81_FR_3222 81 FR 3210 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to COPS

81 FR 3210 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to COPS

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 12 (January 20, 2016)

Page Range3210-3213
FR Document2016-00899

Federal Register, Volume 81 Issue 12 (Wednesday, January 20, 2016) 
[Federal Register Volume 81, Number 12 (Wednesday, January 20, 2016)]
[Notices]
[Pages 3210-3213]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-00899]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76888; File No. SR-CBOE-2015-122]


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

January 13, 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 December 31, 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 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 extend the contributor compensation 
structure of the Customized Option Pricing Service (``COPS''). There is 
no new proposed rule text.

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 purpose of the proposed rule change is to extend the 
contributor compensation structure of the Exchange's COPS,\5\ 
specifically, the COPS data revenue-sharing plan. The Exchange is not 
proposing to change the fees for COPS data.
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    \5\ See Securities Exchange Act Release Nos. 34-67813 (September 
10, 2012), 77 FR 56903 (September 14, 2012) (SR-CBOE-2012-083); 34-
67928 (September 26, 2012), 77 FR 60161 (October 2, 2012) (SR-CBOE-
2012-090); 34-70705 (October 17, 2013), 78 FR 63265 (October 23, 
2013) (SR-CBOE-2013-097); 34-70845 (November 12, 2013), 78 FR 69168 
(November 18, 2013) (SR-CBOE-2013-104); 34-72621 (July 16, 2014), 79 
FR 42616 (July 22, 2014) (SR-CBOE-2014-057); 34-74159 (January 28, 
2015), 80 FR 5863 (February 23, 2015) (SR-CBOE-2015-007); and 34-
74937 (May 12, 2015), 80 FR 28319 (May 18, 2015) (SR-CBOE-2015-046).
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Background
    COPS provides market participants with an ``end-of-day'' \6\ file 
and ``historical'' \7\ files of valuations for Flexible Exchange 
(``FLEX'') \8\ options and certain over-the-counter (``OTC'') options 
(collectively, ``COPS Data''). Market Data Express, LLC (``MDX''), an 
affiliate of CBOE, offers COPS Data for sale to all market 
participants. COPS Data is available to ``Subscribers'' for internal 
use and internal distribution only, and to ``Customers'' who, pursuant 
to a written vendor agreement between MDX and a Customer, may 
distribute the COPS Data externally (i.e., act as a

[[Page 3211]]

vendor) and/or use and distribute the COPS Data internally.
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    \6\ ``End of day'' refers to data that is distributed prior to 
the opening of the next trading day.
    \7\ ``Historical'' COPS data consists of COPS data that is over 
one month old (i.e., copies of the ``end-of-day'' COPS file that are 
over one month old).
    \8\ FLEX options are exchange traded options that provide 
investors with the ability to customize basic option features 
including size, expiration date, exercise style, and certain 
exercise prices.
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    COPS Data consists of indicative \9\ values for four categories of 
``customized'' options. The first category of options is all open 
series of FLEX options listed on any exchange that offers FLEX options 
for trading.\10\ The second category is OTC options that have the same 
degree of customization as FLEX options. The third category includes 
options with strike prices expressed in percentage terms. Values for 
such options are expressed in percentage terms and are theoretical 
values.\11\ The fourth category includes ``exotic'' options.\12\
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    \9\ ``Indicative'' values are indications of potential market 
prices only and as such are neither firm nor the basis for a 
transaction.
    \10\ Current FLEX options open interest spans over 2,000 series 
on over 300 different underlying securities.
    \11\ These values are theoretical in that they are indications 
of potential market prices for options that have not traded (i.e. do 
not yet exist). Market participants sometimes express option values 
in percentage terms rather than in dollar terms because they find it 
is easier to assess the change, or lack of change, in the 
marketplace from one day to the next when values are expressed in 
percentage terms.
    \12\ Exotic options are options which are generally traded OTC 
and are more complex than standard options, usually relating to 
determination of payoff. An exotic option may also include a non-
standard underlying instrument, developed for a particular client or 
for a particular market.
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    The Exchange uses values produced by CBOE Trading Permit Holders 
(``TPHs'') to produce COPS Data. Participating CBOE TPHs submit values 
to MDX on options series specified by MDX on a daily basis. These 
values are generated by the TPHs' internal pricing models. The 
valuations that MDX ultimately publishes are an average of multiple 
contributions of values from participating CBOE TPHs. For each value 
provided by MDX through COPS, MDX includes a corresponding indication 
of the number of TPH contributors that factored into that value.
    CBOE TPHs that meet the following objective qualification criteria 
are allowed to contribute values to MDX for purposes of producing COPS 
Data. Interested CBOE TPHs must be approved by the Exchange, have the 
ability to provide valuations to MDX in a timely manner each day after 
the close of trading, and sign a services agreement with CBOE. 
Interested CBOE TPHs must also have the ability to provide both 
indicative and implied volatility valuations on several different types 
of options, including (i) options on all open FLEX series traded on any 
exchange that offers FLEX options for trading, (ii) options on any 
potential new FLEX options series, (iii) OTC options that have the same 
degree of customization as FLEX options, (iv) customized options where 
the strike price is expressed in percentage terms (the valuations 
provided to MDX must also be expressed in percentage terms), and (v) 
exotic options. In addition, interested CBOE TPHs must participate in a 
testing phase with MDX. The values submitted by a TPH during the 
testing phase and in live production must meet MDX's quality control 
standards designed to ensure the integrity and accuracy of COPS Data. 
MDX has implemented procedures including monthly performance reviews to 
help ensure the integrity and accuracy of COPS Data.
    To help ensure that MDX receives numerous values from multiple TPHs 
on a consistent basis, MDX shares revenue from the sale of COPS Data 
with participating CBOE TPHs.\13\ The amount of revenue that MDX shares 
with participating TPHs is a percentage of the total revenue received 
by MDX from the sale of COPS Data. The revenue sharing is based on the 
following table:
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    \13\ The fees that MDX charges for COPS Data are set forth on 
the Price List on the MDX Web site (www.marketdataexpress.com). MDX 
currently charges a fee per option per day for ``end-of-day'' COPS 
data. The amount of the fee is reduced based on the number of 
options valuations purchased.

