80 FR 64469 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 205 (October 23, 2015)
Federal Register Volume 80, Issue 205 (October 23, 2015)
| Page Range | 64469-64472 | |
| FR Document | 2015-26916 |
[Federal Register Volume 80, Number 205 (Friday, October 23, 2015)] [Notices] [Pages 64469-64472] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-26916] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76192; File No. SR-CBOE-2015-091] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule October 19, 2015. 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 October 9, 2015, 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 the Substance of the Proposed Rule Change The Exchange proposes to amend its Fees Schedule. 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 In March 2015, the Exchange launched Extended Trading Hours (``ETH'') for options on the S&P 500 [[Page 64470]] Index (``SPX'') and CBOE Volatility Index[supreg] (``VIX''), two of the Exchange's exclusively listed options,\3\ as alternatives for hedging and other investment purposes, particularly as a complementary investment tool to VIX futures.\4\ Rule 6.1A(c) provides that the Exchange may designate as eligible for trading during ETH any exclusively listed index option designated for trading under Rules 24.2 and 24.9. In response to customer demand for additional options to trade during ETH for similar purposes, the Exchange recently designated p.m.-settled options on the Standard & Poor's 500 Stock Index (``SPXpm'') to be eligible for trading during ETH. The Exchange commenced trading of SPXpm during ETH on October 1, 2015. As such, the Exchange proposes to establish fees for the trading of SPXpm during ETH (all fees referenced herein are per-contract unless otherwise stated).\5\ First, the Exchange proposes to amend Footnote 37, which provides general information regarding the two trading sessions and indicates which products will be available in ETH, to include trading of SPXpm. --------------------------------------------------------------------------- \3\ An ``exclusively listed option'' is an option that trades exclusively on an exchange because the exchange has an exclusive license to list and trade the option or has the proprietary rights in the interest underlying the option. An exclusively listed option is different than a ``singly listed option,'' which is an option that is not an ``exclusively listed option'' but that is listed by one exchange and not by any other national securities exchange. \4\ See Securities Exchange Act Release No. 34-73704 (November 28, 2014), 79 FR 72044 (December 4, 2014) (SR-CBOE-2014-062) (order granting accelerated approval of proposed rule change to adopt Extended Trading Hours for SPX and VIX). \5\ The Exchange initially filed the proposed fee changes on October 1, 2015 (SR-CBOE-2015-083). On October 9, 2015, the Exchange withdrew that filing and submitted this filing. --------------------------------------------------------------------------- Transaction Fees The Exchange proposes to assess the same fees for SPXpm in the ETH session as are assessed for SPXpm in the Regular Trading Hours session (``RTH'').\6\ As in RTH, the Proprietary Index Options Rate Table will apply during ETH. Transaction fees for SPXpm options will be as follows (all listed rates are per contract): --------------------------------------------------------------------------- \6\ Rule 1.1(qqq) defines ``Regular Trading Hours'' as the hours during which transactions in options may be made on the Exchange as set forth in Rule 6.1 (which hours are from 8:30 a.m. to either. 3:00 p.m. or 3:15 p.m. Chicago time). ------------------------------------------------------------------------ ------------------------------------------------------------------------ Customer (Premium > or = $1)............................ $0.44 Customer (Premium < $1)................................. 0.35 Clearing Trading Permit Holder Proprietary.............. 0.25 CBOE Market-Maker/LMM................................... 0.20 Joint Back-Office, Broker-Dealer, Non-Trading Permit 0.40 Holder Market-Maker.................................... Professional/Voluntary Professional..................... 0.40 ------------------------------------------------------------------------ Additionally, the Exchange notes that SPXpm transactions executed via AIM during ETH will be assessed AIM Agency/Primary and AIM Contra fees based on an order's origin code (which is currently the case during RTH as well). Surcharges The Exchange also proposes to apply in ETH, like RTH, an Index License Surcharge Fee of $0.13 per contract for SPXpm options for all non-customer orders. The surcharges are assessed to help the Exchange recoup license fees the Exchange pays to index licensors for the right to list S&P 500 Index-based products for trading. LMM Rebate CBOE Rule 6.1A (Extended Trading Hours) provides that the Exchange may approve one or more Market-Makers to act as Lead Market-Makers (``LMMs'') in each class during ETH in accordance with Rule 8.15A for terms of at least one month.