Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule To Amend the Fees Schedule, 26299-26301 [2016-10151]
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26299
Federal Register / Vol. 81, No. 84 / Monday, May 2, 2016 / Notices
SECURITIES AND EXCHANGE
COMMISSION
and at the Commission’s Public
Reference Room.
[Release No. 34–77710; File No. SR–CBOE–
2016–038]
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule To Amend the Fees Schedule
April 26, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 12,
2016, Chicago Board Options Exchange,
Incorporated (the ‘‘Exchange’’ or
‘‘CBOE’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Fees Schedule. The text of the proposed
rule change is available on the
Exchange’s Web site (https://
www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fees Schedule.3
The Exchange first proposes to amend
its Volume Incentive Program (‘‘VIP’’).
By way of background, under VIP, the
Exchange credits each Trading Permit
Holder (‘‘TPH’’) 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,
provided the TPH meets certain volume
Tier
1
2
3
4
0.00%–0.75% ..................................................................................................
Above 0.75%–1.50% ......................................................................................
Above 1.50%–3.00% ......................................................................................
Above 3.00% ..................................................................................................
The Exchange believes the increased
credit rate will incentivize increased
volume while also maintaining an
incremental incentive for TPH’s [sic] to
strive for the highest tier level.
srobinson on DSK5SPTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The Exchange initially filed the proposed
change on April 1 2016 (SR–CBOE–2016–033). On
April 12, 2016, the Exchange withdrew that filing
and replaced it with SR–CBOE–2016–038.
4 Currently, qualification for the different fee rates
at different tiers in the VIP is based on a TPH’s
percentage of national customer volume in all
2 17
20:30 Apr 29, 2016
Current
AVP
transaction
fee discount
(%)
VIP thresholds
..........................................................
..........................................................
..........................................................
..........................................................
VerDate Sep<11>2014
thresholds in a month.4 The current
qualification tiers are set to, in
ascending order, 0%–0.75%, above
0.75%–1.50%, above 1.50%–3.00% and
above 3%. The Exchange proposes to
adjust the threshold percentages for
Tiers 2 and 3. Specifically, the Exchange
is proposing to amend Tier 2 to above
0.75%–1.80% and Tier 3 to be above
1.80%–3.00%. The purpose of this
change is to incentivize the sending of
both simple and complex orders to the
Exchange and to adjust the incentive
tiers accordingly as competition
requires while maintaining an
incremental incentive for TPH’s [sic] to
strive for the highest tier level.
The Exchange next proposes to amend
its Affiliate Volume Plan (‘‘AVP’’). By
way of background, under AVP if a TPH
Affiliate 5 of a Market-Maker (including
a Designated Primary Market-Maker
(‘‘DPM’’) or Lead Market-Maker
(‘‘LMM’’)) qualifies under VIP, that
Market-Maker will also qualify for a
discount on that Market-Maker’s
Liquidity Provider Sliding Scale
(‘‘Sliding Scale’’) transaction fees
(‘‘Sliding Scale Credit’’). More
specifically, 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. The
Exchange now proposes to increase the
current discounts for Tiers 3 and 4 as
follows:
Jkt 238001
Proposed
AVP
transaction
fee discount
(%)
0
10
15
20
0
10
20
30
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.6 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 7 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
products, excluding Underlying Symbol List A,
DJX, MXEA, MXEF, MNX, NDX, XSP, XSPAM and
mini-options. Excluded from the VIP credit are
options in Underlying Symbol List A, DJX, MXEA,
MXEF, MNX, NDX, XSP, XSPAM, 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 ‘‘Affiliate’’ is defined as having at least 75%
common ownership between the two entities as
reflected on each entity’s Form BD, Schedule A.
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
PO 00000
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srobinson on DSK5SPTVN1PROD with NOTICES
26300
Federal Register / Vol. 81, No. 84 / Monday, May 2, 2016 / Notices
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
Section 6(b)(4) of the Act,8 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Trading Permit Holders and other
persons using its facilities.
