[Federal Register Volume 80, Number 20 (Friday, January 30, 2015)]
[Notices]
[Pages 5163-5169]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-01754]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74135; File No. SR-C2-2015-001]


Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Amend the Fees Schedule

January 26, 2015.
    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 14, 2015, C2 Options Exchange, Incorporated (the 
``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 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.c2exchange.com/Legal/), at the Exchange's Office of the Secretary, 
and at the Commission's Public Reference Room.

[[Page 5164]]

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.\3\ First, the 
Exchange proposes to amend Taker fees for simple, non-complex orders in 
all multiply-listed index, ETF and ETN options classes (except RUT). 
Currently, for such orders, the Exchange assesses a fee of $0.44 for 
Public Customers and $0.45 to C2 Market-Makers as well as orders from 
all other origins. The Exchange proposes to increase these fee amounts 
by $0.03 for all market participants, resulting in a fee of $0.47 per 
contract for Public Customer orders and $0.48 per contract for orders 
from C2 Market-Makers and all other origins. The reason for the 
proposed change is for competitive reasons. Additionally, the Exchange 
notes that the proposed fee amounts are equivalent to, and in some 
cases lower than, those assessed for similar orders by other 
exchanges.\4\
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    \3\ C2 initially filed the proposed fee change on December 31, 
2014 (SR-C2-2014-030). On January 14, 2015, C2 withdrew that filing 
and submitted this filing. All fee amounts described herein are per 
contract unless otherwise noted.
    \4\ See The NASDAQ Stock Market LLC NASDAQ Options Market 
(``NOM'') Price List, which lists fees for Customer orders that 
remove liquidity in Penny Pilot options at $0.48 per contract and 
non-Penny Pilot options at $0.85 per contract, and for non-Customer 
orders that remove liquidity in Penny Pilot options at $0.49 per 
contact and non-Penny Pilot options at $0.89 per contract.
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    The Exchange also proposes to raise, from $0.35 per contract to 
$0.45 per contract, the Taker fee for complex orders from C2 Market-
Makers and all other origins (Professional Customer, Firm, Broker/
Dealer, non-C2 Market-Maker, JBO, etc.) except Public Customers in 
multiply-listed index, ETF and ETN options classes (except RUT). The 
Exchange desires to impose this increase on orders from C2 Market-
Makers and all other origins and not on Public Customers due to market 
forces. The Exchange notes that Customer order flow enhances liquidity 
on the Exchange for the benefit of all market participants. 
Specifically, Customer liquidity benefits all market participants by 
providing more trading opportunities, which attracts Market-Makers. An 
increase in the activity of these market participants in turn 
facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants. 
Moreover, the options industry has a long history of providing 
preferential pricing to Public Customers. Finally, the proposed fee 
amount is in the range of, and in some cases much lower than, those 
assessed for similar orders by other exchanges.\5\
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    \5\ See NOM Price List, which lists fees for orders from market 
participants other than Customers that remove liquidity in Penny 
Pilot options at $0.49 per contract and non-Penny Pilot options at 
$0.89 per contract.
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    The Exchange proposes to adopt a new fees structure for simple, 
non-complex orders in equity options classes. Currently, the Exchange's 
fees and rebates for such orders are determined by formulas that take 
into account factors such as the C2 BBO Market Width, type of market 
participant, and size of the order. The Exchange proposes to eliminate 
that fees structure and replace it with a more traditional, simple 
Maker/Taker fee and rebate structure, one that mirrors the structure 
(and even the fee amounts) of that which applies to simple, non-complex 
orders in multiply-listed index, ETF and ETN options classes. The 
proposed new Section 1B of the Exchange Fees Schedule would describe 
this new structure as follows:
    The following rates apply to simple, non-complex orders in all 
equity options classes. Listed rates are per contract.

------------------------------------------------------------------------
                                                   Maker      Taker fee
------------------------------------------------------------------------
Public Customer...............................     * ($.37)         $.47
C2 Market-Maker...............................     * ($.40)         $.48
All Other Origins (Professional Customer,          * ($.35)         $.48
 Firm, Broker/Dealer, non-C2 Market-Maker,
 JBO, etc.)...................................
Trades on the Open............................         $.00         $.00
------------------------------------------------------------------------
* Rebates do not apply to orders that trade with Public Customer complex
  orders. In such a circumstance, there will be no fee or rebate.

