81 FR 5800 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Options Regulatory Fee

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 22 (February 3, 2016)

Page Range		5800-5802
FR Document		2016-01929
Federal Register, Volume 81 Issue 22 (Wednesday, February 3, 2016)
[Federal Register Volume 81, Number 22 (Wednesday, February 3, 2016)]
[Notices]
[Pages 5800-5802]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-01929]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76993; File No. SR-CBOE-2016-004]


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

 January 28, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 14, 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.
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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

    Chicago Board Options Exchange, Incorporated (the ``Exchange'' or 
``CBOE'') proposes to amend the Options Regulatory Fee. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to increase the Options Regulatory Fee 
(``ORF'') from $.0064 to $.0081 per contract in order to help ensure 
that revenue collected from the ORF, in combination with other 
regulatory fees and fines, meets the Exchange's total regulatory costs. 
The proposed fee change would be operative on February 1, 2016.
    The ORF is assessed by the Exchange to each Trading Permit Holder 
for all options transactions executed or cleared by the Trading Permit 
Holder that are cleared by The Options Clearing Corporation (``OCC'') 
in the customer range (i.e., transactions that clear in a customer 
account at OCC) regardless of the exchange on which the transaction 
occurs.\3\ In other words, the Exchange imposes the ORF on all 
customer-range transactions executed by a Trading Permit Holder, even 
if the transactions do not take place on the Exchange. The ORF also is 
charged for transactions that are not executed by a Trading Permit 
Holder but are ultimately cleared by a Trading Permit Holder. In the 
case where a Trading Permit Holder executes a transaction and a 
different Trading Permit Holder clears the transaction, the ORF is 
assessed to the Trading Permit Holder who executed the transaction. In 
the case where a non-Trading Permit Holder executes a transaction and a 
Trading Permit Holder clears the transaction, the ORF is assessed to 
the Trading Permit Holder who clears the transaction. The ORF is 
collected indirectly from Trading Permit Holders through their clearing 
firms by OCC on behalf of the Exchange.
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    \3\ The ORF also applies to customer-range transactions executed 
during Extended Trading Hours.
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    The ORF is designed to recover a material portion of the costs to 
the Exchange of the supervision and regulation of Trading Permit Holder 
customer options business, including performing routine surveillances, 
investigations, examinations, financial monitoring, as well as policy, 
rulemaking, interpretive and enforcement activities. The Exchange 
believes that revenue generated from the ORF, when combined with all of 
the Exchange's other regulatory fees and fines, will cover a material 
portion, but not all, of the Exchange's regulatory costs. The Exchange 
notes that its regulatory responsibilities with respect to Trading 
Permit Holder compliance

[[Page 5801]]

with options sales practice rules have largely been allocated to FINRA 
under a 17d-2 agreement.\4\ The ORF is not designed to cover the cost 
of that options sales practice regulation.
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    \4\ See Securities Exchange Act Release No. 76309 (October 29, 
2015), 80 FR 68361 (November 4, 2015).
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    The Exchange will continue to monitor the amount of revenue 
collected from the ORF to ensure that it, in combination with its other 
regulatory fees and fines, does not exceed the Exchange's total 
regulatory costs. The Exchange monitors its regulatory costs and 
revenues at a minimum on a semi-annual basis. If the Exchange 
determines regulatory revenues exceed or are insufficient to cover a 
material portion of its regulatory costs, the Exchange will adjust the 
ORF by submitting a fee change filing to the Commission. The Exchange 
notifies Trading Permit Holders of adjustments to the ORF via 
regulatory circular. The Exchange endeavors to provide Trading Permit 
Holders with such notice at least 30 calendar days prior to the 
effective date of the change.
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 Section 
6(b)(4) of the Act,\6\ which provides that Exchange rules may provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its Trading Permit Holders and other persons using its 
facilities. Additionally, the Exchange believes the proposed rule 
change is consistent with the Section 6(b)(5)\7\ requirement that the 
rules of an exchange not be designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed fee change is reasonable because 
it would help ensure that revenue collected from the ORF, in 
combination with other regulatory fees and fines, does not exceed the 
Exchange's total regulatory costs. Moreover, the Exchange believes the 
ORF ensures fairness by assessing higher fees to those Trading Permit 
Holders that require more Exchange regulatory services based on the 
amount of customer options business they conduct. Regulating customer 
trading activity is much more labor intensive and requires greater 
expenditure of human and technical resources than regulating non-
customer trading activity, which tends to be more automated and less 
labor-intensive. As a result, the costs associated with administering 
the customer component of the Exchange's overall regulatory program are 
materially higher than the costs associated with administering the non-
customer component (e.g., Trading Permit Holder proprietary 
transactions) of its regulatory program.\8\ The Exchange believes the 
proposed fee change is equitable and not unfairly discriminatory in 
that it is charged to all Trading Permit Holders on all their 
transactions that clear in the customer range at the OCC.
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    \8\ If the Exchange changes its method of funding regulation or 
if circumstances otherwise change in the future, the Exchange may 
decide to modify the ORF or assess a separate regulatory fee on 
Trading Permit Holder proprietary transactions if the Exchange deems 
it advisable.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, because it applies to all 
Trading Permit Holders. The proposed ORF is comparable to fees charged 
by other options exchanges for the same or similar service. The 
Exchange believes any burden on competition imposed by the proposed 
rule change is outweighed by the need to help the Exchange adequately 
fund its regulatory activities to ensure compliance with the Exchange 
Act.

