Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule, 23118-23121 [2017-10126]
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asabaliauskas on DSK3SPTVN1PROD with NOTICES
23118
Federal Register / Vol. 82, No. 96 / Friday, May 19, 2017 / Notices
is not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange notes that the proposed
rule change implements provisions of
the CAT NMS Plan approved by the
Commission, and is designed to assist
the Exchange in meeting its regulatory
obligations pursuant to the Plan.
Similarly, all national securities
exchanges and FINRA are proposing
this proposed fee schedule to
implement the requirements of the CAT
NMS Plan. Therefore, this is not a
competitive fee filing and, therefore, it
does not raise competition issues
between and among the exchanges and
FINRA.
Moreover, as previously described,
the Exchange believes that the proposed
rule change fairly and equitably
allocates costs among CAT Reporters. In
particular, the proposed fee schedule is
structured to impose comparable fees on
similarly situated CAT Reporters, and
lessen the impact on smaller CAT
Reporters. CAT Reporters with similar
levels of CAT activity will pay similar
fees. For example, Industry Members
(other than Execution Venue ATSs) with
higher levels of message traffic will pay
higher fees, and those with lower levels
of message traffic will pay lower fees.
Similarly, Execution Venue ATSs and
other Execution Venues with larger
market share will pay higher fees, and
those with lower levels of market share
will pay lower fees. Therefore, given
that there is generally a relationship
between message traffic and market
share to the CAT Reporter’s size, smaller
CAT Reporters generally pay less than
larger CAT Reporters. Accordingly, the
Exchange does not believe that the CAT
Fees would have a disproportionate
effect on smaller or larger CAT
Reporters. In addition, ATSs and
exchanges will pay the same fees based
on market share. Therefore, the
Exchange does not believe that the fees
will impose any burden on the
competition between ATSs and
exchanges. Accordingly, the Exchange
believes that the proposed fees will
minimize the potential for adverse
effects on competition between CAT
Reporters in the market.
Furthermore, the tiered, fixed fee
funding model limits the disincentives
to providing liquidity to the market.
Therefore, the proposed fees are
structured to limit burdens on
competitive quoting and other liquidity
provision in the market.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
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)(ii) of the Act,57 and Rule
19b–4(f)(2) 58 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 shall
institute proceedings to determine
whether the proposed rule 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 rulecomments@sec.gov. Please include File
Number SR–MIAX–2017–18 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–MIAX–2017–18. 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
U.S.C. 78s(b)(3)(A)(ii).
58 17 CFR 240.19b–4(f)(2).
19:15 May 18, 2017
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.59
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–10130 Filed 5–18–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80671; File No. SR–CBOE–
2017–039]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Fees
Schedule
May 15, 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 May 1,
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.
59 17
57 15
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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–MIAX–
2017–18, and should be submitted on or
before June 9, 2017.
PO 00000
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CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 82, No. 96 / Friday, May 19, 2017 / Notices
maintaining an incremental incentive
for Clearing TPHs to strive for the
highest discount level.
To determine a Clearing TPH’s
applicable discount, the Exchange will
calculate a Clearing TPH’s total
proprietary order volume in VIX as a
percentage of all Clearing TPHs’ total
proprietary order volume in VIX during
a calendar month. Total proprietary
order volume is calculated by
accounting for all volume in VIX with
an ‘‘F’’ or ‘‘L’’ Origin Code, with volume
in the Extended Trading Hours (ETH)
II. Self-Regulatory Organization’s
aggregated with Regular Trading Hours
Statement of the Purpose of, and
(RTH) volume for the same calendar
Statutory Basis for, the Proposed Rule
month included for purposes of
Change
calculating the VIX firm volume
In its filing with the Commission, the
threshold and applicable transaction fee
Exchange included statements
discount. The transaction fee discount
concerning the purpose of and basis for
the proposed rule change and discussed percentage will apply to all of a Clearing
TPH’s transaction fees assessed for
any comments it received on the
proprietary order volume in VIX during
proposed rule change. The text of these
the calendar month.
statements may be examined at the
In conjunction with the adoption of
places specified in Item IV below. The
the Supplemental VIX Discount, the
Exchange has prepared summaries, set
Exchange proposes to amend Footnote
forth in sections A, B, and C below, of
11 of its Fees Schedule to reference the
the most significant aspects of such
Supplemental VIX Discount. Like the
statements.