    The Exchange believes that this proposed new fee and rebate 
structure will make it easier for market participants to determine what 
their fees will be. The Exchange also believes that the proposed new 
structure will better allow the Exchange to compete for, and attract 
more, trading flow. The rebates offered are intended to incentivize C2 
Market-Makers to quote competitively on the Exchange and to attract 
market participants to send orders to the Exchange, which will then 
incent Takers to trade with those orders and quotes. The differences 
between the Maker rebates and Taker fees are intended to cover the 
costs associated with operating the Exchange's trading systems 
necessary to provide these trading opportunities. Further, the amounts 
of these rebates and fees are as, or more, beneficial to C2 market 
participants in many circumstances as those offered on other 
exchanges.\6\ The Exchange proposes to not provide a rebate to simple 
orders in equity options that trade with Public Customer complex orders 
in equity options because the Exchange also proposes to provide a 
rebate for Public Customer complex orders, and it would not be 
economically feasible or viable to provide a rebate on an order that is 
trading with an order that is not generating a fee (as this would 
result in a net negative for the Exchange). In such a circumstance, 
there will be no fee or rebate.
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    \6\ See NYSE Arca, Inc. (``NYSE Arca'') Options Fee Schedule, 
which lists, for electronic executions in Penny Pilot issues, 1) the 
standard Customer Maker rebate of $0.25 per contract versus a Taker 
fee of $0.47, 2) the standard NYSE Arca Market Maker Maker rebate of 
$0.28 versus a Taker fee of $0.49, and 3) the standard Firm and 
Broker Dealer Maker rebate of $0.10 versus a Taker fee of $0.49; and 
for electronic executions in non-Penny Pilot issues, 1) the standard 
Customer Maker rebate of $0.75 versus a Taker fee of $0.85, 2) the 
standard NYSE Arca Market Maker Maker rebate of $0.05 versus a Taker 
fee of $0.87, and 3) the standard Firm and Broker Dealer Maker fee 
of $0.50 versus a Taker fee of $0.89 (it should be noted that all 
fee and rebate amounts described in this footnote are the standard 
amounts listed on the NYSE Arca Options Fee Schedule and do not take 
into account any NYSE Arca programs that provide rebates or credits 
to NYSE Arca market participants based on volume transacted on NYSE 
Arca or other such NYSE Arca programs).
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    The Exchange also proposes to adopt a new fees structure for 
complex orders in equity options classes. Currently, Section 1D of the 
Exchange Fees Schedule states: ``For all complex order transactions in 
equity options classes, all components of such transactions (including 
simple, non-complex orders and/or quotes that execute against a complex 
order) will be assessed no fee (or rebate).'' The Exchange proposes to 
delete this language and instead adopt a Maker/Taker fee and rebate 
structure for complex orders in equity options

[[Page 5165]]

classes, one that mirrors the structure (and even the fee amounts) of 
that which applies to complex orders in multiply-listed index, ETF and 
ETN options classes. The following rates apply to complex orders in 
equity options classes. Listed rates are per contract.

------------------------------------------------------------------------
                                                 Maker fee/   Taker fee/
                                                  (rebate)     (rebate)
------------------------------------------------------------------------
Public Customer...............................     * ($.35)     * ($.35)
C2 Market-Maker...............................         $.10         $.45
All Other Origins (Professional Customer,              $.20         $.45
 Firm, Broker/Dealer, non-C2 Market-Maker,
 JBO, etc.)...................................
Trades on the Open............................         $.00         $.00
------------------------------------------------------------------------