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 \9\ and paragraph (f) of Rule 19b-4 \10\ 
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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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-CBOE-2016-004 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-2016-004. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CBOE-2016-004 and should be 
submitted on or before February 24, 2016.


[[Page 5802]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Robert W. Errett,
Deputy Secretary.
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    \11\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-01929 Filed 2-2-16; 8:45 am]
 BILLING CODE 8011-01-P
5800 Federal Register / Vol. 81, No. 22 / Wednesday, February 3, 2016 / Notices

• Send an email to rule-comments@ SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s
sec.gov. Please include File Number SR– COMMISSION Statement of the Purpose of, and
NYSEArca–2016–20 on the subject line. Statutory Basis for, the Proposed Rule
[Release No. 34–76993; File No. SR–CBOE– Change
Paper Comments
2016–004] 1. Purpose
• Send paper comments in triplicate The Exchange proposes to increase
to Secretary, Securities and Exchange Self-Regulatory Organizations;
the Options Regulatory Fee (‘‘ORF’’)
Commission, 100 F Street NE., Chicago Board Options Exchange,
from $.0064 to $.0081 per contract in
Washington, DC 20549–1090. Incorporated; Notice of Filing and
order to help ensure that revenue
Immediate Effectiveness of a Proposed
All submissions should refer to File collected from the ORF, in combination
Rule Change Relating to the Options with other regulatory fees and fines,
Number SR–NYSEArca–2016–20. This Regulatory Fee
file number should be included on the meets the Exchange’s total regulatory
subject line if email is used. To help the January 28, 2016. costs. The proposed fee change would
Commission process and review your be operative on February 1, 2016.
Pursuant to Section 19(b)(1) of the The ORF is assessed by the Exchange
comments more efficiently, please use Securities Exchange Act of 1934 to each Trading Permit Holder for all
only one method. The Commission will (‘‘Act’’),1 and Rule 19b–4 thereunder,2 options transactions executed or cleared
post all comments on the Commission’s notice is hereby given that on January by the Trading Permit Holder that are
Internet Web site (http://www.sec.gov/ 14, 2016, Chicago Board Options cleared by The Options Clearing
rules/sro.shtml). Copies of the Exchange, Incorporated (the ‘‘Exchange’’ Corporation (‘‘OCC’’) in the customer
submission, all subsequent or ‘‘CBOE’’) filed with the Securities range (i.e., transactions that clear in a
amendments, all written statements and Exchange Commission (the customer account at OCC) regardless of
with respect to the proposed rule ‘‘Commission’’) the proposed rule the exchange on which the transaction
change that are filed with the change as described in Items I, II, and occurs.3 In other words, the Exchange
Commission, and all written III below, which Items have been imposes the ORF on all customer-range
communications relating to the prepared by the Exchange. The transactions executed by a Trading
proposed rule change between the Commission is publishing this notice to Permit Holder, even if the transactions
Commission and any person, other than solicit comments on the proposed rule do not take place on the Exchange. The
those that may be withheld from the change from interested persons. ORF also is charged for transactions that
public in accordance with the are not executed by a Trading Permit
provisions of 5 U.S.C. 552, will be I. Self-Regulatory Organization’s Holder but are ultimately cleared by a
available for Web site viewing and Statement of the Terms of Substance of Trading Permit Holder. In the case
printing in the Commission’s Public the Proposed Rule Change where a Trading Permit Holder executes
Reference Room, 100 F Street NE., a transaction and a different Trading
Chicago Board Options Exchange, Permit Holder clears the transaction, the
Washington, DC 20549, on official
Incorporated (the ‘‘Exchange’’ or ORF is assessed to the Trading Permit
business days between the hours of
‘‘CBOE’’) proposes to amend the Holder who executed the transaction. In
10:00 a.m. and 3:00 p.m. Copies of such
Options Regulatory Fee. The text of the the case where a non-Trading Permit
filing will also be available for
proposed rule change is available on the Holder executes a transaction and a
inspection and copying at the principal
Exchange’s Web site (http:// Trading Permit Holder clears the
office of the Exchange. All comments
www.cboe.com/AboutCBOE/ transaction, the ORF is assessed to the
received will be posted without change;
CBOELegalRegulatoryHome.aspx), at Trading Permit Holder who clears the
the Commission does not edit personal
the Exchange’s Office of the Secretary, transaction. The ORF is collected
identifying information from indirectly from Trading Permit Holders
and at the Commission’s Public
submissions. You should submit only through their clearing firms by OCC on
Reference Room.
information that you wish to make behalf of the Exchange.
available publicly. All submissions II. Self-Regulatory Organization’s The ORF is designed to recover a
should refer to File Number SR– Statement of the Purpose of, and material portion of the costs to the
NYSEArca–2016–20 and should be Statutory Basis for, the Proposed Rule Exchange of the supervision and
submitted on or before February 24, Change regulation of Trading Permit Holder
2016. customer options business, including
In its filing with the Commission, the performing routine surveillances,
For the Commission, by the Division of Exchange included statements
Trading and Markets, pursuant to delegated investigations, examinations, financial
concerning the purpose of and basis for monitoring, as well as policy,
authority.10
the proposed rule change and discussed rulemaking, interpretive and
Robert W. Errett, any comments it received on the enforcement activities. The Exchange
Deputy Secretary. proposed rule change. The text of these believes that revenue generated from the
[FR Doc. 2016–01922 Filed 2–2–16; 8:45 am] statements may be examined at the ORF, when combined with all of the
BILLING CODE 8011–01–P places specified in Item IV below. The Exchange’s other regulatory fees and
Exchange has prepared summaries, set fines, will cover a material portion, but
mstockstill on DSK4VPTVN1PROD with NOTICES

