[Federal Register Volume 79, Number 33 (Wednesday, February 19, 2014)]
[Notices]
[Pages 9541-9543]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-03568]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71539; File No. SR-CBOE-2014-012]


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

February 12, 2014.
    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 February 3, 2014, 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 its 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'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 Exchange proposes to make a number of amendments to its Fees 
Schedule. First, the Exchange proposes to increase the Exchangefone 
relocation fee from $100 to $116. The Exchange contracts with a vendor 
to provide the Exchangefone relocations, and this vendor has increased 
its fees, so the Exchange proposes to increase the Exchangefone 
relocation fee to reflect the increased vendor cost.
    On January 2, 2014, the Securities and Exchange Commission (the 
``Commission'') approved a proposed rule change to eliminate the 
Exchange's e-DPM program.\3\ Pursuant to that approved rule change, the 
Exchange announced that the e-DPM program will be eliminated effective 
February 3, 2014.\4\ As such, with the elimination of the e-DPM 
program, the Exchange hereby proposes to delete all references to e-
DPMs and the e-DPM program from its Fees Schedule.
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    \3\ See Securities Exchange Act Release No. 71227 (January 2, 
2014), 79 FR 1398 (January 8, 2014) (SR-CBOE-2013-110).
    \4\ See CBOE Regulatory Circular RG-14-002 (January 9, 2014), 
available at http://www.cboe.com/aboutCBOE/legal/crclReg.aspx.
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    The Exchange also proposes to make an amendment to its OHS (Order 
Handling System) Order Cancellation Fee (``Cancel Fee''). Currently, 
the Notes section of the Cancel Fee carves out certain circumstances in 
which the Cancel Fee does not apply. The Exchange would like to add 
exception to cover the cancellation of any orders that were entered 
during the pre-open or opening rotation states. Sometimes one or more 
other option exchanges open a class sooner than CBOE and a TPH may 
desire to cancel orders still pending at CBOE and route to exchanges 
that are open. The Exchange does not believe

[[Page 9542]]

