82 FR 28150 - 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 82, Issue 117 (June 20, 2017)

[Federal Register Volume 82, Number 117 (Tuesday, June 20, 2017)]
[Notices]
[Pages 28150-28152]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-12766]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80925; File No. SR-CBOE-2017-047]


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

June 14, 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 June 1, 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, 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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[[Page 28151]]

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fees Schedule. Specifically, the 
Exchange proposes to make an amendment to its rebate program for Floor 
Broker Trading Permits. By way of background, Footnote 25, which 
governs rebates on Floor Broker Trading Permits, currently provides 
that any Floor Broker that executes a certain average of customer open-
outcry contracts per day over the course of a calendar month in all 
underlying symbols excluding Underlying Symbol List A (except RLG, RLV, 
RUI, AWDE, FTEM, FXTM and UKXM), DJX, XSP, XSPAM and subcabinet trades 
(``Qualifying Symbols''), will receive a rebate on that TPH's Floor 
Broker Trading Permit fees. Particularly, any Floor Broker Trading 
Permit Holder (``TPH'') that executes an average of 15,000 customer 
(origin code ``C'') open-outcry contracts per day over the course of a 
calendar month in Qualifying Symbols will receive a rebate of $9,000 on 
that TPH's Floor Broker Trading Permit fees. Additionally, any Floor 
Broker TPH that executes an average of 25,000 customer open-outcry 
contracts per day over the course of a calendar month in Qualifying 
Symbols will receive a rebate of $14,000 on that TPH's Floor Broker 
Trading Permit fees. The Exchange proposes to provide that Professional 
Customers and Voluntary Professionals (``Professional Customers'') 
(origin code ``W'') orders would also count towards the qualifying 
volume thresholds. The Exchange believes the inclusion of Professional 
Customer orders in the qualifying thresholds will encourage Floor 
Brokers to execute more Professional Customer orders.
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.\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 
Section 6(b)(4) of the Act,\5\ 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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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(5).
    \5\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that permitting Professional Customer orders 
to count towards the qualifying volume thresholds for the Floor Broker 
Trading Permit rebates is reasonable because it will allow Floor 
Brokers to more easily reach the qualifying volume thresholds (and 
thereafter pay lower Floor Broker Trading Permit fees). The Exchange 
believes the proposed change is equitable and not unfairly 
discriminatory because it applies to qualifying Floor Brokers equally 
and because Floor Brokers serve an important function in facilitating 
the execution of orders via open outcry, which as a price-improvement 
mechanism, the Exchange wishes to encourage and support. The Exchange 
also notes that, while only Customer and Professional Customer orders 
would count towards the qualifying thresholds, an increase in Customer 
and Professional Customer order flow would bring greater volume and 
liquidity, which benefits all market participants by providing more 
trading opportunities and tighter spreads. Moreover, like Customers, 
Professional Customers are non-TPH, non-broker dealers and have 
historically also been treated similar as customers for certain 
programs. Indeed, the Exchange notes that incentive programs based on 
Customer and Professional volume already exist elsewhere within the 
industry.\6\
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    \6\ See e.g., NYSE Arca Options Fees and Charges, Customer and 
Professional Customer Incentive Program and Customer and 
Professional Customer Posting Credit Tiers in Penny and Non Penny 
Pilot Issues.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition that are 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 
change benefits Floor Broker TPHs that reach the qualifying volume 
thresholds, Floor Brokers serve an important function in facilitating 
the execution of orders via open outcry, which as a price-improvement 
mechanism, the Exchange wishes to encourage and support. Further, the 
proposed change is designed to encourage the execution of more 
Professional Customer orders, which volume creates greater trading 
opportunities that benefit all market participants. The Exchange 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 change only 
affects trading on CBOE. To the extent that the proposed change makes 
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.

[[Page 28152]]

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.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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-2017-047 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-2017-047. 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-2017-047 and should be 
submitted on or before July 11, 2017.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-12766 Filed 6-19-17; 8:45 am]
BILLING CODE 8011-01-P