\7\ However, to the extent the Exchange approves Market-Makers to act as LMMs during ETH, subparagraph (e)(iii)(B) of Rule 6.1A provides that LMMs must comply with the continuous quoting obligation and other obligations of Market-Makers described in subparagraph (ii) of Rule 6.1A,\8\ but not the obligations set forth in Rule 8.15A \9\ during ETH for their allocated classes. It further provides that LMMs do not receive a participation entitlement as set forth in Rules 6.45B and 8.15B during ETH. Rather, pursuant to subparagraph (e)(iii)(C) of Rule 6.1A, if an LMM (1) provides continuous electronic quotes in at least the lesser of 99% of the non- adjusted series or 100% of the non-adjusted series minus one call-put pair in an ETH allocated class (excluding intra-day add-on series on the day during which such series are added for trading) during ETH in a given month and (2) ensures an opening of the same percentage of series by 2:05 a.m. for at least 90% of the trading days during ETH in a given month, the LMM will receive a rebate for that month in an amount to be set forth in the Fees Schedule.\10\ Specifically, for TPHs acting as LMMs in SPXpm options during ETH, the Exchange proposes to provide in the Fees Schedule (new Footnote 39) that if a LMM meets the heightened standard described above, the LMM will receive a rebate of $1,000 per month. The Exchange believes it is more fitting to implement an incentive program with a rebate during ETH, rather than the obligation/ benefit structure that currently exists during RTH. LMMs will not be obligated to satisfy heightened continuous quoting and opening quoting standards during ETH. Instead, LMMs must satisfy a heightened standard to receive a rebate, which the Exchange believes will encourage LMMs to provide liquidity during ETH. Additionally, the Exchange notes that LMMs may have to undertake other expenses to be able to quote at the [[Page 64471]] heightened standard during ETH such as purchase additional bandwidth. --------------------------------------------------------------------------- \7\ See CBOE Rule 6.1A(e)(iii)(A). \8\ Rule 6.1A(e)(ii) provides that notwithstanding the 20% contract volume requirement in Rule 8.7(d)(ii), Market-Makers with appointments during Extended Trading Hours must comply with the quoting obligations set forth in Rule 8.7(d)(ii) (except during ETH the Exchange may determine to have no bid/ask differential requirements as set forth in subparagraph (A) and there will be no open outcry quoting obligation as set forth in subparagraph (C)) and all other obligations set forth in Rule 8.7 during that trading session. Additionally, notwithstanding the 90-day and next calendar quarter delay requirements in Rule 8.7(d), a Market-Maker with an ETH appointment in a class must immediately comply with the quoting obligations in Rule 8.7(d)(ii) during ETH. \9\ Rule 8.15A (and Rule 1.1(ccc)) requires LMMs to provide continuous electronic quotes in at least the lesser of 99% of the non-adjusted series or 100% of the non-adjusted series minus one call-put pair within their appointed classes, with the term call-put pair referring to one call and one put that cover the same underlying instrument and have the same expiration date and exercise price, for 90% of the time. \10\ Notwithstanding Rule 1.1(ccc), for purposes of subparagraph (C) of Rule 6.1A, an LMM is deemed to have provided ``continuous electronic quotes'' if the LMM provides electronic two-sided quotes for 90% of the time during Extended Trading Hours in a given month. If a technical failure or limitation of a system of the Exchange prevents the LMM from maintaining, or prevents the LMM from communicating to the Exchange, timely and accurate electronic quotes in a class, the duration of such failure shall not be considered in determining whether the LMM has satisfied the 90% quoting standard with respect to that option class. The Exchange may consider other exceptions to this quoting standard based on demonstrated legal or regulatory requirements or other mitigating circumstances. --------------------------------------------------------------------------- The Exchange also proposes to make a corollary change to Footnote 38. The Exchange notes that currently, for SPX and VIX options, LLMs [sic] are subject to a different rebate program.