82 FR 3379 - 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 7 (January 11, 2017)
Federal Register Volume 82, Issue 7 (January 11, 2017)
| Page Range | 3379-3382 | |
| FR Document | 2017-00368 |
[Federal Register Volume 82, Number 7 (Wednesday, January 11, 2017)] [Notices] [Pages 3379-3382] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-00368] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79745; File No. SR-CBOE-2016-094] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule January 5, 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 December 23, 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- 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 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 waive transaction fees incurred from certain transactions executed in compression forums. SEC Rule 15c3-1 (Net Capital Requirements for Brokers or Dealers) (``Net Capital Rules'') requires every registered broker-dealer [sic] maintain certain specified minimum levels of capital.\3\ The Net Capital Rules are designed to protect securities customers, counterparties, and creditors by requiring broker-dealers to have sufficient liquid resources on hand, at all times, to meet their financial obligations. Notably, hedged positions, including offsetting futures and options contract positions, result in certain net capital requirement reductions under the Net Capital Rules.\4\ --------------------------------------------------------------------------- \3\ 17 CFR 240.15c3-1. \4\ In addition, the Net Capital Rules permit various offsets under which a percentage of an option position's gain at any one valuation point is allowed to offset another position's loss at the same valuation point (e.g., vertical spreads). --------------------------------------------------------------------------- All Options Clearing Corporation (``OCC'') clearing members are subject to the Net Capital Rules. However, a subset [[Page 3380]] of clearing members are subsidiaries of U.S. bank holding companies, which, due to their affiliations with their parent U.S. bank holding companies, must comply with additional bank regulatory capital requirements pursuant to rulemaking required under the Dodd-Frank Wall Street Reform and Consumer Protection Act.\5\ Pursuant to this mandate, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation approved a comprehensive regulatory capital framework for subsidiaries of U.S. bank holding company clearing firms.\6\ Generally, these rules impose higher minimum capital requirements, more restrictive capital eligibility standards, and higher asset risk weights than were previously mandated for clearing members that are subsidiaries of U.S. bank holding companies under the Net Capital Rules. Furthermore, the rules do not permit deductions for hedged securities or offsetting options positions.\7\ Rather, capital charges under these standards are based on the aggregate notional value of short positions regardless of offsets. As a result, clearing Trading Permit Holders (``TPHs'') generally must hold substantially more bank regulatory capital than would otherwise be required under the Net Capital Rules. The impact of these regulatory capital rules are compounded in the SPX options market due to the large notional value of SPX contracts. --------------------------------------------------------------------------- \5\ H.R. 4173 (amending section 3(a) of the Securities Exchange Act of 1934 (the ``Act'') (15 U.S.C. 78c(a))). \6\ 12 CFR 50; 79 FR 61440 (Liquidity Coverage Ratio: Liquidity Risk Measurement Standards). \7\ Many options strategies, including relatively simple strategies often used by retail customers and more sophisticated strategies used by market-makers and institutions, are risk-limited strategies or options spread strategies that employ offsets or hedges to achieve certain investment outcomes. Such strategies typically involve the purchase and sale of multiple options (and may be coupled with purchases or sales of the underlying assets), executed simultaneously as part of the same strategy. In many cases, the potential market exposure of these strategies is limited and defined. Whereas regulatory capital requirements have historically reflected the risk-limited nature of carrying offsetting positions, these positions may now be subject to large regulatory capital requirements. Various factors, including administration costs; transaction fees; and limited market demand or counterparty interest, however, discourage market participants from closing these positions even though many market participants likely would prefer to close the positions rather than carry them to expiration. --------------------------------------------------------------------------- The Exchange believes these regulatory capital requirements could impede efficient use of capital and undermine the critical liquidity role that Market-Makers play in the SPX options market by limiting the amount of capital clearing TPHs can allocate to clearing member transactions. Specifically, the rules may cause clearing TPHs to impose stricter position limits on their clearing members. These stricter position limits may impact the liquidity Market-Makers might supply in the SPX market, and this impact may be compounded when a clearing TPH has multiple Market-Maker client accounts, each having largely risk- neutral portfolio holdings.