Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Options Regulatory Fee, 6662-6663 [2018-02979]
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Federal Register / Vol. 83, No. 31 / Wednesday, February 14, 2018 / Notices
22(e)(2) concerning governance
arrangements that are clear and
transparent and that support the public
interest requirements of Section 17A of
the Act applicable to clearing agencies
and the objectives of participants.20
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposal is
consistent with the requirements of the
Act and in particular with the
requirements of Section 17A of the
Act 21 and Rules 17Ad–22(e)(2) and (5)
thereunder.
It is therefore ordered pursuant to
Section 19(b)(2) of the Act 22 that the
proposed rule change (SR–ICEEU–2017–
011) be, and hereby is, approved.23
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–02974 Filed 2–13–18; 8:45 am]
BILLING CODE 8011–01–P
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to decrease
the Options Regulatory Fee (‘‘ORF’’)
from $.0081 per contract to $.0049 per
contract in order to help ensure that
revenue collected from the ORF, in
combination with other regulatory fees
and fines, meets the Exchange’s total
regulatory costs. The proposed fee
change will be operative on February 1,
2018.
The ORF is assessed by Cboe Options
to each Trading Permit Holder (‘‘TPH’’)
for options transactions cleared by the
TPH that are cleared by the Options
Clearing Corporation (‘‘OCC’’) in the
customer range, regardless of the
exchange on which the transaction
occurs.3 In other words, the Exchange
imposes the ORF on all customer-range
transactions cleared by a TPH, even if
the transactions do not take place on the
Exchange. The ORF is collected by OCC
on behalf of the Exchange from the
Clearing Trading Permit Holder
(‘‘CTPH’’) or non-CTPH that ultimately
clears the transaction. With respect to
linkage transactions, Cboe Options
reimburses its routing broker providing
Routing Services pursuant to Cboe
Options Rule 6.14B for options
regulatory fees it incurs in connection
with the Routing Services it provides.
Revenue generated from ORF, when
combined with all of the Exchange’s
other regulatory fees and fines, is
designed to recover a material portion of
the regulatory costs to the Exchange of
the supervision and regulation of TPH
customer options business. Regulatory
costs include direct regulatory expenses
and certain indirect expenses for work
allocated in support of the regulatory
function. The direct expenses include
in-house and third party service
provider costs to support the day to day
regulatory work such as surveillances,
investigations and examinations. The
indirect expenses include support from
such areas as human resources, legal,
information technology and accounting.
These indirect expenses are estimated to
be approximately 10% of Cboe Options’
total regulatory costs for 2018. Thus,
direct expenses are estimated to be
approximately 90% of total regulatory
costs for 2018. In addition, it is Cboe
Options’ practice that revenue generated
from ORF not exceed more than 75% of
total annual regulatory costs. These
expectations are estimated, preliminary
and may change. These expectations are
estimated, preliminary and may change.
[sic] There can be no assurance that our
final costs for 2018 will not differ
materially from these expectations and
prior practice; however, the Exchange
believes that revenue generated from the
ORF, when combined with all of the
Exchange’s other regulatory fees and
fines, will cover a material portion, but
not all, of the Exchange’s regulatory
costs.
The Exchange also notes that its
regulatory responsibilities with respect
to TPH compliance with options sales
practice rules have largely been
allocated to FINRA under a 17d–2
agreement.4 The ORF is not designed to
cover the cost of that options sales
practice regulation.
The Exchange will continue to
monitor the amount of revenue
collected from the ORF to ensure that it,
in combination with its other regulatory
fees and fines, does not exceed the
Exchange’s total regulatory costs. The
Exchange monitors its regulatory costs
and revenues at a minimum on a semiannual basis. If the Exchange
determines regulatory revenues exceed
or are insufficient to cover a material
portion of its regulatory costs, the
Exchange will adjust the ORF by
submitting a fee change filing to the
Commission. The Exchange notifies
3 The ORF also applies to customer-range
transactions executed during Extended Trading
Hours.
4 See Securities Exchange Act Release No. 76309
(October 29, 2015), 80 FR 68361 (November 4,
2015).
The Exchange seeks to amend its Fees
Schedule. The text of the proposed rule
change is available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/CBOELegalRegulatory
Home.aspx), at the Exchange’s Office of
the Secretary, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
SECURITIES AND EXCHANGE
COMMISSION
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
[Release No. 34–82664; File No. SR–CBOE–
2018–014]
1. Purpose
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating to the Options
Regulatory Fee
February 8, 2018.
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
31, 2018, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) 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.
daltland on DSKBBV9HB2PROD with NOTICES
20 Id.
21 15
U.S.C. 78q–1.