forth in sections A, B, and C below, of not all, of the Exchange’s regulatory
the most significant aspects of such costs. The Exchange notes that its
statements. regulatory responsibilities with respect
to Trading Permit Holder compliance
3 The ORF also applies to customer-range
1 15 U.S.C. 78s(b)(1). transactions executed during Extended Trading
10 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. Hours.

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5802 Federal Register / Vol. 81, No. 22 / Wednesday, February 3, 2016 / Notices

For the Commission, by the Division of The Exchange has prepared summaries, because it provides for the equitable
Trading and Markets, pursuant to delegated set forth in sections A, B, and C below, allocation of reasonable dues, fees, and
authority.11 of the most significant parts of such other charges among its members,
Robert W. Errett, statements. issuers and other persons using its
Deputy Secretary. facilities and does not unfairly
A. Self-Regulatory Organization’s
[FR Doc. 2016–01929 Filed 2–2–16; 8:45 am]
Statement of the Purpose of, and discriminate between customers,
BILLING CODE 8011–01–P
Statutory Basis for, the Proposed Rule issuers, brokers or dealers.
The Exchange believes that the
Change
proposed monthly credit is reasonable,
SECURITIES AND EXCHANGE 1. Purpose equitable and not unfairly
COMMISSION The purpose of this filing is to discriminatory for the following
implement a monthly credit available to reasons. First, the proposed credit
[Release No. 34–76992; File No. SR–
NYSEMKT–2016–10] Specialists to promote trading in Binary would generate additional order flow to
Return Derivatives (‘‘ByRDs’’),4 which is the Exchange by creating incentives to
Self-Regulatory Organizations; NYSE a new product that the Exchange quote and trade ByRDs options, which
MKT LLC; Notice of Filing and anticipates launching in February 2016. would benefit all market participants
Immediate Effectiveness of Proposed To encourage trading of ByRDs, the even those not eligible to receive the
Change Modifying the NYSE Amex Exchange proposes to offer an incentive credit. The Exchange believes it is
Options Fee Schedule To Add an Early to Specialists appointed to trade appropriate to offer the credit to
Adopter Specialist Credit ByRDs.5 Specialists that are appointed Specialists (and not to other types of
in ByRDs and eligible for the incentive Market Makers) as the Specialists are
January 28, 2016. payment would be known on the subject to heightened continuous
Pursuant to Section 19(b)(1) 1 of the Exchange’s Fee Schedule as ‘‘Early quoting obligations, which exceed those
Securities Exchange Act of 1934 (the Adopter Specialists.’’ Specifically, imposed on other Market Makers.9 The
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 effective February 1, 2016, the Exchange Exchange believes the proposed credit
notice is hereby given that, on January proposes to offer each ‘‘Early Adopter would recognize the contributions of
20, 2016, NYSE MKT LLC (the Specialist’’ a monthly credit of $335 for each Early Adopter Specialist to the
‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with each class of ByRDs for which that trading environment on the Exchange
the Securities and Exchange Specialist is appointed, which the and is designed to attract Specialists
Commission (the ‘‘Commission’’) the Exchange believes would provide a willing to seek appointments in and,
proposed rule change as described in competitive incentive to Specialists thus provide continuous quotes in,
Items I, II, and III below, which Items based on market conditions and ByRDs options, which increase in the
have been prepared by the self- competing interests for technology.6 The availability of ByRDs options would
regulatory organization. The Exchange believes the proposed benefit all market participants.
Commission is publishing this notice to incentive payment would further the In addition, the Exchange has