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                                           Total revenue
      Number of participating TPHs           share  %                     Revenue share per TPH  %
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3......................................                21  7
4......................................                24  6
5 or more..............................                30  30 divided by the number of participating TPHs.
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    If only three TPHs participate, MDX shares 21% of total revenue 
with each TPH receiving a 7% share. If four TPHs participate, MDX 
shares 24% of total revenue with each TPH receiving a 6% share. If five 
or more TPHs participate, MDX shares 30% of total revenue divided 
equally among the TPHs. There are currently three participating TPHs.
    In July 2014, the Exchange submitted a proposed rule change to, 
among other things, temporarily change the COPS contributor 
compensation structure from a revenue sharing plan to a fixed payment 
structure for a six-month period (``Fixed Payment Period'').\14\ In May 
2015, the Exchange submitted a proposed rule change to change the COPS 
contributor compensation structure for the remainder of 2015.\15\ 
Pursuant to that proposed rule change, as of May 1, 2015, all revenue 
from the sale of COPS Data was paid to COPS contributors, with revenue 
divided equally among COPS contributors. As described in that proposed 
rule change, MDX would transition back to the revenue share plan 
described above on January 1, 2016.
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    \14\ See Securities Exchange Act Release No. 34-72621 (July 16, 
2014), 79 FR 42616 (July 22, 2014) (SR-CBOE-2014-057).
    \15\ Securities Exchange Act Release No. 34-74937 (May 12, 
2015), 80 FR 28319 (May 18, 2015) (SR-CBOE-2015-046). The Exchange 
is not proposing to eliminate the revenue share plan, but rather 
extend its temporary suspension as described in this rule filing.
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Proposal
    The Exchange proposes to extend the current COPS contributor 
compensation structure for six months. All revenue from the sale of 
COPS Data will continue to be paid to COPS contributors through June 
30, 2016. The revenue will continue to be divided equally among COPS 
contributors. The Exchange had hoped that at the end of 2015, COPS 
revenue would be at a level such that the COPS contributors would 
receive a revenue share roughly in line with the fixed payments they 
received during the Fixed Payment Period. This has not yet occurred. 
The payments to COPS contributors are intended to, at a minimum, help 
COPS contributors cover their costs of producing valuations for COPS 
while the Exchange continues to grow the COPS business. MDX will 
transition back to the revenue share plan described above on July 1, 
2016.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange

[[Page 3212]]

and, in particular, the requirements of Section 6(b) of the Act.\16\ 
Specifically, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \17\ 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) \18\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ Id.
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    The Exchange believes the proposed rule change is not designed to 
permit unfair discrimination between CBOE TPHs because all COPS data 
revenue would be divided equally among TPH contributors for an 
additional six months. The Exchange believes the proposed rule change 
is consistent with the protection of investors and the public interest 
in that it would provide incentive for all of the COPS contributors to 
continue to participate in COPS while the Exchange continues to grow 
the COPS business, thereby helping to maintain the quality of COPS 
Data.

