81_FR_54301 81 FR 54144 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule To Amend the Fees Schedule

81 FR 54144 - 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 157 (August 15, 2016)

Page Range54144-54146
FR Document2016-19313

Federal Register, Volume 81 Issue 157 (Monday, August 15, 2016)
[Federal Register Volume 81, Number 157 (Monday, August 15, 2016)]
[Notices]
[Pages 54144-54146]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-19313]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78508; File No. SR-C2-2016-016]


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

August 9, 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 August 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, 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 the 
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. Specifically, the 
Exchange proposes to establish a fee scale for the purchase of Market 
Maker Quoting and Order Bandwidth Packets (``Bandwidth Packets''), 
provide for an allotment scale of CMI CAS Servers, and adopt a fee for 
extra CMI CAS Servers.
    The Exchange first proposes to adopt a fee scale for Bandwidth 
Packets. Particularly, the Exchange proposes to provide that the first 
through ninth Bandwidth Packets obtained by a Trading Permit Holder 
(``TPH'') would cost $1,000 per packet per month, the tenth through 
fourteenth Bandwidth Packets obtained by that TPH would cost $500 per 
packet per month, and the fifteenth and each additional Bandwidth 
Packet obtained by that TPH would cost $250 per packet per month. The 
Exchange believes the proposed fee scale will encourage Market Makers 
to purchase additional Bandwidth Packets which will allow them to quote 
and trade more on the Exchange, thereby providing more trading 
opportunities for all market participants.
    The Exchange next proposes to amend its Fees Schedule with respect 
to Connectivity Charges. By way of background, in order to connect to 
CBOE Command, which allows a TPH to trade on the C2 System, a TPH must 
connect via either a CMI or FIX interface (depending on the 
configuration of the TPH's own systems). For TPHs that connect via a 
CMI interface, they must use CMI CAS Servers. Currently each TPH is 
provided one CAS Server plus access to a pool of shared backup CAS 
Servers. In order to ensure that a CAS Server is not overburdened by 
quoting activity for Market Makers, the Exchange proposes to allot each 
Market Maker a certain number of CASs (in addition to the shared 
backups) based on the amount of quoting bandwidth that they have. 
Quoting Bandwidth would be determined by the number of Bandwidth 
Packets the TPH holds in addition to 5 times the number of Market Maker 
Trading Permits it holds.\3\ Additionally, the Exchange will aggregate 
the Market Maker Trading Permits and Market Maker Quoting and Order 
Entry Bandwidth Packets from affiliated TPHs (TPHs with at least 75% 
common ownership between the firms as reflected on each firm's Form BD, 
Schedule A) for purposes of determining the number of Trading Permits 
and Market Maker Quoting and Order Entry Bandwidth Packets a TPH holds. 
Particularly, the Exchange proposes to add a chart listing the amounts 
of equivalent Bandwidth Packets and corresponding CAS Servers:
---------------------------------------------------------------------------

    \3\ The Exchange notes that a C2 Market Maker Quoting and Order 
Entry Bandwidth Packet is equivalent to 1/5th of a Market Maker 
Trading Permit. As such, each Market-Maker Trading Permit a TPH 
holds is equivalent to 5 Quoting and Order Entry Bandwidth Packet 
for purposes of bandwidth. Therefore, if a TPH has 2 Market Maker 
Trading Permits and 16 Quoting and Order Entry Bandwidth Packets, 
the TPH has an equivalent of 26 Bandwidth Packets. The Exchange 
proposes to include this example in the Fees Schedule to provide 
additional clarity.

