Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule, 9406-9413 [2017-02374]
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9406
Federal Register / Vol. 82, No. 23 / Monday, February 6, 2017 / Notices
Request for Comment: Peace Corps
invites comments on whether the
proposed collections of information are
necessary for proper performance of the
functions of the Peace Corps, including
whether the information will have
practical use; the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the information
to be collected; and, ways to minimize
the burden of the collection of
information on those who are to
respond, including through the use of
automated collection techniques, when
appropriate, and other forms of
information technology.
This notice is issued in Washington, DC on
January 31, 2017.
Denora Mill,
FOIA/Privacy Act Officer, Management.
[FR Doc. 2017–02367 Filed 2–3–17; 8:45 am]
BILLING CODE 6051–01–P
POSTAL REGULATORY COMMISSION
[Docket Nos. MC2017–83 and CP2017–112]
New Postal Products
Postal Regulatory Commission.
Notice.
AGENCY:
ACTION:
The Commission is noticing
recent Postal Service filings for the
Commission’s consideration concerning
negotiated service agreements. This
notice informs the public of the filing,
invites public comment, and takes other
administrative steps.
DATES: Comments are due: February 8,
2017.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
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I. Introduction
II. Docketed Proceeding(s)
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
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agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s Web site (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3007.40.
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2017–83 and
CP2017–112; Filing Title: Request of the
United States Postal Service to Add
Priority Mail Express & Priority Mail
Contract 43 to Competitive Products List
and Notice of Filing (Under Seal) of
Unredacted Governors’ Decision,
Contract, and Supporting Data; Filing
Acceptance Date: January 31, 2017;
Filing Authority: 39 U.S.C. 3642 and 39
CFR 3020.30 et seq.; Public
Representative: Erin E. Mahagan;
Comments Due: February 8, 2017.
This notice will be published in the
Federal Register.
Stacy L. Ruble,
Secretary.
POSTAL SERVICE
Product Change—Priority Mail Express
and Priority Mail Negotiated Service
Agreement
Postal ServiceTM.
ACTION: Notice.
AGENCY:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Effective date: February 6, 2017.
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on January 31,
2017, it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add Priority
Mail Express & Priority Mail Contract 43
to Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2017–83, CP2017–112.
SUMMARY:
Stanley F. Mires,
Attorney, Federal Compliance.
[FR Doc. 2017–02365 Filed 2–3–17; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79906; File No. SR–CBOE–
2017–008]
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 31, 2017.
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 January
18, 2017, 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.
[FR Doc. 2017–02406 Filed 2–3–17; 8:45 am]
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BILLING CODE 7710–FW–P
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 82, No. 23 / Monday, February 6, 2017 / Notices
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 also available on the
Exchange’s Web site (https://
www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to make a
number of changes to its Fees
Schedule.3
Electronic Transaction Fees for Clearing
Trading Permit Holder Proprietary
The Exchange proposes to increase
the transaction fees for electronic
executions for Clearing Trading Permit
Holder Proprietary (origin codes ‘‘F’’
and ‘‘L’’) orders in Penny Pilot equity,
ETF, ETN and index options (excluding
Underlying Symbol List A 4) classes
from $0.35 per contract to $0.38 per
contract and in Non-Penny Pilot equity,
ETF, ETN and index options (excluding
Underlying Symbol List A) classes from
$0.35 per contract to $0.65 per contract.
The Exchange notes that this increase is
in line with the amounts assessed by
others exchanges for similar
transactions.5
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3 The
Exchange initially filed the proposed fee
changes on January 3, 2017 (SR–CBOE–2017–001).
On January 18, 2017, the Exchange withdrew that
filing and submitted this filing.
4 As of January 3, 2017, Underlying Symbol List
A includes Underlying Symbol List A consists of
OEX, XEO, RUT, RLG, RLV, RUI, AWDE, FTEM,
FXTM, UKXM SPX/SPXW, SPXpm, SRO, VIX,
Volatility Indexes and binary options.
5 See e.g., NASDAQ PHLX LLC (‘‘PHLX’’) Pricing
Schedule, Section II, Multiply Listed Options Fees
and NYSE Amex Options Fees Schedule, Section
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Complex Taker Fee
Currently, the Complex Taker Fee is
$0.08 per contract per side for noncustomer complex order executions that
take liquidity from the COB and auction
responses in the Complex Order
Auction (‘‘COA’’) and the Automated
Improvement Mechanism (‘‘AIM’’) in all
classes except Underlying Symbol List
A and Mini-Options. Additionally, the
Complex Taker Fee is not assessed on
orders originating from a Floor Broker
PAR, electronic executions against
single leg markets, or stock-option order
executions. The Exchange proposes to
increase the amount of the fee from
$0.08 per contract to $0.10 per contract.
The Exchange also proposes to provide
that auction responses in COA and AIM
for noncustomer complex orders in
Penny classes will be subject to a cap of
$0.50 per contract, which includes the
applicable transaction fee, Complex
Surcharge and Marketing Fee (if
applicable).6 The Exchange also wishes
to rename the fee from ‘‘Complex Taker
Fee’’ to ‘‘Complex Surcharge’’.
SPX Index License Surcharge
The Exchange proposes to increase
the Index License Surcharge Fee for SPX
(including SPXW) and SPXpm (the
‘‘SPX Surcharge’’) from $0.13 per
contract to $0.14 per contract. The
Exchange licenses from Standard &
Poor’s the right to offer an index option
product based on the S&P 500 index
(that product being SPX and other SPXbased index option products). In order
to recoup the costs of the SPX license,
the Exchange assesses the SPX
Surcharge. However, the cost of that
license works out to more than the
current SPX Surcharge amount of $0.13
per SPX contract traded (or even the
proposed SPX Surcharge amount of
$0.14 per contract), so the Exchange
ends up subsidizing that SPX license
cost. The Exchange therefore proposes
to increase the SPX Surcharge from
$0.13 per contract to $0.14 per contract
in order to recoup more of the costs
associated with the SPX license.
VIX License Index Surcharge
The Exchange proposes to extend the
current waiver of the VIX Index License
Surcharge of $0.10 per contract for
Clearing Trading Permit Holder
Proprietary (‘‘Firm’’) (origin codes ‘‘F’’
I.A, Options Transaction Fees and Credits, Rates for
Standard Options Transactions.
6 For example, a Market-Maker COA response in
a Penny class that is subject to the Marketing Fee
($0.25 per contract), the Liquidity Provider Sliding
Scale Tier 1 rate ($0.23 per contract) and Complex
Surcharge ($0.10 per contract), would only be
charged $0.50 per contract, instead of $0.58 per
contract.
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9407
or ‘‘L’’) VIX orders that have a premium
of $0.10 or lower and have series with
an expiration of seven (7) calendar days
or less. The Exchange adopted the
current waiver to reduce transaction
costs on expiring, low-priced VIX
options, which the Exchange believed
would 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. The
Exchange had proposed to waive the
surcharge through December 31, 2016,
at which time the Exchange had stated
that it would evaluate whether the
waiver has in fact prompted Firms to
close and roll over these positions close
to expiration as intended. The Exchange
believes the proposed change has in fact
encouraged Firms to do so and as such,
proposes to extend the waiver of the
surcharge through June 30, 2017, at
which time the Exchange will again
reevaluate whether the waiver has
continued to prompt Firms to close and
roll over positions close to expiration at
low premium levels. Accordingly, the
Exchange proposes to delete the
reference to the current waiver period of
December 31, 2016 from the Fees
Schedule and replace it with June 30,
2017.
Liquidity Provider Sliding Scale for
SPX, SPXW and SPXpm
The Exchange proposes to adopt a
sliding scale for Liquidity Provider
(origin code ‘‘M’’) (‘‘LP’’) transaction
fees in SPX, SPXW and SPXpm (‘‘SPX
LP Sliding Scale’’). Currently, LPs are
assessed $0.20 per contract for SPX,
SPXW and SPXpm (collectively, ‘‘SPX
options’’) executions. The new SPX LP
Sliding Scale will assess LPs increased
transaction fees in SPX. Of the increased
rates however, the SPX LP Sliding Scale
will provide progressively lower rates if
certain volume thresholds in SPX
options are attained during a month.
The SPX LP Sliding Scale will be as
follows:
Tier
Volume thresholds
Rate
1 .........
2 .........
3 .........
0.00%–1.50% ................................
Greater than 1.50%–10.0% ..........
Above 10.0% ................................
$0.25
0.23
0.21
The volume thresholds will be based
on total Liquidity Provider Volume in
SPX, SPXW and SPXpm. The purpose of
the SPX LP Sliding Scale is to provide
an incremental incentive for LPs to
reach the highest tier level and
encourage trading of SPX options.