In particular, the Exchange believes
it’s reasonable to increase the lower
threshold in the third tier of VIP (and
thus the corresponding upper threshold
in the second tier) because the change
is designed to adjust the incentive tiers
accordingly as competition requires
while maintaining an incremental
incentive for TPH’s [sic] to strive for the
highest tier level to reach the highest
credits available. This change is also
equitable and not unfairly
discriminatory because it will be
applied to all TPHs uniformly. The
Exchange believes the proposed change
will incentivize the sending of more
simple and complex orders to the
Exchange. The greater liquidity and
trading opportunities should benefit not
just public customers (whose orders are
the only ones that qualify for the VIP)
but all market participants.
The Exchange believes that increasing
the Tier 3 and Tier 4 Sliding Scale
Credits from 15% to 20% and 20% to
30%, respectively, is reasonable because
it is increasing available credits.
Additionally, enhancing the incentives
under the Sliding Scale Credit further
incentivizes a Market-Maker Affiliate to
achieve the highest tier on the VIP so
that the Market-Maker can achieve those
higher credits, which thereby can result
in greater customer liquidity. The
resulting increased volume benefits all
market participants (including MarketMakers or their affiliates who do not
achieve the higher tiers on the VIP;
indeed, this increased volume may
allow them to reach these tiers).
The Exchange believes that limiting
the Sliding Scale Credit to MarketMakers 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.
The Exchange also believes that it’s
equitable and not unfairly
discriminatory to limit the discounts
under the Sliding Scale Credit to
Market-Makers with Affiliates that reach
8 15
certain tiers under VIP. 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 (which is [sic] currently does via
VIP), but also of the operations costs on
the Market-Maker side. The Exchange
believes the Sliding Scale Credit allows
the Exchange to provide further relief to
the Market-Maker side via the discount,
which incents these Market- Makers to
tighten market widths due to the
reduced costs the incentives provide.
Additionally, the Exchange believes the
discount attracts more volume and
liquidity to the Exchange, which
benefits all Exchange participants
through increased opportunities to trade
as well as enhancing price discovery.
The Exchange also notes that
incentivizing a Market-Maker Affiliate
to achieve higher tiers on the VIP, so
that the Market-Maker can achieve
higher tiers under the Sliding Scale
Credit, can result in greater customer
liquidity, and the resulting increased
volume also benefits all market
participants (including Market-Makers
that do not have Affiliates or whose
Affiliates do not achieve the higher tiers
on the VIP; indeed, this increased
volume may allow them to reach these
tiers). Lastly, 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.9
imposes a burden on intramarket
competition because, although it applies
only to Market-Makers, Market-Makers
are valuable market participants that
provide liquidity in the marketplace and
incur costs that other market
participants do not incur. MarketMakers also have a number of
obligations, including quoting
obligations that other market
participants do not have. Additionally,
the Exchange notes that although the
Sliding Scale Credit is limited to
Market-Makers with an Affiliate,
incentivizing a Market-Maker Affiliate
to achieve higher tiers on the VIP, so
that the affiliated Market-Maker can
achieve higher tiers under the Sliding
Scale Credit, can result in greater
liquidity (including customer liquidity),
and the resulting increased volume
benefits all market participants.
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.
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. In particular,
the Exchange believes the proposed
change to amend certain tier thresholds
in VIP does not impose a burden on
intramarket competition because it
applies uniformly to all TPHs and
incentivizes the sending of more simple
and complex orders to the Exchange,
which provides greater liquidity and
trading opportunities. Additionally, the
Exchange does not believe increasing
credits under Tiers 3 and 4 of the
Liquidity Provider Sliding Scale Credit
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.
9 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.
U.S.C. 78f(b)(4).