\8\ --------------------------------------------------------------------------- \8\ Several TPHs have indicated to the Exchange that these rules could hamper their ability to provide consistent liquidity in the SPX options market unless they reduce their positions in SPX by the end of the year. --------------------------------------------------------------------------- Currently, TPHs may reduce open interest in SPX options for regulatory capital purposes by simply trading out of positions at the end of each month as they would trade any open position. The Exchange currently waives transaction fees incurred as a result of transactions that compress or reduce certain open positions.\9\ However, the Exchange believes wide-scale reduction of open interest in SPX options in such a manner is burdensome and inefficient. Accordingly, the Exchange recently adopted a procedure to facilitate these types of transactions on the Exchange to allow TPHs seeking to close positions in SPX options to more easily identify counterparty interest and efficiently conduct closing transactions in SPX options on the Exchange in ``compression forums'' without interfering with normal SPX trading.\10\ In general, under this new process, each month, TPHs may submit to the Exchange lists of open SPX positions (these positions are referred to in Rule 6.56 as ``compression-list positions'') they wish to close against opposing (long/short) positions of other TPHs. The Exchange would then aggregate these positions into a single list to allow TPHs to more easily identify those positions with counterparty interest on the Exchange. The Exchange will then provide a forum on the Exchange's trading floor during which TPHs could conduct closing-only transactions in series of SPX options. The Exchange will hold compression forums on the last three trading days of each calendar month. --------------------------------------------------------------------------- \9\ See CBOE Fees Schedule, Footnote 41 (The Exchange rebates transaction fees if a transaction (i) involves a complex order with at least five (5) different series in S&P 500 Index (SPX) options, SPX Weeklys (SPXW) options or p.m.-settled SPX options (SPXPM), (ii) is a closing-only transaction or, if the transaction involves a Firm order (origin code ``F''), is an opening transaction executed to facilitate a compression of option positions for a market-maker or joint-back office (JBO) account executed as a cross pursuant to and in accordance with CBOE Rule 6.74(b) or (d); (iii) is a position with a required capital charge equal to the minimum capital charge under OCC rules RBH calculator or is a position comprised of option series with a delta of ten or less; and (iv) is entered on any of the final three (3) trading days of any calendar month. To receive this rebate, a rebate request with supporting documentation must be submitted to the Exchange within three business days of the transactions.); see also Securities Exchange Act Release Nos. 79279 (November 10, 2016), 81 FR 81200 (November 17, 2016) (SR-CBOE-2016- 074) and 76842 (January 6, 2016), 81 FR 1455 (January 12, 2016) (SR- CBOE-2015-117). \10\ See Rule 6.56; see also Securities Exchange Act Release No. 79610 (December 20, 2016) (SR-CBOE-2016-090). --------------------------------------------------------------------------- To encourage TPHs to submit compression-list positions in advance of monthly compression forums and compress these positions during compression forums, the Exchange proposes to rebate all transaction fees for closing transactions involving SPX and SPXW compression-list positions executed in a compression forum (pursuant to Rule 6.56).\11\ The Exchange believes compression of these positions would improve market liquidity by freeing capital currently tied up in positions for which there is a minimal chance that a significant loss would occur. The Exchange further believes advanced submission of compression-list positions to the Exchange will allow TPHs to more easily identify counterparty interest and efficiently conduct closing transactions of these positions during compression forums. The Exchange notes the submission of compression-list positions is completely voluntary, open to all TPHs with open positions in SPX, and does not require a TPH to trade any compression-list position or participate in a compression forum. To receive a rebate, a TPH must submit to the Exchange a rebate request with supporting documentation within three business days of the transactions. --------------------------------------------------------------------------- \11\ A rebate of transaction fees would include the transaction fee assessed along with any other surcharges assessed per contract (e.g., the Index License Surcharge). --------------------------------------------------------------------------- 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.\12\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \13\ 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 [[Page 3381]] 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,\14\ which requires Exchange rules to provide for the equitable allocation of reasonable dues, fees, and other charges among its Trading Permit Holders and other persons using its facilities. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f(b). \13\ 15 U.S.C. 78f(b)(5). \14\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- In particular, the Exchange believes rebating transaction fees to TPHs that submit compression-list positions to the Exchange in advance is reasonable and not unfairly discriminatory because it encourages TPHs to submit to the Exchange these positions in advance of compression forums. The Exchange may then aggregate these positions, which will allow TPHs to more easily identify counterparty interest and increase opportunities for TPHs to ultimately close these positions during a compression forum. The Exchange believes compression of these positions would improve market liquidity by freeing capital currently tied up in positions for which there is a minimal chance that a significant loss would occur. All TPHs may submit compression-list positions, are subject to the same submission deadline, and may participate in compression forums. The Exchange believes rebating transaction fees for transactions closing compression-list positions during compression forums is reasonable, equitable and not unfairly discriminatory because compression forums will provide an opportunity for TPHs to efficiently conduct closing transactions of these positions. These positions would result in extremely large bank capital requirements for Clearing TPHs even though there is minimal change [sic] for large losses to occur. Additionally, these positions have little or no economic benefit to the TPHs that hold these positions, who would likely prefer to close them but for the associated transaction fees. The fee rebate therefore allows TPHs to close out of these positions that are needlessly burdensome on themselves and Clearing TPHs. The Exchange believes it is reasonable and not unfairly discriminatory to limit the rebate to transactions that close compression-list positions, which must either have a required capital charge equal to the minimum capital charge pursuant to the RBH calculator in OCC's rules or a delta of ten or less, because these criteria identify option positions that are truly out-of-the-money or spread positions that are essentially riskless strategies. Particularly, the Exchange notes theoretically riskless positions can be identified when the required capital charge equals the minimum capital charge under OCC's RBH calculator. Transactions comprised of option series with a delta of no greater than 10 would indicate an option position that is, by definition, out-of-the-money. The Exchange believes it is reasonable, equitable and not unfairly discriminatory to limit the rebate to SPX options (including SPXW) because only SPX options may be traded in compression forums. SPX has a substantially higher notional value than other options classes. As such, open interest in SPX has a much greater effect on a bank's regulatory capital requirements. Compressing riskless SPX option positions therefore has a greater impact on reducing a bank regulatory capital requirement. The Exchange believes it is reasonable to limit the rebate of transactions fees to closing-only transactions, [sic] only closing transactions are permitted during compression forums. If a transaction were to open interest, it would defeat the purpose of the proposed rebate, which is to encourage the closing of positions creating high bank regulatory capital requirements for positions that are of low economic benefit and risk and could otherwise be offset. The Exchange notes it already waives transaction fees for compression of certain eligible SPX positions.\15\ --------------------------------------------------------------------------- \15\ See supra note 9. --------------------------------------------------------------------------- The Exchange believes requiring TPHs to submit a request for a rebate within three business days of the transactions clarifies the manner in which the rebate can be accomplished in a timely manner and will eliminate any confusion and provide a clear procedure for applicants to get a rebate for their compression transactions, removing impediments to and perfecting the mechanism of a free and open market. Additionally, the Exchange notes such requirement will apply to all TPHs and is similar to the current requirement for requesting a rebate of transaction fees for compression of certain eligible SPX positions.\16\ --------------------------------------------------------------------------- \16\ Id. --------------------------------------------------------------------------- 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 the proposed rule change will impose any burden on intramarket competition not necessary or appropriate in furtherance of the Act because it applies to all TPHs in the same manner with positions that meet the eligible criteria. The proposed rule change would encourage closing of positions that needlessly result in burdensome capital requirements. Closing of the positions would alleviate the capital requirement constraints on TPHs and improve overall market liquidity by freeing capital currently tied up in certain out-of-the-money and riskless SPX positions. The proposed rule change also encourages TPHs to submit to