U.S.C. 78s(b)(2).
23 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
24 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
22 15
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Federal Register / Vol. 83, No. 31 / Wednesday, February 14, 2018 / Notices
daltland on DSKBBV9HB2PROD with NOTICES
TPHs of adjustments to the ORF via
regulatory circular. The Exchange
endeavors to provide TPHs with such
notice at least 30 calendar days prior to
the effective date of the change.
The Exchange also proposes a minor
clean up change to the Fees Schedule.
Specifically, currently the ORF
description mistakenly references
footnote 45. The description will be
amended to reference footnote 46,
which was the Exchange’s original
intention.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.5 Specifically,
the Exchange believes the proposed rule
change is consistent with Section 6(b)(4)
of the Act,6 which provides that
Exchange rules may provide for the
equitable allocation of reasonable dues,
fees, and other charges among its TPHs
and other persons using its facilities.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 7 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange believes the proposed
fee change is reasonable because it
would help ensure that revenue
collected from the ORF, in combination
with other regulatory fees and fines,
does not exceed the Exchange’s total
regulatory costs. Moreover, the
Exchange believes the ORF ensures
fairness by assessing higher fees to those
TPHs that require more Exchange
regulatory services based on the amount
of customer options business they
conduct. Regulating customer trading
activity is much more labor intensive
and requires greater expenditure of
human and technical resources than
regulating non-customer trading
activity, which tends to be more
automated and less labor-intensive. As a
result, the costs associated with
administering the customer component
of the Exchange’s overall regulatory
program are materially higher than the
costs associated with administering the
non-customer component (e.g., TPH
proprietary transactions) of its
regulatory program.8 The Exchange
5 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
7 15 U.S.C. 78f(b)(5).
8 If the Exchange changes its method of funding
regulation or if circumstances otherwise change in
the future, the Exchange may decide to modify the
ORF or assess a separate regulatory fee on TPH
6 15
VerDate Sep<11>2014
22:07 Feb 13, 2018
Jkt 244001
believes the proposed fee change is
equitable and not unfairly
discriminatory in that it is charged to all
TPHs on all their transactions that clear
in the customer range at the OCC.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Cboe Options does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, because it
applies to all TPHs. The proposed ORF
is comparable to fees charged by other
options exchanges for the same or
similar service. The Exchange believes
any burden on competition imposed by
the proposed rule change is outweighed
by the need to help the Exchange
adequately fund its regulatory activities
to ensure compliance with the Exchange
Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 9 and paragraph (f) of Rule
19b–4 10 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File No. SR–
CBOE–2018–014 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–2018–014. 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 website (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 website 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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File No.
SR–CBOE–2018–014, and should be
submitted on or before March 7, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–02979 Filed 2–13–18; 8:45 am]
BILLING CODE 8011–01–P
proprietary transactions if the Exchange deems it
advisable.
9 15 U.S.C. 78s(b)(3)(A).
10 17 CFR 240.19b–4(f).
PO 00000
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11 17
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CFR 200.30–3(a)(12).
14FEN1
]]>Agencies
[Federal Register Volume 83, Number 31 (Wednesday, February 14, 2018)]
[Notices]
[Pages 6662-6663]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-02979]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82664; File No. SR-CBOE-2018-014]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
to the Options Regulatory Fee
February 8, 2018.
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 31, 2018, Cboe Exchange, Inc. (the ``Exchange'' or
``Cboe Options'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange seeks to amend its Fees Schedule. The text of the
proposed rule change is available on the Exchange's website (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's
Office of the Secretary, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to decrease the Options Regulatory Fee
(``ORF'') from $.0081 per contract to $.0049 per contract in order to
help ensure that revenue collected from the ORF, in combination with
other regulatory fees and fines, meets the Exchange's total regulatory
costs. The proposed fee change will be operative on February 1, 2018.
The ORF is assessed by Cboe Options to each Trading Permit Holder
(``TPH'') for options transactions cleared by the TPH that are cleared
by the Options Clearing Corporation (``OCC'') in the customer range,
regardless of the exchange on which the transaction occurs.\3\ In other
words, the Exchange imposes the ORF on all customer-range transactions
cleared by a TPH, even if the transactions do not take place on the
Exchange. The ORF is collected by OCC on behalf of the Exchange from
the Clearing Trading Permit Holder (``CTPH'') or non-CTPH that
ultimately clears the transaction. With respect to linkage
transactions, Cboe Options reimburses its routing broker providing
Routing Services pursuant to Cboe Options Rule 6.14B for options
regulatory fees it incurs in connection with the Routing Services it
provides.