    The purpose of this change is to align and improve the Exchange's 
competitive position in relation to other exchanges. Additionally, the 
Exchange proposes to denote in an asterisk on the Fees Schedule that 
the rebate will only apply to Public Customer complex orders that trade 
with non-Public Customer complex orders. In other circumstances, there 
will be no Maker or Taker fee or rebate. This is because, if the 
Exchange offered the rebate when a Public Customer complex order trades 
with another Public Customer complex order, the Exchange would be 
providing a rebate on both sides of the order. It would not be 
economically feasible or viable to provide a rebate on an order that is 
trading with an order that is not generating a fee (as this would 
result in a net negative for the Exchange). Finally, the amounts of 
these rebates and fees are as, or more, beneficial to C2 market 
participants in many circumstances as those offered on other 
exchanges.\7\
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    \7\ See Boston Options Exchange LLC (``BOX'') Fee Schedule, 
Section III, which denotes that BOX Market-Makers can pay anywhere 
from $0.10 to $0.80 for a complex order execution (depending on the 
type of order it executes against and the options class), with most 
described fees listed at least $0.40, and orders from all other 
origins (not including Public Customers) can pay anywhere from $0.20 
to $0.80 for a complex order execution (depending on the type of 
order it executes against and the options class), with most 
described fees listed at least $0.40 and a few listed at $0.80. See 
also NASDAQ OMX PHLX LLC (``PHLX'') Pricing Schedule, Section II, 
under which Public Customers receive no rebate for complex order 
executions in multiply-listed equity options.
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    Just as the Exchange handles complex orders in multiply-listed 
index, ETF and ETN options classes, for transactions in which simple, 
non-complex orders execute against a complex order, each component of 
the complex order will be assessed the complex order fees listed in 
Section 1D of this Fees Schedule, while the simple, non-complex orders 
will be assessed the transaction fees listed in Section 1B of this Fees 
Schedule. For transactions in which a complex order executes against 
another complex order, each component of the complex order will be 
assessed the complex order fees listed in Section 1D of this Fees 
Schedule. This follows common sense; when a market participant submits 
an order, he likely does not know whether it will trade with a simple 
or complex order, and should get assessed the fee amount applicable to 
the type of order he submits, regardless of what type of order with 
which it trades.
    As with complex orders in multiply-listed index, ETF and ETN 
options classes, for executions that occur within the Complex Order 
Auction (``COA'') against auction responses, the incoming/auctioned 
order is considered maker, and auction responses are considered taker. 
This is because the incoming/auctioned order is the one creating 
trading interest, and the response is taking that interest.
    For the newly-proposed fees structures that apply to both simple 
and complex orders in equity options, the Exchange proposes to assess 
no fees and offer no rebates for Trades on the Open. Trades on the Open 
involve the matching of undisplayed pre-opening trading interest. As 
such, there is, in effect, no Maker or Taker activity occurring. The 
Exchange would like to encourage users to submit pre-opening orders. 
The Exchange also does not assess fees or offer rebates for Trades on 
the Open in multiply-listed index, ETF and ETN options classes (for 
both simple and complex orders).
    The Exchange also proposes to raise the PULSe On-Floor Workstation 
(``PULSe'') fee. Currently, the Exchange charges a fee of $350 per 
month for the first 10 users of a Permit Holder workstation and $100 
per month for all subsequent users. Permit Holders may also make the 
workstation available to their customers, which may include non-broker 
dealer public customers and non-Permit Holder broker dealers (referred 
to herein as ``non-Permit Holders''). For such non-Permit Holders 
workstations, the Exchange charges a fee of $350 per month per 
workstation. The Exchange proposes raising the PULSe On-Floor 
Workstation fee from $350 per month to $400 per month for both Permit 
Holder and non-Permit Holder workstations. The Exchange expended 
significant resources developing PULSe, and intends to recoup some of 
those costs.
    As the Exchange proposes to amend the Fees Schedule to set 
transaction fees and rebates for equity options at the same rates as 
those for multiply-listed index, ETF and ETN options classes, the 
Exchange therefore also proposes to standardize Linkage Routing fees 
for equity options and multiply-listed index, ETF and ETN options. 
Currently, Section 2 of the Exchange Fees Schedule states that $0.65 
per routed contract in addition to applicable C2 taker fee (excluding 
Public Customer orders in equity options classes). For Public Customer 
orders in equity options classes, C2 shall pass through the actual 
transaction fee assessed by the exchange(s) to which the order was 
routed. In order to achieve the above-mentioned standardization, as 
well as cover the costs associated with managing the Exchange's Linkage 
systems and processes, the Exchange proposes to delete the language 
that excludes Public Customer orders in equity classes from the stated 
fee that applies to all other Linkage routing and provides a separate 
fee structure for such orders.\8\ Going forward, the Exchange proposes 
to merely state in Section 2 of the Fees Schedule that the Linkage 
Routing fee will be ``$0.65 per routed contract in addition to 
applicable C2 taker fee.''
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    \8\ As such, the Exchange proposes to delete the language 
``(excluding Public Customer orders in equity options classes). For 
Public Customer orders in equity options classes, C2 shall pass 
through the actual transaction fee assessed by the exchange(s) to 
which the order was routed'' from Section 2 of the Fees Schedule.
---------------------------------------------------------------------------