the Exchange in advance a list of these positions, which will allow TPHs to more easily identify counterparty interest and increase opportunities for to efficiently conduct closing transactions of these positions during compression forums. The Exchange does not believe the proposed rule change will impose any burden on intermarket competition not necessary or appropriate in furtherance of the purposes of the Act because the proposed rule change applies only to the trading of SPX options, which are exclusively- listed on CBOE. To the extent the proposed rule change makes the Exchange a more attractive marketplace for market participants at other exchanges, such market participants are welcome to become CBOE market participants. Furthermore, as stated above, submission of lists of positions for compression is completely voluntary, open to all TPHs, and non-binding, in that submission of a list does not require a TPH to trade any position or even represent any position in a trading crowd. Lists of positions will be made available to all TPHs and contain very limited information regarding open interest in positions in SPX. The list will simply alert TPHs to certain SPX positions that other TPHs are interested in closing at the end of each calendar month. 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) [[Page 3382]] of the Act \17\ and paragraph (f) of Rule 19b-4 \18\ 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. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A). \18\ 17 CFR 240.19b-4(f). --------------------------------------------------------------------------- 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 CommentsUse 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-2016-094 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-CBOE-2016-094. 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 such 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-2016-094 and should be submitted on or before February 1, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-00368 Filed 1-10-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 7 / Wednesday, January 11, 2017 / Notices 3379
national securities exchange have rules the Exchange to document and solicit comments on the proposed rule
designed to prevent fraudulent and periodically review Exchange decisions change from interested persons.
manipulative acts and practices, to made under the rule to deviate from the
I. Self-Regulatory Organization’s
promote just and equitable principles of standard opening procedures, and
Statement of the Terms of Substance of
trade, to foster cooperation and stipulates that the Help Desk can so
the Proposed Rule Change
coordination with persons engaged in deviate in response to unusual market
regulating, clearing, settling, processing conditions with specific regard to the The Exchange proposes to amend its
information with respect to, and public interest.40 In this manner, such Fees Schedule. The text of the proposed
facilitating transactions in securities, to Exchange determinations made by high- rule change is available on the
remove impediments to and perfect the level senior Exchange personnel under Exchange’s Web site (http://
mechanism of a free and open market the rule should be limited, transparent, www.cboe.com/AboutCBOE/
and a national market system, and, in and made with due regard to the CBOELegalRegulatoryHome.aspx), at
general, to protect investors and the Exchange’s obligations under the Act. the Exchange’s Office of the Secretary,
public interest. For the foregoing reasons, the and at the Commission’s Public
In particular, the proposed rule Reference Room.
Commission finds that the proposed
change reorganizes and attempts to
rule change is consistent with Section II. Self-Regulatory Organization’s
clarify the description of the opening
6(b)(5) of the Act and the rules and Statement of the Purpose of, and
(and sometimes closing) procedures,
regulations thereunder applicable to a Statutory Basis for, the Proposed Rule
deletes text that the Exchange believes
national securities exchange. Change
is either obsolete or unnecessary,
removes certain discretion for the IV. Conclusion In its filing with the Commission, the
Exchange to make determinations under Exchange included statements
the rule on a class-by-class basis where It is therefore ordered, pursuant to concerning the purpose of and basis for
C2 no longer needs that discretion, and Section 19(b)(2) of the Act,41 that the the proposed rule change and discussed
is intended to promote greater proposed rule change (SR–C2–2016– any comments it received on the
consistency across Rule 6.11. The 021) be, and hereby is, approved. proposed rule change. The text of these
Commission notes that these changes For the Commission, by the Division of statements may be examined at the
may offer market participants a better Trading and Markets, pursuant to delegated places specified in Item IV below. The
understanding of how the Exchange’s authority.42 Exchange has prepared summaries, set
opening (and sometimes closing) Eduardo A. Aleman, forth in sections A, B, and C below, of
procedures operate. To the extent the Assistant Secretary. the most significant aspects of such
changes achieve that goal, they may [FR Doc. 2017–00367 Filed 1–10–17; 8:45 am] statements.