---------------------------------------------------------------------------
\3\ The ORF also applies to customer-range transactions executed
during Extended Trading Hours.
---------------------------------------------------------------------------
Revenue generated from ORF, when combined with all of the
Exchange's other regulatory fees and fines, is designed to recover a
material portion of the regulatory costs to the Exchange of the
supervision and regulation of TPH customer options business. Regulatory
costs include direct regulatory expenses and certain indirect expenses
for work allocated in support of the regulatory function. The direct
expenses include in-house and third party service provider costs to
support the day to day regulatory work such as surveillances,
investigations and examinations. The indirect expenses include support
from such areas as human resources, legal, information technology and
accounting. These indirect expenses are estimated to be approximately
10% of Cboe Options' total regulatory costs for 2018. Thus, direct
expenses are estimated to be approximately 90% of total regulatory
costs for 2018. In addition, it is Cboe Options' practice that revenue
generated from ORF not exceed more than 75% of total annual regulatory
costs. These expectations are estimated, preliminary and may change.
These expectations are estimated, preliminary and may change. [sic]
There can be no assurance that our final costs for 2018 will not differ
materially from these expectations and prior practice; however, the
Exchange believes that revenue generated from the ORF, when combined
with all of the Exchange's other regulatory fees and fines, will cover
a material portion, but not all, of the Exchange's regulatory costs.
The Exchange also notes that its regulatory responsibilities with
respect to TPH compliance with options sales practice rules have
largely been allocated to FINRA under a 17d-2 agreement.\4\ The ORF is
not designed to cover the cost of that options sales practice
regulation.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 76309 (October 29,
2015), 80 FR 68361 (November 4, 2015).
---------------------------------------------------------------------------
The Exchange will continue to monitor the amount of revenue
collected from the ORF to ensure that it, in combination with its other
regulatory fees and fines, does not exceed the Exchange's total
regulatory costs. The Exchange monitors its regulatory costs and
revenues at a minimum on a semi-annual basis. If the Exchange
determines regulatory revenues exceed or are insufficient to cover a
material portion of its regulatory costs, the Exchange will adjust the
ORF by submitting a fee change filing to the Commission. The Exchange
notifies
[[Page 6663]]
TPHs of adjustments to the ORF via regulatory circular. The Exchange
endeavors to provide TPHs with such notice at least 30 calendar days
prior to the effective date of the change.
The Exchange also proposes a minor clean up change to the Fees
Schedule. Specifically, currently the ORF description mistakenly
references footnote 45. The description will be amended to reference
footnote 46, which was the Exchange's original intention.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\5\ Specifically, the
Exchange believes the proposed rule change is consistent with Section
6(b)(4) of the Act,\6\ which provides that Exchange rules may provide
for the equitable allocation of reasonable dues, fees, and other
charges among its TPHs and other persons using its facilities.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \7\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes the proposed fee change is reasonable because
it would help ensure that revenue collected from the ORF, in
combination with other regulatory fees and fines, does not exceed the
Exchange's total regulatory costs. Moreover, the Exchange believes the
ORF ensures fairness by assessing higher fees to those TPHs that
require more Exchange regulatory services based on the amount of
customer options business they conduct. Regulating customer trading
activity is much more labor intensive and requires greater expenditure
of human and technical resources than regulating non-customer trading
activity, which tends to be more automated and less labor-intensive. As
a result, the costs associated with administering the customer
component of the Exchange's overall regulatory program are materially
higher than the costs associated with administering the non-customer
component (e.g., TPH proprietary transactions) of its regulatory
program.\8\ The Exchange believes the proposed fee change is equitable
and not unfairly discriminatory in that it is charged to all TPHs on
all their transactions that clear in the customer range at the OCC.
---------------------------------------------------------------------------
\8\ If the Exchange changes its method of funding regulation or
if circumstances otherwise change in the future, the Exchange may
decide to modify the ORF or assess a separate regulatory fee on TPH
proprietary transactions if the Exchange deems it advisable.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
Cboe Options does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act, because it applies to all
TPHs. The proposed ORF is comparable to fees charged by other options
exchanges for the same or similar service. The Exchange believes any
burden on competition imposed by the proposed rule change is outweighed
by the need to help the Exchange adequately fund its regulatory
activities to ensure compliance with the Exchange Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \9\ and paragraph (f) of Rule 19b-4 \10\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File No. SR-CBOE-2018-014 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-2018-014. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File No. SR-CBOE-2018-014, and should be submitted on
or before March 7, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-02979 Filed 2-13-18; 8:45 am]
BILLING CODE 8011-01-P