    Finally, as of January 2, 2015, the Exchange no longer lists Mini-
Options. Accordingly, the Exchange proposes to delete from the Fees 
Schedule all references to Mini-Options, as such references are no 
longer necessary and will be obsolete.
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 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,

[[Page 5166]]

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 Section 6(b)(4) of the Act,\11\ 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that it is equitable and not unfairly 
discriminatory to assess lower fees to Public Customers as compared to 
other market participants and to provide higher rebates to Public 
Customers as compared to other market participants other than Market-
Makers in some circumstances because as noted above, Public Customer 
order flow enhances liquidity on the Exchange for the benefit of all 
market participants. Specifically, Public Customer liquidity benefits 
all market participants by providing more trading opportunities, which 
attracts Market-Makers. An increase in the activity of these market 
participants in turn facilitates tighter spreads, which may cause an 
additional corresponding increase in order flow from other market 
participants. The fees and rebates offered to Public Customers are 
intended to attract more Public Customer trading volume to the 
Exchange. Moreover, the options industry has a long history of 
providing preferential pricing to Public Customers, and the Exchange's 
current Fees Schedule currently does so in many places, as do the fees 
structures of many other exchanges. Finally, all fee amounts listed as 
applying to Public Customers will be applied equally to all Public 
Customers (meaning that all Public Customers will be assessed the same 
amount).
    The Exchange believes that it is equitable and not unfairly 
discriminatory to, in some circumstances, assess lower fees to Market-
Makers as compared to other market participants other than Public 
Customers and provide higher rebates to C2 Market-Makers as compared to 
other market participants because C2 Market-Makers, unlike other C2 
market participants, take on a number of obligations, including quoting 
obligations, that other market participants do not have. Further, these 
lower fees and higher rebates offered to C2 Market-Makers are intended 
to incent C2 Market-Makers to quote and trade more on C2, thereby 
providing more trading opportunities for all C2 market participants. 
Finally, all fee amounts listed as applying to C2 Market-Makers will be 
applied equally to all C2 Market-Makers (meaning that all C2 Market-
Makers will be assessed the same amount). This concept also applies to 
orders from all other origins. It should also be noted that all fee 
amounts described herein are intended to attract greater order flow to 
the Exchange, which should therefore serve to benefit all Exchange 
market participants.
    The Exchange believes that the proposed increases to Taker fees for 
simple, non-complex orders in all multiply-listed index, ETF and ETN 
options classes (except RUT) are reasonable because the proposed fee 
amounts are equivalent to, and in some cases lower than, those assessed 
for similar orders by other exchanges.\12\
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    \12\ See NOM Price List, which lists fees for Customer orders 
that remove liquidity in Penny Pilot options at $0.48 per contract 
and non-Penny Pilot options at $0.85 per contract, and for non-
Customer orders that remove liquidity in Penny Pilot options at 
$0.49 per contact and non-Penny Pilot options at $0.89 per contract.
---------------------------------------------------------------------------

    The Exchange believes that the proposed increase in the Taker fee 
for complex orders from C2 Market-Makers and all other origins 
(Professional Customer, Firm, Broker/Dealer, non-C2 Market-Maker, JBO, 
etc.) except Public Customers in multiply-listed index, ETF and ETN 
options classes (except RUT) is reasonable, equitable, and not unfairly 
discriminatory because the proposed fee amount is in the range of, and 
in some cases much lower than, those assessed for similar orders by 
other exchanges.\13\
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    \13\ See NOM Price List, which lists fees for orders from market 
participants other than Customers that remove liquidity in Penny 
Pilot options at $0.49 per contract and non-Penny Pilot options at 
$0.89 per contract.
---------------------------------------------------------------------------

