[Federal Register Volume 77, Number 113 (Tuesday, June 12, 2012)]
[Notices]
[Pages 35091-35092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-14164]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67124; File No. SR-CBOE-2012-052]


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

June 5, 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 May 31, 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 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 amend the CBOE Stock Exchange (``CBSX'') 
Fees Schedule. 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 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 amend the CBSX Fees Schedule with regards 
to connectivity fees. CBSX recently moved its trading systems over to 
the Equinix NY4 facility (``NY4''). In addition to 1 Gigabit Ethernet 
(``1 Gbps'') network access, NY4 has capacity to accommodate 10 Gigabit 
Ethernet (``10 Gbps'') network access. The Exchange would like to make 
such a connection available to CBSX market participants. However, the 
equipment and infrastructure necessary to provide the 10 Gbps 
connection is more expensive than that necessary to provide a 1 Gbps 
connection. As such, the Exchange proposes to adopt a $1,000 per month 
fee for access to a 10 Gbps Network Access Port ($2,000 for Sponsored 
Users), and to clarify on the Fees Schedule that the connection 
currently being provided for $250 per month ($500 for Sponsored Users) 
is for a 1 Gbps connection to a Network Access Port. CBSX market 
participants will be able to elect to connect to CBSX's trading system 
via either a 1 Gbps or 10 Gbps Network Access port. Regardless of which 
is chosen, the Network Access Port fee will be assessed for each port 
that provides direct access to CBSX's trading system. The Exchange 
currently charges a different rate for regular access and Sponsored 
User access, and merely proposes to increase the rates in equal 
proportion.
    The proposed change is to take effect on June 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

[[Page 35092]]

Section 6(b) of the Act.\3\ Specifically, the Exchange believes the 
proposed rule change is consistent with the Section 6(b)(5) \4\ 
requirements that the rules of an exchange be designed to promote just 
and equitable principles of trade, to prevent fraudulent and 
manipulative acts, to remove impediments to and to perfect the 
mechanism for a free and open market and a national market system, and, 
in general, to protect investors and the public interest, and with 
Section 6(b)(4) of the Act \5\, 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.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
    \5\ 15 U.S.C. 78f(b)(4).
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    Assessing a higher fee for 10 Gbps connectivity than for 1 Gbps 
connectivity is reasonable because 10 Gbps connectivity is more robust 
than 1 Gbps connectivity, and is equitable and not unfairly 
discriminatory because 10 Gbps connectivity requires more costly 
equipment and maintenance, and the Exchange must recoup the costs 
related to providing 10 Gbps connectivity. Further, CBSX market 
participants may still elect for the less-expensive 1 Gbps 
connectivity. Finally, the amount of the fee for 10 Gbps connectivity 
is less than the amount of the fees for 10 Gbps connectivity assessed 
by other exchanges.\6\
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    \6\ See New York Stock Exchange Price List, page 13, which lists 
monthly prices of $12,000-61,500 for different types of 10 Gbps 
connectivity (along with initial charges of $10,000-50,000) and 
International Securities Exchange Schedule of Fees, page 9, which 
lists a low-latency Ethernet network access fee of $7,000 per month.
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    Assessing higher fees for Sponsored Users is equitable and not 
unfairly discriminatory because Sponsored Users are able to access the 
Exchange and use the equipment provided without possessing a trading 
permit. As such, Trading Permit Holders who have a trading permit will 
have a higher level of commitment to transacting business on CBSX and 
using Exchange facilities than Sponsored Users. Finally, these 
increases maintain the same proportionate amounts that are paid by 
regular users relative to Sponsored Users.
    Clarifying that the current $250 monthly fee for a Network Access 
Port ($500 for Sponsored Users) is for a 1 Gbps connection removes 
impediments to and to perfect the mechanism for a free and open market 
and a national market system, and, in general, protects investors and 
the public interest by eliminating any confusion about which connection 
will be assessed which fee (now that CBSX will be offering both the 1 
Gbps and 10 Gbps connection options).

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)\7\ of the Act and paragraph (f) of Rule 19b-4 \8\ 
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.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CBOE-2012-052 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-2012-052. 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 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal offices 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-2012-052, 
and should be submitted on or before July 3, 2012.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14164 Filed 6-11-12; 8:45 am]
BILLING CODE 8011-01-P