[Federal Register Volume 78, Number 205 (Wednesday, October 23, 2013)]
[Notices]
[Pages 63265-63267]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24769]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70705; File No. SR-CBOE-2013-097]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to The Customized Option Pricing Service

October 17, 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 October 4, 2013, 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

    Chicago Board Options Exchange, Incorporated (the ``Exchange'' or 
``CBOE'') proposes to: (i) Make available historical Customized Option 
Pricing Service (``COPS'') data and (ii) revise the description of 
COPS. 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 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
    The purpose of the proposed rule change is to: (i) Make available, 
through CBOE's affiliate Market Data Express, LLC (``MDX''), historical 
COPS data and (ii) revise the description of COPS.\3\
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    \3\ The Exchange submitted proposed rule changes in 2012 to 
establish COPS and COPS fees. See Securities Exchange Act Release 
No. 67813 (September 10, 2012), 77 FR 56903 (September 14, 2012) and 
Securities Exchange Act Release No. 67928 (September 26, 2012), 77 
FR 60161 (October 2, 2012). The service was originally named 
``Customized Option Valuation Service'' but is now referred to as 
the ``Customized Option Pricing Service''.
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    Background
    COPS provides subscribers with an ``end-of-day'' file \4\ of 
valuations for Flexible Exchange (``FLEX'') \5\ options and certain 
over-the-counter (``OTC'') options (``COPS Data''). COPS Data is 
available for internal use and internal distribution by subscribers 
(``Subscribers''). MDX offers COPS Data for sale to all market 
participants.
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    \4\ An end of day file refers to data that is distributed prior 
to the opening of the next trading day.
    \5\ FLEX options are exchange traded options that provide 
investors with the ability to customize basic option features 
including size, expiration date, exercise style, and certain 
exercise prices.
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    COPS Data consists of indicative \6\ values for three categories of 
``customized'' options. The first category of options is all open 
series of FLEX options listed on any exchange that offers FLEX options 
for trading.\7\ The second category is OTC options that have the same 
degree of customization as FLEX options. The third category includes 
options with strike prices expressed in percentage terms. Values for 
such options are expressed in percentage terms and are theoretical 
values.\8\
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    \6\ ``Indicative'' values are indications of potential market 
prices only and as such are neither firm nor the basis for a 
transaction.
    \7\ Current FLEX options open interest spans over 2,000 series 
on over 300 different underlying securities.
    \8\ These values are theoretical in that they are indications of 
potential market prices for options that have not traded (i.e. do 
not yet exist). Market participants sometimes express option values 
in percentage terms rather than in dollar terms because they find it 
is easier to assess the change, or lack of change, in the 
marketplace from one day to the next when values are expressed in 
percentage terms.
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    The fees that MDX charges for COPS Data are set forth on the Price 
List on the MDX Web site (www.marketdataexpress.com). MDX currently 
charges a fee per option per day for COPS Data. The amount of the fee 
is reduced based on the number of options purchased. A subscriber pays 
$1.25 per option per day for each option purchased up to 50 options, 
$1.00 per option per day for each option purchased from 51 to 100 
options, $0.75 per option per day for each option purchased from 101 to 
500 options, and $0.50 per option per day for each option purchased 
over 500 options.
    Historical COPS Data
    The Exchange proposes to make available, through MDX, historical 
COPS data (``Historical COPS Data''). Historical COPS Data consists of 
COPS Data that is over one month old (i.e., copies of the ``end-of-
day'' COPS file that are over one month old). Market participants would 
also be able to purchase Historical COPS Data through the MDX Web site. 
All market participants would be charged the same fees for Historical 
COPS Data. The Exchange will file a separate proposed rule change to 
establish the fees to be charged by MDX for Historical COPS Data.
    COPS Description
    COPS Data is currently available only for internal use and internal 
distribution by Subscribers. Pursuant to a written subscriber agreement 
between MDX and a Subscriber, a Subscriber may not act as a vendor and 
distribute the Data externally. The Exchange proposes to make COPS Data 
and Historical COPS Data (collectively, the ``Data'') available to 
Subscribers for internal use and internal distribution only. The 
Exchange also proposes to make COPS Data and Historical COPS Data 
available to ``Customers'' who, pursuant to a written vendor agreement 
between MDX and a Customer, may distribute the Data externally (i.e., 
act as a vendor) and/or use and distribute the Data internally. 
Customers would be subject to the same fees that Subscribers pay for 
internal use and internal distribution of the Data. Customers would not 
be charged any fees initially for their external distribution of the 
Data. The Exchange would file a proposed rule change to establish the 
fees to be charged to Customers by MDX for external distribution of the 
Data.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (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

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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. Additionally, the Exchange 
believes the proposed rule change is consistent with the Section 
6(b)(5)\11\ requirement that the rules of an exchange not be designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers because the Data would be available to all of MDX's Customers 
and Subscribers on an equivalent basis.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ Id.
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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. The Exchange 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. The Exchange believes the proposal to allow 
Customers of the Data to distribute the Data externally would help 
further the dissemination of the Data.
    Additionally, the Exchange is making a voluntary decision to make 
this data available. The Exchange is not required by the Act in the 
first instance to make the Data available. Further, Historical COPS 
Data consists of COPS Data that is over one month old, so no new data 
would be made available by the introduction of the Historical COPS Data 
product.

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. To the contrary, the Exchange 
believes the proposed rule change is pro-competitive in that it would 
allow the Exchange, through MDX, to disseminate COPS data on a 
voluntary basis. COPS is voluntary on the part of the Exchange, which 
is not required to offer such services, and voluntary on the part of 
prospective subscribers that are not required to use it. The Exchange 
notes there are at least a small number of market data vendors that 
produce option value data that is similar to COPS data and market data 
users may elect to buy these other products if they choose.\12\ The 
Options Clearing Corporation (``OCC'') also produces FLEX option value 
data that is similar to the FLEX option value data that is included in 
COPS.\13\ The Exchange believes that COPS helps 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.
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    \12\ These vendors include SuperDerivatives, Markit, Prism, and 
Bloomberg's BVAL service.
    \13\ The OCC makes this data available on its Web site at http://www.theocc.com/webapps/flex-reports.
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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 
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:
    A. Significantly affect the protection of investors or the public 
interest;
    B. Impose any significant burden on competition; and
    C. 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 \14\ and 
Rule 19b-4(f)(6) \15\ 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. If the Commission takes such action, the 
Commission will institute proceedings to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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. 
The Exchange has satisfied this requirement.
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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-2013-097 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-2013-097. 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-CBOE-2013-097 and should be 
submitted on or before November 13, 2013.


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24769 Filed 10-22-13; 8:45 am]
BILLING CODE 8011-01-P