[Federal Register Volume 76, Number 49 (Monday, March 14, 2011)]
[Notices]
[Pages 13690-13691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-5761]
[[Page 13690]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64057; File No. SR-CBOE-2011-019]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Modify the CBOE Fees Schedule
March 8, 2011.
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 February 25, 2011 [sic], 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 and II 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 modify the Fees Schedule to amend its
linkage fees. 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, the self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Currently, when the Exchange receives a customer order that has an
original size of 500 or more contracts that is routed for execution, in
whole or in part, to one or more exchanges in connection with the
Options Order Protection and Locked/Crossed Market Plan (a ``Customer
Linkage Transaction''), the Exchange charges $0.35 per contract in
addition to the customary CBOE execution charges.\3\ The Exchange
proposes to reduce the qualifying customer order size from 500 or more
contracts to 100 or more contracts. This change will allow the Exchange
to pass through some of the transaction costs incurred by the Exchange
associated with the execution and handling of larger orders.
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\3\ See CBOE Fees Schedule, Section 20. See, also, Securities
Exchange Act Release No. 63701 (January 11, 2011), 76 FR 2934
(January 18, 2011) (SR-CBOE-2010-116) and Securities Exchange Act
Release No. 62793 (August 30, 2010), 75 FR 54408 (September 7, 2010)
(SR-CBOE-2010-076).
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The Exchange further proposes to eliminate the flat $0.35 per
contract fee for Customer Linkage Transactions, and instead pass
through the actual transaction fee(s) assessed on the transaction(s) by
the exchange(s) to which the order was routed, minus a $0.05 per
contract discount. These changes allow the Exchange to more accurately
pass through some of the transaction costs incurred by the Exchange
associated with Customer Linkage Transactions while still offering an
added incentive to route orders to CBOE.
The Exchange does not propose to collect these fees for orders
initially routed for manual handling by CBOE Floor Brokers. More
specifically, the Exchange will exempt from these pass-through fees
customer orders that originate from the trading floor via an Exchange
sponsored terminal like a Floor Broker Workstation.\4\ The primary
objective of the fee change is to recoup some of the costs associated
with large electronic orders that are initially transmitted to CBOE by
parties who, in many instances, could be seeking to avoid being
assessed another market's transaction fees. Orders that are initially
routed to CBOE Floor Brokers are not attempting to avoid fees since
they incur brokerage commission charges in connection with manual
handling. Rather, orders that are handled by CBOE Floor Brokers are
large, complex orders that are primarily executed on the CBOE, which
only are transmitted to away markets if, during their execution on
CBOE, it is necessary to sweep some away markets.
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\4\ The Floor Broker Workstation is a system for electronically
entering and managing orders on the Exchange floor. Floor Broker
Workstations are operated by Floor Brokers.
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The proposed fee change will take effect on March 1, 2011.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (``Act''),\5\ in general, and furthers
the objectives of Section 6(b)(4) \6\ of the Act in particular, in that
the passing through of the actual transaction fees assessed on away
exchanges for Customer Linkage Transactions is designed to provide for
the equitable allocation of reasonable dues, fees, and other charges
among CBOE Trading Permit Holders and other persons using Exchange
facilities. Exempting customer orders that originate from an Exchange-
sponsored terminal from the pass-through fees is equitable because
Floor Brokers and their customers are already assessed a number of fees
in connection with trading on the Exchange Floor.
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\5\ 15 U.S.C. 78f(b).
\6\ 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 not necessary or appropriate in furtherance of
the 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
The proposed rule change is designated by the Exchange as
establishing or changing a due, fee, or other charge, thereby
qualifying for effectiveness on filing pursuant to Section
19(b)(3)(A)(ii) \7\ of the Act and subparagraph (f)(2) of Rule 19b-4
\8\ thereunder.
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\7\ 15 U.S.C. 78s(b)(3)(A)(ii).
\8\ 17 C.F.R. 240.19b-4(f)(2).
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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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
[[Page 13691]]
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-2011-019 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-2011-019. 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 website (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 website 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 a.m. and 3
p.m. Copies of such filing will also 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-2011-019 and should be submitted on or
before April 4, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-5761 Filed 3-11-11; 8:45 am]
BILLING CODE 8011-01-P