[Federal Register Volume 76, Number 49 (Monday, March 14, 2011)]
[Notices]
[Pages 13692-13694]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-5719]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64051; File No. SR-CBOE-2011-023]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated: Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Establish a Revenue Sharing Program With Correlix, Inc.

March 8, 2011.
    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 March 1, 2011, Chicago Board Options Exchange, Incorporated 
(``CBOE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission

[[Page 13693]]

(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by CBOE. 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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Chicago Board Options Exchange, Incorporated (``CBOE'' or 
``Exchange'') proposes to establish a revenue sharing program with 
Correlix, Inc. The text of the proposed rule change is available on the 
Exchange's Web site (http://www.cboe.org/legal), at the Exchange's 
Office of the Secretary and at the Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CBOE 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. CBOE 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 is filing a proposed rule change to establish a 
revenue sharing program with Correlix. The Exchange has entered into an 
agreement with Correlix to provide to users of the Exchange real-time 
analytical tools to measure the latency of orders to and from its 
systems. Under the agreement, the Exchange will receive 30% of the 
total monthly subscription fees received by Correlix from parties who 
have contracted directly with Correlix to use their RaceTeam latency 
measurement service for the Exchange's systems. The Exchange will not 
bill or contract with any Correlix RaceTeam customer directly.
    Pricing for the Correlix RaceTeam product for the Exchange varies 
depending on the number of unique acronyms and logons selected by the 
customer for monitoring by Correlix. For the Exchange, the fee will be 
an initial $1,500 monthly base fee for the first unique acronym 
monitored. For each additional unique acronym sought to be monitored, 
an additional monthly charge of $1,500 will be assessed. The monthly 
price for each unique acronym includes the monitoring of up to 25 
Exchange logons associated with that particular acronym. Customers that 
wish to exceed 25 logons per-acronym for monitoring can purchase 
additional 25 logon blocks for an additional fee of $750 per month per 
acronym.
    Under the program, Correlix will see an individualized unique 
Exchange-generated identifier that will allow Correlix RaceTeam to 
determine round trip order time,\3\ from the time the order reaches the 
Exchange extranet, through the Exchange matching engine, and back out 
of the Exchange extranet. The RaceTeam product offering does not 
measure latency outside of the Exchange extranet. The unique identifier 
serves as a technological information barrier so that the RaceTeam data 
collector will only be able to view data for Correlix RaceTeam 
subscriber firms related to latency. Correlix will not see subscriber's 
individual order detail such as security, price or size. Individual 
RaceTeam subscribers' logins will restrict access to only their own 
latency data. Correlix will see no specific information regarding the 
trading activity of non-subscribers. The Exchange believes that the 
above arrangement will provide users of its systems greater 
transparency into the processing of their trading activity and allow 
them to make more efficient trading decisions.
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    \3\ The product measures latency of orders whether the orders 
are rejected, executed or partially executed.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of the Securities Exchange Act of 1934 
(``Act''),\4\ in general, and with Section 6(b)(5) \5\ of the Act in 
particular, in that the proposal is 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. In particular, the proposal 
will provide greater transparency into trade and information processing 
and thus allow market participants to make better informed and more 
efficient trading decisions.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78(f)(b)(5).
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    In addition, the Exchange believes that the proposed rule change is 
consistent with the provisions of Section 6 of the Act in general, and 
with Section 6(b)(4)\6\ of the Act in particular, in that it provides 
for the equitable allocation of reasonable dues, fees and other charges 
among CBOE Trading Permit Holders and other persons using any facility 
or system which the Exchange operates or controls. In particular, the 
Exchange notes that the use of Correlix latency measurement services is 
entirely voluntary and made available on a non-discriminatory basis. In 
addition, the Exchange believes the proposed fees are equitable and 
reasonable in that they are charged uniformly to all market 
participants and are comparable to the fees charged by Correlix in 
connection with its revenue sharing programs with other exchanges.
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    \6\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become

[[Page 13694]]

effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Commission notes that the Exchange satisfied this five-day pre-
filing requirement.
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    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.

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 (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-CBOE-2011-023 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2011-023. This file 
number should be included on the subject line if e-mail 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 (http://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 
a.m. and 3 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-2011-023 and should be 
submitted on or before April 4, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-5719 Filed 3-11-11; 8:45 am]
BILLING CODE 8011-01-P