[Federal Register Volume 78, Number 22 (Friday, February 1, 2013)]
[Notices]
[Pages 7474-7476]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-02147]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68741; File No. SR-C2-2013-002]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Related to Pre-Opening Information
January 28, 2013.
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 January 17, 2013, the C2 Options Exchange, Incorporated
(``Exchange'' or ``C2'') 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 Exchange has designated the proposal as a ``non-
controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of
the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend Rule 6.11, Openings (and
sometimes Closings), regarding the dissemination of certain pre-opening
information. The text of the proposed rule change is available on the
Exchange's Web site (http://www.c2exchange.com/Legal/RuleFilings.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 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
The purpose of this filing is to update the provisions of Rule 6.11
regarding the dissemination of certain pre-opening information. In
relevant part, the current provisions of Rule 6.11(a)(2) provide that,
during the pre-opening period, at specified intervals of time that will
be announced to Participants,\5\ the C2 System will disseminate to
Participants \6\ information about resting orders in the book that
remain from the prior business day and any orders and quotes submitted
before the opening, including the expected opening price (``EOP'') and
expected opening size (``EOS'') given the current resting orders and
quotes. The purpose of the proposed rule change is to update the text
to provide that such pre-opening information will be disseminated to
all users that have elected to receive such information (and to remove
the existing reference to such pre-opening information being
disseminated to Participants). As revised, the rule text will reflect
that any user--whether or not a Participant--may receive pre-opening
information.\7\ This revision will
[[Page 7475]]
update the rule text to accurately reflect the Exchange's current
practice of making such pre-opening information available to any
user.\8\
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\5\ Pursuant to Rule 6.11.02, all pronouncements regarding
determinations by the Exchange pursuant to Rule 6.11 and the
Interpretations and Policies thereunder will be announced to
Participants via Regulatory Circular.
\6\ The term ``Participant'' means a Permit Holder. The term
``Permit Holder'' means the Exchange recognized holder of a Trading
Permit. A Permit Holder is also known as a Trading Permit Holder
under the C2 Bylaws. Permit Holders are deemed ``members'' under the
Act. See C2 Rule 1.1, Definitions.
\7\ The Exchange is also proposing to replace a reference from
the specified intervals of time being ``announced to Participants''
to being ``determined by the Exchange.'' The Exchange notes that all
pronouncements regarding determinations by the Exchange pursuant to
Rule 6.11 and the Interpretations and Policies there under will be
announced to Participants via Regulatory Circular. See C2 Rule
6.11.02; see also note 5, supra. The Exchange also notes that
Regulatory Circulars are publically available on the Exchange's Web
site (www.c2exchange.com).
\8\ Users may elect to receive the pre-opening data via Market
Data Express, LLC (``MDX,'' an affiliate of C2). MDX currently makes
the data available as part of the BBO Data Feed for C2 listed
options at no additional charge. See SR-C2-2013-001.
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The Exchange believes that the dissemination of this pre-opening
information to all users that elect to receive such information
increases opportunities for all types of market participants (e.g.,
public customers, broker-dealers and market-makers) to participate in
opening rotations. This broader participation could lead to more robust
competition because more users may participate in opening rotations,
which may result in better prices for customers.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the Act and the rules and regulations under the Act, in general,
and furthers the objectives of Section 6(b)(5),\9\ in particular, in
that it 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 facilitating
transactions in securities, and to remove impediments to and perfect
the mechanisms of a free and open market and a national market system,
and, in general, to protect investors and the public interest.
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\9\ 15 U.S.C. 78f(b)(5).
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The proposed rule change will update the rule text to accurately
reflect the Exchange's current practice of making pre-opening
information available to any user--whether or not a Participant. The
Exchange believes that the dissemination of the pre-opening information
to all users that elect to receive such information increases
opportunities for all types of market participants (e.g., public
customers, broker-dealers and market-makers) to participate in opening
rotations. This broader participation could lead to more robust
competition because more users may participate in opening rotations,
which may result in better prices for customers.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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. As noted above, the Exchange
believes that the dissemination of the pre-opening information to all
users that elect to receive such information increases opportunities
for all types of participants (e.g., public customers, broker-dealers
and market-makers) to participate in opening rotations. This broader
participation could lead to more robust competition because more users
may participate in opening rotations, which may result in better prices
for customers. The Exchange also believes that the data will help
attract new users and new order flow to the Exchange, thereby improving
the Exchange's ability to compete in the market for options order flow
and executions. Finally, the Exchange notes that at least one other
exchange, the NASDAQ Options Market (``NOM''), makes similar
information about pre-opening information available to non-members.\10\
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\10\ NOM disseminates certain pre-opening order imbalance
information every five seconds for a period of time prior to the
open and this information is made available via subscription. See
NOM Chapter VI, Section 8(b)(1) and Chapter XV, Section 4(e); see
also http://www.nasdaqtrader.com/trader.aspx?id=openclose.
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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
proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 for 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 effective
pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6)(iii) thereunder.\12\ At any time within 60 days of the filing
of such 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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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the text of 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.
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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-C2-2013-002 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-C2-2013-002. 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 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-C2-
[[Page 7476]]
2013-002 and should be submitted on or before February 22, 2013.
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\13\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02147 Filed 1-31-13; 8:45 am]
BILLING CODE 8011-01-P