81 FR 46721 - 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 137 (July 18, 2016)
Federal Register Volume 81, Issue 137 (July 18, 2016)
| Page Range | 46721-46723 | |
| FR Document | 2016-16852 |
[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)] [Notices] [Pages 46721-46723] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-16852] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78292; File No. SR-CBOE-2016-054] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule July 12, 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 July 1, 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, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose On March 21, 2016, the Exchange began offering Asian style settlement and Cliquet style settlement for certain FLEX Broad-Based Index Options (``Exotics'').\3\ In conjunction with the adoption of FLEX Broad-Based Index Options with Asian or Cliquet style settlement, the Exchange adopted an Exotic Surcharge of $0.25 to be assessed on all customer (``C'' origin code) Exotic contracts executed on CBOE. The Exchange proposes to decrease the Exotic Surcharge of $0.25 to $0.03 for all customer XSP Exotic contracts executed on CBOE. Particularly, the Exchange notes that XSP options have \1/10\ the value of S&P 500 Index (``SPX'') options. As XSP has a smaller exercise and assignment value due to the reduced number of shares they deliver as compared to standard SPX option contracts, the Exchange is proposing a lower per contract Exotic Surcharge. --------------------------------------------------------------------------- \3\ In general, Asian style settlement provides for payout based on the average of prices of a broad-based index on pre-determined dates over a specified time period, and Cliquet style settlement provides for a payout that is the greater of $0 or the (positive) sum of ``capped'' monthly returns of a broad-based index on pre- determined dates over a specified period of time. These settlement types are also referred to as ``Exotics'' due to their untraditional nature. --------------------------------------------------------------------------- 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.\4\ Specifically, the Exchange believes the proposed rule change is consistent with the Section [[Page 46722]] 6(b)(5) \5\ 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,\6\ 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. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78f(b). \5\ 15 U.S.C. 78f(b)(5). \6\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- The Exchange believes that reducing the Exotic Surcharge of $0.25 per contract to $0.03 per contract for Exotic customer XSP options is reasonable because customers will pay lower fees for such transactions. The Exchange believes that it is reasonable, equitable and not unfairly discriminatory to reduce the Exotic Surcharge for XSP options only because XSP options are \1/10\ the size of standard options and as such the Exchange believes it's reasonable to assess a lower surcharge. Further, the Exchange notes that the proposed Exotic Surcharge of $0.03 per contract for Exotic XSP options, is only slightly more than \1/10\ of the $0.25 amount assessed as the Exotic Surcharge for standard sized classes. The proposed change is also equitable and not unfairly discriminatory because it is designed to attract greater customer order flow in XSP Exotic options to the Exchange, which would bring greater liquidity to the market, thereby benefiting all market participants. The Exchange also believes that it is equitable and not unfairly discriminatory to assess the Exotic Surcharge to customers and not other market participants because customers are not subject to additional costs for effecting transactions in FLEX Broad-Based Index options that are applicable to other market participants, such as license surcharges. Additionally, customers are not subject to fees for effecting transactions in general that are applicable to other market participants, such as connectivity fees and fees relating to Trading Permits, and are not subject to the same obligations as other market participants, including regulatory and compliance requirements and quoting obligations. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule changes will impose any burdens on competition that are not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because while the Exotic Surcharge is assessed only to customer orders, lower fees for customers is commonplace within the options marketplace for the reasons discussed above. Further, to the extent that any change in intramarket competition may result from the proposed change, such change is justifiable and offset because the proposed change is designed to attract greater customer order flow in XSP Exotic options and because the Exchange does not wish to assess the same per contract surcharge on a class that is \1/10\ the size of standard options. The Exchange does not believe that the proposed change will cause any unnecessary burden on intermarket competition because the proposed change only affects 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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \7\ and paragraph (f) of Rule 19b-4 \8\ 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. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78s(b)(3)(A). \8\ 17 CFR 240.19b-4(f). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR- CBOE-2016-054 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-2016-054. 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 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-CBOE-2016-054, and should be submitted on or before August 8, 2016. [[Page 46723]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\9\ Robert W. Errett, Deputy Secretary. [FR Doc. 2016-16852 Filed 7-15-16; 8:45 am] BILLING CODE 8011-01-P
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III. Date of Effectiveness of the inspection and copying at the principal II. Self-Regulatory Organization’s
Proposed Rule Change and Timing for office of the Exchange. All comments Statement of the Purpose of, and
Commission Action received will be posted without change; Statutory Basis for, the Proposed Rule
The foregoing rule change has become the Commission does not edit personal Change
effective pursuant to section 19(b)(3)(A) identifying information from
submissions. You should submit only In its filing with the Commission, the
of the Act 16 and paragraph (f) of Rule
Exchange included statements
19b–4 thereunder.17 At any time within information that you wish to make
concerning the purpose of and basis for
60 days of the filing of the proposed rule available publicly. All submissions
the proposed rule change and discussed
change, the Commission summarily may should refer to File Number SR–
temporarily suspend such rule change if any comments it received on the
BatsEDGX–2016–27 and should be proposed rule change. The text of these
it appears to the Commission that such submitted on or before August 8, 2016.
