80 FR 44162 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Options Regulatory Fee

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 142 (July 24, 2015)

Page Range		44162-44164
FR Document		2015-18131

Federal Register, Volume 80 Issue 142 (Friday, July 24, 2015)

[Federal Register Volume 80, Number 142 (Friday, July 24, 2015)]
[Notices]
[Pages 44162-44164]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-18131]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75491; File No. SR-CBOE-2015-064]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to the Options Regulatory Fee

July 20, 2015.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934,\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on
July 10, 2015, Chicago Board Options Exchange, Incorporated 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 Substance
of the Proposed Rule Change

Chicago Board Options Exchange, Incorporated (the ``Exchange'' or
``CBOE'') proposes to amend the Options Regulatory Fee. 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 decrease the Options Regulatory Fee
(``ORF'') from $.0086 to $.0064 per contract in order to help ensure
that revenue collected from the ORF, in combination with other
regulatory fees and fines, does not exceed the Exchange's total
regulatory costs. The proposed fee change would be operative on August
1, 2015.
The ORF is assessed by the Exchange to each Trading Permit Holder
for all options transactions executed or cleared by the Trading Permit
Holder that are cleared by The Options Clearing Corporation (``OCC'')
in the customer range (i.e., transactions that clear in a customer
account at OCC) regardless of the exchange on which the transaction
occurs.\3\ In other words, the Exchange imposes the ORF on all
customer-range transactions executed by a Trading Permit Holder, even
if the transactions do not take place on the Exchange. The ORF also is
charged for transactions that are not executed by a Trading Permit
Holder but are ultimately cleared by a Trading Permit Holder. In the
case where a Trading Permit Holder executes a transaction and a
different Trading Permit Holder clears the transaction, the ORF is
assessed to the Trading Permit Holder who executed the transaction. In
the case where a non-Trading Permit Holder executes a transaction and a
Trading Permit Holder clears the transaction, the ORF is assessed to
the Trading Permit Holder who clears the

[[Page 44163]]

transaction. The ORF is collected indirectly from Trading Permit
Holders through their clearing firms by OCC on behalf of the Exchange.
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\3\ The ORF also applies to customer-range transactions executed
during Extended Trading Hours.
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The ORF is designed to recover a material portion of the costs to
the Exchange of the supervision and regulation of Trading Permit Holder
customer options business, including performing routine surveillances,
investigations, examinations, financial monitoring, as well as policy,
rulemaking, interpretive and enforcement activities. The Exchange
believes that revenue generated from the ORF, when combined with all of
the Exchange's other regulatory fees and fines, will cover a material
portion, but not all, of the Exchange's regulatory costs. The Exchange
notes that its regulatory responsibilities with respect to Trading
Permit Holder compliance with options sales practice rules have largely
been allocated to FINRA under a 17d-2 agreement. The ORF is not
designed to cover the cost of that options sales practice regulation.
The Exchange will continue to monitor the amount of revenue
collected from the ORF to ensure that it, in combination with its other
regulatory fees and fines, does not exceed the Exchange's total
regulatory costs. The Exchange monitors its regulatory costs and
revenues at a minimum on a semi-annual basis. If the Exchange
determines regulatory revenues exceed or are insufficient to cover a
material portion of its regulatory costs, the Exchange will adjust the
ORF by submitting a fee change filing to the Commission. The Exchange
notifies Trading Permit Holders of adjustments to the ORF via
regulatory circular. The Exchange endeavors to provide Trading Permit
Holders with such notice at least 30 calendar days prior to the
effective date of the change.
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.\4\ Specifically, the
Exchange believes the proposed rule change is consistent with Section
6(b)(4) of the Act,\5\ which provides that Exchange rules may provide
for the equitable allocation of reasonable dues, fees, and other
charges among its Trading Permit Holders and other persons using its
facilities. Additionally, the Exchange believes the proposed rule
change is consistent with the Section 6(b)(5) \6\ requirement that the
rules of an exchange not be designed to permit unfair discrimination
between customers, issuers, brokers, or dealers.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4).
\6\ Id.
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The Exchange believes the proposed fee change is reasonable because
it would help ensure that revenue collected from the ORF, in
combination with other regulatory fees and fines, does not exceed the
Exchange's total regulatory costs. Moreover, the Exchange believes the
ORF ensures fairness by assessing higher fees to those Trading Permit
Holders that require more Exchange regulatory services based on the
amount of customer options business they conduct. Regulating customer
trading activity is much more labor intensive and requires greater
expenditure of human and technical resources than regulating non-
customer trading activity, which tends to be more automated and less
labor-intensive. As a result, the costs associated with administering
the customer component of the Exchange's overall regulatory program are
materially higher than the costs associated with administering the non-
customer component (e.g., Trading Permit Holder proprietary
transactions) of its regulatory program.\7\ The Exchange believes the
proposed fee change is equitable and not unfairly discriminatory in
that it is charged to all Trading Permit Holders on all their
transactions that clear in the customer range at the OCC.
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\7\ If the Exchange changes its method of funding regulation or
if circumstances otherwise change in the future, the Exchange may
decide to modify the ORF or assess a separate regulatory fee on
Trading Permit Holder proprietary transactions if the Exchange deems
it advisable.
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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 the purposes of the Act, because it applies to all
Trading Permit Holders. The proposed ORF is comparable to fees charged
by other options exchanges for the same or similar service. The
Exchange believes any burden on competition imposed by the proposed
rule change is outweighed by the need to help the Exchange adequately
fund its regulatory activities to ensure compliance with the Exchange
Act.