promote transparency, reduce the BILLING CODE 8011–01–P
potential for investor confusion, and A. Self-Regulatory Organization’s
assist market participants in deciding Statement of the Purpose of, and
whether to participate in C2’s trading Statutory Basis for, the Proposed Rule
SECURITIES AND EXCHANGE
rotations and, if they do participate, Change
COMMISSION
have confidence and certainty as to how 1. Purpose
their orders will be processed by the C2
[Release No. 34–79745; File No. SR–CBOE– The Exchange proposes to amend its
System. 2016–094]
The Commission believes that the Fees Schedule. Specifically, the
proposed rule change is designed to Exchange proposes to waive transaction
Self-Regulatory Organizations;
promote just and equitable principles of fees incurred from certain transactions
Chicago Board Options Exchange,
trade by seeking to ensure that series executed in compression forums.
Incorporated; Notice of Filing and
open in a fair and orderly manner with SEC Rule 15c3–1 (Net Capital
Immediate Effectiveness of a Proposed
sufficient liquidity and opportunities for Requirements for Brokers or Dealers)
Rule Change To Amend the Fees
execution at prices that are determined (‘‘Net Capital Rules’’) requires every
Schedule
by market forces. In particular, the registered broker-dealer [sic] maintain
Exchange notes that the proposed rule January 5, 2017. certain specified minimum levels of
change is designed to ensure that market capital.3 The Net Capital Rules are
Pursuant to Section 19(b)(1) of the
participants are aware of the designed to protect securities customers,
Securities Exchange Act of 1934 (the
circumstances under which the System counterparties, and creditors by
‘‘Act’’),1 and Rule 19b–4 thereunder,2
may not open a series.38 The proposed requiring broker-dealers to have
notice is hereby given that on December
rule change also sets out the sufficient liquid resources on hand, at
23, 2016, Chicago Board Options
circumstances when the Exchange may all times, to meet their financial
Exchange, Incorporated (the ‘‘Exchange’’
exercise discretion under the rule and obligations. Notably, hedged positions,
or ‘‘CBOE’’) filed with the Securities
strives to narrow that discretion within including offsetting futures and options
and Exchange Commission (the
certain established parameters.39 The contract positions, result in certain net
‘‘Commission’’) the proposed rule
proposed rule change further requires capital requirement reductions under
change as described in Items I, II, and
the Net Capital Rules.4
III below, which Items have been
38 See Notice, supra note 3, at 83319. All Options Clearing Corporation
prepared by the Exchange. The
(‘‘OCC’’) clearing members are subject to
sradovich on DSK3GMQ082PROD with NOTICES
39 Exchange determinations, including the
establishment of parameters governing the opening Commission is publishing this notice to
the Net Capital Rules. However, a subset
process, will be set forth in Regulatory Circulars (or
as otherwise specified by the Exchange under the 40 See proposed Rule 6.11(e); see also Notice,
3 17 CFR 240.15c3–1.
proposed rule). On account of the critical supra note 3, at 83318.
importance of this information to investors’ 4 In addition, the Net Capital Rules permit various
41 15 U.S.C. 78s(b)(2).
understanding of how the Exchange’s System offsets under which a percentage of an option
42 17 CFR 200.30–3(a)(12).
operates, C2 should ensure that such information is position’s gain at any one valuation point is
1 15 U.S.C. 78s(b)(1).
prominently displayed, readily searchable and allowed to offset another position’s loss at the same
retrievable, up-to-date, and comprehensive. 2 17 CFR 240.19b–4. valuation point (e.g., vertical spreads).