action is necessary or appropriate in the statements may be examined at the
public interest, for the protection of For the Commission, by the Division of places specified in Item IV below. The
investors, or otherwise in furtherance of Trading and Markets, pursuant to delegated Exchange has prepared summaries, set
authority.18 forth in sections A, B, and C below, of
the purposes of the Act.
Robert W. Errett, the most significant aspects of such
IV. Solicitation of Comments Deputy Secretary. statements.
Interested persons are invited to [FR Doc. 2016–16848 Filed 7–15–16; 8:45 am] A. Self-Regulatory Organization’s
submit written data, views, and BILLING CODE 8011–01–P Statement of the Purpose of, and the
arguments concerning the foregoing, Statutory Basis for, the Proposed Rule
including whether the proposed rule Change
change is consistent with the Act. SECURITIES AND EXCHANGE
Comments may be submitted by any of COMMISSION 1. Purpose
the following methods:
On March 21, 2016, the Exchange
Electronic Comments [Release No. 34–78292; File No. SR–CBOE– began offering Asian style settlement
• Use the Commission’s Internet 2016–054] and Cliquet style settlement for certain
comment form (http://www.sec.gov/ FLEX Broad-Based Index Options
rules/sro.shtml); or Self-Regulatory Organizations; (‘‘Exotics’’).3 In conjunction with the
• Send an email to rule-comments@ Chicago Board Options Exchange, adoption of FLEX Broad-Based Index
sec.gov. Please include File Number SR– Incorporated; Notice of Filing and Options with Asian or Cliquet style
BatsEDGX–2016–27 on the subject line. Immediate Effectiveness of a Proposed settlement, the Exchange adopted an
Rule Change To Amend the Fees Exotic Surcharge of $0.25 to be assessed
Paper Comments
Schedule on all customer (‘‘C’’ origin code) Exotic
• Send paper comments in triplicate contracts executed on CBOE. The
to Secretary, Securities and Exchange July 12, 2016. Exchange proposes to decrease the
Commission, 100 F Street NE., Pursuant to Section 19(b)(1) of the Exotic Surcharge of $0.25 to $0.03 for all
Washington, DC 20549–1090. Securities Exchange Act of 1934 (the customer XSP Exotic contracts executed
All submissions should refer to File ‘‘Act’’),1 and Rule 19b–4 thereunder,2 on CBOE. Particularly, the Exchange
Number SR–BatsEDGX–2016–27. This notice is hereby given that on July 1, notes that XSP options have 1⁄10 the
file number should be included on the 2016, Chicago Board Options Exchange, value of S&P 500 Index (‘‘SPX’’) options.
subject line if email is used. To help the As XSP has a smaller exercise and
Incorporated (the ‘‘Exchange’’ or
Commission process and review your assignment value due to the reduced
‘‘CBOE’’) filed with the Securities and
comments more efficiently, please use number of shares they deliver as
only one method. The Commission will Exchange Commission (the
‘‘Commission’’) the proposed rule compared to standard SPX option
post all comments on the Commission’s contracts, the Exchange is proposing a
Internet Web site (http://www.sec.gov/ change as described in Items I, II, and
III below, which Items have been lower per contract Exotic Surcharge.
