[Federal Register Volume 78, Number 154 (Friday, August 9, 2013)]
[Notices]
[Pages 48750-48752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-19265]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70119; File No. SR-C2-2013-025]


Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Offer a New Data Feed

August 5, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 24, 2013, C2 Options Exchange, Incorporated (the ``Exchange'' 
or ``C2'') 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 Exchange. C2 has 
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under 
the Act,\3\ which renders the proposal effective upon receipt of this 
filing by the Commission. 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\ 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 proposes to offer a new data feed. There are no 
proposed changes to Exchange rule text.

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.

[[Page 48751]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    C2 proposes to offer a new data feed. C2 already offers a C2 BBO 
Data Feed that is a real-time, low latency data feed that includes C2 
``BBO data'' and last sale data.\4\ The BBO and last sale data 
contained in the C2 BBO Data Feed is identical to the data that C2 
sends to the Options Price Reporting Authority (``OPRA'') for 
redistribution to the public.\5\ The C2 BBO Data Feed also includes 
certain data that is not included in the data sent to OPRA, namely, (i) 
totals of customer versus non-customer contracts at the BBO, (ii) All-
or-None contingency orders priced better than or equal to the BBO, 
(iii) BBO data and last sale data for complex strategies (e.g., 
spreads, straddles, buy-writes, etc.) (``Spread Data''), and (iv) 
expected opening price (``EOP'') and expected opening size (``EOS'') 
information that is disseminated prior to the opening of the market and 
during trading rotations (collectively, ``EOP/EOS data'').\6\ MDX 
currently charges Customers a ``data fee'' of $1,000 per month for the 
internal use and external redistribution of the C2 BBO Data Feed.\7\
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    \4\ The C2 BBO Data Feed 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. The C2 BBO Data Feed and the fees charged by 
Market Data Express, LLC (``MDX''), for the C2 BBO Data Feed were 
established in March 2011. See Securities Exchange Act Release No. 
63996 (March 1, 2011), 76 FR 12386 (March 7, 2011). Such fees were 
amended to their current rates in April 2013. See Securities 
Exchange Act Release No. 69400 (April 18, 2013), 78 FR 24285 (April 
24, 2013) (SR-C2-2013-016).
    \5\ The Exchange notes that MDX, an affiliate of C2, makes 
available to Customers the BBO data and last sale data that is 
included in the C2 BBO Data Feed no earlier than the time at which 
the Exchange sends that data to OPRA.
    \6\ The Exchange identified the inclusion of EOP/EOS data in the 
C2 BBO Data Feed in a proposed rule change filed in January 2013. 
See Securities Exchange Act Release No. 68697 (January 18, 2013), 78 
FR 5523 (January 25, 2013).
    \7\ A ``Customer'' is any entity that receives the C2 BBO Data 
Feed directly from MDX's system or through a connection to MDX 
provided by an approved redistributor (i.e., a market data vendor or 
an extranet service provider) and then distributes it internally 
and/or externally.
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    The proposed new C2 COB Feed will provide data regarding the 
Exchange's Complex Order Book (``COB'') and related complex order 
information. The C2 COB Feed will include BBO quotes and identifying 
information for all C2-traded complex order strategies, as well as all 
executed C2 complex order trades (and identify whether the trade was a 
customer trade, or whether a complex order in the COB is a customer 
order). All of this data is also currently included in the C2 BBO Data 
Feed. At this time, the Exchange has determined to offer the C2 COB 
Feed to all market participants free of charge.\8\
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    \8\ All Exchange market participants will be afforded equal 
access to the C2 COB Feed and the Exchange will not discriminate 
amongst who may be able to access the C2 COB Feed.
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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.\9\ Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \10\ requirements that the rules of 
an exchange be 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 regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism 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).
    \10\ 15 U.S.C. 78f(b)(5).
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations and broker-dealers increased authority and flexibility to 
offer new and unique market data to the public. It was believed that 
this authority would expand the amount of data available to consumers, 
and also spur innovation and competition for the provision of market 
data. C2 believes that this proposal is in keeping with those 
principles by promoting increased transparency through the 
dissemination of useful data and also by clarifying its availability to 
market participants.
    Additionally, C2 is making a voluntary decision to make this data 
available. C2 is not required by the Act in the first instance to make 
the data available, unlike the best bid and offer which must be made 
available under the Act. C2 chooses to make the data available as 
proposed in order to improve market quality, to attract order flow, and 
to increase transparency. Further, all of the data included in the C2 
COB Feed is already available in the C2 BBO Data Feed, so no new data 
is being made available by the introduction of the C2 COB Feed.

B. Self-Regulatory Organization's Statement on Burden on Competition

    C2 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. C2 does not believe that the 
proposed rule change will impose any burden on intramarket competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act because the C2 COB Feed is available to all market 
participants. The Exchange does not believe that offering the C2 COB 
Feed will impose any burden on intermarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act 
because the C2 COB Feed involves data that is specific to C2. Further, 
to the extent creating the C2 COB Feed (and offering it for free) makes 
C2 a more attractive marketplace for market participants on other 
exchanges, such market participants may elect to become C2 market 
participants. Indeed, this may enhance competition by spurring other 
options exchanges to create more data feeds (and offer such new feeds 
for free).

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

    Because the foregoing 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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and 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. 
C2 has satisfied this requirement.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Exchange has stated that it is prepared to offer the C2 COB 
Feed

[[Page 48752]]

immediately and does not intend to assess a fee for such feed at this 
time, so waiving the 30-day operative delay would allow Exchange market 
participants to begin to receive the data in the C2 COB Feed 
immediately instead of having to wait 30 days. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest, because such waiver 
will enable market participants to receive the C2 COB data free of 
charge immediately, which data is otherwise only available to market 
participants for a fee (as part of the C2 BBO Data Feed) until the 
proposal becomes effective. For this reason, the Commission hereby 
waives the 30-day operative delay requirement and designates the 
proposed rule change as operative upon filing.\13\
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    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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-C2-2013-025 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-C2-2013-025. 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-C2-2013-025 and should be 
submitted on or before August 30, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-19265 Filed 8-8-13; 8:45 am]
BILLING CODE 8011-01-P