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. To the contrary, the Exchange 
believes the proposal is procompetitive in that it will incentivize 
COPS contributors to continue producing quality valuations to help keep 
COPS competitive with other similar market data products.\19\
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    \19\ Market data vendors including SuperDerivatives, Markit, 
Prism, and Bloomberg's BVAL service produce option value data that 
is similar to COPS Data. The Options Clearing Corporation (``OCC'') 
also produces FLEX option value data that is similar to the FLEX 
option value data that is included in COPS.
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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,\20\ the proposed rule change has become effective 
pursuant to Section 19(b)(3)(A) of the Act \21\ and Rule 19b-4(f)(6) 
thereunder.\22\
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    \20\ The Exchange has fulfilled this requirement.
    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \23\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\24\ 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 believes 
that the proposal is consistent with the protection of investors and 
the public interest because it help COPS contributors cover their costs 
of producing valuations for COPS while the Exchange continues to grow 
the COPS business, and thereby assist the Exchange with maintaining its 
current roster of TPH contributors. The Commission believes that it is 
consistent with the protection of investors and the public interest to 
waive the 30-day operative delay so that the proposal may take effect 
upon filing and allow the current COPS contributor compensation 
structure to continue without interruption. For this reason, the 
Commission designates the proposed rule change to be operative upon 
filing.\25\
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    \23\ 17 CFR 240.19b-4(f)(6).
    \24\ 17 CFR 240.19b-4(f)(6)(iii).
    \25\ 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-2015-122 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-2015-122. 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

[[Page 3213]]

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-2015-122 and should be submitted on or before 
February 10, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-00899 Filed 1-19-16; 8:45 am]
 BILLING CODE 8011-01-P

