[Federal Register Volume 81, Number 235 (Wednesday, December 7, 2016)]
[Notices]
[Pages 88282-88284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29286]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79441; File No. SR-C2-2016-023]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to the Penny Pilot Program
December 1, 2016.
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 23, 2016, 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 and II below, which Items have been prepared by the
Exchange. The Exchange filed the proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
\3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the operation of Penny Pilot
Program through June 30, 2017. The text of the proposed rule change is
provided below.
(additions are italicized; deletions are [bracketed])
* * * * *
C2 Options Exchange, Incorporated
Rules
* * * * *
[[Page 88283]]
Rule 6.4. Minimum Increments for Bids and Offers
The Board of Directors may establish minimum quoting increments
for options traded on the Exchange. When the Board of Directors
determines to change the minimum increments, the Exchange will
designate such change as a stated policy, practice, or
interpretation with respect to the administration of this Rule
within the meaning of subparagraph (3)(A) of subsection 19(b) of the
Exchange Act and will file a rule change for effectiveness upon
filing with the Commission. Until such time as the Board of
Directors makes a change to the minimum increments, the following
minimum increments shall apply to options traded on the Exchange:
(1) No change.
(2) No change.
(3) The decimal increments for bids and offers for all series of
the option classes participating in the Penny Pilot Program are:
$0.01 for all option series quoted below $3 (including LEAPS), and
$0.05 for all option series $3 and above (including LEAPS). For
QQQQs, IWM, and SPY, the minimum increment is $0.01 for all option
series. The Exchange may replace any option class participating in
the Penny Pilot Program that has been delisted with the next most
actively-traded, multiply-listed option class, based on national
average daily volume in the preceding six calendar months, that is
not yet included in the Pilot Program. Any replacement class would
be added on the second trading day following [July 1, 2016]January
1, 2017. The Penny Pilot shall expire on [December 31, 2016]June 30,
2017. Also, for so long as SPDR options (SPY) and options on
Diamonds (DIA) participate in the Penny Pilot Program, the minimum
increments for Mini-SPX Index Options (XSP) and options on the Dow
Jones Industrial Average (DJX), respectively, may be $0.01 for all
option series quoting less than $3 (including LEAPS), and $0.05 for
all option series quoting at $3 or higher (including LEAPS).
(4) No change.
* * * * *
The text of the proposed rule change is also 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 Penny Pilot Program (the ``Pilot Program'') is scheduled to
expire on December 31, 2016. C2 proposes to extend the Pilot Program
until June 30, 2017. C2 believes that extending the Pilot Program will
allow for further analysis of the Pilot Program and a determination of
how the Pilot Program should be structured in the future.
During this extension of the Pilot Program, C2 proposes that it may
replace any option class that is currently included in the Pilot
Program and that has been delisted with the next most actively traded,
multiply listed option class that is not yet participating in the Pilot
Program (``replacement class''). Any replacement class would be
determined based on national average daily volume in the preceding six
months,\5\ and would be added on the second trading day following
January 1, 2017. C2 will announce to its Trading Permit Holders by
circular any replacement classes in the Pilot Program. The Exchange
notes that it intends to utilize the same parameters to prospective
replacement classes as was originally approved.
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\5\ The month immediately preceding a replacement class's
addition to the Pilot Program (i.e., December) would not be used for
purposes of the six-month analysis. Thus, a replacement class to be
added on the second trading day following January 1, 2017 would be
identified based on The Option Clearing Corporation's trading volume
data from June 1, 2016 through November 30, 2016.
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C2 is specifically authorized to act jointly with the other options
exchanges participating in the Pilot Program in identifying any
replacement class.
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. 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. In particular, the proposed rule change allows for
an extension of the Pilot Program for the benefit of market
participants.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ Id.
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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. Specifically, the Exchange
believes that, by extending the expiration of the Pilot Program, the
proposed rule change will allow for further analysis of the Pilot
Program and a determination of how the Program shall be structured in
the future. In doing so, the proposed rule change will also serve to
promote regulatory clarity and consistency, thereby reducing burdens on
the marketplace and facilitating investor protection. In addition, the
Exchange has been authorized to act jointly in extending the Pilot
Program and believes the other exchanges will be filing similar
extensions.
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\ thereunder.
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if
[[Page 88284]]
consistent with the protection of investors and the public interest,
the proposed rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6)(iii) thereunder.\12\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
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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.
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-C2-2016-023 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-C2-2016-023. 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-C2-2016-023 and should be
submitted on or before December 28, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields.
Secretary.
[FR Doc. 2016-29286 Filed 12-6-16; 8:45 am]
BILLING CODE 8011-01-P