VerDate Sep<11>2014
20:30 Apr 29, 2016
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 10 and paragraph (f) of Rule
19b–4 11 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
10 15
11 17
Jkt 238001
PO 00000
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E:\FR\FM\02MYN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
02MYN1
Federal Register / Vol. 81, No. 84 / Monday, May 2, 2016 / Notices
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
[FR Doc. 2016–10151 Filed 4–29–16; 8:45 am]
IV. Solicitation of Comments
BILLING CODE 8011–01–P
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
Paper Comments
srobinson on DSK5SPTVN1PROD with NOTICES
• 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–2016–038. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–CBOE–
2016–038, and should be submitted on
or before May 23, 2016.
20:30 Apr 29, 2016
DEPARTMENT OF STATE
[Public Notice: 9541]
Renewal of Cultural Property Advisory
Committee Charter
The Charter of the
Department of State’s Cultural Property
Advisory Committee (CPAC) has been
renewed for an additional two years.
The Charter of the Cultural Property
Advisory Committee is being renewed
for a two-year period. The Committee
was established by the Convention on
Cultural Property Implementation Act of
1983, 19 U.S.C. 2601 et seq. It reviews
requests from other countries seeking
U.S. import restrictions on
archaeological or ethnological material
the pillage of which places a country’s
cultural heritage in jeopardy. The
Committee makes findings and
recommendations to the President’s
designee who, on behalf of the
President, determines whether to
impose the import restrictions. The
membership of the Committee consists
of private sector experts in archaeology,
anthropology, or ethnology; experts in
the international sale of cultural
property; and representatives of
museums and of the general public.
FOR FURTHER INFORMATION CONTACT:
Cultural Heritage Center, U.S.
Department of State, Bureau of
Educational and Cultural Affairs, 2200 C
Street NW., Washington, DC 20522.
Telephone: (202) 632–6301; Fax: (202)
632–6300.
SUMMARY:
• 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–2016–038 on the subject line.
VerDate Sep<11>2014
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Robert W. Errett,
Deputy Secretary.
Jkt 238001
Dated: March 1, 2016.
Maria P. Kouroupas,
Executive Director, Cultural Property
Advisory Committee, Department of State.
[FR Doc. 2016–10223 Filed 4–29–16; 8:45 am]
BILLING CODE 4710–05–P
DEPARTMENT OF STATE
[Public Notice: 9540]
Overseas Security Advisory Council
(OSAC) Meeting Notice: Closed
Meeting
The Department of State announces a
meeting of the U.S. State Department—
Overseas Security Advisory Council on
12 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00104
Fmt 4703
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26301
June 7 and 8, 2016. Pursuant to Sec.
10(d) of the Federal Advisory
Committee Act (5 U.S.C. Appendix), 5
U.S.C. 552b(c)(4), and 5 U.S.C.
552b(c)(7)(E), it has been determined
that the meeting will be closed to the
public. The meeting will focus on an
examination of corporate security
policies and procedures and will
involve extensive discussion of trade
secrets and proprietary commercial
information that is privileged and
confidential, and will discuss law
enforcement investigative techniques
and procedures. The agenda will
include updated committee reports, a
global threat overview, and other
matters relating to private sector
security policies and protective
programs and the protection of U.S.
business information overseas.
For more information, contact Marsha
Thurman, Overseas Security Advisory
Council, U.S. Department of State,
Washington, DC 20522–2008, phone:
571–345–2214.
Dated: April 14, 2016.
Bill A. Miller,
Director of the Diplomatic, Security Service,
U.S. Department of State.
[FR Doc. 2016–10224 Filed 4–29–16; 8:45 am]
BILLING CODE 4710–43–P
DEPARTMENT OF STATE
[Public Notice: 9542]
Presidential Permits: Withdrawal of
Request From Plains LPG Services,
L.P. for Existing Pipeline Facilities on
the Border of the United States and
Canada Under the St. Clair River
Department of State.
Notice of Withdrawal of Request
for Re-Consideration Concerning the
Scope of Authorizations by Plains LPG
Services, L.P. for Existing Pipeline
Facilities on the Border of the United
States and Canada Under the St. Clair
River.