\11\ As such, the Exchange proposes to clarify that such rebate program is for TPHs acting as a LMM during ETH for SPX and VIX options only. --------------------------------------------------------------------------- \11\ See CBOE Fees Schedule, Footnote 38. If a LMM meets the heightened quoting standard, the LMM will receive a pro-rata share of an LMM compensation pool totaling an amount of $25,000 per month, per LMM, per class for SPX and VIX. --------------------------------------------------------------------------- The Exchange lastly notes that fees, rebates and programs that excluded SPXpm, during RTH will also not apply in ETH.\12\ --------------------------------------------------------------------------- \12\ See e.g., Exchange Fees Schedule, Liquidity Provider Sliding Scale, Marketing Fee, Clearing Trading Permit Holder Fee Cap, and Volume Incentive Program (``VIP''). --------------------------------------------------------------------------- 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.\13\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \14\ 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 Section 6(b)(4) of the Act,\15\ 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. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78f(b). \14\ 15 U.S.C. 78f(b)(5). \15\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- The proposed transaction fee amounts for SPXpm orders during the ETH session are reasonable, equitable and not unfairly discriminatory because they are the same as the amounts of corresponding fees for SPXpm orders during the RTH session. The Exchange notes that the fee amounts for each separate type of market participant will be assessed equally for each product to all such market participants (i.e. all Broker-Dealer orders will be assessed the same amount, all Joint Back- Office orders will be assessed the same amount, etc). Assessing the Index License Surcharge Fee of $0.13 per contract to SPXpm during ETH is reasonable because the amount is the same as the amount of the corresponding surcharge for SPXpm orders during RTH. The surcharge fee is equitable and not unfairly discriminatory because it will be assessed to all market participants to whom the SPXpm will apply in both RTH and ETH. The Exchange believes it is reasonable, equitable and not unfairly discriminatory to offer LMMs in SPXpm during ETH that meet a certain heightened quoting standard (described above) a rebate of $1,000 per month given added costs that a LMM may undertake (e.g., purchase of an additional bandwidth) and because it will encourage LMMs in SPXpm to provide increased liquidity. More specifically, the Exchange believes the amount of the proposed rebate is reasonable because it takes into consideration certain additional costs an LMM may incur and the Exchange believes the proposed amount is such that it will incentivize LMMs to meet the heighted quoting standard. Additionally, if a LMM does not satisfy the heightened quoting standard, then it will not receive the proposed rebate. The Exchange believes it is equitable and not unfairly discriminatory to only offer the rebate to LMMs because it benefits all market participants in ETH to encourage LMMs to satisfy the heightened quoting standards, which may increase liquidity during those hours and provide more trading opportunities and tighter spreads. The Exchange also believes it is more fitting, as well as equitable and not unfairly discriminatory to implement an incentive program with a rebate during ETH, rather than the obligation/benefit structure that exists during RTH. Particularly, the Exchange notes that creating an incentive program in which LMMs must satisfy a heightened standard to receive the rebate, encourages LMMs to provide significant liquidity during ETH, which is important as the Exchange expects lower trading liquidity and trading levels during ETH and thus fewer opportunities for an LMM to receive a participation entitlement (as they currently do during RTH). Therefore, a rebate is more appropriate than imposing an obligation to receive a participation entitlement. The Exchange notes that offering a rebate during ETH is merely a different type of financial benefit that may be given to LMMs during ETH if it achieves a heightened quoting level. The Exchange believes it is equitable and not unfairly discriminatory to provide a lesser rebate for LMMs appointed in SPXpm options as compared to LMMs for SPX and VIX options because the Exchange expects lower trading volume in SPXpm options during ETH as compared to volume for SPX and VIX. Therefore, it would not be economically viable for the Exchange to offer the same amount of rebate to LMMs in SPXpm as is offered to LMMs for SPX and VIX. Finally, not applying in ETH fees, rebates and programs that exclude SPXpm during RTH is reasonable because these fees, rebates and programs will not apply to all TPHs and will be consistent across sessions. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule changes will impose any burden on competition that are not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because, while different fees and rebates are assessed to different market participants in some circumstances, these different market participants have different obligations and different circumstances. For example, Clearing TPHs have clearing obligations that other market participants do not have. Market-Makers have quoting obligations that other market participants do not have. There is a history in the options markets of providing preferential treatment to Customers, as they often do not have as sophisticated trading operations and systems as other market participants, which often makes other market participants prefer to trade with Customers. Further, the proposed fees, rebates and programs for ETH are intended to encourage market participants to bring liquidity to the Exchange during ETH (which benefits all market participants), while still covering Exchange costs (including those associated with the upgrading and maintenance of Exchange systems). The Exchange does not believe that the proposed rule changes will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because SPXpm is a proprietary product that will only be traded on CBOE. To the extent that the proposed changes [[Page 64472]] make CBOE 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 \16\ and paragraph (f) of Rule 19b-4 \17\ 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. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78s(b)(3)(A). \17\ 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 CommentsUse 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-CBOE-2015-091 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-2015-091. 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 such filing also will be available for inspection and copying at the principal offices 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-2015-091, and should be submitted on or before November 13, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\18\ --------------------------------------------------------------------------- \18\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-26916 Filed 10-22-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 205 / Friday, October 23, 2015 / Notices 64469
number, or for an applicant using the purposes of the Act and will be based SECURITIES AND EXCHANGE
Company name box, at http:// on the net asset values of the COMMISSION
www.sec.gov/search/search.htm, or by Underlying Funds. [Release No. 34–76192; File No. SR–CBOE–
calling (202) 551–8090. 2. Applicants agree that any order 2015–091]
Summary of the Application granting the requested relief will be
subject to the terms and conditions Self-Regulatory Organizations;
1. Applicants request an order to Chicago Board Options Exchange,
permit (a) a Fund 1 (each a ‘‘Fund of stated in the application. Such terms
and conditions are designed to, among Incorporated; Notice of Filing and
Funds’’) to acquire shares of Underlying Immediate Effectiveness of a Proposed
Funds 2 in excess of the limits in other things, help prevent any potential
Rule Change To Amend the Fees
sections 12(d)(1)(A) and (C) of the Act (i) undue influence over an Underlying
Schedule
and (b) the Underlying Funds that are Fund that is not in the same ‘‘group of
registered open-end investment investment companies’’ as the Fund of October 19, 2015.
companies or series thereof, their Funds through control or voting power, Pursuant to Section 19(b)(1) of the
principal underwriters and any broker or in connection with certain services, Securities Exchange Act of 1934 (the
or dealer registered under the Securities transactions, and underwritings, (ii) ‘‘Act’’),1 and Rule 19b–4 thereunder,2
Exchange Act of 1934 to sell shares of excessive layering of fees, and (iii) notice is hereby given that on October
the Underlying Fund to the Fund of overly complex fund structures, which 9, 2015, Chicago Board Options
Funds in excess of the limits in section are the concerns underlying the limits Exchange, Incorporated (the ‘‘Exchange’’
12(d)(1)(B) of the Act.3 Applicants also in sections 12(d)(1)(A), (B), and (C) of or ‘‘CBOE’’) filed with the Securities
request an order of exemption under the Act. and Exchange Commission (the
sections 6(c) and 17(b) of the Act from ‘‘Commission’’) the proposed rule
the prohibition on certain affiliated 3. Section 12(d)(1)(J) of the Act change as described in Items I, II, and
transactions in section 17(a) of the Act provides that the Commission may III below, which Items have been
to the extent necessary to permit the exempt any person, security, or prepared by the Exchange. The
Underlying Funds to sell their shares to, transaction, or any class or classes of Commission is publishing this notice to
and redeem their shares from, the Funds persons, securities, or transactions, from solicit comments on the proposed rule
of Funds.4 Applicants state that such any provision of section 12(d)(1) if the change from interested persons.