rules/sro.shtml). Copies of the
submission, all subsequent prepared by the Exchange. The 2. Statutory Basis
amendments, all written statements Commission is publishing this notice to
with respect to the proposed rule solicit comments on the proposed rule The Exchange believes the proposed
change that are filed with the change from interested persons. rule change is consistent with the
Commission, and all written Securities Exchange Act of 1934 (the
I. Self-Regulatory Organization’s ‘‘Act’’) and the rules and regulations
communications relating to the
proposed rule change between the Statement of the Terms of Substance of thereunder applicable to the Exchange
Commission and any person, other than the Proposed Rule Change and, in particular, the requirements of
those that may be withheld from the Section 6(b) of the Act.4 Specifically,
The text of the proposed rule change the Exchange believes the proposed rule
public in accordance with the is available on the Exchange’s Web site
provisions of 5 U.S.C. 552, will be change is consistent with the Section
(http://www.cboe.com/AboutCBOE/
available for Web site viewing and CBOELegalRegulatoryHome.aspx), at 3 In general, Asian style settlement provides for
asabaliauskas on DSK3SPTVN1PROD with NOTICES
printing in the Commission’s Public
the Exchange’s Office of the Secretary, payout based on the average of prices of a broad-
Reference Room, 100 F Street NE., based index on pre-determined dates over a
and at the Commission’s Public
Washington, DC 20549, on official specified time period, and Cliquet style settlement
business days between the hours of Reference Room. provides for a payout that is the greater of $0 or the
10:00 a.m. and 3:00 p.m. Copies of such (positive) sum of ‘‘capped’’ monthly returns of a
broad-based index on pre-determined dates over a
filing will also be available for specified period of time. These settlement types are
18 17 CFR 200.30–3(a)(12). also referred to as ‘‘Exotics’’ due to their
16 15 1 15 U.S.C. 78s(b)(1).
U.S.C. 78s(b)(3)(A). untraditional nature.
17 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4. 4 15 U.S.C. 78f(b).
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For the Commission, by the Division of A. References to Chairman of the Board Section 6.1 (Advisory Board) of the
Trading and Markets, pursuant to delegated Exchange’s Bylaws and replace it with
authority.9 First, the Exchange proposes to
amend Rule 2.15 (Divisions of a reference to ‘‘management.’’ 11 Section
Robert W. Errett, 6.1 currently provides that the Board
Exchange), Rule 4.10 (Other Restrictions
Deputy Secretary. on Trading Permit Holders), Rule 6.17 will establish an Advisory Board which
[FR Doc. 2016–16852 Filed 7–15–16; 8:45 am] (Authority to Take Action Under shall advise the Board and the Office of
BILLING CODE 8011–01–P Emergency Conditions), Rule 10.2 the Chairman regarding matters of
(Contracts of Suspended Trading Permit interest to Trading Permit Holders
Holders), and Rule 16.1 (Imposition of (‘‘TPHs’’). The Exchange notes that the
SECURITIES AND EXCHANGE Suspension) to eliminate references to Advisory Board’s Charter provides that
COMMISSION ‘‘Chairman of the Board’’ and replace the Advisory Board shall advise the
those references with ‘‘Chief Executive Board and ‘‘management’’ regarding
[Release No. 34–78293; File No. SR–CBOE– Officer.’’ 5 The Exchange notes that the matters of interest to TPHs.12 In order to
2016–047] CEO’s responsibility is that of general conform the language in Section 6.1 to
charge and supervision of the business the Advisory Board Charter, the
Self-Regulatory Organizations; Exchange proposes to replace the
of the Corporation, whereas the
Chicago Board Options Exchange, reference to the OOC with
Chairman of the Board’s responsibility
Incorporated; Order Approving a management.13
is that of the presiding officer at all
Proposed Rule Change Relating to
meetings of the Board and stockholders, C. Designee of the President
Senior Management Authority
as well as of other powers and duties as
July 12, 2016. are delegated by the Board.6 The Last, the Exchange proposes to amend
Exchange believes the responsibilities Rules 4.14 (Liquidation of Positions)
I. Introduction currently delegated to the Chairman of and 6.20 (Admission to and Conduct on
On May 23, 2016, Chicago Board the Board under Rules 2.15, 4.10, 6.17, the Trading Floor; Trading Permit
Options Exchange, Incorporated 10.2 and 16.1 pertain to the general Holder Education) to provide that in