3210 Federal Register / Vol. 81, No. 12 / Wednesday, January 20, 2016 / Notices registered clearing agencies ‘‘establish, For these reasons, stated above, the II. Self-Regulatory Organization’s implement, maintain and enforce Commission does not object to the Statement of the Purpose of, and written policies and procedures advance notice. Statutory Basis for, the Proposed Rule reasonably designed to, as applicable Change VI. Conclusion . . . establish default procedures that ensure that the clearing agency can take In its filing with the Commission, the It is therefore noticed, pursuant to timely action to contain losses and Exchange included statements Section 806(e)(1)(I) of the Payment, liquidity pressures and to continue concerning the purpose of and basis for Clearing and Settlement Supervision meeting its obligations in the event of a the proposed rule change and discussed Act,24 that the Commission DOES NOT participant default.’’ The proposal will any comments it received on the OBJECT to the proposed change, and allow OCC to obtain short-term funds to proposed rule change. The text of these authorizes OCC to implement the address liquidity demands arising out of statements may be examined at the change in the advance notice (SR–OCC– the default or suspension of a clearing places specified in Item IV below. The 2015–805) as of the date of this notice. member, in anticipation of a potential Exchange has prepared summaries, set By the Commission. forth in sections A, B, and C below, of default or suspension of clearing members or the insolvency of a bank or Robert W. Errett, the most significant aspects of such Deputy Secretary. statements. another securities or commodities clearing organization. The changes [FR Doc. 2016–00976 Filed 1–19–16; 8:45 am] A. Self-Regulatory Organization’s should help OCC minimize losses in the BILLING CODE 8011–01–P Statement of the Purpose of, and event of such a default, suspension, or Statutory Basis for, the Proposed Rule insolvency, by allowing it to obtain Change funds on extremely short notice to SECURITIES AND EXCHANGE ensure clearance and settlement of COMMISSION 1. Purpose transactions in options and other The purpose of the proposed rule contracts without interruption. [Release No. 34–76888; File No. SR–CBOE– change is to extend the contributor Therefore, the Commission believes that 2015–122] compensation structure of the the proposal is consistent with Exchange’s COPS,5 specifically, the Exchange Act Rule 17Ad–22(d)(11).22 Self-Regulatory Organizations; Chicago Board Options Exchange, COPS data revenue-sharing plan. The By ensuring that OCC has continued Incorporated; Notice of Filing and Exchange is not proposing to change the access to its Non-Bank Liquidity Immediate Effectiveness of a Proposed fees for COPS data. Facility, the Commission believes the Rule Change Relating to COPS Background proposal contained in the Advance Notice is consistent with the objectives January 13, 2016. COPS provides market participants and principles described in Section Pursuant to Section 19(b)(1) of the with an ‘‘end-of-day’’ 6 file and 805(b) of the Act,23 including that it is Securities Exchange Act of 1934 (the ‘‘historical’’ 7 files of valuations for consistent with promoting robust risk ‘‘Act’’),1 and Rule 19b–4 thereunder,2 Flexible Exchange (‘‘FLEX’’) 8 options management, and promoting safety and notice is hereby given that on December and certain over-the-counter (‘‘OTC’’) soundness. The Commission believes 31, 