    The Exchange believes that the proposed new fee and rebate 
structure for simple, non-complex orders in equity options is 
reasonable, equitable and not unfairly discriminatory because the 
Exchange also believes that the proposed new structure will better 
allow the Exchange to compete for, and attract more, trading flow, 
which will benefit all C2 market participants. The rebates offered are 
intended to encourage C2 Market-Makers to quote more often and attract 
market participants to send orders to the Exchange, which will then 
incent Takers to trade with those orders and quotes. The Exchange 
believes that the proposed new fee and rebate structure is also 
reasonable because it may make it easier for market participants to 
determine what their fees will be. The Exchange believes that the 
differences between the Maker rebates and Taker fees are reasonable, 
equitable and not unfairly discriminatory because they are intended to 
cover the costs associated with operating the Exchange's trading 
systems necessary to provide these trading opportunities. Further, the 
amounts of these rebates and fees are as, or more, beneficial to C2 
market participants in many circumstances as those offered on other 
exchanges.\14\ The Exchange believes that its proposal to not provide a 
rebate for simple orders in equity options that trade with Public 
Customer complex orders in equity options is reasonable, equitable and 
not unfairly discriminatory because the Exchange also proposes to 
provide a rebate for Public Customer complex orders, and it would not 
be economically feasible or viable to provide a rebate on an order that 
is trading with an order that is not generating a fee (as this would 
result in a net negative for the Exchange). Finally, the Exchange 
believes that the proposed new fee and rebate structure for simple, 
non-complex orders in equity options is equitable and not unfairly 
discriminatory because the structure and fee amounts are identical to 
those which apply to simple, non-complex orders in multiply-listed 
index, ETF and ETN options classes.
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    \14\ See NYSE Arca Options Fee Schedule, which lists, for 
electronic executions in Penny Pilot issues, (1) the standard 
Customer Maker rebate of $0.25 per contract versus a Taker fee of 
$0.47, (2) the standard NYSE Arca Market Maker Maker rebate of $0.28 
versus a Taker fee of $0.49, and (3) the standard Firm and Broker 
Dealer Maker rebate of $0.10 versus a Taker fee of $0.49; and for 
electronic executions in non-Penny Pilot issues, (1) the standard 
Customer Maker rebate of $0.75 versus a Taker fee of $0.85, (2) the 
standard NYSE Arca Market Maker Maker rebate of $0.05 versus a Taker 
fee of $0.87, and (3) the standard Firm and Broker Dealer Maker fee 
of $0.50 versus a Taker fee of $0.89 (it should be noted that all 
fee and rebate amounts described in this footnote are the standard 
amounts listed on the NYSE Arca Options Fee Schedule and do not take 
into account any NYSE Arca programs that provide rebates or credits 
to NYSE Arca market participants based on volume transacted on NYSE 
Arca or other such NYSE Arca programs).
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    The Exchange believes that the proposed new fee and rebate 
structure for complex orders in equity options is reasonable, equitable 
and not unfairly discriminatory because the Exchange also believes that 
the lower fees for C2 Market-Maker orders as compared to other market 
participants other than Public Customers will encourage C2 Market-
Makers to quote more often and send more orders to the Exchange, 
thereby providing more liquidity and trading opportunities for other 
market participants. The Exchange believes that offering a rebate for 
Public Customer

[[Page 5167]]

complex orders, whether Maker or Taker, will attract Public Customer 
orders to the Exchange. Since other market participants prefer to trade 
with Public Customer orders, this will in turn attract other market 
participants to send orders to the Exchange. The Exchange believes that 
the differences between the Maker and Taker fees are reasonable, 
equitable and not unfairly discriminatory because they are intended to 
cover the costs associated with operating the Exchange's trading 
systems necessary to provide these trading opportunities. The Exchange 
believes that not offering a rebate to Public Customer complex orders 
that trade with other Public Customer orders is reasonable, equitable 
and not unfairly discriminatory because this would result in the 
Exchange providing a rebate on both sides of a transaction, and it 
would not be economically feasible or viable to provide a rebate on an 
order that is trading with an order that is not generating a fee (as 
this would result in a net negative for the Exchange). Further, the 
amounts of these rebates and fees are as, or more, beneficial to C2 
market participants in many circumstances as those offered on other 
exchanges.\15\ Finally, the Exchange believes that the proposed new fee 
and rebate structure for complex orders in equity options is equitable 
and not unfairly discriminatory because the structure and fee amounts 
are identical to those which apply to complex orders in multiply-listed 
index, ETF and ETN options classes.
---------------------------------------------------------------------------