------------------------------------------------------------------------
   Total bandwidth  packets equivalency              CAS Servers
------------------------------------------------------------------------
1-25......................................  1 + shared backup.
26-50.....................................  2 + shared backup.
51-75.....................................  3 + shared backup.
76-100....................................  4 + shared backup.
100+......................................  5 + shared backup.
------------------------------------------------------------------------

    Next, the Exchange proposes to provide that if a Market Maker 
wishes to connect via an extra CMI CAS Server (in order to segregate 
TPH users for business or availability purposes) beyond the TPH's 
allotted number of CMI CAS Servers (described above), that TPH will be 
assessed a fee of $2,000 per month for each extra CMI CAS Server. The 
purpose of this proposed change is to manage the allotment of CMI CAS 
Servers in a fair manner and to prevent the Exchange from being 
required to expend large amounts of resources (the provision and 
management of the CMI CAS Servers can be costly) in order to provide 
TPHs with an unlimited amount of CMI CAS Servers. The purpose of the 
fee for extra CMI CAS Servers is to cover the costs related to the 
provision, management and upkeep of such CMI CAS Servers.
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 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,

[[Page 54145]]

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 the proposed rule change is reasonable 
because the proposed change provides the opportunity to have lower fees 
for the Market Maker Quoting and Order Entry Bandwidth Packets than 
previously. The proposed change is also equitable and not unfairly 
discriminatory because the fee scale will apply to all Market Makers 
uniformly. The Exchange believes it's equitable and not unfairly 
discriminatory to establish a discounted fee scale for Market Maker 
Quoting and Order Entry Bandwidth Packets because Market Makers, unlike 
other C2 market participants, take on a number of obligations, 
including quoting obligations that other market participants do not 
have. Further, the proposed change is intended to incent Market Makers 
to quote and trade more on the Exchange, thereby providing more trading 
opportunities for all market participants.
    The Exchange believes that the proposed change regarding CMI CAS 
Servers is reasonable because each CMI CAS Server should be capable of 
handling the bandwidth needs of at least the equivalent of 25 Bandwidth 
Packets. This proposed allotment is equitable and not unfairly 
discriminatory because it will be applied to all Market Makers 
accessing CBOE Command via a CMI connection. It is equitable and not 
unfairly discriminatory to provide allotment of CASs for Market Makers 
only, because the impact of non-quoting activity does not result in the 
need for more than one CAS. The proposed fee of $2,000 for each extra 
CMI CAS Server that a Market Maker requests is reasonable because it 
allows the Exchange to recoup the costs related to the provision, 
maintenance and upkeep of such Servers, and is equitable and not 
unfairly discriminatory because the fee will be applied to all Market 
Makers that request an extra CMI CAS Server.

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, while different fees apply to Market-Maker 
Quoting and Order Bandwidth Packets, Market-Makers have different 
obligations and different circumstances (as described in the 
``Statutory Basis'' section above). Additionally, the proposed change 
is intended to encourage Market Makers to quote more, which provides 
more trading opportunities for all market participants. The Exchange 
does not believe that the proposed allotment of one CMI CAS Server for 
every equivalent 25 Market Maker Bandwidth Packets that a TPH holds 
(plus one shared backup) and the proposed fee of $2,000 for each extra 
CMI CAS Server that a TPH requests will cause an unnecessary burden on 
intramarket competition because while such allotment and fee will only 
be applied to Market Makers accessing CBOE Command via a CMI 
connection, Market Makers have different obligations and different 
circumstances (as described in the ``Statutory Basis'' section above) 
and because market participants that do not quote would not need 
additional CASs.
    The Exchange does not believe that the proposed change will impose 
any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because it only 
applies to trading on the Exchange. Additionally the Exchange does not 
believe such proposed bandwidth scale, CAS allotment and fee will cause 
an unnecessary burden on intermarket competition because different 
exchanges have different systemic setups for connection to such 
exchanges and are likely not comparable or competitive. 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.

