[Federal Register Volume 77, Number 43 (Monday, March 5, 2012)]
[Notices]
[Pages 13166-13168]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-5277]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66486; File No. SR-CBOE-2012-016]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend the Fees Schedule of Market Data Express, 
LLC

February 28, 2012.
    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 15, 2012, the 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 
substantially 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 proposes to amend the Fee Schedule of Market Data 
Express, LLC (``MDX''), an affiliate of CBOE. The text of the proposed 
rule change is available on the Exchange's Web site (http://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

[[Page 13167]]

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 purpose of the proposed rule change is to establish a monthly 
fee of $500 per data port that MDX will charge for access to certain 
market data with respect to the trading of options on CBOE's market.\3\
---------------------------------------------------------------------------

    \3\ The Commission notes that the MDX Fee Schedule is available 
at https://www.cboe.org/MDX/CSM/OBOOKMain.aspx.
---------------------------------------------------------------------------

    CBOE currently collects and processes market data with respect to 
options quotes and orders and the prices of trades that are executed on 
the Exchange. This market data includes the ``best bid and offer,'' or 
``BBO'', consisting of all outstanding quotes and standing orders at 
the best available price level on each side of the market, with 
aggregate size (``BBO data,'' sometimes referred to as ``top of book 
data''). Data with respect to executed trades is referred to as ``last 
sale'' data. CBOE formats its BBO data and last sale data according to 
Options Price Reporting Authority (``OPRA'') specifications and sends 
the data to OPRA for redistribution to the public.
    MDX provides to ``Customers'' \4\ a real-time, low latency data 
feed that includes the CBOE BBO data and last sale data. (This data 
feed is sometimes referred to in this filing as the ``BBO Data Feed''). 
The BBO and last sale data contained in the BBO Data Feed is identical 
to the data that CBOE sends to OPRA.\5\ In addition, the BBO Data Feed 
includes certain data that is not included in the data sent to OPRA, 
namely, totals of customer versus non-customer contracts at the BBO, 
All-or-None contingency orders priced better than or equal to the BBO, 
and BBO data and last sale data for complex strategies (e.g., spreads, 
straddles, buy-writes, etc.).
---------------------------------------------------------------------------

    \4\ A ``Customer'' is any entity that receives the BBO Data Feed 
directly from MDX's system and then distributes it either internally 
or externally to Subscribers. A ``Subscriber'' is a person (other 
than an employee of a Customer) that receives the BBO Data Feed from 
a Customer for its own internal use.
    \5\ The Exchange notes that MDX makes available to Customers the 
BBO data and last sale data that is included in the BBO Data Feed no 
earlier than the time at which the Exchange sends that data to OPRA. 
The Exchange also notes that it also makes the BBO data and last 
sale data that is included in the BBO Data Feed available directly 
to its Trading Permit Holders, and permits them to redistribute the 
data to their customers.
---------------------------------------------------------------------------

    MDX currently charges Customers a ``direct connect fee'' of $3,500 
per connection per month as well as a ``per user fee'' of $25 per month 
per ``Authorized User'' or ``Device'' for receipt of the BBO Data Feed 
by Subscribers. An ``Authorized User'' is defined as an individual user 
(an individual human being) who is uniquely identified (by user ID and 
confidential password or other unambiguous method reasonably acceptable 
to MDX) and authorized by a Customer to access the BBO Data Feed 
supplied by the Customer. A ``Device'' is defined as any computer, 
workstation or other item of equipment, fixed or portable, that 
receives, accesses and/or displays data in visual, audible or other 
form. Either a CBOE Trading Permit Holder or a non-CBOE Trading Permit 
Holder may be a Customer. All Customers are assessed the same fees.
    MDX provides ports that allow Customers to direct connect to MDX to 
receive the data feed. Currently, such ports are provided to Customers 
free of charge. However, MDX recently made an investment to upgrade the 
equipment involved in the ports, and maintenance and upkeep of such 
ports has gotten costly, as well. As such, MDX proposes to assess a 
monthly fee of $500 per data port in order to recoup such costs and 
maintain such equipment in the future, as well as cover other 
administrative costs. This amount is similar to the amount of fees 
assessed by other exchanges for access to similar data feed ports.\6\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 64964 (July 26, 
2011) (SR-EDGA-2011-22) and Securities Exchange Act Release No. 
64963 (July 26, 2011) (SR-EDGX-2011-21) (in which EDGA Exchange, 
Inc. (``EDGA'') and EDGX Exchange, Inc. (``EDGX'') each assess a 
monthly fee of $500 per port for access to logical ports used to 
receive market data) and also Rule 7015(g) of the NASDAQ Stock 
Market LLC (``NASDAQ'') (in which NASDAQ assesses a monthly fee of 
$600 per Internet port that is used to deliver market data).
---------------------------------------------------------------------------

    The proposed fees would be implemented on March 1, 2012.
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.\7\ Specifically, the Exchange also believes the proposed rule 
change is consistent with Section 6(b)(4) of the Act,\8\ which provides 
that Exchange rules may provide for the equitable allocation of 
reasonable dues, fees, and other charges among its Trading Permit 
Holders and other persons using its facilities. The proposed adoption 
of the monthly $500 per port fee is reasonable because the fee is 
within the same range as those assessed on other exchanges, and because 
MDX must recoup the costs of upgrading and maintaining the equipment 
involved in the ports, as well as cover other administrative costs.\9\ 
The proposed adoption of the port fee is equitable and not unfairly 
discriminatory because it will be assessed to all market participants 
equally.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ See footnote 6.
---------------------------------------------------------------------------

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 the purposes of the 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) \10\ of the Act and paragraph (f) of Rule 19b-4 \11\ 
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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CBOE-2012-016 on the subject line.

[[Page 13168]]

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-2012-016. 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 (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-2012-016 and should be 
submitted on or before March 26, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-5277 Filed 3-2-12; 8:45 am]
BILLING CODE 8011-01-P