82 FR 32739 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Updating the CBOE Fees Schedule Concerning LVCX Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 135 (July 17, 2017)

[Federal Register Volume 82, Number 135 (Monday, July 17, 2017)]
[Notices]
[Pages 32739-32741]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-14888]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81118; File No. SR-CBOE-2017-052]


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

July 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 June 29, 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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Fees Schedule relating to 
Livevol Core X (``LVCX'') fees.
    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 relating to 
Livevol Core X (``LVCX'') fees. By way of background, LVCX is a front-
end order entry and management tool for listed stocks and options that 
supports both simple and complex orders. Particularly, LVCX is a web-
based application integrated into the application programming interface 
of the user's proprietary system. The application provides users with 
the capability to send option orders to U.S. options exchanges and 
stock orders to U.S. stock exchanges (and other trading centers). 
Additionally, LVCX allows users to input parameters to control the 
size, timing and other variables of their trades. Use of the 
application is completely optional and LVCX users may sublicense LVCX 
to their customers.
    The Exchange proposes a new tiered fee schedule for LVCX. 
Specifically, the Exchange proposes to eliminate the current flat fees 
of $100/month (per Log-in ID) and implement a new tiered fee schedule 
for the LVCX application fees. The Exchange believes the proposed 
change will encourage greater application of the LVCX platform by 
reducing the prices as users purchase more Log-In IDs. The proposed 
LVXC tiered pricing is below.

------------------------------------------------------------------------
                                                                Fee per
                    Livevol Core X (LVCX)                      login ID
                                                               per month
------------------------------------------------------------------------
Application Fees by Number of Login IDs:
  0-0.......................................................        $100
  11-30.....................................................          75
  31-100....................................................          50
  101-200...................................................          40
  201-500...................................................          30
  501-1,000.................................................          20
  >1,000....................................................          15
------------------------------------------------------------------------

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

[[Page 32740]]

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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    In particular, the Exchange believes the tiered fee schedule is 
reasonable because broker-dealer clients will see an overall reduction 
of prices as they increase their Log-In IDs. Additionally, the proposed 
change continues to provide for the recoupment of the costs of 
developing, maintaining, supporting and enhancing the application.
    The Exchange believes the proposed rule change is equitably [sic] 
and not unfairly discriminatory because it applies to all users of LVCX 
uniformly. Additionally, the use of LVCX is completely voluntary. The 
LVCX application is available as a convenience to market participants, 
who will continue to have the option to use any order entry and 
management system available in the marketplace to send orders to the 
Exchange and other exchanges. The Exchange also believes these fees are 
reasonable and appropriate as they are competitive with similar 
applications available throughout the market.

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. Particularly, any market 
participant will be able to access LVCX and its tiered platform fees, 
which will apply uniformly to all users. Additionally, the proposed 
tiered fee schedule will offer heightened incentives for all broker-
dealer clients to promote use of LVCX. The Exchange notes that the LVCX 
application is available to all market participants on the same terms 
and conditions, and use of the application is completely voluntary. 
LVCX is merely an alternative application to other similar products 
already available in the market and market participants can develop 
their own proprietary products with the same functionality.
    The Exchange notes that when Congress charged the Commission with 
supervising the development of a ``national market system'' for 
securities, a premise of its action was that prices, products and 
services ordinarily would be determined by market forces.\6\ Consistent 
with this purpose, Congress and the Commission have repeatedly stated 
their preference for competition, rather than regulatory intervention, 
to determine prices, products and services in the securities 
markets.\7\ Many exchanges and other market participants make 
technology products, including products similar to the LVCX, available 
to the industry. Other market participants that offer these products 
can adjust pricing or add functionality to attract users to their 
products to compete with the Exchange-offered products based on all 
competitive forces in the marketplace, as the Exchange expects these 
other market participants currently do. The Exchange believes that 
other market participants that offer these products will continue to 
remain competitive in the market for order-entry, management and 
routing products, as they currently are in this market in which at 
least two exchanges (including CBOE) offer similar technology products. 
For example, CBOE currently offers PULSe, and ISE currently offers 
PrecISE. The Exchange believes that many investors will continue to 
elect to use competing products available from non-exchange technology 
providers.
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    \6\ See, e.g., H.R. Rep. No. 94-229, at 92 (1975) (Conf. Rep.) 
(stating Congress's intent that the ``national market system evolve 
through the interplay of competitive forces as unnecessary 
regulatory restrictions are removed'').
    \7\ See S. Rep. No. 94-75, 94th Cong., 1st Sess. 8 (1975) (``The 
objective [in enacting the 1975 amendments to the Exchange Act] 
would be to enhance competition and to allow economic forces, 
interacting within a fair regulatory field, to arrive at appropriate 
variations in practices and services.''); Order Approving Proposed 
Rule Change Relating to NYSE Arca Data, Securities Exchange Act 
Release No. 59039 (December 2, 2008), 73 FR 74770 (Dec. 9, 2008) at 
74781 (``The Exchange Act and its legislative history strongly 
support the Commission's reliance on competition, whenever possible, 
in meeting its regulatory responsibilities for overseeing the SROs 
and the national market system. Indeed, competition among multiple 
markets and market participants trading the same products is the 
hallmark of the national market system.'') (SR-NYSEArca-2006-21); 
Regulation NMS, 70 FR at 37499 (observing that NMS regulation ``has 
been remarkably successful in promoting market competition in [the] 
forms that are most important to investors and listed companies'').
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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-2017-052 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-2017-052. 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

[[Page 32741]]

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-2017-052 and should be submitted on or before 
August 7, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2017-14888 Filed 7-14-17; 8:45 am]
BILLING CODE 8011-01-P