Clearing TPH Fee Cap, CBOE
Proprietary Products Sliding Scale, and
A. Self-Regulatory Organization’s
the Proprietary VIX Sliding Scale, the
Statement of the Purpose of, and
VIX Discount will apply to (i) Clearing
Statutory Basis for, the Proposed Rule
TPH proprietary orders (‘‘F’’ origin
Change
code), and (ii) orders of Non-TPH
1. Purpose
Affiliates of a Clearing TPH.3 A ‘‘NonThe Exchange proposes to amend its
TPH Affiliate’’ would be defined for the
purposes of the VIX Discount the same
Fees Schedule to adopt a new
way it is defined for the Clearing TPH
Supplemental CBOE Volatility Index
(‘‘VIX’’) Total Firm Volume Discount for Fee Cap, CBOE Proprietary Products
Sliding Scale, and the Proprietary VIX
Clearing Trading Permit Holders’
Sliding Scale: A 100% wholly-owned
(‘‘TPHs’’) proprietary orders
affiliate or subsidiary of a Clearing TPH
(‘‘Supplemental VIX Discount’’). The
Supplemental VIX Discount allows VIX that is registered as a United States or
foreign broker-dealer and that is not a
options transaction fees for Clearing
TPHs’ (including its Non-TPH affiliates) CBOE TPH. As with the Clearing TPH
Fee Cap, CBOE Proprietary Products
proprietary orders to be discounted
Sliding Scale, and the Proprietary VIX
provided a Clearing TPH (including its
Sliding Scale, only proprietary orders of
Non-TPH affiliates) reaches certain VIX
the Non-TPH Affiliate (‘‘L’’ origin code)
firm volume percentage thresholds
effected for purposes of hedging the
during a calendar month.
proprietary over-the-counter trading of
The proposed transaction fee
the Clearing TPH or its affiliates will be
discounts for the different volume
included in calculating the VIX
percentage tiers for the Supplemental
Discount, and such orders must be
VIX Discount are as follows:
marked with a code approved by the
Exchange identifying the orders as
Transaction
fee
eligible for the VIX Discount. As with
VIX firm volume percentage
discount
the Clearing TPH Fee Cap, CBOE
%
Proprietary Products Sliding Scale, and
11.00–12.99 ............................
20 the Proprietary VIX Sliding Scale, each
13.00–14.99 ............................
30 Clearing TPH is responsible for
Above 14.99 ...........................
40 notifying the TPH Department of all of
its affiliations so that fees and contracts
The VIX Discount applies to orders
of the Clearing TPH and its affiliates
bearing the origin codes ‘‘F’’ and ‘‘L.’’
may be aggregated for purposes of the
The purpose of the VIX Discount is to
VIX Discount and is required to certify
encourage greater Clearing TPH
3 See CBOE Fees Schedule, Footnote 11.
proprietary trading of VIX options while
asabaliauskas on DSK3SPTVN1PROD with 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 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.
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23119
the affiliate status of any Non-TPH
Affiliate whose trading activity it seeks
to aggregate. In addition, each Clearing
TPH is required to inform the Exchange
immediately of any event that causes an
entity to cease to be an affiliate.
As with the Clearing TPH Fee Cap,
the CBOE Proprietary Products Sliding
Scale, and the Proprietary VIX Sliding
Scale, the Exchange will aggregate the
fees and trading activity of separate
Clearing TPHs for the purposes of the
VIX Discount if there is at least 75%
common ownership between the
Clearing TPHs as reflected on each
Clearing TPH’s Form BD, Schedule A. A
Clearing TPH’s fees and contracts
executed pursuant to a CMTA
agreement (i.e., executed by another
clearing firm and then transferred to the
Clearing TPH’s account at the OCC) are
aggregated with the Clearing TPH’s nonCMTA fees and contracts for purposes
of the VIX Discount.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.4 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 5 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 6 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange also believes the
proposed rule change is consistent with
Section 6(b)(4) of the Act,7 which
requires that Exchange rules provide for
the equitable allocation of reasonable
dues, fees, and other charges among its
Trading Permit Holders and other
persons using its facilities.
The adoption of the Supplemental
VIX Discount is reasonable because it
4 15
5 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
6 Id.
7 15
U.S.C. 78f(b)(4).
