81 FR 40739 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule To Amend the Fees Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 120 (June 22, 2016)

[Federal Register Volume 81, Number 120 (Wednesday, June 22, 2016)]
[Notices]
[Pages 40739-40741]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-14714]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78090; File No. SR-C2-2016-008]


Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule To 
Amend the Fees Schedule

June 16, 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 10, 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, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    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.c2exchange.com/Legal/), 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 with respect to 
the Linkage Routing fee.\3\ By way of background, the Linkage Routing 
fee is assessed to all orders routed pursuant to the Options Order 
Protection and Locked/Crossed Market Plan. The Linkage Routing fee is 
currently $0.70 per contract plus applicable Taker fees. The Exchange 
proposes to waive the Linkage Routing fee and Taker fees for orders 
that are routed to another Exchange if entered on (i) a prior business 
day or (ii) prior to 8:30 a.m. CST on the same business day.
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    \3\ The Exchange initially filed the proposed fee change on June 
1, 2016 (SR-C2-2016-006). On June 10, 2016, the Exchange withdrew 
that filing and replaced it with SR-C2-2016-008.
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    The Exchange notes that trades on the open involve the matching of 
pre-opening orders and quotes and orders resting in the book from the 
prior business day and therefore, in effect, no Maker or Taker activity 
is occurring. As such, the Exchange currently waives the fees for 
trades on the open. The Exchange would similarly like to waive the 
Linkage Routing fee and applicable Taker fees for (i) pre-opening 
orders that are submitted by 8:30 a.m. CST and (ii) for orders resting 
in the book from a prior business day that link away to another 
Exchange. The Exchange notes that pre-opening orders submitted by 8:30 
a.m. CST and orders resting in the book from a prior business day may 
potentially be linked away after being exposed during the opening 
process pursuant to C2 Rule 6.11.\4\ The Exchange notes that it does 
not wish to assess Linkage or transaction fees for these orders 
however, as no Maker or Taker activity is occurring. Additionally, the 
Exchange notes that

[[Page 40740]]

while a sender of an order intraday would likely know upon submission 
whether that order could potentially link away that day based on the 
National Best Bid and Offer (NBBO) and resting simple orders and 
quotes, a sender of an order could not know at the time of submission 
whether that order would link away after an opening rotation on the 
following trade date (or if entered the same business day prior to 8:30 
a.m. CST, whether it would link away after being exposed during the 
upcoming opening). The Exchange therefore does not wish to assess 
Linkage or Taker fees for these orders.
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    \4\ See C2 Rule 6.11.
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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.\5\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \6\ 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 
Section 6(b)(4) of the Act,7 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.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed rule change is reasonable 
because market participants won't be assessed Linkage Routing or Taker 
fees for orders that are routed to another Exchange if entered on a 
prior business day or prior to 8:30 a.m. CST on the same business day. 
The Exchange also believes it's reasonable, equitable and not unfairly 
discriminatory to not assess linkage or transaction fees for these 
transactions because no Maker or Taker activity is occurring in these 
instances and because market participants cannot anticipate upon 
submission whether their order would be linked away after exposure 
during an opening process, which would result in that market 
participant being assessed Taker fees (and in some instances, when they 
may otherwise have expected to be treated as a Maker). The Exchange 
also wishes to avoid discouraging Trading Permit Holders (``TPHs'') 
from canceling resting orders at the end of the day and from sending 
pre-opening orders (so as to avoid possible linkage and Taker fees if 
linked away after an opening rotation). Finally, the Exchange believes 
the proposed change is equitable and not unfairly discriminatory 
because it applies to all market participants.

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. 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 rule change applies to all 
TPHs and because the Exchange does not wish to assess fees on orders 
that a TPH cannot anticipate being linked away and unexpectedly incur 
Linkage and Taker fees. The Exchange does not believe that the proposed 
change will impose any burden on intermarket competition because it 
only effects trading on C2. Should the proposed change make C2 a more 
attractive trading venue for market participants at other exchanges, 
such market participants may elect to become market participants at C2. 
Additionally, the Exchange notes that it operates in a highly 
competitive market, comprised of fourteen options exchanges, in which 
market participants can easily and readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or rebates to be inadequate.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and paragraph (f) of Rule 19b-4 \9\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-C2-2016-008 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-C2-2016-008. 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

[[Page 40741]]

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-C2-2016-008 and should be 
submitted on or before July 13, 2016.
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    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-14714 Filed 6-21-16; 8:45 am]
 BILLING CODE 8011-01-P