[Federal Register Volume 82, Number 57 (Monday, March 27, 2017)]
[Notices]
[Pages 15247-15249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05922]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80286; File No. SR-CBOE-2017-022]


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

March 21, 2017.
    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 March 14, 2017, 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

    Chicago Board Options Exchange, Incorporated (the ``Exchange'' or 
``CBOE'') proposes to amend user fees for the Complex Order Book 
(``COB'') Data Feed. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to make a number of changes to the Fees 
Schedule of the Exchange's affiliate Market Data Express, LLC 
(``MDX'').\3\ The purpose of the proposed rule change is to amend user 
fees for the Best Bid and Offer (``BBO'') data feed. This data feed is 
made available by MDX.
---------------------------------------------------------------------------

    \3\ The Exchange initially filed the proposed fee changes on 
March 1, 2017 (SR-CBOE-2017-020). On March 14, 2017, the Exchange 
withdrew that filing and submitted this filing.
---------------------------------------------------------------------------

BBO Data Feed
    The BBO Data Feed is a real-time data feed that includes the 
following information: (i) Outstanding quotes and standing orders at 
the best available price level on each side of the market; (ii) 
executed trades time, size, and price; (iii) totals of customer versus 
non-customer contracts at the BBO; (iv) all-or-none contingency orders 
priced better than or equal to the BBO; (v) expected opening price and 
expected opening size; (vi) end-of-day summaries by product, including 
open, high, low, and closing price during the trading session; (vi) 
recap messages any time there is a change in the open, high, low or 
last sale price of a listed option, (vii) Complex Order Book (``COB'') 
information; and (viii) product IDs and codes for all listed options 
contracts. The quote and last sale data contained in the BBO data feed 
is identical to the data sent to the Options Price Reporting Authority 
for redistribution to the public.
Background
    The Floor Broker Workstation (``FBW'') is an order management tool 
used by CBOE Floor Brokers to handle orders on the trading floor of the 
Exchange. Through February 28, 2017, FBW was a third-party facility of 
the Exchange. CBOE made the BBO data feed available to Floor Brokers 
that used FBW at no cost, apart from the applicable FBW login fees 
($450 per login ID). Floor Brokers used the BBO Data Feed via FBW 
primarily to comply with customer priority obligations, such as those 
outlined in CBOE Rule 6.45 (as mentioned above, the BBO data includes 
customer contracts at the BBO). Floor Brokers who receive the BBO data 
feed via FBW (as a facility of CBOE) are not considered ``Customers'' 
of MDX to whom the BBO Data Fee applies (unless the Floor Broker has a 
separate market data agreement in place with MDX) and accordingly are 
not charged the BBO Data Fee.\4\
---------------------------------------------------------------------------

    \4\ A Customer is any person, company or other entity that, 
pursuant to a market data agreement with MDX, is entitled to receive 
data, either directly from MDX or through an authorized 
redistributor (i.e., a Customer or an extranet service provider), 
whether that data is distributed externally or used internally. 
Floor Brokers receiving the BBO Data Feed from CBOE via FBW do not 
receive the feed via an approved redistributor. The MDX fee schedule 
for CBOE data is located at https://www.cboe.org/MDX/CSM/OBOOKMain.aspx.
---------------------------------------------------------------------------

Fees
    Prior to the beginning of trading on March 1, 2017, the Exchange 
will no longer offer FBWs to its Trading Permit Holders (``TPHs'') and 
will deactivate FBW logins on the trading floor.\5\ As of March 1, 
2017, Floor Brokers will need another mechanism through which they may 
access the BBO Data Feed. The Exchange proposes to provide a reduced 
cost version of the BBO Data Feed if [sic] to Floor Brokers that elect 
to receive the feed through a third-party provided device so that they 
can meet their customer priority obligations.
---------------------------------------------------------------------------

    \5\ See CBOE Regulatory Circular RG16-195.
---------------------------------------------------------------------------