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Federal Register / Vol. 82, No. 23 / Monday, February 6, 2017 / Notices
Volume Incentive Program
The Exchange 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.7 The Exchange
proposes to adopt separate pricing for
orders executed electronically via AIM.
The proposed pricing is as follows:
Per contract credit
Percentage thresholds of national customer multiplylisted monthly volume
Tier
Simple
Non-AIM
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1
2
3
4
........................
........................
........................
........................
0.00%–0.75% ...................................................................
Above 0.75% to 1.80% ....................................................
Above 1.80% to 3.00% ....................................................
Above 3.00% ....................................................................
Complex
AIM
$0.00
0.10
0.12
0.15
Non-AIM
$0.00
0.09
0.11
0.14
$0.00
0.21
0.24
0.25
AIM
$0.00
0.20
0.23
0.24
The Exchange notes that AIM
transactions are assessed lower
transaction fees than non-AIM
transactions. As such, the Exchange no
longer wishes to provide the same
amount in credits for these
transactions.8
The Exchange also proposes to amend
the aggregation timer under VIP. The
Exchange notes that currently, credits
on orders executed electronically in
AIM are capped at 1,000 contracts per
order for simple executions and 1,000
contracts per leg for complex
executions. Additionally, credits on
orders executed electronically in HAL
are be capped at 1,000 contracts per
auction quantity. Additionally, multiple
simple orders from the same affiliated
TPH(s) in the same series on the same
side of the market that are executed in
AIM or HAL within a 300 second period
will be aggregated for purposes of
determining the order quantity subject
to the cap. The AIM aggregation timer
begins with an order entered into AIM
and continues for 300 seconds,
aggregating any other orders entered
into AIM in the same series on the same
side of the market by the same affiliated
TPH. The HAL aggregation timer also
begins at the start of a HAL auction and
continues for 300 seconds, aggregating
any other orders executed in HAL in the
same series on the same side of the
market for the same affiliated TPH. The
Exchange had adopted the aggregation
timer to prevent TPHs from breaking up
their orders in order to avoid the fee
cap. The Exchange believes however,
that it can accomplish its objective with
a shorter timer period. As such, the
Exchange proposes to reduce the
aggregation timer for AIM and HAL to
3 seconds.
Permit Fees
The Exchange proposes to reduce
Market-Maker Trading Permit monthly
costs from $5,500 per permit to $5,000
per permit. Furthermore, for those who
commit to the Market-Maker Trading
Permit Holder Sliding Scale, which is
available for all Market-Maker Trading
Permits held by affiliated TPHs and
TPH organizations that are used for
appointments in any options classes
other than RUT, SPX, SPXpm, VIX, OEX
and XEO, the Exchange proposes to
reduce the monthly cost from $5,500 per
permit to $5,000 per permit for the first
10 permits, from $4,000 to $3,700 per
permit for permits 11–20, and from
$2,500 to $1,800 per permit for permits
21 and greater. The purpose of this
change is to reduce access costs and
thereby encourage greater Market-Maker
access, which thereby brings greater
trading activity, volume and liquidity,
benefitting all market participants.
The Exchange next notes that the
‘‘Notes’’ section of the Market-Maker
Trading Permit Sliding Scale table
provides that the sliding scale is
available for Market-Maker Trading
Permits used for appointments ‘‘in any
options classes other than SPX, SPXpm,
VIX, OEX, and XEO.’’ The Exchange
notes that last year, the Exchange also
excepted from the scale RUT
appointments.9 While the Exchange
acknowledged this change in Footnote
24, it inadvertently did not add ‘‘RUT’’
to the exclusion list in the Notes section
described above. The Exchange
therefore proposes to correct that error
and add the reference to ‘‘RUT’’ being
excluded.
The Exchange also proposes to reduce
the Floor Broker Trading Permit
monthly fee for Tier 1 of the Floor
Broker Trading Permit Holder Sliding
Scale. Specifically, Tier 1 of the Floor
Broker Trading Permit Holder Sliding
Scale is available for TPHs and TPH
Organizations that commit in advance to
that tier each calendar year. The
Exchange proposes to reduce the
monthly cost from $6,000 per Floor
Broker Trading Permit to $5,000 per
Floor Broker Trading Permit for permits
2–7.
7 See CBOE Fees Schedule, Volume Incentive
Program.
8 See CBOE Fees Schedule, Equity, ETF, ETN and
Index Options (excluding Underlying Symbol List
A) rate tables.
9 See Securities Exchange Act Release No. 76923
(January 15, 2016), 81 FR 3841 (January 22, 2016)
(SR–CBOE–2016–002).
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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,
2016. The Exchange also waives fees
through December 31, 2016 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 June 30, 2017.
CBOE Command Connectivity Charges
Next, the Exchange proposes to
increase CBOE Command Connectivity
Fees. First, the Exchange proposes to
increase the monthly fee for 10 gigabit
per second (‘‘Gbps’’) Network Access
Ports from $3,500 per port to $4,000 per
port. The Exchange has expended
significant resources setting up,
providing and maintaining this
connectivity, and the costs related to
such provision and maintenance has
increased. The Exchange desires to
recoup such increased costs. This fee
amount is still within the range of, and
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Federal Register / Vol. 82, No. 23 / Monday, February 6, 2017 / Notices
in some cases less than, similar fees
assessed by other exchanges.10
The Exchange also proposes to
increase the fees charged for a CMI
Login ID and FIX Login ID from $500
per month to $750 per month TPHs may
access CBOE Command via either a CMI
Client Application Server or a FIX Port,
depending on how their systems are
configured. As with Network Access
Ports, the Exchange has expended
significant resources setting up,
providing and maintaining this
connectivity, and the costs related to
such provision and maintenance has
increased. The Exchange desires to
recoup such increased costs. This fee
amount is still within the range of, and
in some cases less than, similar fees
assessed by other exchanges.11
Linkage
The Exchange proposes to increase
the Linkage fee (in addition to the
applicable away fees) for Customer
orders from $0.05 to $0.10. The Fees
Schedule currently provides that, in
addition to the customary CBOE
execution charges, for each customer
order that is routed, in whole or in part,
to one or more exchanges in connection
with the Options Order Protection and
Locked/Crossed Market Plan referenced
in Rule 6.80, CBOE shall pass through
the actual transaction fee assessed by
the exchange(s) to which the order was
routed. The Exchange proposes to assess
an additional $0.10 per contract for
customer orders routed away in
addition to the applicable pass through
fees. The purpose of these proposed
increase is to help recoup costs incurred
by the Exchange associated with routing
customer orders through linkage. The
Exchange notes that other exchanges
also assess an additional fee on top of
passing through transaction fees for
customer orders and that the proposed
amount of the fee is in line with the
amount assessed at other exchanges.12
VIX
The Exchange next proposes to amend
its Frequent Trader Program. By way of
background, the Frequent Trader
Program offers transaction fee rebates to
registered Customers, Professional
Customers and Voluntary Professionals
(origin codes ‘‘C’’ and ‘‘W’’) that meet
certain volume thresholds in CBOE VIX
Volatility Index options (‘‘VIX
options’’), Russell 2000 Index (‘‘RUT’’)
options, and S&P 500 Index options
(‘‘SPX’’), weekly S&P 500 options
(‘‘SPXW’’) and p.m.-settled SPX Index
options (‘‘SPXpm’’) (collectively
referred to as ‘‘SPX options’’) provided
the Customer registers for the program.
The Exchange proposes to amend the
Frequent Trader Program to (i) increase
the volume thresholds and (ii) reduce
the rebates. Specifically, the proposed
changes will be as follows:
SPX, SPXW and SPXpm
Monthly
contracts
traded
1 .........................
2 .........................
3 .........................
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Tier
Frequent Trader
10,000–49,999 ...........
50,000–99,999 ...........
100,000 and above ....
Monthly
contracts
traded
Fee rebate
(%)
3
6
9
RUT
Monthly
contracts
trade
Fee rebate
(%)
10,000–49,999 ...........
50,000–99,999 ...........
100,000 and above ....
3
6
9
Fee rebate
(%)
5,000–9,999 ...............
10,000–12,999 ...........
13,000 and above ......