2015, Chicago Board Options options (collectively, ‘‘COPS Data’’). that the proposal is consistent with Exchange, Incorporated (the ‘‘Exchange’’ Market Data Express, LLC (‘‘MDX’’), an promoting robust risk management or ‘‘CBOE’’) filed with the Securities affiliate of CBOE, offers COPS Data for because it allows OCC to maintain and Exchange Commission (the sale to all market participants. COPS access to a committed liquidity resource ‘‘Commission’’) the proposed rule Data is available to ‘‘Subscribers’’ for to help meet its settlement obligations change as described in Items I and II internal use and internal distribution in a manner that is timely and does not below, which Items have been prepared only, and to ‘‘Customers’’ who, pursuant increase OCC’s counterparty exposure to by the Exchange. The Exchange filed the to a written vendor agreement between clearing members or clearing member proposal as a ‘‘non-controversial’’ MDX and a Customer, may distribute affiliated commercial banking proposed rule change pursuant to the COPS Data externally (i.e., act as a institutions. In addition, the proposal Section 19(b)(3)(A)(iii) of the Act 3 and will provide OCC the ability to adjust Rule 19b–4(f)(6) thereunder.4 The 5 See Securities Exchange Act Release Nos. 34– the aggregate commitment level of its Commission is publishing this notice to 67813 (September 10, 2012), 77 FR 56903 Non-Bank Liquidity Facility—to no solicit comments on the proposed rule (September 14, 2012) (SR–CBOE–2012–083); 34– 67928 (September 26, 2012), 77 FR 60161 (October lower than $1 billion and no greater change from interested persons. 2, 2012) (SR–CBOE–2012–090); 34–70705 (October than $1.5 billion—to meet changing 17, 2013), 78 FR 63265 (October 23, 2013) (SR– liquidity demands. The Commission I. Self-Regulatory Organization’s CBOE–2013–097); 34–70845 (November 12, 2013), also believes that the proposal is Statement of the Terms of Substance of 78 FR 69168 (November 18, 2013) (SR–CBOE– consistent with promoting safety and the Proposed Rule Change 2013–104); 34–72621 (July 16, 2014), 79 FR 42616 (July 22, 2014) (SR–CBOE–2014–057); 34–74159 soundness of OCC. As stated above, the The Exchange proposes to extend the (January 28, 2015), 80 FR 5863 (February 23, 2015) Non-Bank Liquidity Facility now will contributor compensation structure of (SR–CBOE–2015–007); and 34–74937 (May 12, include two Confirmations with 2015), 80 FR 28319 (May 18, 2015) (SR–CBOE– the Customized Option Pricing Service 2015–046). staggered expiration dates, which (‘‘COPS’’). There is no new proposed 6 ‘‘End of day’’ refers to data that is distributed tkelley on DSK4VPTVN1PROD with NOTICES should mitigate the risk of a precipitous rule text. prior to the opening of the next trading day. decrease in liquidity resources in the 7 ‘‘Historical’’ COPS data consists of COPS data event OCC is unable to renew any one 24 12 U.S.C. 5465(e)(1)(I). that is over one month old (i.e., copies of the ‘‘end- of its committed liquidity sources. of-day’’ COPS file that are over one month old). 1 15 U.S.C. 78s(b)(1). 8 FLEX options are exchange traded options that 2 17 CFR 240.19b–4. provide investors with the ability to customize 22 Id. 3 15 U.S.C. 78s(b)(3)(A)(iii). basic option features including size, expiration 23 12 U.S.C. 5464(b). 4 17 CFR 240.19b–4(f)(6). date, exercise style, and certain exercise prices. VerDate Sep<11>2014 18:12 Jan 19, 2016 Jkt 238001 PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 E:\FR\FM\20JAN1.SGM 20JAN1