transactions will be consistent with the exemption is consistent with the public
I. Self-Regulatory Organization’s
policies of each Fund of Funds and each interest and the protection of investors. Statement of the Terms of the Substance
Underlying Fund and with the general Section 17(b) of the Act authorizes the of the Proposed Rule Change
Commission to grant an order
1 Applicants request that the order apply to each
permitting a transaction otherwise The Exchange proposes to amend its
existing and future series of AAM ETF Trust and
prohibited by section 17(a) if it finds Fees Schedule. The text of the proposed
to each existing and future registered open-end rule change is available on the
investment company or series thereof that is that (a) the terms of the proposed
advised by Advisors Asset Management, Inc. or its Exchange’s Web site (http://www.cboe.
transaction are fair and reasonable and com/AboutCBOE/CBOELegalRegulatory
successor or by any entity controlling, controlled by
or under common control with Advisors Asset do not involve overreaching on the part Home.aspx), at the Exchange’s Office of
Management, Inc. or its successor and is part of the of any person concerned; (b) the the Secretary, and at the Commission’s
same ‘‘group of investment companies’’ as AAM proposed transaction is consistent with
ETF Trust (each, a ‘‘Fund’’). For purposes of the Public Reference Room.
requested order, ‘‘successor’’ is limited to an entity the policies of each registered
that results from a reorganization into another investment company involved; and (c) II. Self-Regulatory Organization’s
jurisdiction or a change in the type of business the proposed transaction is consistent Statement of the Purpose of, and
organization. For purposes of the request for relief, Statutory Basis for, the Proposed Rule
the term ‘‘group of investment companies’’ means with the general purposes of the Act.
Change
any two or more investment companies, including Section 6(c) of the Act permits the
closed-end investment companies and business Commission to exempt any persons or In its filing with the Commission, the
development companies, that hold themselves out Exchange included statements
to investors as related companies for purposes of transactions from any provision of the
investment and investor services. Act if such exemption is necessary or concerning the purpose of and basis for
2 Certain of the Underlying Funds have obtained
appropriate in the public interest and the proposed rule change and discussed
exemptions from the Commission necessary to
consistent with the protection of any comments it received on the
permit their shares to be listed and traded on a proposed rule change. The text of these
national securities exchange at negotiated prices investors and the purposes fairly
and, accordingly, to operate as an exchange-traded intended by the policy and provisions of statements may be examined at the
fund (‘‘ETF’’). places specified in Item IV below. The
the Act.
3 Applicants represent that a Funds of Funds will Exchange has prepared summaries, set
not invest in reliance on the order in business For the Commission, by the Division of forth in sections A, B, and C below, of
development companies or closed-end investment Investment Management, pursuant to
companies that are not listed and traded on a
the most significant aspects of such
national securities exchange.
delegated authority. statements.
4 A Fund of Funds generally would purchase and Robert W. Errett,
sell shares of an Underlying Fund that operates as
A. Self-Regulatory Organization’s
Deputy Secretary. Statement of the Purpose of, and
an ETF through secondary market transactions
rather than through principal transactions with the [FR Doc. 2015–26917 Filed 10–22–15; 8:45 am] Statutory Basis for, the Proposed Rule
Underlying Fund. Applicants nevertheless request BILLING CODE 8011–01–P Change
mstockstill on DSK4VPTVN1PROD with NOTICES
relief from section 17(a) to permit a Fund of Funds
to purchase or redeem shares from the ETF. A Fund 1. Purpose
of Funds will purchase and sell shares of an
Underlying Fund that is a closed-end fund through In March 2015, the Exchange
secondary market transactions at market prices launched Extended Trading Hours
rather than through principal transactions with the (‘‘ETH’’) for options on the S&P 500
closed-end fund. Accordingly, applicants are not
requesting section 17(a) relief with respect to
1 15 U.S.C. 78s(b)(1).
