82 FR 22694 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Quoting Bandwidth Allowance

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 94 (May 17, 2017)

[Federal Register Volume 82, Number 94 (Wednesday, May 17, 2017)]
[Notices]
[Pages 22694-22696]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-09924]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80654; File No. SR-CBOE-2017-036]


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

May 11, 2017.
    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 April 28, 2017, 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 and II, below, which Items have been prepared by the 
Exchange. The Exchange filed the proposal as a ``non-controversial'' 
proposed rule change pursuant to

[[Page 22695]]

Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 with respect to 
quoting bandwidth allowance. 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 amend its Fees Schedule. The Fees Schedule 
currently sets forth the quoting bandwidth allowance for a Market-Maker 
Trading Permit for the Regular Trading Hours (``RTH'') session (``RTH 
MM Trading Permit'') and a Market-Maker Trading Permit for the Extended 
Hours Trading (``ETH'') session (``ETH MM Trading Permit''). The 
bandwidth allowance is referenced as a maximum number of quotes over 
the course of the trading session. Currently, the quoting bandwidth 
allowance for a RTH MM Trading Permit is equivalent to a maximum of 
40,500,000 quotes over the course of the trading sessions and the 
quoting bandwidth allowance for an ETH MM Trading Permit is equivalent 
to a maximum of 37,500,000 quotes over the course of the trading 
session. Additionally, to the extent a Market-Maker is able to submit 
electronic quotes in a Hybrid 3.0 class (such as an LMM that streams 
quotes in the class or a Market-Maker or LMM that streams quotes in a 
series of a Hybrid 3.0 class that trades on the Hybrid Trading System), 
the Market-Maker receives the quoting bandwidth allowance to quote in, 
and only in, that class.
    The Exchange proposes to increase the quoting bandwidth for RTH and 
ETH MM Trading Permits that are used for an appointment in S&P 500 
Index options (``SPX'') (including SPXW) (i.e., Hybrid 3.0 class). The 
Exchange notes that it recently proposed to move P.M.-settled S&P 500 
Index options expiring on the third-Friday of the month (``third-
Friday''), currently listed in a separate class and trading under the 
symbol ``SPXPM'', to the SPX class which includes the weekly SPXW. In 
connection with the move, the Exchange is changing the trading symbol 
for these options from ``SPXPM'' to ``SPXW.'' The Exchange notes that 
as a result of the move of SPXPM to SPXW, Market-Makers with an 
appointment in SPX will have an obligation to quote more series (i.e., 
series that were formerly SPXPM, will now become SPXW). As such, the 
Exchange intends to increase quoting bandwidth allowance for all 
Market-Maker Trading Permits used for appointments in SPX/SPXW in order 
to ensure adequate bandwidth capacity to meet their quoting obligations 
and ensure a smooth transition of SPXPM into the SPX/SPXW class. The 
Exchange therefore seeks to make a corresponding amendment to the Fees 
Schedule. Specifically, the Exchange proposes to provide that the 
maximum number of quotes over the course of the RTH trading session for 
Market-Maker Trading Permits used for SPX/SPXW appointments is 
81,000,000 and the maximum number of quotes over the course of the ETH 
trading session for Trading Permits used for an appointment in SPX/SPXW 
is 75,000,000. The Fees Schedule will also reflect that the quoting 
allowance for RTH MM Trading Permits used for an appointment in any 
options classes other than SPX/SPXW will remain at 40,500,000 and the 
allowance for ETH MM Trading Permits that do not have an appointment in 
SPX/SPXW will remain at 37,500,000. The Exchange notes that the 
increase of the respective quoting bandwidth allowances for RTH and ETH 
applies to all RTH and ETH Market-Maker Trading Permits used for SPX/
SPXW appointments.
    Lastly, the Exchange notes that it is not increasing the quoting 
bandwidth allowance for the Quoting and Order Entry Bandwidth Packets, 
as the Exchange does not believe it is necessary. Accordingly, the 
Exchange proposes to clarify in the Fees Schedule that the quoting 
allowance provided with a Quoting and Order Entry Bandwidth Packet is 
the same as the quoting allowance that is provided with Market-Maker 
Trading Permits not used for an appointment in SPX/SPXW.
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 the 
Section 6(b)(5) \6\ 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) \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)(5).
    \7\ Id.
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    The Exchange believes that amending the Fees Schedule to accurately 
reflect the increase in quoting bandwidth allowance, alleviates 
confusion, thereby removing impediments to and perfecting the mechanism 
of a free open market and a national market system, and, in general, 
protecting investors and the public interest. The Exchange also notes 
that increasing quoting bandwidth for MM Trading Permits with an SPX/
SPXW appointment helps ensure that Market-Makers have an adequate 
capacity and ability to continue to make active markets, which also 
removes impediments to and perfects the mechanism of a free open market 
and a national market system, and, in general, protects investors and 
the public interest. Lastly, the Exchange believes it's equitable and 
not unfairly discriminatory to increase quoting bandwidth for Trading 
Permits with SPX/SPXW appointments as the number of series that need to 
be quoted in SPXW has increased due to the

[[Page 22696]]

migration of the trading symbol SPXPM to SPXW.

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. 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 the proposed change applies to all Market-
Makers with Market-Maker Trading Permits used for a SPX/SPXW 
appointment and is merely updating the Fees Schedule to accurately 
reflect an increase in quoting bandwidth. Also, while quoting bandwidth 
was increased only for Trading Permits with SPX/SPXW appointments, 
Market-Makers with these appointments now have an increased number of 
series they need to quote due to the migration of the SPXPM symbol to 
SPXW. The Exchange believes that the proposed rule change will not 
cause an unnecessary burden on intermarket competition because it only 
applies to 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

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \8\ and 
subparagraph (f)(6) Rule 19b-4 thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally 
does not become operative for 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \11\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay to allow it to immediately 
update the Market-Maker Trading Permit bandwidth allowance for Trading 
Permits with an SPX/SPXW appointment. As discussed above, as a result 
of the recent move of the SPXPM class into SPXW, Market-Makers with an 
appointment in SPX now have an obligation to quote more series. The 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the increased quoting bandwidth should help Market Makers with 
an SPX/SPXW appointment accommodate the increased number of series that 
they now need to quote and should help to accommodate, without undue 
delay, the maintenance of active quoted markets in SPX/SPXW, which 
should benefit of investors. Therefore, the Commission hereby waives 
the 30-day operative delay and designates the proposed rule change 
operative upon filing.\12\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission also 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-CBOE-2017-036 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-2017-036. 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-2017-036 and should be 
submitted on or before June 7, 2017.
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    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-09924 Filed 5-16-17; 8:45 am]
 BILLING CODE 8011-01-P