Federal Register / Vol. 81, No. 12 / Wednesday, January 20, 2016 / Notices 3211 vendor) and/or use and distribute the participating CBOE TPHs. For each customized options where the strike COPS Data internally. value provided by MDX through COPS, price is expressed in percentage terms COPS Data consists of indicative 9 MDX includes a corresponding (the valuations provided to MDX must values for four categories of indication of the number of TPH also be expressed in percentage terms), ‘‘customized’’ options. The first category contributors that factored into that and (v) exotic options. In addition, of options is all open series of FLEX value. interested CBOE TPHs must participate options listed on any exchange that in a testing phase with MDX. The values offers FLEX options for trading.10 The CBOE TPHs that meet the following objective qualification criteria are submitted by a TPH during the testing second category is OTC options that phase and in live production must meet have the same degree of customization allowed to contribute values to MDX for purposes of producing COPS Data. MDX’s quality control standards as FLEX options. The third category designed to ensure the integrity and includes options with strike prices Interested CBOE TPHs must be approved by the Exchange, have the accuracy of COPS Data. MDX has expressed in percentage terms. Values implemented procedures including for such options are expressed in ability to provide valuations to MDX in a timely manner each day after the close monthly performance reviews to help percentage terms and are theoretical ensure the integrity and accuracy of values.11 The fourth category includes of trading, and sign a services agreement with CBOE. Interested CBOE TPHs must COPS Data. ‘‘exotic’’ options.12 The Exchange uses values produced also have the ability to provide both To help ensure that MDX receives by CBOE Trading Permit Holders indicative and implied volatility numerous values from multiple TPHs (‘‘TPHs’’) to produce COPS Data. valuations on several different types of on a consistent basis, MDX shares Participating CBOE TPHs submit values options, including (i) options on all revenue from the sale of COPS Data to MDX on options series specified by open FLEX series traded on any with participating CBOE TPHs.13 The MDX on a daily basis. These values are exchange that offers FLEX options for amount of revenue that MDX shares generated by the TPHs’ internal pricing trading, (ii) options on any potential with participating TPHs is a percentage models. The valuations that MDX new FLEX options series, (iii) OTC of the total revenue received by MDX ultimately publishes are an average of options that have the same degree of from the sale of COPS Data. The revenue multiple contributions of values from customization as FLEX options, (iv) sharing is based on the following table: Total revenue Revenue share per TPH Number of participating TPHs share % % 3 ......................................................................................................................................... 21 7 4 ......................................................................................................................................... 24 6 5 or more ........................................................................................................................... 30 30 divided by the number of partici- pating TPHs. If only three TPHs participate, MDX Pursuant to that proposed rule change, 2015, COPS revenue would be at a level shares 21% of total revenue with each as of May 1, 2015, all revenue from the such that the COPS contributors would TPH receiving a 7% share. If four TPHs sale of COPS Data was paid to COPS receive a revenue share roughly in line participate, MDX shares 24% of total contributors, with revenue divided with the fixed payments they received revenue with each TPH receiving a 6% equally among COPS contributors. As during the Fixed Payment Period. This share. If five or more TPHs participate, described in that proposed rule change, has not yet occurred. The payments to MDX shares 30% of total revenue MDX would transition back to the COPS contributors are intended to, at a divided equally among the TPHs. There revenue share plan described above on minimum, help COPS contributors are currently three participating TPHs. January 1, 2016. cover their costs of producing In July 2014, the Exchange submitted valuations for COPS while the Exchange Proposal a proposed rule change to, among other continues to grow the COPS business. things, temporarily change the COPS The Exchange proposes to extend the MDX will transition back to the revenue contributor compensation structure current COPS contributor compensation share plan described above on July 1, from a revenue sharing plan to a fixed structure for six months. All revenue 2016. payment structure for a six-month from the sale of COPS Data will 2. Statutory Basis period (‘‘Fixed Payment Period’’).14 In continue to be paid to COPS May 2015, the Exchange submitted a contributors through June 30, 2016. The The Exchange believes the proposed proposed rule change to change the revenue will continue to be divided rule change is consistent with the Act COPS contributor compensation equally among COPS contributors. The and the rules and regulations structure for the remainder of 2015.15 Exchange had hoped that at the end of thereunder applicable to the Exchange 9 ‘‘Indicative’’ values are indications of potential or lack of change, in the marketplace from one day charges a fee per option per day for ‘‘end-of-day’’ market prices only and as such are neither firm nor to the next when values are expressed in percentage COPS data. The amount of the fee is reduced based the basis for a transaction. terms. on the number of options valuations purchased. 10 Current FLEX options open interest spans over 12 Exotic options are options which are generally 14 See Securities Exchange Act Release No. 34– tkelley on DSK4VPTVN1PROD with NOTICES 2,000 series on over 300 different underlying traded OTC and are more complex than standard 72621 (July 16, 2014), 79 FR 42616 (July 22, 2014) securities. options, usually relating to determination of payoff. (SR–CBOE–2014–057). 11 These values are theoretical in that they are An exotic option may also include a non-standard 15 Securities Exchange Act Release No. 34–74937 indications of potential market prices for options underlying instrument, developed for a particular (May 12, 2015), 80 FR 28319 (May 18, 2015) (SR– that have not traded (i.e. do not yet exist). Market client or for a particular market. CBOE–2015–046). The Exchange is not proposing to participants sometimes express option values in 13 The fees that MDX charges for COPS Data are eliminate the revenue share plan, but rather extend percentage terms rather than in dollar terms set forth on the Price List on the MDX Web site its temporary suspension as described in this rule because they find it is easier to assess the change, (www.marketdataexpress.com). MDX currently filing. VerDate Sep<11>2014 18:12 Jan 19, 2016 Jkt 238001 PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 E:\FR\FM\20JAN1.SGM 20JAN1