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 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-C2-2016-016 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-C2-2016-016. 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

[[Page 54146]]

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 
such 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-C2-2016-016, and should be submitted on or before 
September 6, 2016.
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19313 Filed 8-12-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                54144                          Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices

                                                  For the Commission, by the Division of                A. Self-Regulatory Organization’s                     Additionally, the Exchange will
                                                Trading and Markets, pursuant to delegated              Statement of the Purpose of, and                      aggregate the Market Maker Trading
                                                authority.16                                            Statutory Basis for, the Proposed Rule                Permits and Market Maker Quoting and
                                                Robert W. Errett,                                       Change                                                Order Entry Bandwidth Packets from
                                                Deputy Secretary.                                                                                             affiliated TPHs (TPHs with at least 75%
                                                                                                        1. Purpose
                                                [FR Doc. 2016–19323 Filed 8–12–16; 8:45 am]                                                                   common ownership between the firms
                                                BILLING CODE 8011–01–P                                     The Exchange proposes to amend its                 as reflected on each firm’s Form BD,
                                                                                                        Fees Schedule. Specifically, the                      Schedule A) for purposes of
                                                                                                        Exchange proposes to establish a fee                  determining the number of Trading
                                                SECURITIES AND EXCHANGE                                 scale for the purchase of Market Maker                Permits and Market Maker Quoting and
                                                COMMISSION                                              Quoting and Order Bandwidth Packets                   Order Entry Bandwidth Packets a TPH
                                                [Release No. 34–78508; File No. SR–C2–
                                                                                                        (‘‘Bandwidth Packets’’), provide for an               holds. Particularly, the Exchange
                                                2016–016]                                               allotment scale of CMI CAS Servers, and               proposes to add a chart listing the
                                                                                                        adopt a fee for extra CMI CAS Servers.                amounts of equivalent Bandwidth
                                                Self-Regulatory Organizations; C2                          The Exchange first proposes to adopt               Packets and corresponding CAS Servers:
                                                Options Exchange, Incorporated;                         a fee scale for Bandwidth Packets.
                                                Notice of Filing and Immediate                          Particularly, the Exchange proposes to                   Total bandwidth                        CAS Servers
                                                                                                        provide that the first through ninth                   packets equivalency
                                                Effectiveness of a Proposed Rule To
                                                Amend the Fees Schedule                                 Bandwidth Packets obtained by a                       1–25 ..........................   1   +   shared   backup.
                                                                                                        Trading Permit Holder (‘‘TPH’’) would                 26–50 ........................    2   +   shared   backup.
                                                August 9, 2016.                                         cost $1,000 per packet per month, the                 51–75 ........................    3   +   shared   backup.
                                                   Pursuant to Section 19(b)(1) of the                  tenth through fourteenth Bandwidth                    76–100 ......................     4   +   shared   backup.
                                                Securities Exchange Act of 1934 (the                    Packets obtained by that TPH would                    100+ ..........................   5   +   shared   backup.
                                                ‘‘Act’’),1 and Rule 19b–4 thereunder,2                  cost $500 per packet per month, and the
                                                notice is hereby given that on August 1,                fifteenth and each additional Bandwidth                  Next, the Exchange proposes to
                                                2016, C2 Options Exchange,                              Packet obtained by that TPH would cost                provide that if a Market Maker wishes
                                                Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)               $250 per packet per month. The                        to connect via an extra CMI CAS Server
                                                filed with the Securities and Exchange                  Exchange believes the proposed fee                    (in order to segregate TPH users for
                                                Commission (the ‘‘Commission’’) the                     scale will encourage Market Makers to                 business or availability purposes)
                                                proposed rule change as described in                    purchase additional Bandwidth Packets                 beyond the TPH’s allotted number of
                                                Items I, II, and III below, which Items                 which will allow them to quote and                    CMI CAS Servers (described above), that
                                                have been prepared by the Exchange.                     trade more on the Exchange, thereby                   TPH will be assessed a fee of $2,000 per
                                                The Commission is publishing this                       providing more trading opportunities                  month for each extra CMI CAS Server.
                                                notice to solicit comments on the                       for all market participants.                          The purpose of this proposed change is
