[Federal Register Volume 76, Number 49 (Monday, March 14, 2011)]
[Notices]
[Pages 13690-13691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-5761]



[[Page 13690]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64057; File No. SR-CBOE-2011-019]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Modify the CBOE Fees Schedule

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 February 25, 2011 [sic], 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 and II 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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to modify the Fees Schedule to amend its 
linkage fees. 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, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Currently, when the Exchange receives a customer order that has an 
original size of 500 or more contracts that is routed for execution, in 
whole or in part, to one or more exchanges in connection with the 
Options Order Protection and Locked/Crossed Market Plan (a ``Customer 
Linkage Transaction''), the Exchange charges $0.35 per contract in 
addition to the customary CBOE execution charges.\3\ The Exchange 
proposes to reduce the qualifying customer order size from 500 or more 
contracts to 100 or more contracts. This change will allow the Exchange 
to pass through some of the transaction costs incurred by the Exchange 
associated with the execution and handling of larger orders.
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    \3\ See CBOE Fees Schedule, Section 20. See, also, Securities 
Exchange Act Release No. 63701 (January 11, 2011), 76 FR 2934 
(January 18, 2011) (SR-CBOE-2010-116) and Securities Exchange Act 
Release No. 62793 (August 30, 2010), 75 FR 54408 (September 7, 2010) 
(SR-CBOE-2010-076).
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    The Exchange further proposes to eliminate the flat $0.35 per 
contract fee for Customer Linkage Transactions, and instead pass 
through the actual transaction fee(s) assessed on the transaction(s) by 
the exchange(s) to which the order was routed, minus a $0.05 per 
contract discount. These changes allow the Exchange to more accurately 
pass through some of the transaction costs incurred by the Exchange 
associated with Customer Linkage Transactions while still offering an 
added incentive to route orders to CBOE.
    The Exchange does not propose to collect these fees for orders 
initially routed for manual handling by CBOE Floor Brokers. More 
specifically, the Exchange will exempt from these pass-through fees 
customer orders that originate from the trading floor via an Exchange 
sponsored terminal like a Floor Broker Workstation.\4\ The primary 
objective of the fee change is to recoup some of the costs associated 
with large electronic orders that are initially transmitted to CBOE by 
parties who, in many instances, could be seeking to avoid being 
assessed another market's transaction fees. Orders that are initially 
routed to CBOE Floor Brokers are not attempting to avoid fees since 
they incur brokerage commission charges in connection with manual 
handling. Rather, orders that are handled by CBOE Floor Brokers are 
large, complex orders that are primarily executed on the CBOE, which 
only are transmitted to away markets if, during their execution on 
CBOE, it is necessary to sweep some away markets.
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    \4\ The Floor Broker Workstation is a system for electronically 
entering and managing orders on the Exchange floor. Floor Broker 
Workstations are operated by Floor Brokers.
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    The proposed fee change will take effect on March 1, 2011.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Securities Exchange Act of 1934 (``Act''),\5\ in general, and furthers 
the objectives of Section 6(b)(4) \6\ of the Act in particular, in that 
the passing through of the actual transaction fees assessed on away 
exchanges for Customer Linkage Transactions is designed to provide for 
the equitable allocation of reasonable dues, fees, and other charges 
among CBOE Trading Permit Holders and other persons using Exchange 
facilities. Exempting customer orders that originate from an Exchange-
sponsored terminal from the pass-through fees is equitable because 
Floor Brokers and their customers are already assessed a number of fees 
in connection with trading on the Exchange Floor.
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    \5\ 15 U.S.C. 78f(b).
    \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 not necessary or appropriate in furtherance of 
the 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 proposed rule change is designated by the Exchange as 
establishing or changing a due, fee, or other charge, thereby 
qualifying for effectiveness on filing pursuant to Section 
19(b)(3)(A)(ii) \7\ of the Act and subparagraph (f)(2) of Rule 19b-4 
\8\ thereunder.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 C.F.R. 240.19b-4(f)(2).
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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

[[Page 13691]]

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-2011-019 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-2011-019. 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 website (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 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 a.m. and 3 
p.m. Copies of such filing will also 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 No. SR-CBOE-2011-019 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. 2011-5761 Filed 3-11-11; 8:45 am]
BILLING CODE 8011-01-P