3212 Federal Register / Vol. 81, No. 12 / Wednesday, January 20, 2016 / Notices and, in particular, the requirements of C. Self-Regulatory Organization’s proposed rule change to be operative Section 6(b) of the Act.16 Specifically, Statement on Comments on the upon filing.25 the Exchange believes the proposed rule Proposed Rule Change Received From At any time within 60 days of the change is consistent with the Section Members, Participants, or Others filing of the proposed rule change, the 6(b)(5) 17 requirements that the rules of Commission summarily may The Exchange neither solicited nor temporarily suspend such rule change if an exchange be designed to prevent received comments on the proposed fraudulent and manipulative acts and it appears to the Commission that such rule change. action is necessary or appropriate in the practices, to promote just and equitable III. Date of Effectiveness of the public interest, for the protection of principles of trade, to foster cooperation Proposed Rule Change and Timing for investors, or otherwise in furtherance of and coordination with persons engaged Commission Action the purposes of the Act. If the in regulating, clearing, settling, Commission takes such action, the processing information with respect to, Because the foregoing rule does not (i) Commission will institute proceedings and facilitating transactions in significantly affect the protection of to determine whether the proposed rule securities, to remove impediments to investors or the public interest; (ii) change should be approved or and perfect the mechanism of a free and impose any significant burden on disapproved. open market and a national market competition; and (iii) become operative system, and, in general, to protect for 30 days from the date on which it IV. Solicitation of Comments investors and the public interest. was filed, or such shorter time as the Interested persons are invited to Additionally, the Exchange believes the Commission may designate if consistent submit written data, views, and proposed rule change is consistent with with the protection of investors and the arguments concerning the foregoing, the Section 6(b)(5) 18 requirement that public interest, provided that the self- including whether the proposed rule the rules of an exchange not be designed regulatory organization has given the change is consistent with the Act. to permit unfair discrimination between Commission written notice of its intent Comments may be submitted by any of to file the proposed rule change at least the following methods: customers, issuers, brokers, or dealers. five business days prior to the date of The Exchange believes the proposed filing of the proposed rule change or Electronic Comments rule change is not designed to permit such shorter time as designated by the • Use the Commission’s Internet unfair discrimination between CBOE Commission,20 the proposed rule comment form (http://www.sec.gov/ TPHs because all COPS data revenue change has become effective pursuant to rules/sro.shtml); or would be divided equally among TPH Section 19(b)(3)(A) of the Act 21 and • Send an email to rule-comments@ contributors for an additional six Rule 19b–4(f)(6) thereunder.22 sec.gov. Please include File Number SR– months. The Exchange believes the A proposed rule change filed under CBOE–2015–122 on the subject line. proposed rule change is consistent with Rule 19b–4(f)(6) 23 normally does not Paper Comments the protection of investors and the become operative prior to 30 days after • Send paper comments in triplicate public interest in that it would provide the date of the filing. However, pursuant to Secretary, Securities and Exchange incentive for all of the COPS to Rule 19b–4(f)(6)(iii),24 the Commission, 100 F Street NE., contributors to continue to participate Commission may designate a shorter Washington, DC 20549–1090. in COPS while the Exchange continues time if such action is consistent with the protection of investors and the public All submissions should refer to File to grow the COPS business, thereby Number SR–CBOE–2015–122. This file helping to maintain the quality of COPS interest. The Exchange has asked the Commission to waive the 30-day number should be included on the Data. subject line if email is used. To help the operative delay so that the proposal may B. Self-Regulatory Organization’s become operative immediately upon Commission process and review your Statement on Burden on Competition filing. The Exchange believes that the comments more efficiently, please use proposal is consistent with the only one method. The Commission will CBOE does not believe that the protection of investors and the public post all comments on the Commission’s proposed rule change will impose any interest because it help COPS Internet Web site (http://www.sec.gov/ burden on competition that is not contributors cover their costs of rules/sro.shtml). Copies of the necessary or appropriate in furtherance producing valuations for COPS while submission, all subsequent of the purposes of the Act. To the the Exchange continues to grow the amendments, all written statements contrary, the Exchange believes the COPS business, and thereby assist the with respect to the proposed rule proposal is procompetitive in that it will Exchange with maintaining its current change that are filed with the incentivize COPS contributors to roster of TPH contributors. The Commission, and all written Commission believes that it is communications relating to the continue producing quality valuations consistent with the protection of proposed rule change between the to help keep COPS competitive with investors and the public interest to Commission and any person, other than other similar market data products.19 waive the 30-day operative delay so that those that may be withheld from the the proposal may take effect upon filing public in accordance with the and allow the current COPS contributor provisions of 5 U.S.C. 552, will be 16 15 U.S.C. 78f(b). compensation structure to continue available for Web site viewing and 17 15 U.S.C. 78f(b)(5). without interruption. For this reason, printing in the Commission’s Public tkelley on DSK4VPTVN1PROD with NOTICES 18 Id. the Commission designates the Reference Room, 100 F Street NE., 19 Market data vendors including Washington, DC 20549 on official SuperDerivatives, Markit, Prism, and Bloomberg’s 20 The Exchange has fulfilled this requirement. BVAL service produce option value data that is 25 For purposes only of waiving the 30-day 21 15 U.S.C. 78s(b)(3)(A). similar to COPS Data. The Options Clearing operative delay, the Commission has also Corporation (‘‘OCC’’) also produces FLEX option 22 17 CFR 240.19b–4(f)(6). considered the proposed rule’s impact on value data that is similar to the FLEX option value 23 17 CFR 240.19b–4(f)(6). efficiency, competition, and capital formation. See data that is included in COPS. 24 17 CFR 240.19b–4(f)(6)(iii). 15 U.S.C. 78c(f). VerDate Sep<11>2014 18:12 Jan 19, 2016 Jkt 238001 PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 E:\FR\FM\20JAN1.SGM 20JAN1