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 \8\ and paragraph (f) 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 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.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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 rule-comments@sec.gov. Please include
File Number SR-CBOE-2015-064 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-2015-064. 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

[[Page 44164]]

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-CBOE-2015-064 and should be submitted on or before
August 14, 2015.

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).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-18131 Filed 7-23-15; 8:45 am]
BILLING CODE 8011-01-P

44162 Federal Register / Vol. 80, No. 142 / Friday, July 24, 2015 / Notices

• Other responsibilities as required incurred in support of PredicTox in CBOELegalRegulatoryHome.aspx), at
upon implementation of PredicTox accordance with applicable law and the Exchange’s Office of the Secretary,
A full list of Steering Committee their specific institutional policies and at the Commission’s Public
responsibilities, as well as • Members are subject to the Reference Room.
responsibilities of the Chair, may be PredicTox Conflict of Interest policies
II. Self-Regulatory Organization’s
found on the Reagan-Udall Foundation (additional information can be accessed Statement of the Purpose of, and
Web site. on the Reagan-Udall Foundation Web Statutory Basis for, the Proposed Rule
site) Change
III. PredicTox Steering Committee
Positions and Selection Criteria V. Nomination Instructions In its filing with the Commission, the
RUF is seeking nominations for 7 • The nomination form can be Exchange included statements
voting members of the PredicTox accessed on the Reagan-Udall concerning the purpose of and basis for
Steering Committee, comprised of the Foundation Web site the proposed rule change and discussed
following 5 categories: • Individuals may be nominated for 1 any comments it received on the
• Patient Advocate: 1 member or more of the 5 stakeholder categories proposed rule change. The text of these
• Pharmaceutical sector: 2 members • Individuals may nominate statements may be examined at the
• Technology sector: 1 member themselves or others places specified in Item IV below. The
• Academia/Research Institute: 2 • The nomination deadline is August Exchange has prepared summaries, set
members 28, 2015. forth in sections A, B, and C below, of
• At Large: 1 member the most significant aspects of such
Dated: July 20, 2015.
The Steering Committee will also statements.
have 2 members from the FDA Jane Reese-Coulbourne,
Executive Director, Reagan-Udall Foundation A. Self-Regulatory Organization’s
(appointed by the FDA) and 1 member
for the FDA. Statement of the Purpose of, and
from the National Institutes of Health
[FR Doc. 2015–18123 Filed 7–23–15; 8:45 am] Statutory Basis for, the Proposed Rule
(appointed by the National Institutes of Change
Health). These 3 individuals will be BILLING CODE 4164–04–P
non-voting members. 1. Purpose
Nominees for the voting positions will The Exchange proposes to decrease
be evaluated by the RUF Board based on SECURITIES AND EXCHANGE the Options Regulatory Fee (‘‘ORF’’)
the following required criteria for each COMMISSION from $.0086 to $.0064 per contract in
of the 7 positions: [Release No. 34–75491; File No. SR–CBOE– order to help ensure that revenue
• Ability to complete Steering 2015–064] collected from the ORF, in combination
Committee responsibilities, listed above with other regulatory fees and fines,
• Currently employed by/ Self-Regulatory Organizations; does not exceed the Exchange’s total
volunteering for stakeholder field (e.g., Chicago Board Options Exchange, regulatory costs. The proposed fee
pharmaceutical, academia, patient Incorporated; Notice of Filing and change would be operative on August 1,
advocate, etc.) with several years of Immediate Effectiveness of a Proposed 2015.
relevant experience Rule Change Relating to the Options The ORF is assessed by the Exchange
• Leading expert in their relevant Regulatory Fee to each Trading Permit Holder for all
field (based on position, publications, or options transactions executed or cleared
other experience) July 20, 2015. by the Trading Permit Holder that are
• Working knowledge of at least one Pursuant to Section 19(b)(1) of the cleared by The Options Clearing
of the following areas: Risk assessment; Securities Exchange Act of 1934,1 and Corporation (‘‘OCC’’) in the customer
drug safety profiling; pharmacology or Rule 19b–4 thereunder,2 notice is range (i.e., transactions that clear in a
systems pharmacology; toxicology or hereby given that on July 10, 2015, customer account at OCC) regardless of
systems toxicology; biostatistics; Chicago Board Options Exchange, the exchange on which the transaction
cardiology; oncology; bioinformatics; Incorporated filed with the Securities occurs.3 In other words, the Exchange
ontology; multi-scale modeling; and Exchange Commission (the imposes the ORF on all customer-range
knowledge management platforms; ‘‘Commission’’) the proposed rule transactions executed by a Trading
software development; or data sharing change as described in Items I, II, and Permit Holder, even if the transactions
• Prior experience serving on a III below, which Items have been do not take place on the Exchange. The
related or similar governance body prepared by the Exchange. The ORF also is charged for transactions that
• Understanding of the landscape and Commission is publishing this notice to are not executed by a Trading Permit
the impact on the stakeholder group solicit comments on the proposed rule Holder but are ultimately cleared by a
they are representing with their seat change from interested persons. Trading Permit Holder. In the case
IV. Terms of Service I. Self-Regulatory Organization’s where a Trading Permit Holder executes
Statement of the Terms of Substance of a transaction and a different Trading
• The PredicTox Steering Committee Permit Holder clears the transaction, the
meets in-person at least twice per year, the Proposed Rule Change
ORF is assessed to the Trading Permit
with teleconferences in between Chicago Board Options Exchange, Holder who executed the transaction. In
asabaliauskas on DSK5VPTVN1PROD with NOTICES