3
6
9
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 RLG,
RLV, RUI, AWDE, FTEM, FXTM and
UKXM), DJX, XSP, XSPAM, minioptions and subcabinet trades
(‘‘Qualifying Symbols’’), will receive a
rebate on that TPH’s Floor Broker
Trading Permit Fees. Specifically, any
Floor Broker Trading Permit Holder that
executes an average of 15,000 customer
open-outcry contracts per day over the
course of a calendar month in
Qualifying Symbols will receive a rebate
of $7,500 on that Floor Broker Trading
Permit Holder’s Floor Broker Trading
Permit fees. Additionally, any Floor
Broker Trading Permit Holder that
executes an average of 25,000 customer
open-outcry contracts per day over the
course of a calendar month in
Qualifying Symbols will receive a rebate
of $15,000 on that TPH’s Floor Broker
Trading Permit fees. The Exchange
proposes to increase the rebate received
for executing an average of 15,000
customer open-outcry contracts to
$9,000 and reduce the rebate received
for executing an average of 25,000
customer open-outcry contracts to
$14,000.
and CFLEX Surcharge Fee) for each of
these products. This waiver however is
set to expire December 31, 2016. In
order to continue to promote trading of
these new options classes, the Exchange
proposes to extend the fee waiver of
through June 30, 2017.
RLG, RLV, RUI, AWDE, FTEM, FXTM
and UKXM Transaction Fees
By way of background, a FLEX Trader
is entitled to a pro-rata share of the
monthly compensation pool based on
the customer order fees collected from
customer orders traded against that
FLEX Trader’s orders with origin codes
other than ‘‘C’’ in FLEX Broad-Based
Index Options with Asian or Cliquet
style settlement (‘‘Exotics’’) each month
(‘‘Incentive Program’’). The Fees
Schedule provides that the Incentive
Program is set to expire either by
December 31, 2016 or until total average
daily volume in Exotics exceeds 15,000
contracts for three consecutive months,
whichever comes first. The Exchange
notes that total average daily volume in
10 See e.g., Miami International Securities
Exchange LLC (‘‘MIAX’’) Options Fees Schedule,
Section 5(a), which lists connectivity fees of $5,500
per month for 10 Gbps.
11 See e.g., International Securities Exchange
(‘‘ISE’’) Schedule of Fees, Section V(C), FIX
Session/API Session Fees. See also PHLX Pricing
Schedule, Section VII(B)., Port Fees.
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The Exchange recently began trading
options on seven FTSE Russell Indexes
(i.e., Russell 1000 Growth Index
(‘‘RLG’’), Russell 1000 Value Index
(‘‘RLV’’), Russell 1000 Index (‘‘RUI’’),
FTSE Developed Europe Index
(‘‘AWDE’’), FTSE Emerging Markets
Index (‘‘FTEM’’), China 50 Index
‘‘(FXTM’’) and FTSE 100 Index
(‘‘UKXM’’)). In order to promote and
encourage trading of these new
products, the Exchange currently waives
all transaction fees (including the Floor
Brokerage Fee, Index License Surcharge
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Fmt 4703
Sfmt 4703
FLEX Asian and Cliquet Flex Trader
Incentive Program
12 See e.g., PHLX Pricing Schedule, Section V.,
Customer Routing Fees. See also, MIAX Options
Fees Schedule, Section 1(c), Fees and Rebates for
Customer Orders Routed to Another Options
Exchange.
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Exotics has not yet exceeded 15,000
contracts for three consecutive months.
In order to continue to incentivize FLEX
Traders to provide liquidity in FLEX
Asian and Cliquet options, the Exchange
proposes to extend the program to June
30, 2017 or until total average daily
volume in Exotics exceeds 15,000
contracts for three consecutive months,
whichever comes first.
sradovich on DSK3GMQ082PROD with NOTICES
AWDE, FTEM, FXTM and UKXM DPM
Payment
The Exchange currently offers a
compensation plan to the Designated
Primary Market-Maker(s) (‘‘DPM(s)’’)
appointed in AWDE, FTEM, FXTM or
UKXM to offset the initial DPM costs.
Specifically, the Fees Schedule provides
that DPM(s) appointed for an entire
month in these classes will receive a
payment of $7,500 per class per month
through December 31, 2016. The
Exchange notes that DPMs appointed in
these products still have ongoing costs,
which the Exchange desires to continue
to help offset. As such, the Exchange
proposes to extend the DPM payment
plan through June 30, 2017.
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.13 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 14 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,15 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.
Increasing the fee for electronic
executions for Clearing Trading Permit
Holder Proprietary orders in Penny and
13 15
U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
15 15 U.S.C. 78f(b)(4).
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16:03 Feb 03, 2017
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Non-Penny Pilot equity, ETF, ETN and
index options (excluding Underlying
Symbol List A) classes is reasonable
because the proposed fee amount is in
line with the amounts assessed by
another exchange for similar
transactions.16 The Exchange believes
that this proposed change is also
equitable and not unfairly
discriminatory because the proposed
changes will apply equally to all
Clearing Trading Permit Holders. The
Exchange notes that it does not assess
Customers the electronic options
transaction fees in Penny and NonPenny Pilot options because Customer
order flow enhances liquidity on the
Exchange for the benefit of all market
participants. Specifically, Customer
liquidity benefits all market participants
by providing more trading
opportunities, which attracts MarketMakers. 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. The Exchange notes that
Market-Makers are assessed lower
electronic options transaction fees in
Penny and Non-Penny Pilot options as
compared to Clearing Trading Permit
Holders, as well as Professionals, JBOs,
Broker Dealers and non-Trading Permit
Holder Market-Makers because they
have obligations to the market and
regulatory requirements, which
normally do not apply to other market
participants (e.g., obligations to make
continuous markets). Professionals,
JBOs, Broker Dealers and non-Trading
Permit Holder Market-Makers are
assessed higher fees as compared to the
proposed fees for Clearing Trading
Permit Holder Proprietary orders
because Clearing Trading Permit
Holders also have obligations, which
normally do not apply to other market
participants (e.g., must have higher
capital requirements, clear trades for
other market participants, must be
members of OCC). Accordingly, the
differentiation between electronic
transaction fees for Customers, MarketMakers, Clearing Trading Permit
Holders and other market participants
recognizes the differing obligations and
contributions made to the liquidity and
trading environment on the Exchange by
these market participants. The Exchange
also believes it’s equitable and not
unfairly discriminatory to assess higher
fees for Non-Penny option classes than
16 See e.g., PHLX Pricing Schedule, Section II,
Multiply Listed Options Fees and NYSE Amex
Options Fees Schedule, Section I.A, Options
Transaction Fees and Credits, Rates for Standard
Options Transactions.
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Fmt 4703
Sfmt 4703
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.
The Exchange believes that the
proposed increase of the Complex Taker
Fee from $0.08 per contract per side to
$0.10 per contract per side is reasonable
because it helps offset the increased
credits given to complex orders under
VIP. Indeed, the Exchange notes that
VIP credits for complex orders have
increased since the Complex Taker Fee
was increased to $0.08 per contract.17
The Exchange believes capping
noncustomer COA and AIM auction
responses in Penny classes is reasonable
because those market participants
would be paying lower fees. Applying
the Complex Surcharge to all market
participants except customers is
equitable and not unfairly
discriminatory because customer order
flow enhances liquidity on the
Exchange for the benefit of all market
participants. As noted above, customer
liquidity benefits all market participants
by providing more trading
opportunities, which attracts MarketMakers. 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. By exempting customer
orders, the fee will not discourage the
sending of customer orders, and
therefore there should still be plenty of
customer orders for other market
participants to trade with. The Exchange
also believes capping auction responses
in COA and AIM at $0.50 per contract
is reasonable, equitable and not unfairly
discriminatory because the Exchange
does not want to discourage the use of
these price improvement mechanisms.
The Exchange lastly believes renaming
the fee to Complex Surcharge may
alleviate confusion, which removes
impediments to and perfects the
mechanism of a free and open market
and a national market system, and, in
general, protects investors and the
public interest.
The Exchange believes increasing the
SPX Surcharge is reasonable because the
Exchange still pays more for the SPX
license than the amount of the proposed
SPX Surcharge (meaning that the
17 See Securities Exchange Act Release No. 75188
(June 17, 2015), 80 FR 36021 (June 23, 2015) (SR–
CBOE–2015–058) and See CBOE Fees Schedule,
Volume Incentive Program.
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06FEN1
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Federal Register / Vol. 82, No. 23 / Monday, February 6, 2017 / Notices
Exchange is, and will still be,
subsidizing the costs of the SPX
license). This increase is equitable and
not unfairly discriminatory because all
non-Customer market participants will
be assessed the same increased SPX
Surcharge. Not applying the SPX
Surcharge Fee to customer orders is
equitable and not unfairly
discriminatory because this is designed
to attract customer SPX orders, which
increases liquidity and provides greater
trading opportunities to all market
participants.