                                                proposed rule change from interested                       The Exchange next proposes to amend                to manage the allotment of CMI CAS
                                                persons.                                                its Fees Schedule with respect to                     Servers in a fair manner and to prevent
                                                I. Self-Regulatory Organization’s                       Connectivity Charges. By way of                       the Exchange from being required to
                                                Statement of the Terms of the Substance                 background, in order to connect to                    expend large amounts of resources (the
                                                of the Proposed Rule Change                             CBOE Command, which allows a TPH                      provision and management of the CMI
                                                                                                        to trade on the C2 System, a TPH must                 CAS Servers can be costly) in order to
                                                   The Exchange proposes to amend its                                                                         provide TPHs with an unlimited
                                                                                                        connect via either a CMI or FIX interface
                                                Fees Schedule. The text of the proposed                                                                       amount of CMI CAS Servers. The
                                                                                                        (depending on the configuration of the
                                                rule change is available on the                                                                               purpose of the fee for extra CMI CAS
                                                                                                        TPH’s own systems). For TPHs that
                                                Exchange’s Web site (http://                                                                                  Servers is to cover the costs related to
                                                                                                        connect via a CMI interface, they must
                                                www.c2exchange.com/Legal/), at the                                                                            the provision, management and upkeep
                                                                                                        use CMI CAS Servers. Currently each
                                                Exchange’s Office of the Secretary, and                                                                       of such CMI CAS Servers.
                                                                                                        TPH is provided one CAS Server plus
                                                at the Commission’s Public Reference
                                                                                                        access to a pool of shared backup CAS                 2. Statutory Basis
                                                Room.
                                                                                                        Servers. In order to ensure that a CAS
                                                                                                                                                                 The Exchange believes the proposed
                                                II. Self-Regulatory Organization’s                      Server is not overburdened by quoting
                                                                                                                                                              rule change is consistent with the
                                                Statement of the Purpose of, and                        activity for Market Makers, the
                                                                                                                                                              Securities Exchange Act of 1934 (the
                                                Statutory Basis for, the Proposed Rule                  Exchange proposes to allot each Market
                                                                                                                                                              ‘‘Act’’) and the rules and regulations
                                                Change                                                  Maker a certain number of CASs (in
                                                                                                                                                              thereunder applicable to the Exchange
                                                  In its filing with the Commission, the                addition to the shared backups) based
                                                                                                                                                              and, in particular, the requirements of
                                                Exchange included statements                            on the amount of quoting bandwidth
                                                                                                                                                              Section 6(b) of the Act.4 Specifically,
                                                concerning the purpose of and basis for                 that they have. Quoting Bandwidth
                                                                                                                                                              the Exchange believes the proposed rule
                                                the proposed rule change and discussed                  would be determined by the number of
                                                                                                                                                              change is consistent with the Section
                                                any comments it received on the                         Bandwidth Packets the TPH holds in
                                                                                                                                                              6(b)(5) 5 requirements that the rules of
                                                proposed rule change. The text of these                 addition to 5 times the number of
                                                                                                                                                              an exchange be designed to prevent
                                                statements may be examined at the                       Market Maker Trading Permits it holds.3
                                                                                                                                                              fraudulent and manipulative acts and
                                                places specified in Item IV below. The                    3 The Exchange notes that a C2 Market Maker         practices, to promote just and equitable
sradovich on DSK3GMQ082PROD with NOTICES