meetings as deemed necessary by the Incorporated (the ‘‘Exchange’’ or the case where a non-Trading Permit
Chair ‘‘CBOE’’) proposes to amend the Holder executes a transaction and a
• Members will serve two or three Options Regulatory Fee. The text of the Trading Permit Holder clears the
year, staggered terms, as determined by proposed rule change is available on the transaction, the ORF is assessed to the
the RUF Board Exchange’s Web site (http:// Trading Permit Holder who clears the
• Members do not receive www.cboe.com/AboutCBOE/
compensation from RUF 3 The ORF also applies to customer-range
• Members can be reimbursed by RUF 1 15 U.S.C. 78s(b)(1). transactions executed during Extended Trading
for actual and reasonable expenses 2 17 CFR 240.19b–4. Hours.

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44164 Federal Register / Vol. 80, No. 142 / Friday, July 24, 2015 / Notices

communications relating to the I. Self-Regulatory Organization’s The purpose of this proposed rule
proposed rule change between the Statement of the Terms of the Substance change is to adopt a $500 Appeal Fee
Commission and any person, other than of the Proposed Rule Change that will apply in the event of
those that may be withheld from the The Exchange proposes to (1) amend unsuccessful appeals of Official
public in accordance with the Rule 1092 to assess a $500 Appeal Fee determinations rendered pursuant to
provisions of 5 U.S.C. 552, will be against a member or member Section (l) of New Rule 1092 and to
available for Web site viewing and organization which initiates and loses permit the Exchange to pass along
printing in the Commission’s Public an appeal of an Options Exchange charges assessed by another market
Reference Room, 100 F Street NE., Official (‘‘Official’’) determination center in connection with Obvious Error
regarding an Obvious Error or and Catastrophic Error determination
Washington, DC 20549 on official
Catastrophic Error, and to pass through requests presented to that market center
business days between the hours of
other market center charges associated by the Exchange on a member or
10:00 a.m. and 3:00 p.m. Copies of the member organization’s behalf. To
filing also will be available for with obvious error determinations; (2)
amend Rule 124, to clarify that that the accommodate this proposed fee change,
inspection and copying at the principal the Exchange proposes to amend Rule
office of the Exchange. All comments $250 appeal fee provided for in Rule
124, Disputes-Options, to add new
received will be posted without change; 124(d) will not apply to appeals of
language to section (l) of New Rule
the Commission does not edit personal Obvious Error or Catastrophic Error
1092, and to make conforming changes
identifying information from determinations, and (3) to modify the
to the Exchange’s Pricing Schedule, as
submissions. You should submit only Phlx Pricing Schedule (‘‘Pricing
described below.
Schedule’’) to reflect the new $500 (I) $500 Appeal Fee/Pass Through
information that you wish to make
Appeal Fee and pass-through charges Charges. The Exchange proposes to
available publicly. All submissions
from other market centers. amend section (l) of the New Rule 1092,
should refer to File Number SR–CBOE– The text of the proposed rule change
2015–064 and should be submitted on pursuant to which the Exchange will
is available on the Exchange’s Web site
or before August 14, 2015. assess a $500 fee against members or
at http://
member organizations who initiate a
For the Commission, by the Division of nasdaqomxphlx.cchwallstreet.com/, at request for an appeal of an Official’s
Trading and Markets, pursuant to delegated the principal office of the Exchange, and Obvious Error or Catastrophic Error
authority.10 at the Commission’s Public Reference determination to the Exchange’s Market
Robert W. Errett, Room. Operations Review Committee
Deputy Secretary. II. Self-Regulatory Organization’s (‘MORC’’), where the appeal is
