81 FR 38753 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Penny Pilot Program

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 114 (June 14, 2016)

Page Range		38753-38754
FR Document		2016-13961
Federal Register, Volume 81 Issue 114 (Tuesday, June 14, 2016)
[Federal Register Volume 81, Number 114 (Tuesday, June 14, 2016)]
[Notices]
[Pages 38753-38754]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-13961]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78012; File No. SR-C2-2016-007]


Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to the Penny Pilot Program

June 8, 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 June 1, 2016, C2 Options Exchange, Incorporated (the 
``Exchange'' or ``C2'') 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 operation of Penny Pilot 
Program through December 31, 2016. The text of the proposed rule change 
is provided below. (additions are in italics; deletions are 
[bracketed])
* * * * *

C2 Options Exchange, Incorporated Rules

* * * * *

Rule 6.4. Minimum Increments for Bids and Offers

    The Board of Directors may establish minimum quoting increments for 
options traded on the Exchange. When the Board of Directors determines 
to change the minimum increments, the Exchange will designate such 
change as a stated policy, practice, or interpretation with respect to 
the administration of this Rule within the meaning of subparagraph 
(3)(A) of subsection 19(b) of the Exchange Act and will file a rule 
change for effectiveness upon filing with the Commission. Until such 
time as the Board of Directors makes a change to the minimum 
increments, the following minimum increments shall apply to options 
traded on the Exchange:
    (1) No change.
    (2) No change.
    (3) The decimal increments for bids and offers for all series of 
the option classes participating in the Penny Pilot Program are: $0.01 
for all option series quoted below $3 (including LEAPS), and $0.05 for 
all option series $3 and above (including LEAPS). For QQQQs, IWM, and 
SPY, the minimum increment is $0.01 for all option series. The Exchange 
may replace any option class participating in the Penny Pilot Program 
that has been delisted with the next most actively-traded, multiply-
listed option class, based on national average daily volume in the 
preceding six calendar months, that is not yet included in the Pilot 
Program. Any replacement class would be added on the second trading day 
following [July 1, 2015 and January 1, 2016]July 1, 2016. The Penny 
Pilot shall expire on [June 30, 2016]December 31, 2016. Also, for so 
long as SPDR options (SPY) and options on Diamonds (DIA) participate in 
the Penny Pilot Program, the minimum increments for Mini-SPX Index 
Options (XSP) and options on the Dow Jones Industrial Average (DJX), 
respectively, may be $0.01 for all option series quoting less than $3 
(including LEAPS), and $0.05 for all option series quoting at $3 or 
higher (including LEAPS).
    (4) No change.
* * * * *
    The text of the proposed rule change is also 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 Penny Pilot Program (the ``Pilot Program'') is scheduled to 
expire on June 30, 2016. C2 proposes to extend the Pilot Program until 
December 31, 2016. C2 believes that extending the Pilot Program will 
allow for further analysis of the Pilot Program and a determination of 
how the Pilot Program should be structured in the future.
    During this extension of the Pilot Program, C2 proposes that it may 
replace any option class that is currently included in the Pilot 
Program and that has been delisted with the next most actively traded, 
multiply listed option class that is not yet participating in the Pilot 
Program (``replacement class''). Any replacement class would be

[[Page 38754]]

determined based on national average daily volume in the preceding six 
months,\5\ and would be added on the second trading day following July 
1, 2016. C2 will announce to its Trading Permit Holders by circular any 
replacement classes in the Pilot Program. The Exchange notes that it 
intends to utilize the same parameters to prospective replacement 
classes as was originally approved.
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    \5\ The month immediately preceding a replacement class's 
addition to the Pilot Program (i.e., June) would not be used for 
purposes of the six-month analysis. Thus, a replacement class to be 
added on the second trading day following July 1, 2016 would be 
identified based on The Option Clearing Corporation's trading volume 
data from December 1, 2015 through May 31, 2016.
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    C2 is specifically authorized to act jointly with the other options 
exchanges participating in the Pilot Program in identifying any 
replacement class.
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 and, in particular, the requirements of section 6(b) of the 
Act.\6\ Specifically, the Exchange believes the proposed rule change is 
consistent with the section 6(b)(5) \7\ 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 the section 6(b)(5) \8\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers. In particular, the proposed 
rule change allows for an extension of the Pilot Program for the 
benefit of market participants.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    C2 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. Specifically, the Exchange 
believes that, by extending the expiration of the Pilot Program, the 
proposed rule change will allow for further analysis of the Pilot 
Program and a determination of how the Program shall be structured in 
the future. In doing so, the proposed rule change will also serve to 
promote regulatory clarity and consistency, thereby reducing burdens on 
the marketplace and facilitating investor protection. In addition, the 
Exchange has been authorized to act jointly in extending the Pilot 
Program and believes the other exchanges will be filing similar 
extensions.