The Exchange believes it’s reasonable
to continue 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 7
calendar days or less because the
Exchange wants to continue
encouraging 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 7 calendar days or
less. Finally, the Exchange believes it’s
reasonable, equitable and not unfairly
discriminatory to provide that the
surcharge will be waived through June
2017, as it gives the Exchange additional
time to evaluate if the waiver is
continuing to have the desired effect of
encouraging these transactions.
The Exchange believes increasing SPX
transaction fees for Liquidity Providers
is reasonable because the Exchange has
expended considerable resources
developing and maintaining SPX. The
Exchange believes that this proposed
change is equitable and not unfairly
discriminatory because although
Liquidity Providers still pay lower SPX
transaction fees than certain other
market participants, Liquidity Providers
are valuable market participants that
provide liquidity in the marketplace and
incur costs that other market
participants do not incur. For example,
Liquidity Providers have a number of
obligations, including quoting
obligations that other market
participants do not have. The Exchange
also believes establishing a Sliding
Scale for LPs in SPX options is
reasonable because it will allow LPs
who engage in SPX options trading the
opportunity to pay progressively lower
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16:03 Feb 03, 2017
Jkt 241001
fees for such transactions as increased
volume thresholds are met. Specifically,
the SPX LP Sliding Scale allows the
Exchange to provide an incremental
incentive for Liquidity Providers to
strive for the highest tier level, which
provides increasingly lower fees.
The Exchange believes the proposed
reduced credits for AIM executions
under VIP is reasonable because it still
provides TPHs an opportunity to receive
notable credits for reaching certain
qualifying volume thresholds that they
would not otherwise receive (now just
a smaller credit). The Exchange also
believes it’s reasonable, equitable and
not unfairly discriminatory to establish
lower credits for AIM executions than
non-AIM executions under VIP because
AIM transactions are already assessed
lower transaction fees than non-AIM
transactions and the Exchange no longer
wishes to provide the same amount of
credits for these transactions.18
Additionally, the Exchange believes the
proposed change is equitable and not
unfairly discriminatory because it
applies to all TPHs that meet the
qualifying volume thresholds.
The Exchange also believes it’s
reasonable, equitable and not unfairly
discriminatory to provide that multiple
simple orders from the same TPH in the
same series on the same side of the
market that are received within three (3)
seconds (instead of three hundred (300)
seconds) will be aggregated for purposes
of determining the order quantity
subject to the AIM and HAL cap because
the Exchange believes this amount of
time is still sufficient to prevent TPHs
from breaking up their orders in order
to avoid the fee cap and it would apply
to all TPHs.
The lowered costs for Market-Maker
Trading Permits is reasonable because
the fees will be lower than previously,
and the reduced access costs may
encourage greater Market-Maker access,
which thereby brings greater trading
activity, volume and liquidity,
benefitting all market participants. The
Exchange believes the proposed change
is equitable and not unfairly
discriminatory because it applies to all
Market-Makers.
The Exchange believes adding ‘‘RUT’’
to the Notes section of the Market-Maker
Trading Permits Sliding Scale will
alleviate confusion as to what Trading
Permits the sliding scale does and does
not apply to. The alleviation of
confusion removes impediments to and
perfects the mechanism of a free and
open market and a national market
18 See CBOE Fees Schedule, Equity, ETF, ETN
and Index Options (excluding Underlying Symbol
List A) rate tables.
PO 00000
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Fmt 4703
Sfmt 4703
9411
system, and, in general, protects
investors and the public interest.
The lowered costs for Floor Broker
Trading Permits in Tier 1 of the Floor
Broker Trading Permits Sliding Scale is
reasonable because the fee for that tier
will be lower than previously, and the
reduced access costs may encourage
greater Floor Broker access, which
thereby brings greater trading activity,
volume and liquidity, benefitting all
market participants. The Exchange
believes the proposed change is
equitable and not unfairly
discriminatory because it applies to all
Floor Brokers.
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 June
30, 2017 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.
The proposed change to increase the
10 Gbps Network Access Port fee is
reasonable because the fees are within
the same range as those assessed on
other exchanges,19 and because such
increase will assist in recouping
ongoing expenditures made by the
Exchange. This proposed change is
equitable and not unfairly
discriminatory because the proposed
change will apply to all TPHs. The
proposed change to increase the fees
assessed for CMI Login IDs and FIX
Login IDs is also reasonable because the
Exchange desires to recoup increasing
costs associated with maintaining
connectivity to the Exchange. The
Exchange believes it’s equitable and not
unfairly discriminatory because all
TPHs will be assessed the same amount
for Login ID fees.
The Exchange’s proposal to increase
the Linkage fee from $0.05 per contract
to $0.10 per contract (in addition to
applicable transaction fees) for customer
orders is reasonable because the
increase will help offset the costs
associated with routing orders through
Linkage. Additionally, the proposed
amount is reasonable as it is in line with
amounts charged by other Exchanges for
similar transactions.20 The Exchange
19 See
20 See
E:\FR\FM\06FEN1.SGM
supra Note 10.
supra Note 12.
06FEN1
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believes it’s equitable and not unfairly
discriminatory because the proposed
change will apply to all customer orders
that are linked away.
The Exchange believes it is reasonable
to increase the volume thresholds in
Frequent Trader because it adjusts for
current volume trends. The Exchange
notes that the rebalance of tiers still
allows the Exchange to maintain an
incremental incentive for Customers to
strive for the highest tier level. The
Exchange believes the proposed change
is also equitable and not unfairly
discriminatory because it applies to all
Customers. The Exchange believes it’s
reasonable to reduce the Frequent
Trader rebates because it still provides
Customers an opportunity to receive
notable discounted rates for reaching
certain qualifying volume thresholds
that they would not otherwise receive
(now just a smaller discount). The
Exchange believes that the proposed
change is not unfairly discriminatory
because it will apply to all Customers
that meet the qualifying volume
thresholds.
The Exchange believes that increasing
the first tier of the Floor Broker Access
Rebate (i.e., the rebate received when
executing 15,000 contracts or more per
day) is reasonable because it allows the
qualifying Floor Brokers to pay even
lower Floor Broker Trading Permit fees
than before. The Exchange believes that
it is reasonable to reduce the second tier
rebate of the Floor Broker Access (i.e.,
the rebate received when executing
25,000 contracts or more per day),
because qualifying Floor Brokers are
still paying lower Floor Broker Trading
Permit fees than they otherwise would
have. The Exchange notes that the
purpose of both rebates incentives is to
encourage the execution of orders via
open outcry, which should increase
volume, which would benefit all market
participants (including Floor Brokers
who do not hit the either contracts-perday thresholds) trading via open outcry
(and indeed, this increased volume
could make it possible for some Floor
Brokers to hit the contracts-per-day
thresholds). The Exchange believes the
proposed changes are equitable and not
unfairly discriminatory because they
apply to qualifying Floor Brokers
equally.
The Exchange believes it is
reasonable, equitable and not unfairly
discriminatory to extend the waiver of
all transaction fees for RLG, RLV, RUI,
AWDE, FTEM, FXTM and UKXM
transactions, including the Floor
Brokerage fee, the License Index
Surcharge and CFLEX Surcharge Fee,
because it promotes and encourages
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16:03 Feb 03, 2017
Jkt 241001
trading of these products which are still
new and applies to all TPHs.
The Exchange believes extending the
FLEX Asian and Cliquet Flex Trading
Incentive Program is reasonable,
equitable and not unfairly
discriminatory because providing FLEX
Traders with incentives to trade FLEX
Asian and Cliquet options should result
in a more robust price discovery process
that will result in better execution
prices for customers. In addition, the
proposed change applies equally to all
FLEX Traders.
Finally, the Exchange believes that it
is reasonable, equitable and not unfairly
discriminatory to extend the
compensation plan to the DPM(s)
appointed in AWDE, FTEM, FXTM or
UKXM to continue to offset their
ongoing DPM costs.
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
PO 00000
Frm 00043
Fmt 4703
Sfmt 4703
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 21 and paragraph (f) of Rule
19b–4 22 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–2017–008 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.