                                                Exchange has prepared summaries, set                    Quoting and Order Entry Bandwidth Packet is           principles of trade, to foster cooperation
                                                forth in sections A, B, and C below, of                 equivalent to 1/5th of a Market Maker Trading         and coordination with persons engaged
                                                the most significant aspects of such                    Permit. As such, each Market-Maker Trading Permit     in regulating, clearing, settling,
                                                statements.                                             a TPH holds is equivalent to 5 Quoting and Order
                                                                                                        Entry Bandwidth Packet for purposes of bandwidth.
                                                                                                        Therefore, if a TPH has 2 Market Maker Trading        include this example in the Fees Schedule to
                                                  16 17 CFR 200.30–3(a)(12).                                                                                  provide additional clarity.
                                                                                                        Permits and 16 Quoting and Order Entry Bandwidth
                                                  1 15 U.S.C. 78s(b)(1).                                                                                        4 15 U.S.C. 78f(b).
                                                                                                        Packets, the TPH has an equivalent of 26
                                                  2 17 CFR 240.19b–4.                                   Bandwidth Packets. The Exchange proposes to             5 15 U.S.C. 78f(b)(5).




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                                                                                Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices                                            54145

                                                processing information with respect to,                    B. Self-Regulatory Organization’s                     III. Date of Effectiveness of the
                                                and facilitating transactions in                           Statement on Burden on Competition                    Proposed Rule Change and Timing for
                                                securities, to remove impediments to                          C2 does not believe that the proposed              Commission Action
                                                and perfect the mechanism of a free and                    rule change will impose any burden on                    The foregoing rule change has become
                                                open market and a national market                          competition that is not necessary or                  effective pursuant to Section 19(b)(3)(A)
                                                system, and, in general, to protect                        appropriate in furtherance of the                     of the Act 7 and paragraph (f) of Rule
                                                investors and the public interest.                         purposes of the Act. The Exchange does                19b–4 8 thereunder. At any time within
                                                Additionally, the Exchange believes the                    not believe that the proposed rule                    60 days of the filing of the proposed rule
                                                proposed rule change is consistent with                    change will impose any burden on                      change, the Commission summarily may
                                                Section 6(b)(4) of the Act,6 which                         intramarket competition that is not                   temporarily suspend such rule change if
                                                requires that Exchange rules provide for                   necessary or appropriate in furtherance               it appears to the Commission that such
                                                the equitable allocation of reasonable                     of the purposes of the Act because,                   action is necessary or appropriate in the
                                                dues, fees, and other charges among its                    while different fees apply to Market-                 public interest, for the protection of
                                                Trading Permit Holders and other                           Maker Quoting and Order Bandwidth                     investors, or otherwise in furtherance of
                                                persons using its facilities.                              Packets, Market-Makers have different                 the purposes of the Act. If the
                                                   The Exchange believes the proposed                      obligations and different circumstances               Commission takes such action, the
                                                rule change is reasonable because the                      (as described in the ‘‘Statutory Basis’’              Commission will institute proceedings
                                                proposed change provides the                               section above). Additionally, the                     to determine whether the proposed rule
                                                opportunity to have lower fees for the                     proposed change is intended to                        change should be approved or
                                                Market Maker Quoting and Order Entry                       encourage Market Makers to quote more,                disapproved.
                                                Bandwidth Packets than previously. The                     which provides more trading                           IV. Solicitation of Comments
                                                proposed change is also equitable and                      opportunities for all market
                                                                                                           participants. The Exchange does not                     Interested persons are invited to
                                                not unfairly discriminatory because the                                                                          submit written data, views, and
                                                fee scale will apply to all Market Makers                  believe that the proposed allotment of
                                                                                                           one CMI CAS Server for every                          arguments concerning the foregoing,
                                                uniformly. The Exchange believes it’s                                                                            including whether the proposed rule
                                                equitable and not unfairly                                 equivalent 25 Market Maker Bandwidth
                                                                                                           Packets that a TPH holds (plus one                    change is consistent with the Act.
                                                discriminatory to establish a discounted                                                                         Comments may be submitted by any of
                                                fee scale for Market Maker Quoting and                     shared backup) and the proposed fee of
                                                                                                                                                                 the following methods:
                                                Order Entry Bandwidth Packets because                      $2,000 for each extra CMI CAS Server
                                                Market Makers, unlike other C2 market                      that a TPH requests will cause an                     Electronic Comments
                                                participants, take on a number of                          unnecessary burden on intramarket                       • Use the Commission’s Internet
                                                obligations, including quoting                             competition because while such                        comment form (http://www.sec.gov/
                                                obligations that other market                              allotment and fee will only be applied                rules/sro.shtml); or
                                                participants do not have. Further, the                     to Market Makers accessing CBOE                         • Send an email to rule-comments@
                                                proposed change is intended to incent                      Command via a CMI connection, Market                  sec.gov. Please include File Number SR–
                                                Market Makers to quote and trade more                      Makers have different obligations and                 C2–2016–016 on the subject line.
                                                on the Exchange, thereby providing                         different circumstances (as described in
                                                                                                           the ‘‘Statutory Basis’’ section above) and            Paper Comments
                                                more trading opportunities for all
                                                market participants.                                       because market participants that do not                 • Send paper comments in triplicate
                                                                                                           quote would not need additional CASs.                 to Secretary, Securities and Exchange
                                                   The Exchange believes that the                             The Exchange does not believe that                 Commission, 100 F Street NE.,
                                                proposed change regarding CMI CAS                          the proposed change will impose any                   Washington, DC 20549–1090.
                                                Servers is reasonable because each CMI                     burden on intermarket competition that                All submissions should refer to File
                                                CAS Server should be capable of                            is not necessary or appropriate in                    Number SR–C2–2016–016. This file
                                                handling the bandwidth needs of at                         furtherance of the purposes of the Act                number should be included on the
                                                least the equivalent of 25 Bandwidth                       because it only applies to trading on the             subject line if email is used. To help the
                                                Packets. This proposed allotment is                        Exchange. Additionally the Exchange                   Commission process and review your
                                                equitable and not unfairly                                 does not believe such proposed                        comments more efficiently, please use
                                                discriminatory because it will be                          bandwidth scale, CAS allotment and fee                only one method. The Commission will
                                                applied to all Market Makers accessing                     will cause an unnecessary burden on                   post all comments on the Commission’s
                                                CBOE Command via a CMI connection.                         intermarket competition because                       Internet Web site (http://www.sec.gov/
                                                It is equitable and not unfairly                           different exchanges have different                    rules/sro.shtml). Copies of the
                                                discriminatory to provide allotment of                     systemic setups for connection to such                submission, all subsequent
                                                CASs for Market Makers only, because                       exchanges and are likely not comparable               amendments, all written statements
                                                the impact of non-quoting activity does                    or competitive. Should the proposed                   with respect to the proposed rule
                                                not result in the need for more than one                   change make C2 a more attractive                      change that are filed with the
                                                CAS. The proposed fee of $2,000 for                        trading venue for market participants at              Commission, and all written
                                                each extra CMI CAS Server that a                           other exchanges, such market                          communications relating to the
                                                Market Maker requests is reasonable                        participants may elect to become market               proposed rule change between the
                                                because it allows the Exchange to                          participants at C2.                                   Commission and any person, other than
                                                recoup the costs related to the
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                                                                                 those that may be withheld from the
                                                provision, maintenance and upkeep of                       C. Self-Regulatory Organization’s
                                                                                                                                                                 public in accordance with the
                                                such Servers, and is equitable and not                     Statement on Comments on the
                                                                                                                                                                 provisions of 5 U.S.C. 552, will be
                                                unfairly discriminatory because the fee                    Proposed Rule Change Received From
                                                                                                                                                                 available for Web site viewing and
                                                will be applied to all Market Makers                       Members, Participants, or Others
                                                                                                                                                                 printing in the Commission’s Public
                                                that request an extra CMI CAS Server.                        The Exchange neither solicited nor
                                                                                                           received comments on the proposed                       7 15   U.S.C. 78s(b)(3)(A).
                                                  6 15   U.S.C. 78f(b)(4).                                 rule change.                                            8 17   CFR 240.19b–4(f).