[FR Doc. 2015–18131 Filed 7–23–15; 8:45 am] Statement of the Purpose of, and unsuccessful and the MORC votes to
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule uphold the Official’s determination.
Change Further, the new rule permits the
In its filing with the Commission, the Exchange to pass any resulting charges
SECURITIES AND EXCHANGE Exchange included statements through to the relevant member or
COMMISSION concerning the purpose of and basis for member organization in instances where
the proposed rule change and discussed the Exchange, on behalf of the member
any comments it received on the or member organization, requests a
[Release No. 34–75488; File No. SR–Phlx–
2015–65] proposed rule change. The text of these determination by another market center
statements may be examined at the that a transaction is an Obvious Error or
Self-Regulatory Organizations; places specified in Item IV below. The Catastrophic Error.
NASDAQ OMX PHLX LLC; Notice of (II) Amendment to Rule 124.
Exchange has prepared summaries, set
Currently, Rule 124(d) provides for
Filing and Immediate Effectiveness of forth in sections A, B, and C below, of
assessment of a $250 fee to a member or
Proposed Rule Change To Amend the most significant aspects of such
member organization seeking review by
Rules 1092 and 124, and Modify the statements.
the MORC of an Official ruling
Phlx Pricing Schedule A. Self-Regulatory Organization’s regarding Obvious Errors or
July 20, 2015. Statement of the Purpose of, and Catastrophic Errors if the Official’s
Statutory Basis for, the Proposed Rule ruling is sustained and not overturned
Pursuant to section 19(b)(1) of the Change or modified by the MORC.4 The
Securities Exchange Act of 1934 (the Exchange proposes to amend Rule
‘‘Act’’),1 and Rule 19b–4 thereunder,2 1. Purpose
124(a) to clarify that no provision of
notice is hereby given that on July 15, On May 8, 2015 the Exchange filed a
2015, NASDAQ OMX PHLX LLC proposed rule change (the ‘‘1092 transparency and finality with respect to the
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the Replacement Filing’’) to delete Rule adjustment and nullification of erroneous options
1092, Obvious Errors and Catastrophic transactions, achieving consistent results for
Securities and Exchange Commission participants across U.S. options exchanges while
(‘‘SEC’’ or ‘‘Commission’’) the proposed Errors, and replace it with new Rule maintaining a fair and orderly market, protecting
rule change as described in Items I, II, 1092 entitled ‘‘Nullification and investors and protecting the public interest.
and III below, which Items have been Adjustment of Options Transactions 4 Exchange Rule 124(a) currently provides that
asabaliauskas on DSK5VPTVN1PROD with NOTICES

prepared by the Exchange. The including Obvious Errors’’ (‘‘New Rule ‘‘[t]his Rule 124(a) shall not apply to options
1092’’). New Rule 1092 also became transactions that are the result of an Obvious Error
Commission is publishing this notice to (as defined in Rule 1092).’’ However, the Exchange
solicit comments on the proposed rule operative on May 8, 2015.3 currently applies Rule 124(d) to unsuccessful
appeals of Official determinations of Obvious Errors
change from interested persons. 3 See SR–Phlx–2015–43. New Rule 1092 to the MORC. The Exchange believes that fees
harmonizes rules related to the adjustment and associated with MORC appeals of Obvious Errors or
10 17
nullification of erroneous options transactions with Catastrophic Errors will be more logically set forth
CFR 200.30–3(a)(12).
those of other exchanges. The Exchange believes in the rulebook in Rule 1092(l) which describes the
1 15 U.S.C. 78s(b)(1). that New Rule 1092, together with comparable rules MORC appeals process for Obvious Errors and
2 17 CFR 240.19b–4. filed by the other options exchanges, will provide Catastrophic Errors.

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Document Created: 2018-02-23 09:24:52
Document Modified: 2018-02-23 09:24:52

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 44162