81 FR 92883 - 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 244 (December 20, 2016)

[Federal Register Volume 81, Number 244 (Tuesday, December 20, 2016)]
[Notices]
[Pages 92883-92885]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-30554]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79548; File No. SR-CBOE-2016-085]


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

December 14, 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 December 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Fees Schedule. The text of the 
proposed rule change is also available on the Exchange's Web site 
(http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the 
Exchange's Office of the Secretary, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fees Schedule. Specifically, the 
Exchange proposes to increase the transaction fee for electronic 
executions by broker-dealers, non-Trading Permit Holder (``non-TPH'') 
Market-Makers, Professionals/Voluntary Professionals and Joint Back-
Offices (``JBOs'') in Penny Pilot equity, ETF, ETN and index options 
(excluding Underlying Symbol List A) classes from $0.45 per contract to 
$0.47 per contract. The Exchange notes that this increase is in line 
with the amount assessed by another exchange for similar 
transactions.\3\
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    \3\ See e.g., NASDAQ PHLX Pricing Schedule, Section II, Multiply 
Listed Options Fees.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\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, 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

[[Page 92884]]

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.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(4).
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    Increasing the fee for electronic executions by broker-dealers, 
non-TPH Market-Makers, Professionals/Voluntary Professionals and JBOs 
in Penny Pilot equity, ETF, ETN and index options (excluding Underlying 
Symbol List A) classes is reasonable because the proposed fee amount is 
in line with the amount assessed by another exchange for similar 
transactions.\7\ The Exchange believes that this proposed change is 
also equitable and not unfairly discriminatory because the Exchange 
will assess broker-dealers, non-TPH Market-Makers, Professionals/
Voluntary Professionals and JBOs the same electronic options 
transaction fees in Penny Pilot options classes. The Exchange notes 
that it does not assess Customers the electronic options transaction 
fees in Penny Pilot options because Customer order flow enhances 
liquidity on the Exchange for the benefit of all market participants. 
Specifically, Customer liquidity benefits all market participants by 
providing more trading opportunities, which attracts Market-Makers. An 
increase in the activity of these market participants in turn 
facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants. 
The Exchange notes that Market-Makers are assessed lower electronic 
options transaction fees in Penny Pilot options as compared to 
Professionals, JBOs, Broker Dealers and non-Trading Permit Holder 
Market-Makers because they have obligations to the market and 
regulatory requirements, which normally do not apply to other market 
participants (e.g., obligations to make continuous markets). Clearing 
Trading Permit Holder Proprietary orders are assessed lower options 
transaction fees in Penny Pilot options because they also have 
obligations, which normally do not apply to other market participants 
(e.g., must have higher capital requirements, clear trades for other 
market participants, must be members of OCC). Accordingly, the 
differentiation between electronic transaction fees for Customers, 
Market-Makers, Clearing Trading Permit Holders and other market 
participants recognizes the differing obligations and contributions 
made to the liquidity and trading environment on the Exchange by these 
market participants.
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    \7\ See NASDAQ PHLX Pricing Schedule, Section II, Multiply 
Listed Options Fees.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that are [sic] 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 proposed fee 
increase applies only to certain market participants, the other market 
participants have different obligations and different circumstances (as 
described in the ``Statutory Basis'' section above). For example, 
Clearing TPHs have clearing obligations that other market participants 
do not have. Market-Makers have quoting obligations that other market 
participants do not have. There is also a history in the options 
markets of providing preferential treatment to Customers. 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 \8\ and paragraph (f) of Rule 19b-4 \9\ 
thereunder. At any time within 60 days of the filing of the proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CBOE-2016-085 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-2016-085. 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-2016-085, and should be 
submitted on or before January 10, 2017.
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    \10\ 17 CFR 200.30-3(a)(12).


[[Page 92885]]


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-30554 Filed 12-19-16; 8:45 am]
 BILLING CODE 8011-01-P