[Federal Register Volume 75, Number 240 (Wednesday, December 15, 2010)]
[Notices]
[Pages 78284-78285]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31436]
[[Page 78284]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63470; File No. SR-CBOE-2010-108]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to CBOE's Marketing Fee Program
December 8, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 1, 2010, Chicago Board Options Exchange, Incorporated
(``CBOE'' or the ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Exchange has designated this proposal as one establishing or
changing a due, fee, or other charge imposed by CBOE under Section
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\
which renders the proposal effective upon filing with the Commission.
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)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Chicago Board Options Exchange, Incorporated (``CBOE'' or
``Exchange'') proposes to amend its Fees Schedule and specifically make
certain changes to its Marketing Fee Program. The text of the proposed
rule change is available on the Exchange's Web site (http://www.cboe.org/legal), at the Exchange's Office of the Secretary and at
the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, CBOE 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. CBOE 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
CBOE proposes to amend its Marketing Fee Program in two respects.
First, CBOE proposes to amend the types of transactions in which the
fee is assessed in the SPY option class. Currently, the marketing fee
is assessed on transactions as set forth in footnote 6 of the Fees
Schedule.\5\ In that regard, CBOE notes that it is assessed on both
electronic and open outcry transactions. CBOE now proposes to not
assess the marketing fee on electronic transactions in SPY options,
except that it would continue to assess the marketing fee on electronic
transactions resulting from its Automated Improvement Mechanism (``AIM
'') pursuant to CBOE Rule 6.74A and transactions in open outcry. CBOE
proposes to implement this change on a pilot basis starting on December
1, 2010 and continuing through March 31, 2011.
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\5\ In particular, the marketing fee is assessed only on
transactions of Market-Makers, e-DPMs, and DPMs, resulting from (i)
customer orders from payment accepting firms, or (ii) customer
orders that have designated a ``Preferred Market-Maker'' under CBOE
Rule 8.13. However, as described in footnote 6, the marketing fee
does not apply to: Market-Maker-to-Market-Maker transactions
including transactions resulting from orders from non-Trading Permit
Holder market-makers; transactions resulting from accommodation
liquidations (cabinet trades); and transactions resulting from any
of the strategies identified and/or defined in footnote 13 of this
Fees Schedule; and transactions in the Penny Pilot classes resulting
from orders executed through the Hybrid Agency Liaison under Rule
6.14.
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This proposed change is intended to attract more customer volume to
the Exchange in this option class and to allow CBOE market-makers to
better compete for order flow. CBOE notes that the SPY option class is
unique in the manner in which it trades and is one of the most active
option classes. CBOE also notes that DPMs and Preferred Market-Makers
can utilize the marketing fee funds to attract orders from payment
accepting firms that are executed in AIM and in open outcry. Finally,
CBOE believes that the marketing fee funds received by payment
accepting firms may be used to offset transaction and other costs
related to the execution of an order in AIM and in open outcry,
including in the SPY option class. For these reasons, CBOE believes
that it would make sense to continue to assess the marketing fee in
transactions resulting from AIM and in open outcry in the SPY option
class, and would assist in attracting customer volume to the Exchange.
In addition, CBOE proposes to amend its Marketing Fee Program to
not assess the fee in transactions in Flexible Exchange Options
(``FLEX''), which CBOE believes may encourage Market-Makers to transact
in FLEX options. CBOE proposes to implement this change to the
marketing fee program beginning on December 1, 2010. CBOE is not
amending its Marketing Fee Program in any other respects.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) of the Securities Exchange Act of 1934 (``Act''), \6\ in
general, and furthers the objectives of Section 6(b)(4) \7\ of the Act
in particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees, and other charges among its
Trading Permit Holders and other persons using its facilities in that
it is intended to attract more customer volume on the Exchange in the
SPY option class and also to encourage Market-Makers to transact in
FLEX options.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4).
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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 [sic] purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change establishes or changes a
due, fee, or other charge imposed by the Exchange, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and
subparagraph (f)(2) of Rule 19b-4 \9\ 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
[[Page 78285]]
investors, or otherwise in furtherance of the purposes of the Act.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(2).
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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 e-mail to [email protected]. Please include
File Number SR-CBOE-2010-108 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2010-108. This file
number should be included on the subject line if e-mail 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 on official business
days between the hours of 10 a.m. and 3 p.m. Copies of such filing also
will be available for inspection and copying at the principal office of
CBOE. 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-2010-108 and should be submitted on or before January 5, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-31436 Filed 12-14-10; 8:45 am]
BILLING CODE 8011-01-P