21 15
22 17
E:\FR\FM\06FEN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
06FEN1
Federal Register / Vol. 82, No. 23 / Monday, February 6, 2017 / Notices
All submissions should refer to File
Number SR–CBOE–2017–008. 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–
2017–008, and should be submitted on
or before February 27, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–02374 Filed 2–3–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
sradovich on DSK3GMQ082PROD with NOTICES
[Release No. 34–79907; File No. SR–NYSE–
2017–01]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Proposed Rule Change, as
Modified by Amendment No. 1, To
Adopt the Rule 6800 Series To
Implement the Compliance Rule
Regarding the National Market System
Plan Governing the Consolidated Audit
Trail
January 31, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
23 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
VerDate Sep<11>2014
16:03 Feb 03, 2017
Jkt 241001
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on January
17, 2017, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) 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 selfregulatory organization. On January 30,
2017, the Exchange filed Amendment
No. 1 to the proposed rule change,
which amended and replaced the
proposed rule change in its entirety. The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as amended, from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposed rule change
to adopt the Rule 6800 Series to
implement the compliance rule
(‘‘Compliance Rule’’) regarding the
National Market System Plan Governing
the Consolidated Audit Trail (the ‘‘CAT
NMS Plan’’ or ‘‘Plan’’).4 The proposed
rule change is available on the
Exchange’s Web site at www.nyse.com,
at the principal office of the Exchange,
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
self-regulatory organization 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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
This Amendment No. 1 amends and
replaces in its entirety the original
proposal filed by the Exchange on
January 17, 2017. The Exchange submits
this Amendment No. 1 in order to
clarify certain points and add additional
2 15
U.S.C. 78a.
CFR 240.19b–4.
4 Unless otherwise specified, capitalized terms
used in this rule filing are defined as set forth
herein or in the CAT NMS Plan.
3 17
PO 00000
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9413
details to the Compliance Rule as
proposed herein.
Bats BYX Exchange, Inc., Bats BZX
Exchange, Inc., Bats EDGA Exchange,
Inc., Bats EDGX Exchange, Inc., BOX
Options Exchange LLC, C2 Options
Exchange, Incorporated, Chicago Board
Options Exchange, Incorporated,
Chicago Stock Exchange, Inc., Financial
Industry Regulatory Authority, Inc.,
International Securities Exchange, LLC,
Investors’ Exchange LLC, ISE Gemini,
LLC, ISE Mercury, LLC, Miami
International Securities Exchange LLC,
MIAX PEARL, LLC, NASDAQ BX, Inc.,
NASDAQ PHLX LLC, The NASDAQ
Stock Market LLC, National Stock
Exchange, Inc., New York Stock
Exchange LLC, NYSE MKT LLC, and
NYSE Arca, Inc. (collectively, the
‘‘Participants’’) filed with the
Commission, pursuant to Section 11A of
the Exchange Act 5 and Rule 608 of
Regulation NMS thereunder,6 the CAT
NMS Plan.7 The Participants filed the
Plan to comply with Rule 613 of
Regulation NMS under the Exchange
Act. The Plan was published for
comment in the Federal Register on
May 17, 2016,8 and approved by the
Commission, as modified, on November
15, 2016.9
The Plan is designed to create,
implement and maintain a consolidated
audit trail (‘‘CAT’’) that would capture
customer and order event information
for orders in NMS Securities and OTC
Equity Securities, across all markets,
from the time of order inception through
routing, cancellation, modification, or
execution in a single consolidated data
source. Each Participant is required to
enforce compliance by its Industry
Member, as applicable, with the
provisions of the Plan, by adopting a
Compliance Rule applicable to their
Industry Members.10 As is described
5 15
U.S.C. 78k–1.
CFR 242.608.
7 See Letter from the Participants to Brent J.
Fields, Secretary, Commission, dated September 30,
2014; and Letter from Participants to Brent J. Fields,
Secretary, Commission, dated February 27, 2015.
On December 24, 2015, the Participants submitted
an amendment to the CAT NMS Plan. See Letter
from Participants to Brent J. Fields, Secretary,
Commission, dated December 23, 2015.
8 See Securities Exchange Act Release No. 77724
(April 27, 2016), 81 FR 30614 (May 17, 2016).
9 See Securities Exchange Act Release No. 79318
(November 15, 2016), 81 FR 84696 (November 23,
2016) (‘‘Order Approving the National Market
System Plan Governing the Consolidated Audit
Trail) (‘‘Approval Order’’).
10 See SEC Rule 613(g)(1). The proposed Rule
6800 Series would be applicable to member
organizations. The term ‘‘member organization’’
means a ‘‘registered broker or dealer (unless exempt
pursuant to the Securities Exchange Act of 1934)
(the ‘‘Act’’) that is a member of the Financial
Industry Regulatory Authority, Inc. (‘‘FINRA’’) or
6 17
E:\FR\FM\06FEN1.SGM
Continued
06FEN1
]]>Agencies
[Federal Register Volume 82, Number 23 (Monday, February 6, 2017)]
[Notices]
[Pages 9406-9413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02374]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79906; File No. SR-CBOE-2017-008]
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 31, 2017.
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 January 18, 2017, 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.
---------------------------------------------------------------------------
[[Page 9407]]
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 also available on the Exchange's Web site
(https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the
Exchange's Office of the Secretary, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to make a number of changes to its Fees
Schedule.\3\
---------------------------------------------------------------------------
\3\ The Exchange initially filed the proposed fee changes on
January 3, 2017 (SR-CBOE-2017-001). On January 18, 2017, the
Exchange withdrew that filing and submitted this filing.
---------------------------------------------------------------------------
Electronic Transaction Fees for Clearing Trading Permit Holder
Proprietary
The Exchange proposes to increase the transaction fees for
electronic executions for Clearing Trading Permit Holder Proprietary
(origin codes ``F'' and ``L'') orders in Penny Pilot equity, ETF, ETN
and index options (excluding Underlying Symbol List A \4\) classes from
$0.35 per contract to $0.38 per contract and in Non-Penny Pilot equity,
ETF, ETN and index options (excluding Underlying Symbol List A) classes
from $0.35 per contract to $0.65 per contract. The Exchange notes that
this increase is in line with the amounts assessed by others exchanges
for similar transactions.\5\
---------------------------------------------------------------------------
\4\ As of January 3, 2017, Underlying Symbol List A includes
Underlying Symbol List A consists of OEX, XEO, RUT, RLG, RLV, RUI,
AWDE, FTEM, FXTM, UKXM SPX/SPXW, SPXpm, SRO, VIX, Volatility Indexes
and binary options.
\5\ See e.g., NASDAQ PHLX LLC (``PHLX'') Pricing Schedule,
Section II, Multiply Listed Options Fees and NYSE Amex Options Fees
Schedule, Section I.A, Options Transaction Fees and Credits, Rates
for Standard Options Transactions.
---------------------------------------------------------------------------
Complex Taker Fee
Currently, the Complex Taker Fee is $0.08 per contract per side for
non-customer complex order executions that take liquidity from the COB
and auction responses in the Complex Order Auction (``COA'') and the
Automated Improvement Mechanism (``AIM'') in all classes except
Underlying Symbol List A and Mini-Options. Additionally, the Complex
Taker Fee is not assessed on orders originating from a Floor Broker
PAR, electronic executions against single leg markets, or stock-option
order executions. The Exchange proposes to increase the amount of the
fee from $0.08 per contract to $0.10 per contract. The Exchange also
proposes to provide that auction responses in COA and AIM for
noncustomer complex orders in Penny classes will be subject to a cap of
$0.50 per contract, which includes the applicable transaction fee,
Complex Surcharge and Marketing Fee (if applicable).\6\ The Exchange
also wishes to rename the fee from ``Complex Taker Fee'' to ``Complex
Surcharge''.
---------------------------------------------------------------------------
\6\ For example, a Market-Maker COA response in a Penny class
that is subject to the Marketing Fee ($0.25 per contract), the
Liquidity Provider Sliding Scale Tier 1 rate ($0.23 per contract)
and Complex Surcharge ($0.10 per contract), would only be charged
$0.50 per contract, instead of $0.58 per contract.
---------------------------------------------------------------------------
SPX Index License Surcharge
The Exchange proposes to increase the Index License Surcharge Fee
for SPX (including SPXW) and SPXpm (the ``SPX Surcharge'') from $0.13
per contract to $0.14 per contract. The Exchange licenses from Standard
& Poor's the right to offer an index option product based on the S&P
500 index (that product being SPX and other SPX-based index option
products). In order to recoup the costs of the SPX license, the
Exchange assesses the SPX Surcharge. However, the cost of that license
works out to more than the current SPX Surcharge amount of $0.13 per
SPX contract traded (or even the proposed SPX Surcharge amount of $0.14
per contract), so the Exchange ends up subsidizing that SPX license
cost. The Exchange therefore proposes to increase the SPX Surcharge
from $0.13 per contract to $0.14 per contract in order to recoup more
of the costs associated with the SPX license.
