Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule to Amend the Fees Schedule, 50580-50582 [2016-18057]
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50580
Federal Register / Vol. 81, No. 147 / Monday, August 1, 2016 / Notices
or publicly disseminated; (d) how
information regarding the Portfolio
Indicative Value and the Disclosed
Portfolio is disseminated; (e) the
requirement that Equity Trading Permit
Holders deliver a prospectus to
investors purchasing newly issued
Shares prior to or concurrently with the
confirmation of a transaction; and (f)
trading information.
(6) For initial and continued listing,
the Fund will be in compliance with
Rule 10A–3 under the Act,53 as
provided by NYSE Arca Equities Rule
5.3.
(7) The Fund may hold up to an
aggregate amount of 15% of its net
assets in illiquid assets.
(8) Not more than 10% of the net
assets of the Fund in the aggregate
invested in equity securities (other than
non-exchange-traded investment
company securities) shall consist of
equity securities whose principal
market is not a member of the ISG or is
a market with which the Exchange does
not have a CSSA. Furthermore, not more
than 10% of the net assets of the Fund
in the aggregate invested in futures
contracts shall consist of futures
contracts whose principal market is not
a member of ISG or is a market with
which the Exchange does not have a
CSSA. No more than 10% of the net
assets of the Fund will be invested in
ADRs that are not exchange-listed.
(9) The Fund’s investments will be
consistent with the Fund’s investment
objective and will not be used to
produce leveraged returns. The Fund’s
investments will not be used to seek
performance that is the multiple or
inverse multiple (i.e., 2Xs and 3Xs) of
the Index.
(10) All ETFs in which the Fund
invests will be listed and traded in the
U.S. on a national securities exchange
and the Fund will not invest in inverse
ETFs or in leveraged (e.g., 2X, –2X, 3X
or –3X) ETFs.
(11) The Fund will not invest in
options or swaps.
(12) A minimum of 100,000 Shares for
the Fund will be outstanding at the
commencement of trading on the
Exchange.
The Exchange represents that all
statements and representations made in
the filing regarding (a) the description of
the portfolio, (b) limitations on portfolio
holdings or reference assets, or (c) the
applicability of Exchange rules and
surveillance procedures shall constitute
continued listing requirements for
listing the Shares on the Exchange. In
addition, the issuer has represented to
the Exchange that it will advise the
53 See
17 CFR 240.10A–3.
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Exchange of any failure by the Fund to
comply with the continued listing
requirements, and, pursuant to its
obligations under Section 19(g)(1) of the
Act, the Exchange will monitor for
compliance with the continued listing
requirements.54 If the Fund is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
NYSE Arca Equities Rule 5.5(m).
This approval order is based on all of
the Exchange’s representations,
including those set forth above, in the
Notice, and in Amendment No. 1 to the
proposed rule change. The Commission
notes that the Fund and the Shares must
comply with the requirements of NYSE
Arca Equities Rule 8.600, including
those set forth in this proposed rule
change, as modified by Amendment No.
1, to be listed and traded on the
Exchange on an initial and continuing
basis.
For the foregoing reasons, the
Commission finds that the proposed
rule change, as modified by Amendment
No. 1, is consistent with Section 6(b)(5)
of the Act 55 and the rules and
regulations thereunder applicable to a
national securities exchange.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,56
that the proposed rule change (SR–
NYSEArca–2016–79), as modified by
Amendment No. 1, be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.57
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–18052 Filed 7–29–16; 8:45 am]
BILLING CODE 8011–01–P
54 The Commission notes that certain other
proposals for the listing and trading of Managed
Fund Shares include a representation that the
exchange will ‘‘surveil’’ for compliance with the
continued listing requirements. See, e.g., Securities
Exchange Act Release No. 77499 (April 1, 2016), 81
FR 20428 (April 7, 2016) (SR–BATS–2016–04)
(approving a proposed rule change to list and trade
shares of the SPDR DoubleLine Short Duration
Total Return Tactical ETF), available at: https://
www.sec.gov/rules/sro/bats/2016/34-77499.pdf. In
the context of this representation, it is the
Commission’s view that ‘‘monitor’’ and ‘‘surveil’’
both mean ongoing oversight of the Fund’s
compliance with the continued listing
requirements. Therefore, the Commission does not
view ‘‘monitor’’ as a more or less stringent
obligation than ‘‘surveil’’ with respect to the
continued listing requirements.