    The Exchange is proposing a fee of $100 per month, per Approved 
Third-Party Device, for Floor Broker Users accessing the BBO data feed 
on the Exchange floor. Floor Broker User fees are payable only for CBOE 
Floor Brokers accessing the BBO data feed via Approved Third-Party 
Devices for managing and executing orders on the CBOE trading floor. An 
``Approved Third-Party Device'' means any computer, workstation or 
other item of equipment, fixed or portable, that receives, accesses 
and/or displays data

[[Page 15248]]

in visual, audible or other form that has been provided by a third-
party and that has been approved, by CBOE, for use on the CBOE trading 
floor. A ``Floor Broker User'' is a person or entity registered with 
CBOE as a floor broker pursuant to CBOE Rules. Floor Broker Users may 
directly interact with the CBOE Hybrid Order Handling System and view 
and manipulate data using their Approved Third-Party Devices, but not 
save, copy, export or transfer the data or any results of a 
manipulation to any other computer hardware, software or media, except 
for printing it to paper or other non-magnetic media.
    In addition, the Exchange proposes to clarify the definition of 
Customer in the BBO section of the MDX Fee Schedule does not include a 
third-party vendor of an Approved Third-Party Device, as defined below, 
unless it has a market data agreement in place with MDX.
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 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. The Exchange also 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes the proposed Floor Broker User Fee is 
equitable and not unfairly discriminatory because it would apply 
equally to all Floor Brokers using Approved Third-Party Devices on the 
Exchange trading floor. Furthermore, the Exchange believes it is 
reasonable, equitable and not unfairly discriminatory to charge Floor 
Brokers more than ``external'' Display Only Service users, because, 
unlike those users, Floor Brokers use the BBO Data on the Exchange 
trading floor to manage and execute orders and directly interact with 
the Order Handling System. The Exchange believes it is reasonable, 
equitable and not unfairly discriminatory to charge Floor Brokers 
accessing the BBO data feed via Approved Third-Party Devices a fee of 
$100 per month as opposed to the $7000 per month fee for BBO Data Feed 
Customers because: (1) Unlike BBO Data Feed Customers, Floor Broker 
Users may not save, copy, export or transfer the BBO data and; (2) 
unlike BBO Data Feed Customers, Floor Broker Users generally use the 
data for the limited purpose of meeting their order priority 
obligations (as opposed to using the data for proprietary trading 
activity). The Exchange believes the Floor Broker User Fees are 
reasonable because it will no longer collect a $450 monthly fee for 
FBW, based on conversations with vendors of currently Approved Third-
Party Devices, the Exchange believes the $100 Floor Broker user fee 
plus the amount a Floor Broker pays the third party for use of an 
Approved Third-Party Device will be comparable to the previously 
assessed monthly FBW fees.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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 proposed rule change 
will not have an impact on intramarket competition as the fee for BBO 
Data Feed via an Approved Third-Party Device will apply to all Floor 
Brokers equally who use Approved Third-Party Devices. Further, the 
proposed rule will have not have an impact on intramarket competition 
because the amount a Floor Broker previously paid for FBW, which 
included the BBO Data Feed, is comparable to the amount it will pay for 
access to the BBO Data Feed through an Approved Third-Party Device plus 
the separate payment to the third-party vendor for use of the device.
    The Exchange does not believe that the proposed change will cause 
any unnecessary burden on intermarket competition because the proposed 
change only affects trading on the Exchange's trading floor. To the 
extent that the proposed changes make the Exchange a more attractive 
marketplace for market participants at other exchanges, such market 
participants are welcome to become CBOE market participants.

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 change should be approved or 
disapproved.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 No. SR-CBOE-2017-022 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 No. SR-CBOE-2017-022. 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

[[Page 15249]]

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 No. SR-CBOE-2017-022, and should be submitted on or before April 
17, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05922 Filed 3-24-17; 8:45 am]
 BILLING CODE 8011-01-P