VIX License Index Surcharge
The Exchange proposes to extend the current waiver of 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 seven (7) calendar days or less. The Exchange adopted the
current waiver to reduce transaction costs on expiring, low-priced VIX
options, which the Exchange believed would 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. The Exchange had
proposed to waive the surcharge through December 31, 2016, at which
time the Exchange had stated that it would evaluate whether the waiver
has in fact prompted Firms to close and roll over these positions close
to expiration as intended. The Exchange believes the proposed change
has in fact encouraged Firms to do so and as such, proposes to extend
the waiver of the surcharge through June 30, 2017, at which time the
Exchange will again reevaluate whether the waiver has continued to
prompt Firms to close and roll over positions close to expiration at
low premium levels. Accordingly, the Exchange proposes to delete the
reference to the current waiver period of December 31, 2016 from the
Fees Schedule and replace it with June 30, 2017.
Liquidity Provider Sliding Scale for SPX, SPXW and SPXpm
The Exchange proposes to adopt a sliding scale for Liquidity
Provider (origin code ``M'') (``LP'') transaction fees in SPX, SPXW and
SPXpm (``SPX LP Sliding Scale''). Currently, LPs are assessed $0.20 per
contract for SPX, SPXW and SPXpm (collectively, ``SPX options'')
executions. The new SPX LP Sliding Scale will assess LPs increased
transaction fees in SPX. Of the increased rates however, the SPX LP
Sliding Scale will provide progressively lower rates if certain volume
thresholds in SPX options are attained during a month. The SPX LP
Sliding Scale will be as follows:
------------------------------------------------------------------------
Tier Volume thresholds Rate
------------------------------------------------------------------------
1........................... 0.00%-1.50%....................... $0.25
2........................... Greater than 1.50%-10.0%.......... 0.23
3........................... Above 10.0%....................... 0.21
------------------------------------------------------------------------
The volume thresholds will be based on total Liquidity Provider
Volume in SPX, SPXW and SPXpm. The purpose of the SPX LP Sliding Scale
is to provide an incremental incentive for LPs to reach the highest
tier level and encourage trading of SPX options.
[[Page 9408]]
Volume Incentive Program
The Exchange 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.\7\ The Exchange proposes to adopt
separate pricing for orders executed electronically via AIM. The
proposed pricing is as follows:
---------------------------------------------------------------------------
\7\ See CBOE Fees Schedule, Volume Incentive Program.
----------------------------------------------------------------------------------------------------------------
Per contract credit
Percentage thresholds ---------------------------------------------------------------
Tier of national customer Simple Complex
multiply- listed ---------------------------------------------------------------
monthly volume Non-AIM AIM Non-AIM AIM
----------------------------------------------------------------------------------------------------------------
1...................... 0.00%-0.75%............ $0.00 $0.00 $0.00 $0.00
2...................... Above 0.75% to 1.80%... 0.10 0.09 0.21 0.20
3...................... Above 1.80% to 3.00%... 0.12 0.11 0.24 0.23
4...................... Above 3.00%............ 0.15 0.14 0.25 0.24
----------------------------------------------------------------------------------------------------------------
The Exchange notes that AIM transactions are assessed lower
transaction fees than non-AIM transactions. As such, the Exchange no
longer wishes to provide the same amount in credits for these
transactions.\8\
---------------------------------------------------------------------------
\8\ See CBOE Fees Schedule, Equity, ETF, ETN and Index Options
(excluding Underlying Symbol List A) rate tables.
---------------------------------------------------------------------------
The Exchange also proposes to amend the aggregation timer under
VIP. The Exchange notes that currently, credits on orders executed
electronically in AIM are capped at 1,000 contracts per order for
simple executions and 1,000 contracts per leg for complex executions.
Additionally, credits on orders executed electronically in HAL are be
capped at 1,000 contracts per auction quantity. Additionally, multiple
simple orders from the same affiliated TPH(s) in the same series on the
same side of the market that are executed in AIM or HAL within a 300
second period will be aggregated for purposes of determining the order
quantity subject to the cap. The AIM aggregation timer begins with an
order entered into AIM and continues for 300 seconds, aggregating any
other orders entered into AIM in the same series on the same side of
the market by the same affiliated TPH. The HAL aggregation timer also
begins at the start of a HAL auction and continues for 300 seconds,
aggregating any other orders executed in HAL in the same series on the
same side of the market for the same affiliated TPH. The Exchange had
adopted the aggregation timer to prevent TPHs from breaking up their
orders in order to avoid the fee cap. The Exchange believes however,
that it can accomplish its objective with a shorter timer period. As
such, the Exchange proposes to reduce the aggregation timer for AIM and
HAL to 3 seconds.
Permit Fees
The Exchange proposes to reduce Market-Maker Trading Permit monthly
costs from $5,500 per permit to $5,000 per permit. Furthermore, for
those who commit to the Market-Maker Trading Permit Holder Sliding
Scale, which is available for all Market-Maker Trading Permits held by
affiliated TPHs and TPH organizations that are used for appointments in
any options classes other than RUT, SPX, SPXpm, VIX, OEX and XEO, the
Exchange proposes to reduce the monthly cost from $5,500 per permit to
$5,000 per permit for the first 10 permits, from $4,000 to $3,700 per
permit for permits 11-20, and from $2,500 to $1,800 per permit for
permits 21 and greater. The purpose of this change is to reduce access
costs and thereby encourage greater Market-Maker access, which thereby
brings greater trading activity, volume and liquidity, benefitting all
market participants.
The Exchange next notes that the ``Notes'' section of the Market-
Maker Trading Permit Sliding Scale table provides that the sliding
scale is available for Market-Maker Trading Permits used for
appointments ``in any options classes other than SPX, SPXpm, VIX, OEX,
and XEO.'' The Exchange notes that last year, the Exchange also
excepted from the scale RUT appointments.\9\ While the Exchange
acknowledged this change in Footnote 24, it inadvertently did not add
``RUT'' to the exclusion list in the Notes section described above. The
Exchange therefore proposes to correct that error and add the reference
to ``RUT'' being excluded.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 76923 (January 15,
2016), 81 FR 3841 (January 22, 2016) (SR-CBOE-2016-002).
---------------------------------------------------------------------------
The Exchange also proposes to reduce the Floor Broker Trading
Permit monthly fee for Tier 1 of the Floor Broker Trading Permit Holder
Sliding Scale. Specifically, Tier 1 of the Floor Broker Trading Permit
Holder Sliding Scale is available for TPHs and TPH Organizations that
commit in advance to that tier each calendar year. The Exchange
proposes to reduce the monthly cost from $6,000 per Floor Broker
Trading Permit to $5,000 per Floor Broker Trading Permit for permits 2-
7.
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, 2016. The Exchange also waives fees through December 31,
2016 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 June 30, 2017.
CBOE Command Connectivity Charges
Next, the Exchange proposes to increase CBOE Command Connectivity
Fees. First, the Exchange proposes to increase the monthly fee for 10
gigabit per second (``Gbps'') Network Access Ports from $3,500 per port
to $4,000 per port. The Exchange has expended significant resources
setting up, providing and maintaining this connectivity, and the costs
related to such provision and maintenance has increased. The Exchange
desires to recoup such increased costs. This fee amount is still within
the range of, and
[[Page 9409]]
in some cases less than, similar fees assessed by other exchanges.\10\
---------------------------------------------------------------------------
\10\ See e.g., Miami International Securities Exchange LLC
(``MIAX'') Options Fees Schedule, Section 5(a), which lists
connectivity fees of $5,500 per month for 10 Gbps.
---------------------------------------------------------------------------
The Exchange also proposes to increase the fees charged for a CMI
Login ID and FIX Login ID from $500 per month to $750 per month TPHs
may access CBOE Command via either a CMI Client Application Server or a
FIX Port, depending on how their systems are configured. As with
Network Access Ports, the Exchange has expended significant resources
setting up, providing and maintaining this connectivity, and the costs
related to such provision and maintenance has increased. The Exchange
desires to recoup such increased costs. This fee amount is still within
the range of, and in some cases less than, similar fees assessed by
other exchanges.\11\
---------------------------------------------------------------------------
\11\ See e.g., International Securities Exchange (``ISE'')
Schedule of Fees, Section V(C), FIX Session/API Session Fees. See
also PHLX Pricing Schedule, Section VII(B)., Port Fees.
