[Federal Register Volume 80, Number 238 (Friday, December 11, 2015)]
[Notices]
[Pages 77070-77072]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31178]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76567; File No. SR-CBOE-2015-109]


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

December 7, 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 November 24, 2015, 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 the 
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.\3\ Specifically, 
the Exchange proposes to increase the Customer Priority Surcharge fee 
assessed to contracts executed in VIX volatility index options (``VIX 
options'') and weekly S&P 500 options (``SPXW options''). Currently, 
the VIX Customer Priority Surcharge (``VIX Surcharge'') is assessed on 
all Customer (C) VIX contracts executed electronically that are Maker 
and not Market Turner. Additionally, the VIX Surcharge is only assessed 
on such contracts that have a premium of $0.11 or greater. The Exchange 
proposes to increase the VIX Surcharge from $0.10 per contract to $0.20 
per contract on such contracts that have a premium of $0.11 or greater. 
The SPXW Customer Priority Surcharge (``SPXW Surcharge'') is currently 
assessed on all Customer (C) SPXW contracts executed electronically.\4\ 
The Exchange also proposes to increase the SPXW Surcharge from $0.05 
per contract to $0.10 per contract.
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    \3\ The Exchange initially filed the proposed fee change on 
November 2, 2015 (SR-CBOE-2015-101). On November 24, 2015, the 
Exchange withdrew that filing and submitted this filing.
    \4\ The SPXW Surcharge is not assessed to contracts executed by 
a floor broker using a PAR terminal or orders in SPXW options in 
SPXW electronic book that are executed during opening rotation on 
the final settlement day of VIX options and futures which have the 
expiration that contribute to the VIX settlement calculation.
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    The Exchange also proposes to amend the Fees Schedule with respect 
to the Qualified Contingent Cross (``QCC'') Orders Rate Table. By way 
of background, the Fees Schedule currently provides for a ``QCC Rate 
Table'' which sets forth a transaction fee and credit for QCC 
transactions. In addition, the ``Notes'' section of the QCC Rate Table 
includes the definition of a QCC transaction. Specifically the 
``Notes'' section currently provides that ``A QCC transaction is 
comprised of an `initiating order' to buy (sell) at least 1,000 
contracts, coupled with a contra-side order to sell (buy) an equal 
number of contracts . . .'' The Exchange notes that it recently amended 
its QCC rules to expand the availability of QCC orders

[[Page 77071]]

by permitting multiple contra-parties on a QCC order.\5\ As such, the 
definition of QCC Orders in CBOE Rule 6.53 has been amended. The 
Exchange proposes to similarly amend the Fees Schedule to incorporate 
this new definition to maintain consistency in the Rules and Fees 
Schedule and avoid potential confusion.
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    \5\ See Securities Exchange Act Release No. 75756 (August 25, 
2015), 80 FR 168 (August 31, 2015) (SR-CBOE-2015-073).
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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.\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. The Exchange 
also believes the proposed rule change is consistent with Section 
6(b)(4) of the Act,\8\ which provides that Exchange rules may provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its Trading Permit Holders.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the SPXW and VIX Customer Priority 
Surcharge increases are reasonable because the amount of the new fees 
are within the range of surcharges assessed for customer transactions 
in other CBOE proprietary products (for example customers are currently 
assessed a $0.20 Hybrid 3.0 Execution Surcharge (which essentially acts 
as a customer priority surcharge) in SPX options).
    The Exchange believes that it is equitable and not unfairly 
discriminatory to assess the SPXW and VIX Priority Surcharges to 
Customers and not other market participants because Customers are not 
subject to additional costs for effecting transactions in SPXW and VIX 
which are applicable to other market participants, such as license 
surcharges. Additionally, Customers are not subject to fees applicable 
to other market participants such as connectivity fees and fees 
relating to Trading Permits, and are not subject to the same 
obligations as other market participants, including regulatory and 
compliance requirements and quoting obligations.
    The Exchange notes that the VIX Surcharge was adopted to minimize 
the cost differentials between manual and electronic executions (as 
Floor Brokers assess a commission on customer executions). As such, the 
Exchange believes it's equitable and not unfairly discriminatory to 
assess the VIX Surcharge to Makers and not Takers because electronic 
Maker orders are analogous to customer orders represented by Floor 
Brokers in open outcry (as compared to Takers that immediately remove 
liquidity and do not rest in the book). The Exchange believes it's 
equitable and not unfairly discriminatory to assess only Makers in VIX 
and both Makers and Takers in SPXW because the SPX product group has 
reached a mature and established level since its introduction while VIX 
has not and the Exchange therefore wants to incentivize liquidity in 
VIX and not discourage trading. The Exchange also notes that another 
S&P 500 product (SPX) also charges a surcharge to both Makers and 
Takers (i.e., the Hybrid 3.0 Surcharge). The Exchange believes that it 
is equitable and not unfairly discriminatory to only assess the VIX 
Surcharge to Maker Non-Turners because the Exchange wants to encourage 
improving the market (``turning'').
    The Exchange believes that it is equitable and not unfairly 
discriminatory to only assess the VIX Surcharge when the contract 
premium is at least $0.11 because the Exchange wants to reduce costs on 
low priced VIX options to encourage Customers to close and roll over 
positions close to expiration at low premium levels. Currently, such 
Customers are less likely to do this because the transaction fee is 
closer to the premium level. The Exchange believes that maintaining 
lowered fees overall for VIX options trading with a premium of $0.00-
$0.10 will encourage the trading of such options. As such, the Exchange 
does not wish to assess the VIX Surcharge on such options in order to 
keep the costs low.
    Finally, the Exchange believes that codifying the amended 
definition of a QCC transaction in the Fees Schedule (in addition to 
the Exchange's Rules, where it is currently provided for), will 
alleviate potential confusion and maintain clarity in the Fees 
Schedule, which serves 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.

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 because, while different 
electronic transaction fees are assessed to different market 
participants, different market participants have different obligations 
and circumstances as noted above. The Exchange believes that the 
proposal to increase the surcharge amount assessed to Customers for 
executions in SPXW and VIX contracts will not cause an unnecessary 
burden on intermarket competition because SPXW and VIX are only traded 
on CBOE. 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.
    Additionally, the proposed change to codify in the Fees Schedule 
the revised definition of a QCC order is not intended for competitive 
reasons and only applies to CBOE. The Exchange notes that no rights or 
obligations of Trading Permit Holders are affected by this particular 
change.

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 \9\ and paragraph (f) of Rule 19b-4 \10\ 
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

[[Page 77072]]

change should be approved or disapproved.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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-2015-109 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-2015-109. 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 such 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-2015-109, and should be 
submitted on or before January 4, 2016.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Brent J. Fields,
Secretary.
[FR Doc. 2015-31178 Filed 12-10-15; 8:45 am]
BILLING CODE 8011-01-P