solicit comments on the proposed rule Exchange’s goal of introducing new evaluated the market conditions,
change from interested persons. products to the marketplace by including the technology needs of
I. Self-Regulatory Organization’s encouraging Specialists to make a Specialists appointed to options on
Statement of the Terms of the Substance market for these products. ByRDs and believes the proposed
of the Proposed Rule Change monthly credit of $335 is reasonable,
2. Statutory Basis
equitable and not unfairly
The Exchange proposes to modify the The Exchange believes that the discriminatory.10 The Exchange notes
NYSE Amex Options Fee Schedule proposed rule change is consistent with that offering market participants
(‘‘Fee Schedule’’). The Exchange Section 6(b) of the Act,7 in general, and incentives to trade in certain newly
proposes to implement the fee change furthers the objectives of Sections offered products is not new of novel.11
effective February 1, 2016. The 6(b)(4) and (5) of the Act,8 in particular, For these reasons, the Exchange
proposed change is available on the believes that the proposal is consistent
Exchange’s Web site at www.nyse.com, 4 See Securities Exchange Act Release No. 56251
with the Act.
(August 14, 2007), 72 FR 46523 (August 20, 2007)
at the principal office of the Exchange, (SR–Amex–2004–27) (Order approving listing of
and at the Commission’s Public B. Self-Regulatory Organization’s
Fixed Return Options (‘‘FROs’’)); see also Securities
Reference Room. Exchange Act Release No. 71957 (April 16, 2014),
Statement on Burden on Competition
79 FR 22563 (April 22, 2014) (SR–NYSEMKT– In accordance with Section 6(b)(8) of
II. Self-Regulatory Organization’s 2014–06) (Order approving name change from FROs
the Act,12 the Exchange does not believe
Statement of the Purpose of, and to Binary Return Derivatives (ByRDs) and re-launch
of these products, with certain modification, and that the proposed rule change will
Statutory Basis for, the Proposed Rule amending Obvious Errors rules to include ByRDs). impose any burden on competition that
Change ByRDs are European-style option contracts on is not necessary or appropriate in
individual stocks, exchange-traded funds and
In its filing with the Commission, the Index-Linked Securities that have a fixed return in furtherance of the purposes of the Act.
self-regulatory organization included cash based on a set strike price; satisfy specified The Exchange believes the proposed
statements concerning the purpose of, listing criteria; and may only be exercised at incentive is pro-competitive as it would
and basis for, the proposed rule change expiration pursuant to the Rules of the Options further the Exchange’s goal of
Clearing Corporation. See, e.g., NYSE MKT Rule
and discussed any comments it received 900ByRDs.
mstockstill on DSK4VPTVN1PROD with NOTICES

on the proposed rule change. The text 5 Each Specialist must be registered with the 9 See supra n. 5.
10 Indetermining the $335 fee, the Exchange
of those statements may be examined at Exchange as a Market Maker and is thus subject to
the quoting requirements imposed on Market considered factors such as systems upgrades and
the places specified in Item IV below. Makers. See, e.g., Rules 920NY, 925.1NY(b) and additional data feeds that may be necessary to act
927NY. as a Specialist in ByRDS.
11 17 CFR 200.30–3(a)(12). 6 See proposed Section I.H. of the Fee Schedule, 11 See Exchange Act Release No. 34–60536
1 15 U.S.C. 78s(b)(1). which was previously Reserved. (August 19, 2009), 74 FR 43204 (August 26, 2009)
2 15 U.S.C. 78a. 7 15 U.S.C. 78f(b). (SR–ISE–2009–59).
3 17 CFR 240.19b–4. 8 15 U.S.C. 78f(b)(4) and (5). 12 15 U.S.C. 78f(b)(8).

VerDate Sep<11>2014 19:14 Feb 02, 2016 Jkt 238001 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 E:\FR\FM\03FEN1.SGM 03FEN1
Document Created: 2016-02-03 00:40:36
Document Modified: 2016-02-03 00:40:36
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 5800