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![Federal Register / Vol. 82, No. 7 / Wednesday, January 11, 2017 / Notices 3381
securities, to remove impediments to that are truly out-of-the-money or of the purposes of the Act. The
and perfect the mechanism of a free and spread positions that are essentially Exchange does not believe the proposed
open market and a national market riskless strategies. Particularly, the rule change will impose any burden on
system, and, in general, to protect Exchange notes theoretically riskless intramarket competition not necessary
investors and the public interest. positions can be identified when the or appropriate in furtherance of the Act
Additionally, the Exchange believes the required capital charge equals the because it applies to all TPHs in the
proposed rule change is consistent with minimum capital charge under OCC’s same manner with positions that meet
Section 6(b)(4) of the Act,14 which RBH calculator. Transactions comprised the eligible criteria. The proposed rule
requires Exchange rules to provide for of option series with a delta of no change would encourage closing of
the equitable allocation of reasonable greater than 10 would indicate an positions that needlessly result in
dues, fees, and other charges among its option position that is, by definition, burdensome capital requirements.
Trading Permit Holders and other out-of-the-money. Closing of the positions would alleviate
persons using its facilities. The Exchange believes it is the capital requirement constraints on
In particular, the Exchange believes reasonable, equitable and not unfairly TPHs and improve overall market
rebating transaction fees to TPHs that discriminatory to limit the rebate to SPX liquidity by freeing capital currently
submit compression-list positions to the options (including SPXW) because only tied up in certain out-of-the-money and
Exchange in advance is reasonable and SPX options may be traded in riskless SPX positions. The proposed
not unfairly discriminatory because it compression forums. SPX has a rule change also encourages TPHs to
encourages TPHs to submit to the substantially higher notional value than submit to the Exchange in advance a list
Exchange these positions in advance of other options classes. As such, open of these positions, which will allow
compression forums. The Exchange may interest in SPX has a much greater effect TPHs to more easily identify
then aggregate these positions, which on a bank’s regulatory capital counterparty interest and increase
will allow TPHs to more easily identify requirements. Compressing riskless SPX opportunities for to efficiently conduct
counterparty interest and increase option positions therefore has a greater closing transactions of these positions
opportunities for TPHs to ultimately impact on reducing a bank regulatory during compression forums.
close these positions during a capital requirement. The Exchange does not believe the
compression forum. The Exchange The Exchange believes it is reasonable proposed rule change will impose any
believes compression of these positions to limit the rebate of transactions fees to burden on intermarket competition not
would improve market liquidity by closing-only transactions, [sic] only necessary or appropriate in furtherance
freeing capital currently tied up in closing transactions are permitted of the purposes of the Act because the
positions for which there is a minimal during compression forums. If a proposed rule change applies only to
chance that a significant loss would transaction were to open interest, it the trading of SPX options, which are
occur. All TPHs may submit would defeat the purpose of the exclusively-listed on CBOE. To the
compression-list positions, are subject proposed rebate, which is to encourage extent the proposed rule change makes
to the same submission deadline, and the closing of positions creating high the Exchange a more attractive
may participate in compression forums. bank regulatory capital requirements for marketplace for market participants at
The Exchange believes rebating positions that are of low economic
transaction fees for transactions closing other exchanges, such market
benefit and risk and could otherwise be participants are welcome to become
compression-list positions during offset. The Exchange notes it already
compression forums is reasonable, CBOE market participants.