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Federal Register / Vol. 82, No. 96 / Friday, May 19, 2017 / Notices
will allow Clearing TPHs who engage in
VIX options trading the opportunity to
obtain a discount on its transaction fees.
Similarly, aggregating the fees and
trading activity of separate Clearing
TPHs for the purposes of the
Supplemental VIX Discount if there is at
least 75% common ownership between
the Clearing TPHs and aggregating a
Clearing TPH’s fees and contracts
executed pursuant to a CMTA
agreement with the Clearing TPH’s nonCMTA fees and contracts for the
purpose of the Supplemental VIX
Discount is reasonable because this will
allow more Clearing TPHs to qualify for
the discount at the higher rates in the
Supplemental VIX Discount table.
Applying the Supplemental VIX
Discount to Clearing TPH (and their
affiliates, in the manner described
above) proprietary orders only is
equitable and not unfairly
discriminatory because, as noted above,
Clearing TPHs take on a number of
obligations and responsibilities (such as
membership with the Options Clearing
Corporation), significant regulatory
burdens, and financial obligations that
other market participants are not
required to undertake. Further, the
Supplemental VIX Discount is designed
to encourage increased Clearing TPH
proprietary VIX options volume, which
provides increased VIX options volume
and greater trading opportunities for all
market participants. Similarly, applying
higher discount rates for Clearing TPHs
who hit the higher percentage of total
VIX options contract proprietary volume
of all Clearing TPHs on the VIX
Discount is equitable and not unfairly
discriminatory because this is designed
to encourage increased TPH proprietary
VIX options volume, which provides
increased VIX options volume and
greater trading opportunities for all
Clearing TPHs, including those who are
not able to reach the higher volume
percentages. Moreover, the Exchange
already offers other fee-lowering
programs (such as the Fee Cap, CBOE
Proprietary Products Sliding Scale, and
Proprietary VIX Sliding Scale) which
entail lower fees for Clearing TPHs (and
their affiliates, in the manner described
above) and are limited to Clearing TPHs
(and their affiliates, in the manner
described above).
Applying the Supplemental VIX
Discount to VIX options and not to other
products is equitable and not unfairly
discriminatory because the Exchange
would like to encourage more trading in
VIX.
The Exchange believes adding
references to the Supplemental VIX
Discount in Footnote 11 of the Fees
Schedule alleviates potential confusion
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19:15 May 18, 2017
Jkt 241001
by investors reading the Fees Schedule
in light of the proposed change. This
avoidance 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.
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 is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed rule change will impose any
burden on intramarket competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because, while the Supplemental VIX
Discount applies only to Clearing TPH
proprietary orders, Clearing TPHs take
on a number of obligations and
responsibilities (such as membership
with the Options Clearing Corporation),
significant regulatory burdens, and
financial obligations that other market
participants are not required to
undertake. Further, the Supplemental
VIX Discount is designed to encourage
increased Clearing TPH proprietary VIX
options volume, which provides
increased VIX options volume and
greater trading opportunities for all
market participants. Therefore, the
Exchange believes that any potential
effects on intramarket competition that
the proposed adoption of the
Supplemental VIX Discount may cause
are therefore justifiable. 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 rule change applies only to
CBOE. To the extent that the proposed
changes make CBOE a more attractive
marketplace for market participants at
other exchanges, such market
participants are welcome to become
CBOE market participants.
B. Self-Regulatory Organization’s
Statement on 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)
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of the Act 8 and paragraph (f) of Rule
19b–4 9 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 No. SR–
CBOE–2017–039 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File No.
SR–CBOE–2017–039. This file number
should be included on the subject line
if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
8
9
15 U.S.C. 78s(b)(3)(A).
17 CFR 240.19b–4(f).
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Federal Register / Vol. 82, No. 96 / Friday, May 19, 2017 / Notices
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 No. SR–CBOE–
2017–039, and should be submitted on
or before June 9, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–10126 Filed 5–18–17; 8:45 am]
BILLING CODE 8011–01–P
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80672; File No. SR–OCC–
2017–012]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change Concerning
the Options Clearing Corporation’s
Management Structure
May 15, 2017.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 5,
2017, The Options Clearing Corporation
(‘‘OCC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below; Items I and
II have been prepared primarily by OCC.
OCC filed the proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6) 4
thereunder so that the proposal was
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
This proposed rule change by OCC
concerns the amendment of OCC’s ByLaws to provide that the Board of
Directors (‘‘Board’’) may, in its
discretion, designate the Chief
Operating Officer (‘‘COO’’) to act as
President of OCC.