55 15 U.S.C. 78f(b)(5).
56 15 U.S.C. 78s(b)(2).
57 17 CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78421; File No. SR–C2–
2016–013]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule to
Amend the Fees Schedule
July 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 July 14,
2016, C2 Options Exchange,
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
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 the 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.c2exchange.com/Legal/), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fees Schedule.3 Specifically, the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The Exchange initially filed the proposed fee
change on July 1, 2016 (SR–C2–2016–011). On July
2 17
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Exchange proposes to increase Maker
rebates for simple orders in all equity,
multiply-listed index (except Russell
2000 Index (‘‘RUT’’)), ETF and ETN
options classes. Specifically, the
Exchange proposes to adopt the
following rates. Listed rates are per
contract.
Penny Classes
Current
Public Customer ..............................................................................................
C2 Market-Maker .............................................................................................
All Other Origins (Professional Customer, Firm, Broker/Dealer, non-C2 Market-Maker, JBO, etc.) ...................................................................................
Trades on the Open ........................................................................................
Proposed
Current
Proposed
(.37)
(.40)
(.42)
(.45)
(.75)
(.68)
(.80)
(.73)
(.35)
(0.00)
(.40)
(0.00)
(.60)
(0.00)
(.65)
(0.00)
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.5 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 6 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
Section 6(b)(4) of the Act,7 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 the proposed
rule change is reasonable because the
proposed change provides additional
rebates to Makers and is designed to
attract additional volume to the
Exchange, which benefits all market
participants.
The Exchange believes that it is
equitable and not unfairly
discriminatory to provide higher rebates
to Public Customers as compared to
other market participants (other than C2
Market-Makers for penny classes)
because Public Customer order flow
enhances liquidity on the Exchange for
the benefit of all market participants.
Specifically, Public Customer liquidity
benefits all market participants by
providing more trading opportunities,
which attracts Market-Makers. An
increase in the activity of these market
participants in turn facilitates tighter
spreads, which may cause an additional
corresponding increase in order flow
from other market participants.
Moreover, the options industry has a
long history of providing preferential
pricing to Public Customers. Finally, all
fee and rebate amounts listed as
applying to Public Customers will be
applied equally to all Public Customers.
The Exchange believes that it is
equitable and not unfairly
discriminatory to provide higher rebates
to Market-Makers as compared to other
market participants other than Public
Customers (for non-penny options)
because Market-Makers, unlike other C2
market participants, take on a number of
obligations, including quoting
obligations, that other market
participants do not have. Further, these
lower fees and higher rebates offered to
Market-Makers are intended to incent
Market-Makers to quote and trade more
on the Exchange, thereby providing
more trading opportunities for all
market participants. Finally, all rebate
amounts listed as applying to MarketMakers will be applied equally to all
Market-Makers.
The Exchange also believes it is
equitable and not unfairly
discriminatory to provide lower rebates
to all other origins (i.e., Professional
Customer, Firm, Broker/Dealer, non-C2
Market-Maker, JBO, etc.). Particularly,
the Exchange notes that it believes it’s
equitable and not unfairly
discriminatory to provide lower rebates
than it does of Market-Makers, because
these market participants do not have
the same obligations, such as quoting, as
Market-Makers do. The Exchange
believes it’s equitable and not unfairly
discriminatory to assess lower rebate
than it does to Public Customers,
because, as described above, there is a
history of providing preferential pricing
to Public Customers as Public Customer
liquidity benefits all market participants
by providing more trading
opportunities. The Exchange notes that
the proposed fee and rebate amounts
listed will also be applied equally to
each of these market participants (i.e.,
Professional Customers, Firms, Broker/
Dealers, non-C2 Market-Makers, JBOs,
etc. will be assessed the same amount).