waives transaction fees for compression
equitable and not unfairly Furthermore, as stated above,
of certain eligible SPX positions.15
discriminatory because compression submission of lists of positions for
The Exchange believes requiring
forums will provide an opportunity for compression is completely voluntary,
TPHs to submit a request for a rebate
TPHs to efficiently conduct closing open to all TPHs, and non-binding, in
within three business days of the
transactions of these positions. These that submission of a list does not require
transactions clarifies the manner in
positions would result in extremely a TPH to trade any position or even
which the rebate can be accomplished
large bank capital requirements for represent any position in a trading
in a timely manner and will eliminate
Clearing TPHs even though there is crowd. Lists of positions will be made
any confusion and provide a clear
minimal change [sic] for large losses to available to all TPHs and contain very
procedure for applicants to get a rebate
occur. Additionally, these positions limited information regarding open
for their compression transactions,
have little or no economic benefit to the interest in positions in SPX. The list
removing impediments to and
TPHs that hold these positions, who will simply alert TPHs to certain SPX
perfecting the mechanism of a free and
would likely prefer to close them but for positions that other TPHs are interested
open market. Additionally, the
the associated transaction fees. The fee in closing at the end of each calendar
Exchange notes such requirement will
rebate therefore allows TPHs to close month.
apply to all TPHs and is similar to the
out of these positions that are needlessly current requirement for requesting a C. Self-Regulatory Organization’s
burdensome on themselves and Clearing rebate of transaction fees for Statement on Comments on the
TPHs. compression of certain eligible SPX Proposed Rule Change Received From
The Exchange believes it is reasonable positions.16 Members, Participants, or Others
and not unfairly discriminatory to limit
the rebate to transactions that close B. Self-Regulatory Organization’s The Exchange neither solicited nor
Statement on Burden on Competition received comments on the proposed
sradovich on DSK3GMQ082PROD with NOTICES
compression-list positions, which must
either have a required capital charge CBOE does not believe that the rule change.
equal to the minimum capital charge proposed rule change will impose any III. Date of Effectiveness of the
pursuant to the RBH calculator in OCC’s burden on competition that is not Proposed Rule Change and Timing for
rules or a delta of ten or less, because necessary or appropriate in furtherance Commission Action
these criteria identify option positions
15 See supra note 9. The foregoing rule change has become
14 15 U.S.C. 78f(b)(4). 16 Id. effective pursuant to Section 19(b)(3)(A)
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![3382 Federal Register / Vol. 82, No. 7 / Wednesday, January 11, 2017 / Notices
of the Act 17 and paragraph (f) of Rule inspection and copying at the principal Dated: December 20, 2016.
19b–4 18 thereunder. At any time within office of the Exchange. All comments John F. Kerry,
60 days of the filing of the proposed rule received will be posted without change; Secretary of State.
change, the Commission summarily may the Commission does not edit personal [FR Doc. 2017–00442 Filed 1–10–17; 8:45 am]
temporarily suspend such rule change if identifying information from BILLING CODE 4710–AD–P
it appears to the Commission that such submissions. You should submit only
action is necessary or appropriate in the information that you wish to make
public interest, for the protection of available publicly. All submissions DEPARTMENT OF TRANSPORTATION
investors, or otherwise in furtherance of should refer to File Number SR–CBOE–
the purposes of the Act. If the 2016–094 and should be submitted on Federal Aviation Administration
Commission takes such action, the or before February 1, 2017.
Commission will institute proceedings [Summary Notice No. PE–2017–01]
For the Commission, by the Division of
to determine whether the proposed rule Trading and Markets, pursuant to delegated Petition for Exemption; Summary of
change should be approved or authority.19 Petition Received; The Boeing
disapproved. Eduardo A. Aleman, Company
IV. Solicitation of Comments Assistant Secretary.
[FR Doc. 2017–00368 Filed 1–10–17; 8:45 am]
AGENCY: Federal Aviation
Interested persons are invited to Administration (FAA), DOT.
submit written data, views, and BILLING CODE 8011–01–P
ACTION: Notice of petition for exemption
arguments concerning the foregoing,
received.
including whether the proposed rule
change is consistent with the Act. DEPARTMENT OF STATE SUMMARY: This notice contains a
Comments may be submitted by any of summary of a petition seeking relief
the following methods: [Public Notice 9849] from specified requirements of Title 14,
Electronic Comments Code of Federal Regulations (14 CFR).