17 CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
10
1 15
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19:15 May 18, 2017
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II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission,
OCC 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. OCC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements. All terms
with initial capitalization that are not
otherwise defined herein have the same
meaning as set forth in the OCC ByLaws and Rules.5
1. Purpose
On April 26, 2017, the Commission
approved a proposed rule change by
OCC that, among other things, amended
OCC’s By-Laws and Rules to: (1)
Remove all references to OCC’s
President to reflect the fact that the
President would no longer be a
recognized officer within OCC’s
management and (2) reallocate the
authority and responsibilities
previously granted to the President
between the COO and a newly
appointed Chief Administrative Officer
(‘‘CAO’’).6 OCC is now proposing to
amend Article IV, Section 1 of the ByLaws to provide that the Board may, in
its discretion, designate that the COO
also serve as President of OCC. The
purpose of the proposed rule change is
to provide further clarity and
transparency around OCC’s
management structure and the roles and
titles of its senior management.
Prior to the approval of SR–OCC–
2017–002,7 OCC’s By-Laws stipulated
that its President would also serve as
COO, with the authority and
responsibilities of the COO and
President primarily being addressed
throughout the By-Laws and Rules in
terms of this officer’s capacity as
President. As a result of SR–OCC–2017–
002,8 OCC’s By-Laws and Rules were
amended to eliminate all references to
the President; however, the position of
COO was retained, and OCC’s senior
management was reorganized within an
5 OCC’s By-Laws and Rules can be found on
OCC’s public Web site: https://optionsclearing.com/
about/publications/bylaws.jsp.
6 See Securities Exchange Act Release No. 80531
(April 26, 2017), 82 FR 20502 (May 2, 2017) (SR–
OCC–2017–002).
7 Id.
8 Id.
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23121
Office of the Executive Chairman
comprised of the Executive Chairman
and Chief Executive Officer, the COO
and the CAO. Pursuant to Article IV,
Section 8 of the By-Laws, the COO and
CAO are responsible for the aspects of
OCC’s business that do not report
directly to the Executive Chairman, with
such responsibilities being determined
by the Board to promote the efficient
and effective management and operation
of OCC. The By-Laws and Rules also
address various other authorities and
responsibilities of the COO and CAO.9
The proposed rule change would
provide that the Board may, in its
discretion, designate that the COO also
serve as President. The two roles would
not, however, be tied together by
operation of the By-Laws as it was prior
to the approval of SR–OCC–2017–002
and would instead provide the Board
with the discretionary authority to make
this determination as it deems
appropriate. The proposed rule change
is not intended to modify OCC’s current
management structure or the allocation
of duties and responsibilities currently
associated with the roles of COO or
CAO as set forth in By-Laws and Rules.
If the Board determines to designate that
the COO also serve as President, the
authority and responsibilities of the
COO and President would continue to
be governed by the allocation of
authority and responsibilities of the
COO as currently set forth in OCC’s ByLaws and Rules. The proposed rule
change would take a similar approach to
the previous construction of OCC’s ByLaws and Rules regarding the role of
COO and President; however, the
proposed approach would now describe
the authority and responsibilities of the
President and COO throughout the ByLaws and Rules in terms of this officer’s
capacity as COO (as opposed to
President).
OCC notes that, under Article IV,
Section 1 of the By-Laws, the Board
may, but need not, elect such other
officers (i.e., officers in addition to the
Executive Chairman, Member Vice
Chairman, COO, CAO, Secretary, and
Treasurer) as it may from time to time
9 For example, OCC’s Rules provide the Executive
Chairman, COO and CAO with the authority to,
among other things, impose certain restrictions on
a Clearing Member’s transactions, positions and
activities based on the financial or operational
condition of the Clearing Member (Rule 305);
extend settlement times in emergency conditions;
(Rule 505); waive the required margin deposit of a
Clearing Member in the interest of maintaining fair
and orderly markets (Rule 609A); and make a
determination as to whether the immediate
liquidation of some or all of a suspended Clearing
Member’s margin deposits and/or contributions to
the Clearing Fund would not be in the best interests
of the OCC, other Clearing Members, or the general
public (Rule 1104).