---------------------------------------------------------------------------
Linkage
The Exchange proposes to increase the Linkage fee (in addition to
the applicable away fees) for Customer orders from $0.05 to $0.10. The
Fees Schedule currently provides that, in addition to the customary
CBOE execution charges, for each customer order that is routed, in
whole or in part, to one or more exchanges in connection with the
Options Order Protection and Locked/Crossed Market Plan referenced in
Rule 6.80, CBOE shall pass through the actual transaction fee assessed
by the exchange(s) to which the order was routed. The Exchange proposes
to assess an additional $0.10 per contract for customer orders routed
away in addition to the applicable pass through fees. The purpose of
these proposed increase is to help recoup costs incurred by the
Exchange associated with routing customer orders through linkage. The
Exchange notes that other exchanges also assess an additional fee on
top of passing through transaction fees for customer orders and that
the proposed amount of the fee is in line with the amount assessed at
other exchanges.\12\
---------------------------------------------------------------------------
\12\ See e.g., PHLX Pricing Schedule, Section V., Customer
Routing Fees. See also, MIAX Options Fees Schedule, Section 1(c),
Fees and Rebates for Customer Orders Routed to Another Options
Exchange.
---------------------------------------------------------------------------
Frequent Trader
The Exchange next proposes to amend its Frequent Trader Program. By
way of background, the Frequent Trader Program offers transaction fee
rebates to registered Customers, Professional Customers and Voluntary
Professionals (origin codes ``C'' and ``W'') that meet certain volume
thresholds in CBOE VIX Volatility Index options (``VIX options''),
Russell 2000 Index (``RUT'') options, and S&P 500 Index options
(``SPX''), weekly S&P 500 options (``SPXW'') and p.m.-settled SPX Index
options (``SPXpm'') (collectively referred to as ``SPX options'')
provided the Customer registers for the program. The Exchange proposes
to amend the Frequent Trader Program to (i) increase the volume
thresholds and (ii) reduce the rebates. Specifically, the proposed
changes will be as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
VIX SPX, SPXW and SPXpm RUT
--------------------------------------------------------------------------------------------------------------------------
Tier Monthly contracts Monthly contracts
traded Fee rebate (%) traded Fee rebate (%) Monthly contracts trade Fee rebate (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................ 10,000-49,999.......... 3 10,000-49,999.......... 3 5,000-9,999............ 3
2............................ 50,000-99,999.......... 6 50,000-99,999.......... 6 10,000-12,999.......... 6
3............................ 100,000 and above...... 9 100,000 and above...... 9 13,000 and above....... 9
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 RLG, RLV, RUI, AWDE, FTEM, FXTM and UKXM), DJX, XSP,
XSPAM, mini-options and subcabinet trades (``Qualifying Symbols''),
will receive a rebate on that TPH's Floor Broker Trading Permit Fees.
Specifically, any Floor Broker Trading Permit Holder that executes an
average of 15,000 customer open-outcry contracts per day over the
course of a calendar month in Qualifying Symbols will receive a rebate
of $7,500 on that Floor Broker Trading Permit Holder's Floor Broker
Trading Permit fees. Additionally, any Floor Broker Trading Permit
Holder that executes an average of 25,000 customer open-outcry
contracts per day over the course of a calendar month in Qualifying
Symbols will receive a rebate of $15,000 on that TPH's Floor Broker
Trading Permit fees. The Exchange proposes to increase the rebate
received for executing an average of 15,000 customer open-outcry
contracts to $9,000 and reduce the rebate received for executing an
average of 25,000 customer open-outcry contracts to $14,000.
RLG, RLV, RUI, AWDE, FTEM, FXTM and UKXM Transaction Fees
The Exchange recently began trading options on seven FTSE Russell
Indexes (i.e., Russell 1000 Growth Index (``RLG''), Russell 1000 Value
Index (``RLV''), Russell 1000 Index (``RUI''), FTSE Developed Europe
Index (``AWDE''), FTSE Emerging Markets Index (``FTEM''), China 50
Index ``(FXTM'') and FTSE 100 Index (``UKXM'')). In order to promote
and encourage trading of these new products, the Exchange currently
waives all transaction fees (including the Floor Brokerage Fee, Index
License Surcharge and CFLEX Surcharge Fee) for each of these products.
This waiver however is set to expire December 31, 2016. In order to
continue to promote trading of these new options classes, the Exchange
proposes to extend the fee waiver of through June 30, 2017.
FLEX Asian and Cliquet Flex Trader Incentive Program
By way of background, a FLEX Trader is entitled to a pro-rata share
of the monthly compensation pool based on the customer order fees
collected from customer orders traded against that FLEX Trader's orders
with origin codes other than ``C'' in FLEX Broad-Based Index Options
with Asian or Cliquet style settlement (``Exotics'') each month
(``Incentive Program''). The Fees Schedule provides that the Incentive
Program is set to expire either by December 31, 2016 or until total
average daily volume in Exotics exceeds 15,000 contracts for three
consecutive months, whichever comes first. The Exchange notes that
total average daily volume in
[[Page 9410]]
Exotics has not yet exceeded 15,000 contracts for three consecutive
months. In order to continue to incentivize FLEX Traders to provide
liquidity in FLEX Asian and Cliquet options, the Exchange proposes to
extend the program to June 30, 2017 or until total average daily volume
in Exotics exceeds 15,000 contracts for three consecutive months,
whichever comes first.
AWDE, FTEM, FXTM and UKXM DPM Payment
The Exchange currently offers a compensation plan to the Designated
Primary Market-Maker(s) (``DPM(s)'') appointed in AWDE, FTEM, FXTM or
UKXM to offset the initial DPM costs. Specifically, the Fees Schedule
provides that DPM(s) appointed for an entire month in these classes
will receive a payment of $7,500 per class per month through December
31, 2016. The Exchange notes that DPMs appointed in these products
still have ongoing costs, which the Exchange desires to continue to
help offset. As such, the Exchange proposes to extend the DPM payment
plan through June 30, 2017.
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.\13\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \14\ 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,\15\ 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.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
Increasing the fee for electronic executions for Clearing Trading
Permit Holder Proprietary orders in Penny and Non-Penny Pilot equity,
ETF, ETN and index options (excluding Underlying Symbol List A) classes
is reasonable because the proposed fee amount is in line with the
amounts assessed by another exchange for similar transactions.\16\ The
Exchange believes that this proposed change is also equitable and not
unfairly discriminatory because the proposed changes will apply equally
to all Clearing Trading Permit Holders. The Exchange notes that it does
not assess Customers the electronic options transaction fees in Penny
and Non-Penny Pilot options because Customer order flow enhances
liquidity on the Exchange for the benefit of all market participants.
Specifically, 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.
The Exchange notes that Market-Makers are assessed lower electronic
options transaction fees in Penny and Non-Penny Pilot options as
compared to Clearing Trading Permit Holders, as well as Professionals,
JBOs, Broker Dealers and non-Trading Permit Holder Market-Makers
because they have obligations to the market and regulatory
requirements, which normally do not apply to other market participants
(e.g., obligations to make continuous markets). Professionals, JBOs,
Broker Dealers and non-Trading Permit Holder Market-Makers are assessed
higher fees as compared to the proposed fees for Clearing Trading
Permit Holder Proprietary orders because Clearing Trading Permit
Holders also have obligations, which normally do not apply to other
market participants (e.g., must have higher capital requirements, clear
trades for other market participants, must be members of OCC).
Accordingly, the differentiation between electronic transaction fees
for Customers, Market-Makers, Clearing Trading Permit Holders and other
market participants recognizes the differing obligations and
contributions made to the liquidity and trading environment on the
Exchange by these market participants. The Exchange also believes it's
equitable and not unfairly discriminatory to assess higher fees 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.
---------------------------------------------------------------------------
\16\ See e.g., PHLX Pricing Schedule, Section II, Multiply
Listed Options Fees and NYSE Amex Options Fees Schedule, Section
I.A, Options Transaction Fees and Credits, Rates for Standard
Options Transactions.
---------------------------------------------------------------------------
The Exchange believes that the proposed increase of the Complex
Taker Fee from $0.08 per contract per side to $0.10 per contract per
side is reasonable because it helps offset the increased credits given
to complex orders under VIP. Indeed, the Exchange notes that VIP
credits for complex orders have increased since the Complex Taker Fee
was increased to $0.08 per contract.\17\ The Exchange believes capping
noncustomer COA and AIM auction responses in Penny classes is
reasonable because those market participants would be paying lower
fees. Applying the Complex Surcharge to all market participants except
customers is equitable and not unfairly discriminatory because customer
order flow enhances liquidity on the Exchange for the benefit of all
market participants. As noted above, 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. By exempting customer orders, the fee will not discourage
the sending of customer orders, and therefore there should still be
plenty of customer orders for other market participants to trade with.
The Exchange also believes capping auction responses in COA and AIM at
$0.50 per contract is reasonable, equitable and not unfairly
discriminatory because the Exchange does not want to discourage the use
of these price improvement mechanisms. The Exchange lastly believes
renaming the fee to Complex Surcharge may alleviate confusion, which
removes impediments to and perfects the mechanism of a free and open
market and a national market system, and, in general, protects
investors and the public interest.