transactions in shares of closed-end funds
(including business development companies). 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 18:05 Oct 22, 2015 Jkt 238001 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 E:\FR\FM\23OCN1.SGM 23OCN1](https://thefederalregister.org/doc/80_FR_64674/page/1.svg)
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heightened standard during ETH such all such market participants (i.e. all is merely a different type of financial
as purchase additional bandwidth. Broker-Dealer orders will be assessed benefit that may be given to LMMs
The Exchange also proposes to make the same amount, all Joint Back-Office during ETH if it achieves a heightened
a corollary change to Footnote 38. The orders will be assessed the same quoting level. The Exchange believes it
Exchange notes that currently, for SPX amount, etc). is equitable and not unfairly
and VIX options, LLMs [sic] are subject Assessing the Index License discriminatory to provide a lesser rebate
to a different rebate program.11 As such, Surcharge Fee of $0.13 per contract to for LMMs appointed in SPXpm options
the Exchange proposes to clarify that SPXpm during ETH is reasonable as compared to LMMs for SPX and VIX
such rebate program is for TPHs acting because the amount is the same as the options because the Exchange expects
as a LMM during ETH for SPX and VIX amount of the corresponding surcharge lower trading volume in SPXpm options
options only. for SPXpm orders during RTH. The during ETH as compared to volume for
The Exchange lastly notes that fees, surcharge fee is equitable and not SPX and VIX. Therefore, it would not be
rebates and programs that excluded unfairly discriminatory because it will economically viable for the Exchange to
SPXpm, during RTH will also not apply be assessed to all market participants to offer the same amount of rebate to
in ETH.12 whom the SPXpm will apply in both LMMs in SPXpm as is offered to LMMs
2. Statutory Basis RTH and ETH. for SPX and VIX.
The Exchange believes it is Finally, not applying in ETH fees,
The Exchange believes the proposed reasonable, equitable and not unfairly rebates and programs that exclude
rule change is consistent with the discriminatory to offer LMMs in SPXpm SPXpm during RTH is reasonable
Securities Exchange Act of 1934 (the during ETH that meet a certain because these fees, rebates and programs
‘‘Act’’) and the rules and regulations heightened quoting standard (described will not apply to all TPHs and will be
thereunder applicable to the Exchange above) a rebate of $1,000 per month consistent across sessions.
and, in particular, the requirements of given added costs that a LMM may
Section 6(b) of the Act.13 Specifically, undertake (e.g., purchase of an B. Self-Regulatory Organization’s
the Exchange believes the proposed rule additional bandwidth) and because it Statement on Burden on Competition
change is consistent with the Section will encourage LMMs in SPXpm to The Exchange does not believe that
6(b)(5) 14 requirements that the rules of provide increased liquidity. More the proposed rule changes will impose
an exchange be designed to prevent specifically, the Exchange believes the any burden on competition that are not
fraudulent and manipulative acts and amount of the proposed rebate is necessary or appropriate in furtherance
practices, to promote just and equitable reasonable because it takes into of the purposes of the Act. The
principles of trade, to foster cooperation consideration certain additional costs an Exchange does not believe that the
and coordination with persons engaged LMM may incur and the Exchange proposed rule change will impose any
in regulating, clearing, settling, believes the proposed amount is such burden on intramarket competition that
processing information with respect to, that it will incentivize LMMs to meet is not necessary or appropriate in
and facilitation transactions in the heighted quoting standard. furtherance of the purposes of the Act
securities, to remove impediments to Additionally, if a LMM does not satisfy because, while different fees and rebates
and perfect the mechanism of a free and the heightened quoting standard, then it are assessed to different market
open market and a national market will not receive the proposed rebate. participants in some circumstances,
system, and, in general, to protect The Exchange believes it is equitable these different market participants have
investors and the public interest. and not unfairly discriminatory to only different obligations and different
Additionally, the Exchange believes the offer the rebate to LMMs because it circumstances. For example, Clearing
proposed rule change is consistent with benefits all market participants in ETH TPHs have clearing obligations that
Section 6(b)(4) of the Act,15 which to encourage LMMs to satisfy the other market participants do not have.