E:\FR\FM\19MYN1.SGM
19MYN1
]]>Agencies
[Federal Register Volume 82, Number 96 (Friday, May 19, 2017)]
[Notices]
[Pages 23118-23121]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-10126]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80671; File No. SR-CBOE-2017-039]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the Fees Schedule
May 15, 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 May 1, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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[[Page 23119]]
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend its Fees Schedule. The text of the
proposed rule change is available on the Exchange's Web site (https://www.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 amend its Fees Schedule to adopt a new
Supplemental CBOE Volatility Index (``VIX'') Total Firm Volume Discount
for Clearing Trading Permit Holders' (``TPHs'') proprietary orders
(``Supplemental VIX Discount''). The Supplemental VIX Discount allows
VIX options transaction fees for Clearing TPHs' (including its Non-TPH
affiliates) proprietary orders to be discounted provided a Clearing TPH
(including its Non-TPH affiliates) reaches certain VIX firm volume
percentage thresholds during a calendar month.
The proposed transaction fee discounts for the different volume
percentage tiers for the Supplemental VIX Discount are as follows:
------------------------------------------------------------------------
Transaction
VIX firm volume percentage fee
discount %
------------------------------------------------------------------------
11.00-12.99............................................... 20
13.00-14.99............................................... 30
Above 14.99............................................... 40
------------------------------------------------------------------------
The VIX Discount applies to orders bearing the origin codes ``F''
and ``L.'' The purpose of the VIX Discount is to encourage greater
Clearing TPH proprietary trading of VIX options while maintaining an
incremental incentive for Clearing TPHs to strive for the highest
discount level.
To determine a Clearing TPH's applicable discount, the Exchange
will calculate a Clearing TPH's total proprietary order volume in VIX
as a percentage of all Clearing TPHs' total proprietary order volume in
VIX during a calendar month. Total proprietary order volume is
calculated by accounting for all volume in VIX with an ``F'' or ``L''
Origin Code, with volume in the Extended Trading Hours (ETH) aggregated
with Regular Trading Hours (RTH) volume for the same calendar month
included for purposes of calculating the VIX firm volume threshold and
applicable transaction fee discount. The transaction fee discount
percentage will apply to all of a Clearing TPH's transaction fees
assessed for proprietary order volume in VIX during the calendar month.
In conjunction with the adoption of the Supplemental VIX Discount,
the Exchange proposes to amend Footnote 11 of its Fees Schedule to
reference the Supplemental VIX Discount. Like the Clearing TPH Fee Cap,
CBOE Proprietary Products Sliding Scale, and the Proprietary VIX
Sliding Scale, the VIX Discount will apply to (i) Clearing TPH
proprietary orders (``F'' origin code), and (ii) orders of Non-TPH
Affiliates of a Clearing TPH.\3\ A ``Non-TPH Affiliate'' would be
defined for the purposes of the VIX Discount the same way it is defined
for the Clearing TPH Fee Cap, CBOE Proprietary Products Sliding Scale,
and the Proprietary VIX Sliding Scale: A 100% wholly-owned affiliate or
subsidiary of a Clearing TPH that is registered as a United States or
foreign broker-dealer and that is not a CBOE TPH. As with the Clearing
TPH Fee Cap, CBOE Proprietary Products Sliding Scale, and the
Proprietary VIX Sliding Scale, only proprietary orders of the Non-TPH
Affiliate (``L'' origin code) effected for purposes of hedging the
proprietary over-the-counter trading of the Clearing TPH or its
affiliates will be included in calculating the VIX Discount, and such
orders must be marked with a code approved by the Exchange identifying
the orders as eligible for the VIX Discount. As with the Clearing TPH
Fee Cap, CBOE Proprietary Products Sliding Scale, and the Proprietary
VIX Sliding Scale, each Clearing TPH is responsible for notifying the
TPH Department of all of its affiliations so that fees and contracts of
the Clearing TPH and its affiliates may be aggregated for purposes of
the VIX Discount and is required to certify the affiliate status of any
Non-TPH Affiliate whose trading activity it seeks to aggregate. In
addition, each Clearing TPH is required to inform the Exchange
immediately of any event that causes an entity to cease to be an
affiliate.
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\3\ See CBOE Fees Schedule, Footnote 11.