AGENCY:
ACTION:
On May 23, 2014, the
Department of State (Department) issued
a Presidential Permit to Plains LPG
Services, L.P. (Plains LPG) based on
Plains LPG’s acquisition of six existing
pipelines under the St. Clair River. After
the new permits were issued, Plains
LPG provided new information that
altered the Department’s understanding
of the historic authorization for two of
the six St. Clair pipelines. In light of this
additional information, the Department
was revisiting Plains LPG’s 2012
application and considering whether to
issue a new permit for these two St.
Clair pipelines that would authorize the
SUMMARY:
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02MYN1
]]>Agencies
[Federal Register Volume 81, Number 84 (Monday, May 2, 2016)]
[Notices]
[Pages 26299-26301]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-10151]
[[Page 26299]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77710; File No. SR-CBOE-2016-038]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule To Amend the Fees Schedule
April 26, 2016.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on April 12, 2016, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Fees Schedule. The text of the
proposed rule change is available on the Exchange's Web site (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's
Office of the Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fees Schedule.\3\
---------------------------------------------------------------------------
\3\ The Exchange initially filed the proposed change on April 1
2016 (SR-CBOE-2016-033). On April 12, 2016, the Exchange withdrew
that filing and replaced it with SR-CBOE-2016-038.
---------------------------------------------------------------------------
The Exchange first proposes to amend its Volume Incentive Program
(``VIP''). By way of background, under VIP, the Exchange credits each
Trading Permit Holder (``TPH'') 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, provided the TPH meets certain
volume thresholds in a month.\4\ The current qualification tiers are
set to, in ascending order, 0%-0.75%, above 0.75%-1.50%, above 1.50%-
3.00% and above 3%. The Exchange proposes to adjust the threshold
percentages for Tiers 2 and 3. Specifically, the Exchange is proposing
to amend Tier 2 to above 0.75%-1.80% and Tier 3 to be above 1.80%-
3.00%. The purpose of this change is to incentivize the sending of both
simple and complex orders to the Exchange and to adjust the incentive
tiers accordingly as competition requires while maintaining an
incremental incentive for TPH's [sic] to strive for the highest tier
level.
---------------------------------------------------------------------------
\4\ Currently, qualification for the different fee rates at
different tiers in the VIP is based on a TPH's percentage of
national customer volume in all products, excluding Underlying
Symbol List A, DJX, MXEA, MXEF, MNX, NDX, XSP, XSPAM and mini-
options. Excluded from the VIP credit are options in Underlying
Symbol List A, DJX, MXEA, MXEF, MNX, NDX, XSP, XSPAM, 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).
---------------------------------------------------------------------------
The Exchange next proposes to amend its Affiliate Volume Plan
(``AVP''). By way of background, under AVP if a TPH Affiliate \5\ of a
Market-Maker (including a Designated Primary Market-Maker (``DPM'') or
Lead Market-Maker (``LMM'')) qualifies under VIP, that Market-Maker
will also qualify for a discount on that Market-Maker's Liquidity
Provider Sliding Scale (``Sliding Scale'') transaction fees (``Sliding
Scale Credit''). More specifically, 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. The Exchange now proposes to increase the
current discounts for Tiers 3 and 4 as follows:
---------------------------------------------------------------------------
\5\ ``Affiliate'' is defined as having at least 75% common
ownership between the two entities as reflected on each entity's
Form BD, Schedule A.
------------------------------------------------------------------------
Proposed
Current AVP AVP
transaction transaction
Tier VIP thresholds fee fee
discount discount
(%) (%)
------------------------------------------------------------------------
1............................ 0.00%-0.75%.... 0 0
2............................ Above 0.75%- 10 10
1.50%.
3............................ Above 1.50%- 15 20
3.00%.
4............................ Above 3.00%.... 20 30
------------------------------------------------------------------------
The Exchange believes the increased credit rate will incentivize
increased volume while also maintaining an incremental incentive for
TPH's [sic] to strive for the highest tier level.