requires that Exchange rules provide for heightened quoting standards, which Market-Makers have quoting obligations
the equitable allocation of reasonable may increase liquidity during those that other market participants do not
dues, fees, and other charges among its hours and provide more trading have. There is a history in the options
Trading Permit Holders and other opportunities and tighter spreads. The markets of providing preferential
persons using its facilities. Exchange also believes it is more fitting, treatment to Customers, as they often do
The proposed transaction fee amounts as well as equitable and not unfairly not have as sophisticated trading
for SPXpm orders during the ETH discriminatory to implement an operations and systems as other market
session are reasonable, equitable and incentive program with a rebate during participants, which often makes other
not unfairly discriminatory because they ETH, rather than the obligation/benefit market participants prefer to trade with
are the same as the amounts of structure that exists during RTH. Customers. Further, the proposed fees,
corresponding fees for SPXpm orders Particularly, the Exchange notes that rebates and programs for ETH are
during the RTH session. The Exchange creating an incentive program in which intended to encourage market
notes that the fee amounts for each LMMs must satisfy a heightened participants to bring liquidity to the
separate type of market participant will standard to receive the rebate, Exchange during ETH (which benefits
be assessed equally for each product to encourages LMMs to provide significant all market participants), while still
liquidity during ETH, which is covering Exchange costs (including
11 See CBOE Fees Schedule, Footnote 38. If a
important as the Exchange expects those associated with the upgrading and
LMM meets the heightened quoting standard, the
LMM will receive a pro-rata share of an LMM lower trading liquidity and trading maintenance of Exchange systems).
mstockstill on DSK4VPTVN1PROD with NOTICES
compensation pool totaling an amount of $25,000 levels during ETH and thus fewer The Exchange does not believe that
per month, per LMM, per class for SPX and VIX. opportunities for an LMM to receive a the proposed rule changes will impose
12 See e.g., Exchange Fees Schedule, Liquidity
participation entitlement (as they any burden on intermarket competition
Provider Sliding Scale, Marketing Fee, Clearing currently do during RTH). Therefore, a that is not necessary or appropriate in
Trading Permit Holder Fee Cap, and Volume
Incentive Program (‘‘VIP’’). rebate is more appropriate than furtherance of the purposes of the Act
13 15 U.S.C. 78f(b). imposing an obligation to receive a because SPXpm is a proprietary product
14 15 U.S.C. 78f(b)(5). participation entitlement. The Exchange that will only be traded on CBOE. To
15 15 U.S.C. 78f(b)(4). notes that offering a rebate during ETH the extent that the proposed changes
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![64472 Federal Register / Vol. 80, No. 205 / Friday, October 23, 2015 / Notices
make CBOE a more attractive rules/sro.shtml). Copies of the Administration, 409 3rd Street, 6th
marketplace for market participants at submission, all subsequent Floor, Washington, DC 20416.
other exchanges, such market amendments, all written statements FOR FURTHER INFORMATION CONTACT: Gina
participants are welcome to become with respect to the proposed rule Beyer, Program Analyst, Disaster
CBOE market participants. change that are filed with the Assistance, gina.beyer@sba.gov 202–
Commission, and all written 205–6458, or Curtis B. Rich,
C. Self-Regulatory Organization’s
communications relating to the Management Analyst, 202–205–7030,
Statement on Comments on the
proposed rule change between the curtis.rich@sba.gov;
Proposed Rule Change Received From
Commission and any person, other than
Members, Participants, or Others SUPPLEMENTARY INFORMATION: A team of
those that may be withheld from the
The Exchange neither solicited nor public in accordance with the Quality Assurance staff at the Disaster
received comments on the proposed provisions of 5 U.S.C. 552, will be Assistance Center (DASC) will conduct
rule change. available for Web site viewing and a brief telephone survey of customers to
printing in the Commission’s Public determine their satisfaction with the
III. Date of Effectiveness of the services received from the (DASC) and
Proposed Rule Change and Timing for Reference Room, 100 F Street NE.,
Washington, DC 20549 on official the Field Operations Centers. The result
Commission Action will help the Agency to improve where
business days between the hours of
The foregoing rule change has become 10:00 a.m. and 3:00 p.m. Copies of such necessary, the delivery of critical
effective pursuant to Section 19(b)(3)(A) filing also will be available for financial assistance to disaster victims.
