81 FR 9533 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 8.2

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 37 (February 25, 2016)

[Federal Register Volume 81, Number 37 (Thursday, February 25, 2016)]
[Notices]
[Pages 9533-9535]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-03959]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77194; File No. SR-C2-2016-002]


Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 8.2

February 19, 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 February 10, 2016, C2 Options Exchange, Incorporated (``C2'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II 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 C2 Rule 8.2 relating to the Market-
Maker registration cost for all option classes. The text of the 
proposed rule change is provided below.

(additions are italicized; deletions are [bracketed])

* * * * *

C2 Options Exchange, Incorporated Rules

* * * * *

Rule 8.2. Continuing Market-Maker Registration

    (a)-(c) No change.
    (d) Market-Maker Option Class Registration. Absent an exemption by 
the Exchange, an option class registration of a Market-Maker confers 
the right to quote in that product. A Market-Maker may change its 
registered classes upon advance notification to the Exchange in a form 
and manner prescribed by the Exchange.
    Each Trading Permit held by a Market-Maker has a registration 
credit of 1.0. A Market-Maker may select for each Trading Permit the 
Market-Maker holds any combination of option classes, whose aggregate 
registration cost does not exceed 1.0. Option class ``registration 
costs'' are set forth below:

------------------------------------------------------------------------
                     Option class                      Registration cost
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All options..........................................        [.001].0001
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    (e) No change.
* * * * *
    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 purpose of this rule change is to amend C2 Rule 8.2 relating to 
the Market-Maker registration cost for all option classes. All option 
classes on C2 currently have a registration cost of .001. C2 proposes 
to reduce the registration cost to .0001, effective February 22, 2016, 
which would apply to all existing classes that currently trade on C2 
and to all classes listed in the future.
    In support of this filing, the Exchange states it intends to add an 
additional 2,000 option classes beginning the week of February 22, 
2016. By reducing the registration cost for existing classes, Market-
Makers could utilize the excess registration capacity of their current 
trading permits to quote in these additional option classes when they 
begin trading without having to obtain any additional trading permits, 
which promotes competition and efficiency.
    The Exchange will announce its plan to reduce the registration cost 
for all option classes via Regulatory Circular at least one business 
day before February 22, 2016, which the Exchange believes provides 
Market-Makers with sufficient notice.

[[Page 9534]]

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act. \3\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \4\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \5\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
    \5\ Id.
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    In particular, the Exchange believes that reducing the registration 
cost for all option classes will foster competition and efficiency by 
enabling Market-Makers to use the excess registration capacity to quote 
in additional option classes. The Exchange believes this may result in 
more liquidity and competitive pricing, which ultimately benefits 
investors. Additionally, the proposed rule change does not result in 
unfair discrimination, as the reduced registration cost will apply to 
all Market-Makers.

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 proposed rule change will 
apply to all Market-Makers (it is applicable only to Market-Makers, 
since only Market-Makers can register to quote in classes). C2 does not 
believe that the proposed rule change will impose any burden on 
intermarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because the proposed rule change 
only applies to the C2 Market-Maker registration process. C2 believes 
that the proposed rule change will enhance competition among market 
participants and benefit investors and the marketplace because Market-
Makers will be able to use the excess registration capacity to quote in 
additional option classes and increase overall liquidity on the 
Exchange.

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 Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \6\ and Rule 19b-4(f)(6) thereunder.\7\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \7\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Exchange has stated that it intends to add an additional 
2,000 option classes on February 22, 2016. The Exchange has argued that 
waiving the operative delay would allow it to reduce the registration 
cost for all option classes on that date, which would allow Market-
Makers to utilize their excess registration capacity to quote and 
provide liquidity in these additional option classes on their first 
trading day without having to obtain additional trading permits. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it would provide Market-Makers with the ability to quote and 
provide liquidity in the new option classes that C2 seeks to list 
without necessarily requiring Market Makers to purchase an additional 
trading permit to do so. Market Makers could thus be incentivized to 
begin making markets in the new classes without delay, which could 
enhance liquidity in these new classes to the potential benefit of 
investors. For this reason, the Commission hereby waives the 30-day 
operative delay requirement and designates the proposed rule change as 
operative upon filing.\8\
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    \8\ For purposes only of waiving the 30-day operative delay, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
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    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.

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-C2-2016-002 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-C2-2016-002. 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

[[Page 9535]]

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 such filing also will be available 
for inspection and copying at the principal offices 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-C2-2016-002, 
and should be submitted on or before March 17, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-03959 Filed 2-24-16; 8:45 am]
 BILLING CODE 8011-01-P