    \15\ See BOX Fee Schedule, Section III, which denotes that BOX 
Market-Makers can pay anywhere from $0.10 to $0.80 for a complex 
order execution (depending on the type of order it executes against 
and the options class), with most described fees listed at at least 
$0.40, and orders from all other origins (not including Public 
Customers) can pay anywhere from $0.20 to $0.80 for a complex order 
execution (depending on the type of order it executes against and 
the options class), with most described fees listed at at least 
$0.40 and many [sic] listed at $0.80. See also PHLX Pricing 
Schedule, Section II, under which Public Customers receive no rebate 
for complex order executions in multiply-listed equity options.
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable, equitable and not 
unfairly discriminatory to assess no fee and provide no rebate for 
Trades on the Open in equity options, both simple and complex orders, 
because this is in line with the treatment of Trades on the Open in 
multiply-listed index, ETF and ETN options classes. Further, all market 
participants will be subject to this same treatment.
    The Exchange believes increasing the PULSe fee from $350 per month 
to $400 per month for the first 10 users of a Permit Holder workstation 
and from $350 to $400 per month per workstation for non-Permit Holder 
workstations is reasonable because the Exchange expended significant 
resources developing PULSe and desires to recoup some of those costs. 
This change is equitable and not unfairly discriminatory because all 
market participants who desire to use PULSe will be assessed the same 
fee.
    The Exchange believes that deleting the exception for Public 
Customer equity options orders from the standard Linkage Routing fee is 
reasonable because, while this change removes an exception, it merely 
makes Linkage Routing fees the same amount for all orders sent through 
the Linkage, regardless of the type of market participant sending the 
order or product. Indeed, this $0.65 fee amount (plus applicable Taker 
fee) is reasonable because it is the amount that is currently being 
assessed to all market participants for all other orders, including to 
Public Customers for orders in multiply-listed index, ETF and ETN 
options classes. Similarly, the Exchange believes the proposed change 
is equitable and not unfairly discriminatory because it will 
standardize the Linkage Routing fee, meaning that this fee structure 
will apply to all C2 market participants trading both options and 
multiply-listed index, ETF and ETN options classes.
    Finally, the Exchange believes removing all references to Mini-
Options, which have been delisted, maintains clarity in the Fees 
Schedule and promotes just and equitable principles of trade by 
eliminating potential confusion and removing impediments to and 
perfecting the mechanism of a free and open market and a national 
market system.

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. The Exchange does not believe 
that any circumstances in which the Exchange assesses a lower fee, or 
provides a higher rebate, to Public Customers will impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because Public Customers order 
flow as discussed above enhances liquidity on the Exchange for the 
benefit of all market participants.. These lower fees and higher 
rebates offered to Public Customers are intended to attract more Public 
Customer trading volume to the Exchange. This, in turn, would increase 
liquidity and trading opportunities for other market participants on 
C2, and provide these other market participants with greater 
opportunity to trade with Public Customer orders. Therefore, the 
Exchange believes that these lower fees and higher rebates for Public 
Customers should serve to benefit all C2 market participants. Moreover, 
the options industry has a long history of providing preferential 
pricing to Public Customers, and the Exchange's current Fees Schedule 
currently does so in many places, as do the fees structures of many 
other exchanges. Finally, all fee amounts listed as applying to Public 
Customers will be applied equally to all Public Customers (meaning that 
all Public Customers will be assessed the same amount).
    The Exchange does not believe that any circumstances in which the 
Exchange assesses a lower fee, or provides a higher rebate, to C2 
Market-Makers will impose any burden on intramarket competition that is 
not necessary or appropriate in furtherance of the purposes of the Act 
because C2 Market-Makers, unlike other C2 market participants, take on 
a number of obligations, including quoting obligations, that other 
market participants do not have. Further, these lower fees and higher 
rebates offered to C2 Market-Makers are intended to incent C2 Market-
Makers to quote and trade more on C2, thereby providing more trading 
opportunities for all C2 market participants. Finally, all fee amounts 
listed as applying to C2 Market-Makers will be applied equally to all 
C2 Market-Makers (meaning that all C2 Market-Makers will be assessed 
the same amount). This concept also applies to orders from all other 
origins.
    The Exchange does not believe that the proposed increases to Taker 
fees for simple, non-complex orders in all multiply-listed index, ETF 
and ETN options classes (except RUT) will impose any burden on 
intermarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because they only apply to 
trading on the Exchange. Further, these proposed fee amounts are 
equivalent to, and in some cases lower than, those assessed for similar 
orders by other exchanges \16\, and therefore shall continue to 
encourage competition.
---------------------------------------------------------------------------

    \16\ See NOM Price List, which lists fees for Customer orders 
that remove liquidity in Penny Pilot options at $0.48 per contract 
and non-Penny Pilot options at $0.85 per contract, and for non-
Customer orders that remove liquidity in Penny Pilot options at 
$0.49 per contact and non-Penny Pilot options at $0.89 per contract.