(‘‘CBOE’’ or ‘‘Exchange’’) filed with the charge and supervision of the addition to the President, a designee of
Securities and Exchange Commission Exchange’s business and therefore fall the President may act pursuant to the
(‘‘Commission’’), pursuant to Section within the scope of the CEO’s stated authorities delegated by those Rules.14
19(b)(1) of the Securities Exchange Act responsibilities, instead of the Chairman The Exchange notes that allowing such
of 1934 (‘‘Act’’) 1 and Rule 19b–4 of the Board’s.7 authorities to also be delegated to a
thereunder,2 a proposed rule change to designee of the President provides
B. Office of the Chairman additional flexibility and certainty that
amend its Bylaws and Rules with
respect to delegations of certain Second, the Exchange proposes to if the President were unavailable, an
authorities to senior management. The eliminate the term ‘‘Office of the alternate Exchange official could carry
proposed rule change was published for Chairman’’ (‘‘OOC’’) in Rule 4.10 (Other out the designated responsibilities of the
comment in the Federal Register on Restrictions on Trading Permit Holders) President if needed.15
June 7, 2016.3 The Commission received and Rule 18.31 (Awards) and replace
III. Discussion and Commission
no comments on the proposal. This these references with ‘‘Chief Executive
Findings
order approves the proposed rule Officer or President.’’ 8 The Exchange
change. notes that historically, the OOC was The Commission finds that the
considered to be the management proposed rule change is consistent with
II. Description of the Proposed Rule committee of the Exchange and the Act and the rules and regulations
Change 4 consisted of the Chairman of the Board thereunder applicable to the Exchange
The Exchange proposes to update (who at the time was also the CEO), the and, in particular, the requirements of
references to senior management Vice-Chairman (which role no longer Section 6(b) of the Act.16 Specifically,
contained in its Bylaws and Rules to exists) and the President.9 As the the Commission believes the proposed
more accurately reflect roles and Exchange’s senior management rule change is consistent with the
responsibilities within its current senior structure has since changed, the Section 6(b)(5) 17 requirements that the
management structure. The Exchange Exchange proposes to eliminate the rules of an exchange be designed to
notes that historically the CBOE references to the OOC in its rules. In its prevent fraudulent and manipulative
Chairman of the Board also held the title place, the Exchange proposes that the acts and practices, to promote just and
of Chief Executive Officer (‘‘CEO’’). powers and responsibilities delegated to equitable principles of trade, to foster
Currently, however, the titles of the OOC as a whole will now be cooperation and coordination with
Chairman of Board, CEO, and President delegated to either the CEO or the persons engaged in regulating, clearing,
are held by three different individuals. President. The Exchange believes the settling, processing information with
As such, the Exchange proposes to authorities delegated in Rules 4.10 and respect to, and facilitating transactions
amend its rules relating to authorities 18.31 fall more squarely within the in securities, to remove impediments to
delegated to senior management to more scope of the CEO’s or President’s roles and perfect the mechanism of a free and
accurately reflect the current senior and responsibilities.10 open market and a national market
management structure. Third, the Exchange proposes to
asabaliauskas on DSK3SPTVN1PROD with NOTICES
eliminate the reference to the OOC in 11 See id.
9 17 12 See id.
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1). 5 See
Notice, supra note 3, at 36644. 13 See id. Additionally, the title of the Bylaws will
2 17 CFR 240.19b–4. 6 See
id.; see also Sections 3.6 and 5.2 of the be changed to Seventh Amended and Restated
3 See Securities Exchange Act Release No. 77962 CBOE Bylaws. Bylaws of CBOE. See id.
7 See Notice, supra note 3, at 36644. 14 See id.
(June 1, 2016), 81 FR 36641 (June 7, 2016)
8 See id. 15 See Notice, supra note 3, at 36645.
(‘‘Notice’’).
4 A more detailed description of the proposed 9 See id. 16 15 U.S.C. 78f(b).
rule change appears in the Notice. See id. 10 See id. 17 15 U.S.C. 78f(b)(5).
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Document Created: 2016-07-16 02:28:43
Document Modified: 2016-07-16 02:28:43
| 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 46721 |
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