It should also be noted that all fee and
rebate amounts described herein are
intended to attract greater order flow to
the Exchange, which should therefore
serve to benefit all Exchange market
participants.
The Exchange believes it’s reasonable,
equitable and not unfairly
discriminatory to continue to assess no
fees and offer no rebates for Trades on
the Open because trades on the Open
involve the matching of undisplayed
pre-opening trading interest. As such,
there is, in effect, no Maker or Taker
activity occurring. Additionally, the
Exchange would like to encourage users
to submit pre-opening orders.
14, 2016, the Exchange withdrew that filing and
replaced it with this filing.
4 See e.g., Bats BZX Options Exchange Fee
Schedule, Transaction Fees, which lists, for
executions in Penny Pilot securities, (1) Customer
Maker rebate of $0.25 to $0.53, (2) Market-Maker
Maker rebate of $0.35 to $0.42, and (3) Firm and
Broker Dealer Maker rebate of $0.36 to $0.46; and
for executions in non-Penny Pilot securities, (1)
Customer Maker rebate of $0.85 to $1.00, (2)
Market-Maker Maker rebate of $0.42 to $0.52, and
(3) Firm and Broker Maker rebate of $0.36 to $0.67.
5 15 U.S.C. 78f(b).
6 15 U.S.C. 78f(b)(5).
7 15 U.S.C. 78f(b)(4).
The Exchange believes the increased
amounts will incentivize more volume
to the Exchange. Specifically, the
proposed increased rebates are intended
to encourage C2 Market-Makers to quote
more often and attract market
participants to send orders to the
Exchange, which will then incent
Takers to trade with those orders and
quotes. The Exchange notes that the
proposed Maker rebate amounts are
similar to and in line with the amounts
currently assessed for simple, noncomplex orders in equity, multiplylisted index, ETF and ETN options
classes at other Exchanges.4
2. Statutory Basis
sradovich on DSK3GMQ082PROD with NOTICES
Non-Penny
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The Exchange lastly believes it’s
equitable and not unfairly
discriminatory to assess higher rebates
for non-Penny option classes than
Penny option classes because Penny
classes and non-Penny classes offer
different pricing, liquidity, spread and
trading incentives. The spreads in
Penny classes are tighter than those in
non-Penny classes (which trade in $0.05
increments). The wider spreads in nonPenny option classes allow for greater
profit potential.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
sradovich on DSK3GMQ082PROD with NOTICES
C2 does not believe that the proposed
rule change will impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. 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 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, Public
Customers order flow, as discussed
above, enhances liquidity on the
Exchange for the benefit of all market
participants. There is also a history in
the options markets of providing
preferential treatment to Public
Customers. Additionally, MarketMakers have quoting obligations that
other market participants do not have.
The Exchange does not believe that
the proposed change will impose any
burden on intermarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because it only applies to trading on the
Exchange. Further, the proposed rebate
amounts are similar to those assessed
for similar orders by other exchanges,8
and therefore should continue to
encourage competition. Should the
proposed change make C2 a more
attractive trading venue for market
participants at other exchanges, such
market participants may elect to become
market participants at C2.
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 9 and paragraph (f) of Rule
19b–4 10 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–
C2–2016–013 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–C2–2016–013. 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
20:16 Jul 29, 2016
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[FR Doc. 2016–18057 Filed 7–29–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No.34–78419; File No. SR–Phlx–
2016–78]
Self-Regulatory Organizations;
NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend Phlx
Rule 754 (Employees’ Discretion as to
Customers’ Accounts)
July 26, 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 July 14,
2016, NASDAQ PHLX LLC (‘‘Phlx’’ or
‘‘Exchange’’) 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
Rule 754 of the Phlx rules. The text of
the proposed rule change is available on
the Exchange’s Web site at https://
nasdaqphlx.cchwallstreet.com/, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
U.S.C. 78s(b)(3)(A).