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 Exchange has filed the proposed rule change pursuant to section 
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\ thereunder. 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
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, the proposed rule change has become 
effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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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-C2-2016-007 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-C2-2016-007. 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 identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-C2-2016-007 and should be 
submitted on or before July 5, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-13961 Filed 6-13-16; 8:45 am]
BILLING CODE 8011-01-P
38754 Federal Register / Vol. 81, No. 114 / Tuesday, June 14, 2016 / Notices

determined based on national average proposed rule change will allow for Comments may be submitted by any of
daily volume in the preceding six further analysis of the Pilot Program and the following methods:
months,5 and would be added on the a determination of how the Program
second trading day following July 1, shall be structured in the future. In Electronic Comments
2016. C2 will announce to its Trading doing so, the proposed rule change will • Use the Commission’s Internet
Permit Holders by circular any also serve to promote regulatory clarity comment form (http://www.sec.gov/
replacement classes in the Pilot and consistency, thereby reducing rules/sro.shtml); or
Program. The Exchange notes that it burdens on the marketplace and
intends to utilize the same parameters to facilitating investor protection. In • Send an email to rule-comments@
prospective replacement classes as was addition, the Exchange has been sec.gov. Please include File Number SR–
originally approved. authorized to act jointly in extending C2–2016–007 on the subject line.
C2 is specifically authorized to act the Pilot Program and believes the other
jointly with the other options exchanges Paper Comments
exchanges will be filing similar
participating in the Pilot Program in extensions. • Send paper comments in triplicate
identifying any replacement class. to Secretary, Securities and Exchange
C. Self-Regulatory Organization’s
2. Statutory Basis Statement on Comments on the Commission, 100 F Street NE.,
The Exchange believes the proposed Proposed Rule Change Received From Washington, DC 20549–1090.
rule change is consistent with the Act Members, Participants, or Others All submissions should refer to File
and the rules and regulations Number SR–C2–2016–007. This file
The Exchange neither solicited nor
thereunder applicable to the Exchange number should be included on the
received comments on the proposed
and, in particular, the requirements of subject line if email is used. To help the
rule change.
section 6(b) of the Act.6 Specifically, the Commission process and review your
Exchange believes the proposed rule III. Date of Effectiveness of the comments more efficiently, please use
change is consistent with the section Proposed Rule Change and Timing for
only one method. The Commission will
6(b)(5) 7 requirements that the rules of Commission Action
post all comments on the Commission’s
an exchange be designed to prevent
fraudulent and manipulative acts and The Exchange has filed the proposed Internet Web site (http://www.sec.gov/
practices, to promote just and equitable rule change pursuant to section rules/sro.shtml). Copies of the
principles of trade, to foster cooperation 19(b)(3)(A) of the Act 9 and Rule 19b– submission, all subsequent
and coordination with persons engaged 4(f)(6) 10 thereunder. Because the amendments, all written statements
in regulating, clearing, settling, proposed rule change does not: (i) with respect to the proposed rule
processing information with respect to, Significantly affect the protection of change that are filed with the
and facilitation transactions in investors or the public interest; (ii) Commission, and all written
securities, to remove impediments to impose any significant burden on communications relating to the
and perfect the mechanism of a free and competition; and (iii) become operative proposed rule change between the
open market and a national market prior to 30 days from the date on which Commission and any person, other than
system, and, in general, to protect it was filed, or such shorter time as the those that may be withheld from the
investors and the public interest. Commission may designate, if
public in accordance with the
Additionally, the Exchange believes the consistent with the protection of
provisions of 5 U.S.C. 552, will be
proposed rule change is consistent with investors and the public interest, the
proposed rule change has become available for Web site viewing and
the section 6(b)(5) 8 requirement that the printing in the Commission’s Public
rules of an exchange not be designed to effective pursuant to section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii) Reference Room, 100 F Street NE.,
permit unfair discrimination between Washington, DC 20549 on official
customers, issuers, brokers, or dealers. thereunder.
At any time within 60 days of the business days between the hours of
In particular, the proposed rule change
filing of the proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the
allows for an extension of the Pilot
Commission summarily may filing also will be available for
Program for the benefit of market
temporarily suspend such rule change if inspection and copying at the principal
participants.
it appears to the Commission that such office of the Exchange. All comments
B. Self-Regulatory Organization’s action is necessary or appropriate in the received will be posted without change;
Statement on Burden on Competition public interest, for the protection of the Commission does not edit personal
C2 does not believe that the proposed investors, or otherwise in furtherance of identifying information from
rule change will impose any burden on the purposes of the Act. If the submissions. You should submit only
competition that is not necessary or Commission takes such action, the information that you wish to make
appropriate in furtherance of the Commission will institute proceedings available publicly. All submissions
purposes of the Act. Specifically, the to determine whether the proposed rule should refer to File Number SR–C2–
Exchange believes that, by extending the change should be approved or 2016–007 and should be submitted on
expiration of the Pilot Program, the disapproved. or before July 5, 2016.
5 The IV. Solicitation of Comments For the Commission, by the Division of
month immediately preceding a
replacement class’s addition to the Pilot Program Trading and Markets, pursuant to delegated
Interested persons are invited to
srobinson on DSK5SPTVN1PROD with NOTICES

(i.e., June) would not be used for purposes of the authority.11
six-month analysis. Thus, a replacement class to be submit written data, views, and Robert W. Errett,
added on the second trading day following July 1, arguments concerning the foregoing,
2016 would be identified based on The Option including whether the proposed rule Deputy Secretary.
Clearing Corporation’s trading volume data from [FR Doc. 2016–13961 Filed 6–13–16; 8:45 am]
December 1, 2015 through May 31, 2016. change is consistent with the Act.
6 15 U.S.C. 78f(b). BILLING CODE 8011–01–P
7 15 U.S.C. 78f(b)(5). 9 15 U.S.C. 78s(b)(3)(A).
8 Id. 10 17 CFR 240.19b–4(f)(6). 11 17 CFR 200.30–3(a)(12).

VerDate Sep<11>2014 19:36 Jun 13, 2016 Jkt 238001 PO 00000 Frm 00099 Fmt 4703 Sfmt 9990 E:\FR\FM\14JNN1.SGM 14JNN1
Document Created: 2016-06-14 02:58:31
Document Modified: 2016-06-14 02:58:31
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		81 FR 38753