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[[Page 5168]]

    The Exchange does not believe that the proposed increase in the 
Taker fee for complex orders from C2 Market-Makers and all other 
origins (Professional Customer, Firm, Broker/Dealer, non-C2 Market-
Maker, JBO, etc.) except Public Customers in multiply-listed index, ETF 
and ETN options classes (except RUT) will impose any burden on 
intermarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because it only applies to 
trading on the Exchange. Further, the proposed fee amount is in the 
range of, and in some cases much lower than, those assessed for similar 
orders by other exchanges,\17\ and therefore should continue to 
encourage competition.
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    \17\ See NOM Price List, which lists fees for orders from market 
participants other than Customers that remove liquidity in Penny 
Pilot options at $0.49 per contract and non-Penny Pilot options at 
$0.89 per contract.
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    The Exchange does not believe that the proposed new fee and rebate 
structure for simple orders in equity options will impose any burden on 
intermarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because it only applies to 
trading on the Exchange. The Exchange also believes that the proposed 
new structure will better allow the Exchange to compete for, and 
attract more, trading flow, thereby enhancing competition. Along those 
lines, the amounts of these rebates and fees are as, or more, 
beneficial to C2 market participants in many circumstances as those 
offered on other exchanges.\18\
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    \18\ See NYSE Arca Options Fee Schedule, which lists, for 
electronic executions in Penny Pilot issues, (1) the standard 
Customer Maker rebate of $0.25 per contract versus a Taker fee of 
$0.47, (2) the standard NYSE Arca Market Maker Maker rebate of $0.28 
versus a Taker fee of $0.49, and (3) the standard Firm and Broker 
Dealer Maker rebate of $0.10 versus a Taker fee of $0.49; and for 
electronic executions in non-Penny Pilot issues, (1) the standard 
Customer Maker rebate of $0.75 versus a Taker fee of $0.85, (2) the 
standard NYSE Arca Market Maker Maker rebate of $0.05 versus a Taker 
fee of $0.87, and (3) the standard Firm and Broker Dealer Maker fee 
of $0.50 versus a Taker fee of $0.89 (it should be noted that all 
fee and rebate amounts described in this footnote are the standard 
amounts listed on the NYSE Arca Options Fee Schedule and do not take 
into account any NYSE Arca programs that provide rebates or credits 
to NYSE Arca market participants based on volume transacted on NYSE 
Arca or other such NYSE Arca programs).
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    The Exchange does not believe that the proposed new fee and rebate 
structure for complex orders in equity options will impose any burden 
on intermarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because it only applies to 
trading on the Exchange. The Exchange also believes that the proposed 
new structure will better allow the Exchange to compete for, and 
attract more, trading flow, thereby enhancing competition.
    The Exchange does not believe that the proposal to assess no fees 
and provide no rebates for Trades on the Open because will impose any 
burden on intermarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act because it only applies to 
trading on the Exchange. The Exchange does not believe that this 
proposal will impose any burden on intramarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act 
because it applies equally to all market participants.
    The Exchange does not believe that the proposed change to the 
Linkage Routing fee will impose any burden on intramarket competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act because the new proposed fee structure will apply to all market 
participants. The Exchange does not believe that the proposed change to 
the Linkage Routing fee will impose any burden on intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because it only applies to trading on the Exchange 
and orders sent from the Exchange to other exchanges via Linkage.
    Should any of the proposed changes make C2 a more attractive 
trading venue for market participants at other exchanges, such market 
participants may elect to become market participants at C2.

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 \19\ and paragraph (f) of Rule 19b-4 \20\ 
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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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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-C2-2015-001 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-C2-2015-001. 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-C2-2015-001 and should be 
submitted on or before February 20, 2015.


[[Page 5169]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-01754 Filed 1-29-15; 8:45 am]
BILLING CODE 8011-01-P