that market participants should be assessed the Cancel Fee in these 
circumstances. Similarly, on occasion, a trading halt may occur on the 
Exchange, and market participants may want orders that they had entered 
onto CBOE to be cancelled during such halts and moved to another 
exchange for execution. The Exchange does not believe that market 
participants should be assessed the Cancel Fee in these circumstances, 
either. As such, the Exchange proposes to add exception (vii) of the 
Cancel Fee to state that the Cancel fee shall not apply to orders that 
are entered or canceled prior to the opening, during the opening 
rotation, or during a trading halt.
    The Exchange always strives for clarity in its rules and Fees 
Schedule, so that market participants may best understand how rules and 
fees apply. As such, the Exchange proposes a number of changes to 
clarify its Fees Schedule. The first such proposed change regards the 
Hybrid 3.0 Execution Fee. The Exchange assesses a Hybrid 3.0 Execution 
Fee on electronic executions in Hybrid 3.0 classes (with a number of 
exceptions).\5\ However, as the Hybrid 3.0 Execution Fee is assessed on 
top of regular transaction fees for transactions in the Hybrid 3.0 
classes, the Hybrid 3.0 Execution Fee would more accurately be 
described as a ``surcharge'' (as other fees listed on the Fees Schedule 
that are assessed on top of regular transaction fees are labeled as 
``surcharges''). As such, the Exchange proposes to rename the Hybrid 
3.0 Execution Fee the ``Hybrid 3.0 Execution Surcharge''.
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    \5\ For more information on the Hybrid 3.0 Execution Fee, see 
Footnote 21 of the Exchange Fees Schedule.
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    The Exchange also proposes to clarify Footnote 21 of the Fees 
Schedule, which currently states that ``All electronic executions in 
Hybrid 3.0 classes shall be assessed the Hybrid 3.0 Execution Fee, 
except that this fee shall not apply to . . . orders executed by a 
broker.'' The Exchange wishes to clarify that this means that orders 
executed by a floor broker using a PAR terminal (as opposed to simply 
``orders executed by a broker'') shall be excepted from assessment of 
the Hybrid 3.0 Execution Fee (renamed herein the ``Hybrid 3.0 Execution 
Surcharge'' as described above). This was, and is, the original intent 
of this exception. This is not a substantive fee change because the 
only brokers that apply here are floor brokers, and the only way floor 
brokers can perform such executions is via a PAR terminal. This change 
to the language only makes more clear the types of executions that are 
excepted from the Hybrid 3.0 Execution Surcharge.
    Similarly, the Exchange proposes to clarify Footnote 31 of the Fees 
Schedule's description of the Customer Priority Surcharge as it applies 
to SPXW. Currently, Footnote 31 states that such surcharge applies to 
all customer contracts executed electronically, except those contracts 
traded on a PAR terminal. The Exchange wishes to use the same 
clarifying language as applies to the Hybrid 3.0 Execution Surcharge 
(as described above), and state that the SPXW Customer Priority 
Surcharge applies to all customer contracts executed electronically, 
except those executed by a floor broker on a PAR terminal. This is a 
clarification and not a substantive fee change because only floor 
brokers can execute orders using a PAR terminal.
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.\6\ Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \7\ 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 
facilitation 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) \8\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers. The Exchange also believes the 
proposed rule change is consistent with Section 6(b)(4) of the Act,\9\ 
which requires that Exchange rules 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ Id.
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the increased Exchangefone relocation 
fee is reasonable because the increase is being enacted to reflect an 
increase in the amount that a vendor charges the Exchange to provide 
the Exchangefone relocations, and also because the amount of the 
increase is a mere $16. The Exchange believes that this change is 
equitable and not unfairly discriminatory because the increased 
Exchangefone relocation fee will apply to all market participants who 
request an Exchangefone relocation.
    The Exchange believes that the removal of references to e-DPMs and 
the e-DPM program from the Fees Schedule will eliminate any potential 
confusion regarding whether or not the e-DPM program is still active on 
the Exchange, thereby removing impediments to and perfecting the 
mechanism of a free and open market and a national market system. 
Similarly, the Exchange believes that renaming the Hybrid 3.0 Execution 
Fee as the ``Hybrid 3.0 Execution Surcharge'' will clarify that the 
Hybrid 3.0 Execution Fee applies on top of regular transaction fees 
(like other surcharges listed on the Fees Schedule), thereby 
eliminating potential confusion and removing impediments to and 
perfecting the mechanism of a free and open market and a national 
market system. The Exchange also believes that the clarification in 
Footnote 21 of the Fees Schedule that the Hybrid 3.0 Execution 
Surcharge shall not apply to orders executed by a floor broker using a 
PAR terminal will eliminate potential confusion regarding to whom the 
Hybrid 3.0 Execution Surcharge applies (and does not apply), thereby 
eliminating potential confusion and removing impediments to and 
perfecting the mechanism of a free and open market and a national 
market system. Along the same lines, the Exchange believes that the 
clarification in Footnote 31 that the SPXW Customer Priority Surcharge 
applies to all customer contracts executed electronically, except those 
executed by a floor broker on a PAR terminal will eliminate potential 
confusion regarding to whom the SPXW Customer Priority Surcharge 
applies (and does not apply), thereby eliminating potential confusion 
and removing impediments to and perfecting the mechanism of a free and 
open market and a national market system.
    The Exchange believes that the proposed change to the Cancel Fee is 
reasonable because it would allow some market participants who 
currently would get assessed the Cancel Fee to avoid having to pay the 
fee. The Exchange believes that the proposed change is reasonable, 
equitable and not unfairly discriminatory because it makes logical 
sense to not apply the

[[Page 9543]]

Cancel Fee to orders that are entered or canceled prior to the opening, 
during the opening rotation, or during a trading halt. The Exchange 
does not believe that a TPH should be assessed a Cancel Fee for 
cancelling orders in order to move such orders to another exchange 
because that other exchange opens a class sooner than CBOE or because 
there is a trading halt on CBOE and the TPH wishes to get those orders 
filled. Moreover, this proposed change will apply to all market 
participants equally; the Cancel Fee will not be assessed to any 
cancelled orders, regardless of the type of market participant, that 
are entered or canceled prior to the opening, during the opening 
rotation, or during a trading halt.

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. CBOE 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 all of the proposed changes will apply to all market 
participants. CBOE does not believe that the proposed rule change will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed changes only apply to trading on CBOE. To the extent that any 
of the proposed changes makes CBOE a more attractive market for market 
participants on other exchanges, such market participants may elect to 
become market participants on CBOE. Finally, the majority of the 
proposed changes are non-substantive clarifications.

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) of the Act \10\ and paragraph (f) of Rule 19b-4 \11\ 
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 shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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-2014-012 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-2014-012. 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-2014-012 and should be 
submitted on or before March 12, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03568 Filed 2-18-14; 8:45 am]
BILLING CODE 8011-01-P