 3846]]
believes it is also equitable and not unfairly discriminatory to not
assess the Tier Appointment fee unless a Market-Maker trades at least
1,000 RUT options contracts in open outcry during a calendar month. The
Exchange believes this requirement again allows for minimum open outcry
activity in RUT without having to pay an additional fee. This proposed
change is also equitable and not unfairly discriminatory because it
will be assessed uniformly to all Market-Makers that meet either of the
above criteria and because it allows the Exchange to recoup
expenditures related to the maintenance of a proprietary and
exclusively listed product.
---------------------------------------------------------------------------
\15\ See CBOE Fees Schedule, SPX and VIX Tier Appointment Fees.
\16\ Id.
---------------------------------------------------------------------------
The Exchange believes extending the waiver of ETH Trading Permit
and Bandwidth Packet fees for one of each type of Trading Permit and
Bandwidth Packet, per affiliated TPH through July 31, 2016 is
reasonable, equitable and not unfairly discriminatory, because it
promotes and encourages trading during the ETH session and applies to
all ETH TPHs. The Exchange believes it's also reasonable, equitable and
not unfairly discriminatory to waive fees for Login IDs related to
waived Trading Permits and/or Bandwidth Packets in order to promote and
encourage ongoing participation in ETH and also applies to all ETH
TPHs.
Increasing the FBW and FBW2 fee from $400 per month (per login ID)
to $450 per month (per login ID) is reasonable because the total amount
charged by the Exchange's vendor that provides the FBW (and FBW2) is
more than $450 per month (per login ID) for FBW and FBW2 and the
Exchange simply wants to reduce the extent to which the Exchange
subsidizes such costs. This change is equitable and not unfairly
discriminatory because all market participants who desire to use the
FBW and FBW2 will be assessed the same fee.
The Exchange believes it is reasonable to extend the waiver of FBW2
fees for each FBW login a TPH has through March 2016 because it
encourages users to use and become familiar with the updated FBW2 login
IDs while waiting for certain features to be implemented on FBW2. The
Exchange believes the proposed changes are equitable and not unfairly
discriminatory because it applies to all users of FBW2.
The Exchange believes that correcting an inadvertent failure to
update the QCC rate change in the Fee Cap table (in addition to the QCC
Rate Table, where it is currently provided for) will alleviate
potential confusion and maintain clarity in the Fees Schedule, which
serves 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.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition that are not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange 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, while different fees
and rebates are assessed to different market participants in some
circumstances, these different market participants have different
obligations and different circumstances (as described in the
``Statutory Basis'' section above). For example, Clearing TPHs have
clearing obligations that other market participants do not have.
Market-Makers have quoting obligations that other market participants
do not have. There is a history in the options markets of providing
preferential treatment to customers, as they often do not have as
sophisticated trading operations and systems as other market
participants, which often makes other market participants prefer to
trade with customers. Further, the Exchange fees and rebates, both
current and those proposed to be changed, are intended to encourage
market participants to bring increased volume to the Exchange (which
benefits all market participants), while still covering Exchange costs
(including those associated with the upgrading and maintenance of
Exchange systems).
The Exchange does not believe that the proposed rule changes 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 are intended to promote competition and better improve
the Exchange's competitive position and make CBOE a more attractive
marketplace in order to encourage market participants to bring
increased volume to the Exchange (while still covering costs as
necessary). Further, the proposed changes only affect trading on CBOE.
To the extent that the proposed changes make CBOE a more attractive
marketplace for market participants at other exchanges, such market
participants are welcome 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 \17\ and paragraph (f) of Rule 19b-4 \18\
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.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 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-2016-002 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-2016-002. 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
[[Page 3847]]
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-2016-002 and should be submitted on or before
February 12, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
\19\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-01200 Filed 1-21-16; 8:45 am]
BILLING CODE 8011-01-P