10 17 CFR 240.19b–4(f).
supra note 4.
VerDate Sep<11>2014
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Robert W. Errett,
Deputy Secretary.
11 17
9 15
8 See
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–C2–
2016–013, and should be submitted on
or before August 22, 2016.
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]]>Agencies
[Federal Register Volume 81, Number 147 (Monday, August 1, 2016)]
[Notices]
[Pages 50580-50582]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18057]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78421; File No. SR-C2-2016-013]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule to
Amend the Fees Schedule
July 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 July 14, 2016, C2 Options Exchange, Incorporated (the
``Exchange'' or ``C2'') 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 the
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.c2exchange.com/Legal/), at the Exchange's Office of the Secretary,
and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fees Schedule.\3\ Specifically,
the
[[Page 50581]]
Exchange proposes to increase Maker rebates for simple orders in all
equity, multiply-listed index (except Russell 2000 Index (``RUT'')),
ETF and ETN options classes. Specifically, the Exchange proposes to
adopt the following rates. Listed rates are per contract.
---------------------------------------------------------------------------
\3\ The Exchange initially filed the proposed fee change on July
1, 2016 (SR-C2-2016-011). On July 14, 2016, the Exchange withdrew
that filing and replaced it with this filing.
----------------------------------------------------------------------------------------------------------------
Penny Classes Non-Penny
---------------------------------------------------------------
Current Proposed Current Proposed
----------------------------------------------------------------------------------------------------------------
Public Customer................................. (.37) (.42) (.75) (.80)
C2 Market-Maker................................. (.40) (.45) (.68) (.73)
All Other Origins (Professional Customer, Firm, (.35) (.40) (.60) (.65)
Broker/Dealer, non-C2 Market-Maker, JBO, etc.).
Trades on the Open.............................. (0.00) (0.00) (0.00) (0.00)
----------------------------------------------------------------------------------------------------------------
The Exchange believes the increased amounts will incentivize more
volume to the Exchange. Specifically, the proposed increased rebates
are intended to encourage C2 Market-Makers to quote more often and
attract market participants to send orders to the Exchange, which will
then incent Takers to trade with those orders and quotes. The Exchange
notes that the proposed Maker rebate amounts are similar to and in line
with the amounts currently assessed for simple, non-complex orders in
equity, multiply-listed index, ETF and ETN options classes at other
Exchanges.\4\
---------------------------------------------------------------------------
\4\ See e.g., Bats BZX Options Exchange Fee Schedule,
Transaction Fees, which lists, for executions in Penny Pilot
securities, (1) Customer Maker rebate of $0.25 to $0.53, (2) Market-
Maker Maker rebate of $0.35 to $0.42, and (3) Firm and Broker Dealer
Maker rebate of $0.36 to $0.46; and for executions in non-Penny
Pilot securities, (1) Customer Maker rebate of $0.85 to $1.00, (2)
Market-Maker Maker rebate of $0.42 to $0.52, and (3) Firm and Broker
Maker rebate of $0.36 to $0.67.
---------------------------------------------------------------------------
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.\5\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \6\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with
Section 6(b)(4) of the Act,\7\ 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.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
\7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes the proposed rule change is reasonable
because the proposed change provides additional rebates to Makers and
is designed to attract additional volume to the Exchange, which
benefits all market participants.
