[Federal Register Volume 77, Number 136 (Monday, July 16, 2012)]
[Notices]
[Pages 41841-41842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-17202]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67383; File No. SR-CBOE-2012-063]


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

July 10, 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 June 27, 2012, the Chicago Board Options Exchange, Incorporated 
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the self-
regulatory organization. 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 its Fees Schedule. The text of the 
proposed rule change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOE LegalRegulatoryHome.aspx), 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 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Currently, when stock-option strategy orders are sent to the 
Exchange, the stock portions are processed and routed manually by 
brokers to a stock exchange for execution. However, CBOE will soon 
begin rollout of new functionality to automate the handling of complex 
orders containing a stock leg through the use of the Complex Order 
Auction (``COA''), Complex Order Book (``COB''), Automated Improvement 
Mechanism (``AIM''), Solicitation Auction Mechanism (``SAM''), and the 
splitting mechanism which is used for certain market orders pursuant to 
Interpretation .06(d) of CBOE Rule 6.53C (through which, if at the 
conclusion of COA an eligible market order cannot be filled in whole or 
in a permissible ratio, then any remaining balance of the option leg(s) 
will route to the Hybrid System for processing as a simple market 
order(s) and any remaining balance of the stock leg will route to a 
designated dealer for processing as a market order). Through this new 
functionality, the stock portions of stock-option strategy orders will 
be electronically communicated by the Exchange to a designated broker-
dealer, who will then manage the execution of such stock portions.\3\ 
As such, the Exchange proposes to adopt a fee of $0.0010 per share for 
the processing and routing by the Exchange of the stock portion of 
stock-option strategy orders executed through those mechanisms. The 
purpose of the proposed fee is to cover the fees being assessed to the 
Exchange by the designated broker that will be managing

[[Page 41842]]

the execution of these stock portions of stock-option strategy orders, 
as well as to cover the costs of developing and maintaining the 
Exchange systems that allow for the processing and routing of such 
stock portions to the designated broker.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 66769 (April 6, 
2012), 77 FR 22027 (April 12, 2012) (SR-CBOE-2012-005).
---------------------------------------------------------------------------

    The Exchange proposes to waive this fee for customer orders until 
August 31, 2012 in order to encourage the sending of customer stock-
option strategy orders to CBOE via this new system.
    The proposed fee applies in addition to the fees assessed by the 
outside venue to which the stock portion of the order is routed if an 
exchange destination is specified on the original order (with such fees 
to be passed on to the market participant). A maximum of $50.00 per 
order will be assessed under this fee in order to assure that market 
participants do not pay extremely large fees for the processing and 
routing by the Exchange of the stock portions of stock-option orders. 
Moreover, this maximum fee amount is in line with the maximum fee that 
will be assessed by the designated broker that the Exchange intends to 
use.
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.\4\ Specifically, the Exchange believes the proposed rule change is 
consistent 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. The amount of the proposed fee is 
reasonable because it is intended to cover the fees being assessed to 
the Exchange by the designated broker that will be managing the 
execution of these stock portions of stock-option strategy orders, as 
well as to help cover the costs of developing and maintaining the 
Exchange systems that allow for the processing and routing of such 
stock portions to the designated broker. The proposed fee is equitable 
and not unfairly discriminatory because it will be applied to all 
market participants equally.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    Waiving the fee for the processing and routing of the stock portion 
of customer stock-option strategy orders through August 31, 2012 is 
equitable and not unfairly discriminatory because this waiver is 
intended to encourage the sending of customer orders to the Exchange, 
and the resulting increased volume and liquidity will benefit all 
market participants. Finally, capping the fee at $50.00 per order is 
reasonable because it will limit the amount a market participant will 
be assessed for the routing and processing by the Exchange of the stock 
portion of stock-option strategy orders, and is equitable and not 
unfairly discriminatory because this maximum will apply to all market 
participants.

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) \6\ of the Act and paragraph (f)(2) of Rule 19b-4 \7\ 
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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2012-063 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-2012-063. 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 such 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 publicly available. All 
submissions should refer to File Number SR-CBOE-2012-063 and should be 
submitted on or before August 6, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority. \8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-17202 Filed 7-13-12; 8:45 am]
BILLING CODE 8011-01-P