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As with the Clearing TPH Fee Cap, the CBOE Proprietary Products
Sliding Scale, and the Proprietary VIX Sliding Scale, the Exchange will
aggregate the fees and trading activity of separate Clearing TPHs for
the purposes of the VIX Discount if there is at least 75% common
ownership between the Clearing TPHs as reflected on each Clearing TPH's
Form BD, Schedule A. A Clearing TPH's fees and contracts executed
pursuant to a CMTA agreement (i.e., executed by another clearing firm
and then transferred to the Clearing TPH's account at the OCC) are
aggregated with the Clearing TPH's non-CMTA fees and contracts for
purposes of the VIX Discount.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\4\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \5\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \6\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange also believes the
proposed rule change is consistent with Section 6(b)(4) of the Act,\7\
which requires that Exchange rules provide for the equitable allocation
of reasonable dues, fees, and other charges among its Trading Permit
Holders and other persons using its facilities.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
\6\ Id.
\7\ 15 U.S.C. 78f(b)(4).
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The adoption of the Supplemental VIX Discount is reasonable because
it
[[Page 23120]]
will allow Clearing TPHs who engage in VIX options trading the
opportunity to obtain a discount on its transaction fees. Similarly,
aggregating the fees and trading activity of separate Clearing TPHs for
the purposes of the Supplemental VIX Discount if there is at least 75%
common ownership between the Clearing TPHs and aggregating a Clearing
TPH's fees and contracts executed pursuant to a CMTA agreement with the
Clearing TPH's non-CMTA fees and contracts for the purpose of the
Supplemental VIX Discount is reasonable because this will allow more
Clearing TPHs to qualify for the discount at the higher rates in the
Supplemental VIX Discount table.
Applying the Supplemental VIX Discount to Clearing TPH (and their
affiliates, in the manner described above) proprietary orders only is
equitable and not unfairly discriminatory because, as noted above,
Clearing TPHs take on a number of obligations and responsibilities
(such as membership with the Options Clearing Corporation), significant
regulatory burdens, and financial obligations that other market
participants are not required to undertake. Further, the Supplemental
VIX Discount is designed to encourage increased Clearing TPH
proprietary VIX options volume, which provides increased VIX options
volume and greater trading opportunities for all market participants.
Similarly, applying higher discount rates for Clearing TPHs who hit the
higher percentage of total VIX options contract proprietary volume of
all Clearing TPHs on the VIX Discount is equitable and not unfairly
discriminatory because this is designed to encourage increased TPH
proprietary VIX options volume, which provides increased VIX options
volume and greater trading opportunities for all Clearing TPHs,
including those who are not able to reach the higher volume
percentages. Moreover, the Exchange already offers other fee-lowering
programs (such as the Fee Cap, CBOE Proprietary Products Sliding Scale,
and Proprietary VIX Sliding Scale) which entail lower fees for Clearing
TPHs (and their affiliates, in the manner described above) and are
limited to Clearing TPHs (and their affiliates, in the manner described
above).
Applying the Supplemental VIX Discount to VIX options and not to
other products is equitable and not unfairly discriminatory because the
Exchange would like to encourage more trading in VIX.
The Exchange believes adding references to the Supplemental VIX
Discount in Footnote 11 of the Fees Schedule alleviates potential
confusion by investors reading the Fees Schedule in light of the
proposed change. This avoidance 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.
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 is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because, while the Supplemental
VIX Discount applies only to Clearing TPH proprietary orders, Clearing
TPHs take on a number of obligations and responsibilities (such as
membership with the Options Clearing Corporation), significant
regulatory burdens, and financial obligations that other market
participants are not required to undertake. Further, the Supplemental
VIX Discount is designed to encourage increased Clearing TPH
proprietary VIX options volume, which provides increased VIX options
volume and greater trading opportunities for all market participants.
Therefore, the Exchange believes that any potential effects on
intramarket competition that the proposed adoption of the Supplemental
VIX Discount may cause are therefore justifiable. 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 rule change
applies only to CBOE. To the extent that the proposed changes make CBOE
a more attractive marketplace for market participants at other
exchanges, such market participants are welcome to become CBOE market
participants.
B. Self-Regulatory Organization's Statement on 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 \8\ and paragraph (f) of Rule 19b-4 \9\
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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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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 No. SR-CBOE-2017-039 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File No. SR-CBOE-2017-039. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for
[[Page 23121]]
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 No. SR-CBOE-2017-039, and should be
submitted on or before June 9, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-10126 Filed 5-18-17; 8:45 am]
BILLING CODE 8011-01-P