---------------------------------------------------------------------------
\17\ See Securities Exchange Act Release No. 75188 (June 17,
2015), 80 FR 36021 (June 23, 2015) (SR-CBOE-2015-058) and See CBOE
Fees Schedule, Volume Incentive Program.
---------------------------------------------------------------------------
The Exchange believes increasing the SPX Surcharge is reasonable
because the Exchange still pays more for the SPX license than the
amount of the proposed SPX Surcharge (meaning that the
[[Page 9411]]
Exchange is, and will still be, subsidizing the costs of the SPX
license). This increase is equitable and not unfairly discriminatory
because all non-Customer market participants will be assessed the same
increased SPX Surcharge. Not applying the SPX Surcharge Fee to customer
orders is equitable and not unfairly discriminatory because this is
designed to attract customer SPX orders, which increases liquidity and
provides greater trading opportunities to all market participants.
The Exchange believes it's reasonable to continue 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 7 calendar days or less because the Exchange wants to
continue encouraging 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 7 calendar days or less. Finally, the
Exchange believes it's reasonable, equitable and not unfairly
discriminatory to provide that the surcharge will be waived through
June 2017, as it gives the Exchange additional time to evaluate if the
waiver is continuing to have the desired effect of encouraging these
transactions.
The Exchange believes increasing SPX transaction fees for Liquidity
Providers is reasonable because the Exchange has expended considerable
resources developing and maintaining SPX. The Exchange believes that
this proposed change is equitable and not unfairly discriminatory
because although Liquidity Providers still pay lower SPX transaction
fees than certain other market participants, Liquidity Providers are
valuable market participants that provide liquidity in the marketplace
and incur costs that other market participants do not incur. For
example, Liquidity Providers have a number of obligations, including
quoting obligations that other market participants do not have. The
Exchange also believes establishing a Sliding Scale for LPs in SPX
options is reasonable because it will allow LPs who engage in SPX
options trading the opportunity to pay progressively lower fees for
such transactions as increased volume thresholds are met. Specifically,
the SPX LP Sliding Scale allows the Exchange to provide an incremental
incentive for Liquidity Providers to strive for the highest tier level,
which provides increasingly lower fees.
The Exchange believes the proposed reduced credits for AIM
executions under VIP is reasonable because it still provides TPHs an
opportunity to receive notable credits for reaching certain qualifying
volume thresholds that they would not otherwise receive (now just a
smaller credit). The Exchange also believes it's reasonable, equitable
and not unfairly discriminatory to establish lower credits for AIM
executions than non-AIM executions under VIP because AIM transactions
are already assessed lower transaction fees than non-AIM transactions
and the Exchange no longer wishes to provide the same amount of credits
for these transactions.\18\ Additionally, the Exchange believes the
proposed change is equitable and not unfairly discriminatory because it
applies to all TPHs that meet the qualifying volume thresholds.
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\18\ See CBOE Fees Schedule, Equity, ETF, ETN and Index Options
(excluding Underlying Symbol List A) rate tables.
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The Exchange also believes it's reasonable, equitable and not
unfairly discriminatory to provide that multiple simple orders from the
same TPH in the same series on the same side of the market that are
received within three (3) seconds (instead of three hundred (300)
seconds) will be aggregated for purposes of determining the order
quantity subject to the AIM and HAL cap because the Exchange believes
this amount of time is still sufficient to prevent TPHs from breaking
up their orders in order to avoid the fee cap and it would apply to all
TPHs.
The lowered costs for Market-Maker Trading Permits is reasonable
because the fees will be lower than previously, and the reduced access
costs may encourage greater Market-Maker access, which thereby brings
greater trading activity, volume and liquidity, benefitting all market
participants. The Exchange believes the proposed change is equitable
and not unfairly discriminatory because it applies to all Market-
Makers.
The Exchange believes adding ``RUT'' to the Notes section of the
Market-Maker Trading Permits Sliding Scale will alleviate confusion as
to what Trading Permits the sliding scale does and does not apply to.
The alleviation of confusion removes impediments to and perfects the
mechanism of a free and open market and a national market system, and,
in general, protects investors and the public interest.
The lowered costs for Floor Broker Trading Permits in Tier 1 of the
Floor Broker Trading Permits Sliding Scale is reasonable because the
fee for that tier will be lower than previously, and the reduced access
costs may encourage greater Floor Broker access, which thereby brings
greater trading activity, volume and liquidity, benefitting all market
participants. The Exchange believes the proposed change is equitable
and not unfairly discriminatory because it applies to all Floor
Brokers.
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 June 30, 2017 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.
The proposed change to increase the 10 Gbps Network Access Port fee
is reasonable because the fees are within the same range as those
assessed on other exchanges,\19\ and because such increase will assist
in recouping ongoing expenditures made by the Exchange. This proposed
change is equitable and not unfairly discriminatory because the
proposed change will apply to all TPHs. The proposed change to increase
the fees assessed for CMI Login IDs and FIX Login IDs is also
reasonable because the Exchange desires to recoup increasing costs
associated with maintaining connectivity to the Exchange. The Exchange
believes it's equitable and not unfairly discriminatory because all
TPHs will be assessed the same amount for Login ID fees.
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\19\ See supra Note 10.
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The Exchange's proposal to increase the Linkage fee from $0.05 per
contract to $0.10 per contract (in addition to applicable transaction
fees) for customer orders is reasonable because the increase will help
offset the costs associated with routing orders through Linkage.
Additionally, the proposed amount is reasonable as it is in line with
amounts charged by other Exchanges for similar transactions.\20\ The
Exchange
[[Page 9412]]
believes it's equitable and not unfairly discriminatory because the
proposed change will apply to all customer orders that are linked away.
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\20\ See supra Note 12.
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The Exchange believes it is reasonable to increase the volume
thresholds in Frequent Trader because it adjusts for current volume
trends. The Exchange notes that the rebalance of tiers still allows the
Exchange to maintain an incremental incentive for Customers to strive
for the highest tier level. The Exchange believes the proposed change
is also equitable and not unfairly discriminatory because it applies to
all Customers. The Exchange believes it's reasonable to reduce the
Frequent Trader rebates because it still provides Customers an
opportunity to receive notable discounted rates for reaching certain
qualifying volume thresholds that they would not otherwise receive (now
just a smaller discount). The Exchange believes that the proposed
change is not unfairly discriminatory because it will apply to all
Customers that meet the qualifying volume thresholds.
The Exchange believes that increasing the first tier of the Floor
Broker Access Rebate (i.e., the rebate received when executing 15,000
contracts or more per day) is reasonable because it allows the
qualifying Floor Brokers to pay even lower Floor Broker Trading Permit
fees than before. The Exchange believes that it is reasonable to reduce
the second tier rebate of the Floor Broker Access (i.e., the rebate
received when executing 25,000 contracts or more per day), because
qualifying Floor Brokers are still paying lower Floor Broker Trading
Permit fees than they otherwise would have. The Exchange notes that the
purpose of both rebates incentives is to encourage the execution of
orders via open outcry, which should increase volume, which would
benefit all market participants (including Floor Brokers who do not hit
the either contracts-per-day thresholds) trading via open outcry (and
indeed, this increased volume could make it possible for some Floor
Brokers to hit the contracts-per-day thresholds). The Exchange believes
the proposed changes are equitable and not unfairly discriminatory
because they apply to qualifying Floor Brokers equally.
The Exchange believes it is reasonable, equitable and not unfairly
discriminatory to extend the waiver of all transaction fees for RLG,
RLV, RUI, AWDE, FTEM, FXTM and UKXM transactions, 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 extending the FLEX Asian and Cliquet Flex
Trading Incentive Program is reasonable, equitable and not unfairly
discriminatory because providing FLEX Traders with incentives to trade
FLEX Asian and Cliquet options should result in a more robust price
discovery process that will result in better execution prices for
customers. In addition, the proposed change applies equally to all FLEX
Traders.
Finally, the Exchange believes that it is reasonable, equitable and
not unfairly discriminatory to extend the compensation plan to the
DPM(s) appointed in AWDE, FTEM, FXTM or UKXM to continue to offset
their ongoing DPM costs.
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 \21\ and paragraph (f) of Rule 19b-4 \22\
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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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 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-2017-008 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.
[[Page 9413]]
All submissions should refer to File Number SR-CBOE-2017-008. 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-2017-008, and should be
submitted on or before February 27, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02374 Filed 2-3-17; 8:45 am]
BILLING CODE 8011-01-P
