81 FR 28110 - 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 81, Issue 89 (May 9, 2016)

[Federal Register Volume 81, Number 89 (Monday, May 9, 2016)]
[Notices]
[Pages 28110-28112]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-10758]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77758; File No. SR-CBOE-2016-040]


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

May 3, 2016.
    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 April 21, 2016, 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 Exchange filed the proposal as a ``non-controversial'' 
proposed rule change pursuant to section 19(b)(3)(A)(iii) of the Act 
\3\ and Rule 19b-4(f)(6) thereunder.\4\ 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Fees Schedule to update 
references to quoting bandwidth. 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 amend its Fees Schedule, effective April 
21, 2016.
    The Fees Schedule currently sets forth the quoting bandwidth 
allowance for a Market-Maker Trading Permit. The bandwidth allowance is 
referenced as a maximum number of quotes over the course of the trading 
day (currently 35,640,000). The Exchange notes however, that the 
current reference applies to the Regular Trading Hours session 
(``RTH'') only. In order to avoid confusion and maintain clarity and 
transparency in the rules, the Exchange proposes to add a reference to 
the quoting bandwidth allowance for an Extended Trading Hours \5\ 
(``ETH'') Market-Maker Trading Permit (i.e., 37,500,000 quotes over the 
course of the ETH session).\6\ The Exchanges notes that ETH bandwidth 
applies to all ETH Market-Maker Trading Permits and all ETH Quoting and 
Order Entry Bandwidth Packets. The Exchange also notes that the trading 
hours for RTH and ETH differ and as such, an ETH Market-Maker Trading 
Permit is equivalent to a different maximum number of quotes over the 
course of the trading session.\7\
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    \5\ Extended Trading Hours are from 2:00 a.m. Central time 
(``CT'') to 8:15 a.m. (CT) on Monday through Friday.
    \6\ The Exchange notes that prior to April 18, 2016, the maximum 
bandwidth quoting allowance during ETH was 33,000,000 quotes over 
the course of the ETH session.
    \7\ The rate per second(s) for quoting bandwidth is (and has 
always been) the same for both the RTH and ETH sessions. Because the 
ETH trading session is shorter than the RTH trading session, the 
stated number of quotes over the course of a trading session is less 
for ETH than RTH.
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    The Exchange next proposes to update the bandwidth currently set 
forth in Fees Schedule. The Fees Schedule currently states that the 
quoting bandwidth allowance for a Market-Maker Trading Permit is 
equivalent to a maximum of 35,640,000 quotes over the course of a 
trading day. The Exchange proposes to clarify that the stated quoting 
bandwidth reflects the maximum number of quotes over the course of a 
trading ``session'' instead of trading ``day.'' Particularly, RTH and 
ETH are separate trading sessions that are part of the same trading 
day. As such, the current expression of RTH bandwidth as quotes over 
the course of a trading ``day'' is inaccurate. Next, the Exchange notes 
that it increased quoting bandwidth allowance, effective April 18, 
2016. The Exchange therefore seeks to make a corresponding amendment to 
the Fees Schedule. Specifically, the Exchange proposes to update the 
reference to the number of maximum quotes from 35,640,000 to 
40,500,000. The Exchange notes that the increase of quoting bandwidth 
allowance applies to all RTH Market-Maker Trading Permits and all RTH 
Quoting and Order Entry Bandwidth Packets.
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.\8\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \9\ 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 facilitating 
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 the 
section 6(b)(5) \10\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
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    In particular, the Exchange believes that adding a reference to the 
quoting bandwidth allowance during ETH avoids potential confusion and 
maintains transparency in the Fees Schedule, thereby removing

[[Page 28111]]

impediments to and perfecting the mechanism of a free open market and a 
national market system, and, in general, protecting investors and the 
public interest. Similarly, as RTH and ETH are separate trading 
sessions (but part of the same trading day), the current reference to 
the RTH bandwidth as a maximum number of quotes over the course of a 
trading ``day'' is no longer accurate and as such, the Exchange 
believes replacing ``trading day'' with ``trading session'' eliminates 
incorrect terminology and avoids potential confusion.
    The Exchange believes that amending the Fees Schedule to accurately 
reflect the increase in quoting bandwidth allowance, alleviates 
confusion, thereby removing impediments to and perfecting the mechanism 
of a free open market and a national market system, and, in general, 
protecting investors and the public interest. The Exchange also notes 
that increasing quoting bandwidth helps ensure that Market-Makers have 
an adequate capacity and ability to continue to make active markets, 
which also removes impediments to and perfects the mechanism of a free 
open market and a national market system, and, in general, protects 
investors and the public interest.

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. 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 the proposed change applies to all Market-
Makers and is merely updating the Fees Schedule to accurately reflect 
an increase in quoting bandwidth, update outdated terminology, and 
reflect what the maximum bandwidth is for ETH. The Exchange believes 
that the proposed rule change will not cause an unnecessary burden on 
intermarket competition because it only applies to trading on CBOE. To 
the extent that the proposed changes 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

    Because the foregoing rule does not (i) significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, provided that the self-regulatory organization 
has given the Commission written notice of its intent to file the 
proposed rule change at least five business days prior to the date of 
filing of the proposed rule change or such shorter time as designated 
by the Commission,\11\ the proposed rule change has become effective 
pursuant to section 19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6) 
thereunder.\13\
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    \11\ The Exchange has fulfilled this requirement.
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\15\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange states that 
without a waiver of the operative delay, the Fees Schedule would 
reflect an outdated bandwidth amount, of only one trading session, 
which could cause potential confusion to TPHs. The Commission believes 
that it is consistent with the protection of investors and the public 
interest to waive the 30-day operative delay so the Exchange's Fees 
Schedule may immediately reflect the correct bandwidth fees. For this 
reason, the Commission designates the proposed rule change to be 
operative upon filing.\16\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

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 Number SR-CBOE-2016-040 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-2016-040. 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 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

[[Page 28112]]

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-2016-040 and should be submitted on 
or before May 31, 2016.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-10758 Filed 5-6-16; 8:45 am]
 BILLING CODE 8011-01-P