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                                                54146                         Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Notices

                                                Reference Room, 100 F Street NE.,                       Structure) of the Rules and Procedures                 NSCC is seeking to diversify its variable
                                                Washington, DC 20549 on official                        (‘‘Rules’’) of NSCC in order to add a new              revenue base with the proposed new
                                                business days between the hours of                      fee that will be charged to Members and                fee, which will introduce a revenue
                                                10:00 a.m. and 3:00 p.m. Copies of such                 certain Limited Members 5 in                           source that is not dependent on trading
                                                filing also will be available for                       connection with the maintenance of the                 volumes. The Clearing Fund
                                                inspection and copying at the principal                 Clearing Fund, as described in greater                 Maintenance Fee will be ratably based
                                                office of the Exchange. All comments                    detail below.6 Members and applicable                  on the member’s Clearing Fund average
                                                received will be posted without change;                 Limited Members are collectively                       cash deposit.
                                                the Commission does not edit personal                   referred to herein as ‘‘members.’’
                                                                                                                                                               Offset Increasing Costs and Expenses
                                                identifying information from
                                                                                                        II. Clearing Agency’s Statement of the                   NSCC seeks to achieve a target
                                                submissions. You should submit only
                                                                                                        Purpose of, and Statutory Basis for, the               operating margin to cover operating
                                                information that you wish to make
                                                                                                        Proposed Rule Change                                   expenses and fund capital expenditures
                                                available publicly. All submissions
                                                should refer to File Number SR–C2–                         In its filing with the Commission, the              as well as investments in its clearing
                                                2016–016, and should be submitted on                    clearing agency included statements                    services and risk management
                                                or before September 6, 2016.                            concerning the purpose of and basis for                infrastructure; however, NSCC faces
                                                  For the Commission, by the Division of
                                                                                                        the proposed rule change and discussed                 continued increasing risk management
                                                Trading and Markets, pursuant to delegated              any comments it received on the                        costs as well as regulatory and
                                                authority.9                                             proposed rule change. The text of these                compliance-related expenses that need
                                                Robert W. Errett,                                       statements may be examined at the                      to be offset by revenue growth in order
                                                Deputy Secretary.                                       places specified in Item IV below. The                 to meet the target operating margin.
                                                                                                        clearing agency has prepared                           Such increased costs and expenses, if
                                                [FR Doc. 2016–19313 Filed 8–12–16; 8:45 am]
                                                                                                        summaries, set forth in sections A, B,                 not offset by revenue growth, could
                                                BILLING CODE 8011–01–P
                                                                                                        and C below, of the most significant                   weaken NSCC’s financial position over
                                                                                                        aspects of such statements.                            time. As such, NSCC is seeking to
                                                SECURITIES AND EXCHANGE                                                                                        implement the Clearing Fund
                                                                                                        (A) Clearing Agency’s Statement of the
                                                COMMISSION                                                                                                     Maintenance Fee to add an additional
                                                                                                        Purpose of, and Statutory Basis for, the
                                                                                                                                                               revenue source to offset increasing costs
                                                [Release No. 34–78525; File No. SR–NSCC–                Proposed Rule Change
                                                                                                                                                               and expenses.
                                                2016–002]                                               1. Purpose                                               Proceeds of the Clearing Fund
                                                                                                           The proposed rule change will add a                 Maintenance Fee will be used primarily
                                                Self-Regulatory Organizations;
                                                                                                        fee that will be charged to members in                 to offset risk management costs,
                                                National Securities Clearing
                                                                                                        connection with the maintenance of the                 regulatory and compliance expenses
                                                Corporation; Notice of Filing and
                                                                                                        Clearing Fund.                                         and for general operating expenses.
                                                Immediate Effectiveness of a Proposed
                                                Rule Change To Add a Clearing Fund                      Clearing Fund Maintenance Fee                          Calculation
                                                Maintenance Fee                                                                                                  The amount of the monthly Clearing
                                                                                                           Pursuant to the proposed rule change,
                                                August 9, 2016.                                                                                                Fund Maintenance Fee for a member
                                                                                                        NSCC proposes to introduce a new fee,
                                                   Pursuant to Section 19(b)(1) of the                                                                         will be calculated monthly, in arrears,
                                                                                                        to be known as the Clearing Fund
                                                Securities Exchange Act of 1934                                                                                as the product of 0.25% and the average
                                                                                                        Maintenance Fee, which will be charged
                                                (‘‘Act’’) 1 and Rule 19b–4 thereunder,2                                                                        of the member’s actual cash deposit to
                                                                                                        to members in arrears on a monthly
                                                notice is hereby given that on July 29,                                                                        the Clearing Fund as of the end of each
                                                                                                        basis.
                                                2016, National Securities Clearing                         The proposed rule change will (i)                   day of the month, multiplied by the
                                                Corporation (‘‘NSCC’’) filed with the                   diversify NSCC’s revenue sources and                   number of days in that month and
                                                Securities and Exchange Commission                      mitigate NSCC’s dependence on                          divided by 360; provided that, the
                                                (‘‘Commission’’) the proposed rule                      revenues driven by trading volumes and                 investment rate of return on investment
                                                change as described in Items I, II and III              (ii) add a stable revenue source that will             by NSCC of cash in the Clearing Fund
                                                below, which Items have been prepared                   contribute to NSCC’s operating margin                  for that month is equal to or greater than
                                                by the clearing agency. NSCC filed the                  by offsetting increasing costs and                     0.25%. No fee will be charged to any
                                                proposed rule change pursuant to                        expenses, as further described below.                  member for a month in which the
                                                Section 19(b)(3)(A) of the Act 3 and Rule                                                                      monthly rate of return on investment of
                                                19b–4(f)(2) thereunder.4 The proposed                   Diversify Revenue Sources                              cash in the Clearing Fund is less than
                                                rule change was effective upon filing                      NSCC’s current revenues are highly                  0.25%.
                                                with the Commission. The Commission                     variable due to the nature of the clearing               Based on the 2015 average actual cash
                                                is publishing this notice to solicit                    services, which are primarily driven by                deposits to the Clearing Fund, the
                                                comments on the proposed rule change                    trading volumes, but, as a utility,                    expected annual revenue to be
                                                from interested persons.                                NSCC’s expenses are largely fixed. The                 generated by the Clearing Fund
                                                                                                        combination of fixed costs and variable                Maintenance Fee is approximately $16
                                                I. Clearing Agency’s Statement of the                   revenues represents a financial risk for               million.
                                                Terms of Substance of the Proposed                      NSCC. To mitigate such financial risk,
                                                Rule Change                                                                                                    Member Impact
sradovich on DSK3GMQ082PROD with NOTICES