Federal Register / Vol. 81, No. 12 / Wednesday, January 20, 2016 / Notices 3213 business days between the hours of proposed rule change, or institute I. Self-Regulatory Organization’s 10:00 a.m. and 3:00 p.m. Copies of the proceedings to determine whether these Statement of the Terms of the Substance filing also will be available for proposed rule changes should be of the Proposed Rule Change inspection and copying at the principal disapproved. The 45th day for this filing The Exchange proposes to amend the office of the Exchange. All comments is January 14, 2016. fees for NYSE Arca Options Product, as received will be posted without change; The Commission is extending the 45- set forth on the NYSE Arca Options the Commission does not edit personal day time period for Commission action Proprietary Market Data Fee Schedule identifying information from on the proposed rule change. The (‘‘Fee Schedule’’). The Exchange submissions. You should submit only Commission finds that it is appropriate proposes to establish a multiple data information that you wish to make to designate a longer period within feed fee effective January 1, 2016. available publicly. All submissions which to take action on the proposed Specifically, the Exchange proposes to should refer to File Number SR–CBOE– rule change so that it has sufficient time establish a new monthly fee, the 2015–122 and should be submitted on to consider and take action on the ‘‘Multiple Data Feed Fee,’’ that would or before February 10, 2016. Exchange’s proposed rule change. apply to data recipients that take a data For the Commission, by the Division of Accordingly, pursuant to section feed for NYSE Arca Options Product in Trading and Markets, pursuant to delegated more than two locations. Data recipients authority.26 19(b)(2)(A)(ii)(I) of the Act 5 and for the reasons stated above, the Commission taking NYSE Arca Options Product in Robert W. Errett, more than two locations would be designates February 28, 2016 as the date Deputy Secretary. charged $200 per additional location per by which the Commission should either [FR Doc. 2016–00899 Filed 1–19–16; 8:45 am] approve or disapprove, or institute product per month. The text of the BILLING CODE 8011–01–P proceedings to determine whether to proposed rule change is available on the disapprove, the proposed rulechange Exchange’s Web site at www.nyse.com, (File No. SR–ISE Gemini–2015–17). at the principal office of the Exchange, SECURITIES AND EXCHANGE and at the Commission’s Public COMMISSION For the Commission, by the Division of Reference Room. Trading and Markets, pursuant to delegated [Release No. 34–76894; File No. SR–ISE authority.6 II. Self-Regulatory Organization’s Gemini–2015–17] Statement of the Purpose of, and Robert W. Errett, Deputy Secretary. Statutory Basis for, the Proposed Rule Self-Regulatory Organizations; ISE Change Gemini, LLC; Notice of Designation of [FR Doc. 2016–00904 Filed 1–19–16; 8:45 am] Longer Period for Commission Action BILLING CODE 8011–01–P In its filing with the Commission, the on Proposed Rule Change To Amend self-regulatory organization included Rule 804(g) statements concerning the purpose of, SECURITIES AND EXCHANGE and basis for, the proposed rule change January 13, 2016. and discussed any comments it received COMMISSION On November 12, 2015, ISE Gemini, on the proposed rule change. The text LLC (‘‘Exchange’’) filed with the of those statements may be examined at Securities and Exchange Commission [Release No. 34–76890; File No. SR– the places specified in Item IV below. (‘‘Commission’’), pursuant to Section NYSEArca–2015–130] The Exchange has prepared summaries, 19(b)(1) of the Securities Exchange Act set forth in sections A, B, and C below, Self-Regulatory Organizations; NYSE of 1934 (‘‘Act’’) 1 and Rule 19b–4 of the most significant parts of such Arca, Inc.; Notice of Filing and thereunder,2 a proposed rule change to statements. Immediate Effectiveness of Proposed require clearing member approval before Rule Change To Amend Market Data A. Self-Regulatory Organization’s a market maker could resume trading Fees for the NYSE Arca Options Statement of the Purpose of, and after the activation of a market-wide Product Statutory Basis for, the Proposed Rule speed bump under Exchange Rule 804(g). The proposed rule change was Change January 13, 2016. published for comment in the Federal 1. Purpose Register on November 30, 2015.3 The Pursuant to section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the The Exchange proposes to amend the Commission has received no comment ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 fees for NYSE Arca Options Product,4 as letters on the proposal. Section 19(b)(2) of the Act 4 provides notice is hereby given that, on December set forth on the NYSE Arca Options that within 45 days of the publication of 31, 2015, NYSE Arca, Inc. (the Proprietary Market Data Fee Schedule notice of the filing of a proposed rule ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with (‘‘Fee Schedule’’). The Exchange change, or within such longer period up the Securities and Exchange proposes to establish a multiple data to 90 days as the Commission may Commission (the ‘‘Commission’’) the feed fee effective January 1, 2016. designate if it finds such longer period proposed rule change as described in Specifically, the Exchange proposes to to be appropriate and publishes its Items I, II, and III below, which Items establish a new monthly fee, the reasons for so finding or as to which the have been prepared by the self- ‘‘Multiple Data Feed Fee,’’ that would self-regulatory organization consents, regulatory organization. The apply to data recipients that take a data the Commission shall either approve the Commission is publishing this notice to feed for NYSE Arca Options Product in proposed rule change, disapprove the solicit comments on the proposed rule more than two locations. Data recipients tkelley on DSK4VPTVN1PROD with NOTICES change from interested persons. 4 See Securities Exchange Act Release Nos. 76023 26 17 CFR 200.30–3(a)(12). 5 15 (Sept. 29, 2015), 80 FR 60208 (Oct. 5, 2015) (SR– 1 15 U.S.C. 78s(b)(1). U.S.C. 78s(b)(2)(A)(ii)(I). 6 17 CFR 200.30–3(a)(31). NYSEArca–2015–83). The single fee for the NYSE 2 17 CFR 240.19b–4. Arca Options Product set forth on the Fee Schedule 3 See Securities Exchange Act Release No. 76505 1 15 U.S.C. 78s(b)(1). is comprised of three data feeds: Arca Options Top, (November 23, 2015), 80 FR 74824. 2 15 U.S.C. 78a. Arca Options Deep and Arca Options Complex 4 15 U.S.C. 78s(b)(2). 3 17 CFR 240.19b–4. products. VerDate Sep<11>2014 18:12 Jan 19, 2016 Jkt 238001 PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 E:\FR\FM\20JAN1.SGM 20JAN1


Document Created: 2016-01-19 23:43:38
Document Modified: 2016-01-19 23:43:38
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 3210 
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