The Exchange believes that it is equitable and not unfairly
discriminatory to provide higher rebates to Public Customers as
compared to other market participants (other than C2 Market-Makers for
penny classes) because Public Customer order flow enhances liquidity on
the Exchange for the benefit of all market participants. Specifically,
Public Customer liquidity benefits all market participants by providing
more trading opportunities, which attracts Market-Makers. An increase
in the activity of these market participants in turn facilitates
tighter spreads, which may cause an additional corresponding increase
in order flow from other market participants. Moreover, the options
industry has a long history of providing preferential pricing to Public
Customers. Finally, all fee and rebate amounts listed as applying to
Public Customers will be applied equally to all Public Customers.
The Exchange believes that it is equitable and not unfairly
discriminatory to provide higher rebates to Market-Makers as compared
to other market participants other than Public Customers (for non-penny
options) because Market-Makers, unlike other C2 market participants,
take on a number of obligations, including quoting obligations, that
other market participants do not have. Further, these lower fees and
higher rebates offered to Market-Makers are intended to incent Market-
Makers to quote and trade more on the Exchange, thereby providing more
trading opportunities for all market participants. Finally, all rebate
amounts listed as applying to Market-Makers will be applied equally to
all Market-Makers.
The Exchange also believes it is equitable and not unfairly
discriminatory to provide lower rebates to all other origins (i.e.,
Professional Customer, Firm, Broker/Dealer, non-C2 Market-Maker, JBO,
etc.). Particularly, the Exchange notes that it believes it's equitable
and not unfairly discriminatory to provide lower rebates than it does
of Market-Makers, because these market participants do not have the
same obligations, such as quoting, as Market-Makers do. The Exchange
believes it's equitable and not unfairly discriminatory to assess lower
rebate than it does to Public Customers, because, as described above,
there is a history of providing preferential pricing to Public
Customers as Public Customer liquidity benefits all market participants
by providing more trading opportunities. The Exchange notes that the
proposed fee and rebate amounts listed will also be applied equally to
each of these market participants (i.e., Professional Customers, Firms,
Broker/Dealers, non-C2 Market-Makers, JBOs, etc. will be assessed the
same amount). It should also be noted that all fee and rebate amounts
described herein are intended to attract greater order flow to the
Exchange, which should therefore serve to benefit all Exchange market
participants.
The Exchange believes it's reasonable, equitable and not unfairly
discriminatory to continue to assess no fees and offer no rebates for
Trades on the Open because trades on the Open involve the matching of
undisplayed pre-opening trading interest. As such, there is, in effect,
no Maker or Taker activity occurring. Additionally, the Exchange would
like to encourage users to submit pre-opening orders.
[[Page 50582]]
The Exchange lastly believes it's equitable and not unfairly
discriminatory to assess higher rebates for non-Penny option classes
than Penny option classes because Penny classes and non-Penny classes
offer different pricing, liquidity, spread and trading incentives. The
spreads in Penny classes are tighter than those in non-Penny classes
(which trade in $0.05 increments). The wider spreads in non-Penny
option classes allow for greater profit potential.
B. Self-Regulatory Organization's Statement on Burden on Competition
C2 does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. 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 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, Public Customers order flow, as discussed above, enhances
liquidity on the Exchange for the benefit of all market participants.
There is also a history in the options markets of providing
preferential treatment to Public Customers. Additionally, Market-Makers
have quoting obligations that other market participants do not have.
The Exchange does not believe that the proposed change will impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because it only
applies to trading on the Exchange. Further, the proposed rebate
amounts are similar to those assessed for similar orders by other
exchanges,\8\ and therefore should continue to encourage competition.
Should the proposed change make C2 a more attractive trading venue for
market participants at other exchanges, such market participants may
elect to become market participants at C2.
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\8\ See supra note 4.
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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 \9\ and paragraph (f) of Rule 19b-4 \10\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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-C2-2016-013 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-C2-2016-013. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-C2-2016-013, and should be
submitted on or before August 22, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Robert W. Errett,
Deputy Secretary.
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\11\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-18057 Filed 7-29-16; 8:45 am]
BILLING CODE 8011-01-P