                                                   The proposed rule change consists of                   5 The proposed new fee will be imposed on
                                                                                                                                                                  The proposed rule change will impose
                                                modifications to the Addendum A (Fee                    Limited Members that are required to make deposits     the Clearing Fund Maintenance Fee on
                                                                                                        to the Clearing Fund. Currently, those Limited         all members that are required to make
                                                  9 17
                                                                                                        Members are Mutual Fund/Insurance Services             deposits to the Clearing Fund.
                                                       CFR 200.30–3(a)(12).                             Members and Fund Members organized under the
                                                  1 15 U.S.C. 78s(b)(1).                                                                                          The Clearing Fund Maintenance Fee
                                                                                                        laws of the Republic of Ireland.
                                                  2 17 CFR 240.19b–4.                                     6 Capitalized terms not defined herein are defined   is a monthly fee based ratably upon the
                                                  3 15 U.S.C. 78s(b)(3)(A).
                                                                                                        in the Rules, available at www.dtcc.com/∼/media/       amount of the member’s daily actual
                                                  4 17 CFR 240.19b–4(f)(2).                             Files/Downloads/legal/rules/nscc_rules.pdf.            cash deposited to the Clearing Fund; it


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Document Created: 2016-08-13 02:22:38
Document Modified: 2016-08-13 02:22:38
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 54144 

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