[Federal Register Volume 79, Number 222 (Tuesday, November 18, 2014)]
[Notices]
[Pages 68743-68745]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27186]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73575; File No. SR-CBOE-2014-084]


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

November 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 November 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.
---------------------------------------------------------------------------

    \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/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 amend its Fees Schedule, effective 
November 3, 2014. The Exchange always strives for clarity in its rules 
and Fees Schedule, so that market participants may best understand how 
rules and fees apply. First, the Exchange proposes to remove obsolete 
language in Footnotes 29 and 30. On October 1, 2014, the Exchange 
submitted a rule filing to amend its Order Router Subsidy (``ORS'') and 
Complex Order Router Subsidy (``CORS'') Programs (collectively 
``Programs'').\3\ In the filing, among other things, the Exchange 
proposed to cease making payments under both Programs with respect to 
executed contracts in mini-option classes. The Exchange however, 
inadvertently did not remove the following statement from Footnotes 29 
and 30: ``For billing purposes, mini-options fees will be rounded to 
the nearest $0.01 using standard rounding rules.'' As mini-options are 
no longer part of either Program, reference to how mini-option fees 
would be billed under the program is unnecessary. The Exchange proposes 
to remove the obsolete language, which will prevent potential confusion 
and maintain clarity in the Fees Schedule.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 73354 (October 15, 
2014), 79 FR 203 (October 21, 2014) (SR-CBOE-2014-75).
---------------------------------------------------------------------------

    The Exchange also proposes to amend its OHS (Order Handling System) 
Order Cancellation Fee (``Cancel Fee''). By way of background, the 
Exchange had established this fee to address various operational 
problems and recoup costs resulting from the practice of immediately 
following orders routed through the OHS with a cancel request. 
Currently, the executing Clearing Trading Permit Holder is charged 
$2.00 for every public customer order (origin code ``C'') that it 
cancels through the OHS in any month where the total number of 
cancellations sent by the executing Clearing Trading Permit Holder is 
in excess of the number of public customer orders that the executing 
Clearing Trading Permit Holder executes in a month for itself or for a 
correspondent firm. Additionally, this fee does not apply: (i) if an 
executing Clearing Trading Permit Holder cancels less than 500 public 
customer orders through OHS in a month for itself or for a 
correspondent firm; (ii) to cancelled OHS orders that improve the 
Exchange's prevailing bid-offer (BBO) market at the time the orders are 
received; (iii) to fill and cancellation activity occurring within the 
first one minute of trading following the opening of each options 
class, (iv) to complex order fills and cancels, (v) to unfilled Fill-
or-Kill (FOK) orders, (vi) to unfilled Immediate-or-Cancel (IOC) 
orders, and

[[Page 68744]]

(vii) to orders that are entered or cancelled prior to the opening, 
during the opening rotation, or during a trading halt. The Exchange now 
proposes to waive the cancellation fee.
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.\4\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \5\ 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) \6\ 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,\7\ 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.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ Id.
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposed 
clarifications to the Fees Schedule will make the Fees Schedule easier 
to read and alleviate potential confusion. The alleviation of potential 
confusion will remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, 
protect investors and the public interest.
    The Exchange believes that it is reasonable and equitable to waive 
the cancellation fee. The cancellation fee was originally introduced in 
response to capacity concerns stemming from Trading Permit Holders 
generating significant order traffic that did not result in executed 
trades due to orders being cancelled at high rates. However, the total 
number of monthly cancelled fees assessed has decreased over time. As 
such, the Exchange believes the fee may no longer be necessary. The 
Exchange believes it's reasonable to waive the cancellation fee because 
it will merely result in Trading Permit Holders no longer being subject 
to this fee. Additionally, the Exchange notes that another exchange has 
similarly waived its Cancellation Fee.\8\ The Exchange does not believe 
the proposed change is unfairly discriminatory as it applies equally to 
all Trading Permit Holders, who will no longer be subject to any 
cancellation fees.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 72817 (August 12, 
2014), 79 FR 48801 (August 18, 2014) (SR-ISE-2014-039).
---------------------------------------------------------------------------

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 the proposed changes apply to all Trading Permit 
Holders. The Exchange believes that the proposal to waive the 
cancellation fee will not cause an unnecessary burden on intermarket 
competition because at least one other exchange has similarly waived 
its cancellation fee.\9\ To the extent that the proposed changes make 
CBOE a more attractive marketplace for market participants at other 
exchanges, such market participants are welcome to become CBOE market 
participants.
---------------------------------------------------------------------------

    \9\ Id.
---------------------------------------------------------------------------

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 written 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 will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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-2014-084 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2014-084. 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-

[[Page 68745]]

2014-084 and should be submitted on or before December 9, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

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

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27186 Filed 11-17-14; 8:45 am]
BILLING CODE 8011-01-P