of the Act 16 and paragraph (f) of Rule inspection and copying at the principal Solicitation of Public Comments
19b–4 17 thereunder. At any time within offices of the Exchange. All comments
60 days of the filing of the proposed rule SBA is requesting comments on (a)
received will be posted without change; Whether the collection of information is
change, the Commission summarily may the Commission does not edit personal
temporarily suspend such rule change if necessary for the agency to properly
identifying information from perform its functions; (b) whether the
it appears to the Commission that such submissions. You should submit only
action is necessary or appropriate in the burden estimates are accurate; (c)
information that you wish to make whether there are ways to minimize the
public interest, for the protection of available publicly. All submissions
investors, or otherwise in furtherance of burden, including through the use of
should refer to File Number SR–CBOE– automated techniques or other forms of
the purposes of the Act. If the 2015–091, and should be submitted on
Commission takes such action, the information technology; and (d) whether
or before November 13, 2015. there are ways to enhance the quality,
Commission will institute proceedings
to determine whether the proposed rule For the Commission, by the Division of utility, and clarity of the information.
Trading and Markets, pursuant to delegated
change should be approved or authority.18 Summary of Information Collection
disapproved.
Robert W. Errett, Title: Disaster Assistance Customer
IV. Solicitation of Comments Deputy Secretary. Satisfaction Survey.
Interested persons are invited to [FR Doc. 2015–26916 Filed 10–22–15; 8:45 am] Description of Respondents: Disaster
submit written data, views, and BILLING CODE 8011–01–P Customers satisfaction with service
arguments concerning the foregoing, received.
including whether the proposed rule Form Number: SBA Form 2313FOC,
change is consistent with the Act. SMALL BUSINESS ADMINISTRATION 2313CSC.
Comments may be submitted by any of Total Estimated Annual Responses:
the following methods: Data Collection Available for Public 24,284.
Comments Total Estimated Annual Hour Burden:
Electronic Comments 199.
• Use the Commission’s Internet 60-day notice and request for
ACTION:
Curtis B. Rich,
comment form (http://www.sec.gov/ comments.
Management Analyst.
rules/sro.shtml); or
SUMMARY: The Small Business [FR Doc. 2015–26895 Filed 10–22–15; 8:45 am]
• Send an email to rule-comments@
Administration (SBA) intends to request BILLING CODE 8025–01–P
sec.gov. Please include File Number SR–
approval, from the Office of
CBOE–2015–091 on the subject line.
Management and Budget (OMB) for the
Paper Comments collection of information described SMALL BUSINESS ADMINISTRATION
• Send paper comments in triplicate below. The Paperwork Reduction Act
(PRA) of 1995, 44 U.S.C Chapter 35 Data Collection Available for Public
to Secretary, Securities and Exchange
requires federal agencies to publish a Comments
Commission, 100 F Street NE.,
Washington, DC 20549–1090. notice in the Federal Register
concerning each proposed collection of 60-day notice and request for
ACTION:
All submissions should refer to File comments.
information before submission to OMB,
Number SR–CBOE–2015–091. This file
and to allow 60 days for public SUMMARY: The Small Business
number should be included on the
comment in response to the notice. This Administration (SBA) intends to request
subject line if email is used. To help the
notice complies with that requirement.
mstockstill on DSK4VPTVN1PROD with NOTICES
Commission process and review your approval, from the Office of
comments more efficiently, please use DATES: Submit comments on or before Management and Budget (OMB) for the
only one method. The Commission will December 22, 2015. collection of information described
post all comments on the Commission’s ADDRESSES: Send all comments to Gina below. The Paperwork Reduction Act
Internet Web site (http://www.sec.gov/ Beyer, Program Analyst, Office of (PRA) of 1995, 44 U.S.C Chapter 35
Disaster Assistance, Small Business requires federal agencies to publish a
16 15 U.S.C. 78s(b)(3)(A). notice in the Federal Register
17 17 CFR 240.19b–4(f). 18 17 CFR 200.30–3(a)(12). concerning each proposed collection of
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Document Created: 2015-12-14 15:32:38
Document Modified: 2015-12-14 15:32:38
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| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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