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.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market
[[Page 26300]]
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with Section 6(b)(4) of the Act,\8\ which requires that
Exchange rules provide for the equitable allocation of reasonable dues,
fees, and other charges among its Trading Permit Holders and other
persons using its facilities.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
In particular, the Exchange believes it's reasonable to increase
the lower threshold in the third tier of VIP (and thus the
corresponding upper threshold in the second tier) because the change is
designed to adjust the incentive tiers accordingly as competition
requires while maintaining an incremental incentive for TPH's [sic] to
strive for the highest tier level to reach the highest credits
available. This change is also equitable and not unfairly
discriminatory because it will be applied to all TPHs uniformly. The
Exchange believes the proposed change will incentivize the sending of
more simple and complex orders to the Exchange. The greater liquidity
and trading opportunities should benefit not just public customers
(whose orders are the only ones that qualify for the VIP) but all
market participants.
The Exchange believes that increasing the Tier 3 and Tier 4 Sliding
Scale Credits from 15% to 20% and 20% to 30%, respectively, is
reasonable because it is increasing available credits. Additionally,
enhancing the incentives under the Sliding Scale Credit further
incentivizes a Market-Maker Affiliate to achieve the highest tier on
the VIP so that the Market-Maker can achieve those higher credits,
which thereby can result in greater customer liquidity. 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).
The Exchange believes that limiting the Sliding Scale Credit to
Market-Makers 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.
The Exchange also believes that it's equitable and not unfairly
discriminatory to limit the discounts under the Sliding Scale Credit to
Market-Makers with Affiliates that reach certain tiers under VIP. 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 (which is [sic] currently does via
VIP), but also of the operations costs on the Market-Maker side. The
Exchange believes the Sliding Scale Credit allows the Exchange to
provide further relief to the Market-Maker side via the discount, which
incents these Market- Makers to tighten market widths due to the
reduced costs the incentives provide. Additionally, the Exchange
believes the discount attracts more volume and liquidity to the
Exchange, which benefits all Exchange participants through increased
opportunities to trade as well as enhancing price discovery. The
Exchange also notes that incentivizing a Market-Maker Affiliate to
achieve higher tiers on the VIP, so that the Market-Maker can achieve
higher tiers under the Sliding Scale Credit, can result in greater
customer liquidity, and the resulting increased volume also benefits
all market participants (including Market-Makers that do not have
Affiliates or whose Affiliates do not achieve the higher tiers on the
VIP; indeed, this increased volume may allow them to reach these
tiers). Lastly, 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.\9\
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\9\ 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.
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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. In particular, the Exchange
believes the proposed change to amend certain tier thresholds in VIP
does not impose a burden on intramarket competition because it applies
uniformly to all TPHs and incentivizes the sending of more simple and
complex orders to the Exchange, which provides greater liquidity and
trading opportunities. Additionally, the Exchange does not believe
increasing credits under Tiers 3 and 4 of the Liquidity Provider
Sliding Scale Credit imposes a burden on intramarket competition
because, although it applies only to Market-Makers, Market-Makers are
valuable market participants that provide liquidity in the marketplace
and incur costs that other market participants do not incur. Market-
Makers also have a number of obligations, including quoting obligations
that other market participants do not have. Additionally, the Exchange
notes that although the Sliding Scale Credit is limited to Market-
Makers with an Affiliate, incentivizing a Market-Maker Affiliate to
achieve higher tiers on the VIP, so that the affiliated Market-Maker
can achieve higher tiers under the Sliding Scale Credit, can result in
greater liquidity (including customer liquidity), and the resulting
increased volume benefits all market participants.
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 \10\ and paragraph (f) of Rule 19b-4 \11\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the
[[Page 26301]]
Commission takes such action, the Commission will institute proceedings
to determine whether the proposed rule change should be approved or
disapproved.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-CBOE-2016-038 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-2016-038. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2016-038, and should be
submitted on or before May 23, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-10151 Filed 4-29-16; 8:45 am]
BILLING CODE 8011-01-P