E.O. 13224 Designation of Ali Damush, The purpose of this notice is to improve
• Use the Commission’s Internet aka Ali Daghmoush, aka Ali the public’s awareness of, and
comment form (http://www.sec.gov/ Dagmoush, aka Ali Daamoush, aka Ali participation in, this aspect of the FAA’s
rules/sro.shtml); or Dagmush, aka Shiekh Ali Musa regulatory activities. Neither publication
• Send an email to rule-comments@ Da’amoush as a Specially Designated of this notice nor the inclusion or
sec.gov. Please include File Number SR– Global Terrorist omission of information in the summary
CBOE–2016–094 on the subject line.
Acting under the authority of and in is intended to affect the legal status of
Paper Comments accordance with section 1(b) of the petition or its final disposition.
• Send paper comments in triplicate Executive Order 13224 of September 23, DATE: Comments on this petition must
to Brent J. Fields, Secretary, Securities 2001, as amended by Executive Order identify the petition docket number
and Exchange Commission, 100 F Street 13268 of July 2, 2002, and Executive involved and must be received on or
NE., Washington, DC 20549–1090. Order 13284 of January 23, 2003, I before January 23, 2017.
All submissions should refer to File hereby determine that the person known ADDRESSES: You may send comments
Number SR–CBOE–2016–094. This file as Ali Damush, also known as Ali identified by docket number FAA–
number should be included on the Daghmoush, also known as Ali 2016–9340 using any of the following
subject line if email is used. To help the Dagmoush, also known as Ali methods:
Commission process and review your Daamoush, also known as Ali Dagmush, • Government-wide rulemaking Web
comments more efficiently, please use also known as Shiekh Ali Musa site: Go to http://www.regulations.gov
only one method. The Commission will Da’amoush committed, or poses a and follow the instructions for sending
post all comments on the Commission’s significant risk of committing, acts of your comments digitally.
Internet Web site (http://www.sec.gov/ terrorism that threaten the security of • Mail: Send comments to the Docket
rules/sro.shtml). Copies of the U.S. nationals or the national security, Management Facility; U.S. Department
submission, all subsequent foreign policy, or economy of the United of Transportation, 1200 New Jersey
amendments, all written statements States. Avenue, SE., West Building Ground
with respect to the proposed rule Consistent with the determination in Floor, Room W12–140, Washington, DC
change that are filed with the section 10 of Executive Order 13224 that 20590.
Commission, and all written prior notice to persons determined to be • Fax: Fax comments to the Docket
communications relating to the subject to the Order who might have a Management Facility at 202–493–2251.
proposed rule change between the constitutional presence in the United • Hand Delivery: Bring comments to
Commission and any person, other than States would render ineffectual the the Docket Management Facility in
those that may be withheld from the blocking and other measures authorized Room W12–140 of the West Building
public in accordance with the in the Order because of the ability to Ground Floor at 1200 New Jersey
provisions of 5 U.S.C. 552, will be transfer funds instantaneously, I Avenue, SE., Washington, DC, between
available for Web site viewing and determine that no prior notice needs to 9 a.m. and 5 p.m., Monday through
printing in the Commission’s Public be provided to any person subject to this Friday, except Federal holidays.
determination who might have a Privacy: We will post all comments
sradovich on DSK3GMQ082PROD with NOTICES
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official constitutional presence in the United we receive, without change, to http://
business days between the hours of States, because to do so would render www.regulations.gov, including any
10:00 a.m. and 3:00 p.m. Copies of such ineffectual the measures authorized in personal information you provide.
filing also will be available for the Order. This notice shall be Using the search function of our docket
published in the Federal Register. Web site, anyone can find and read the
17 15 U.S.C. 78s(b)(3)(A). comments received into any of our
18 17 CFR 240.19b–4(f). 19 17 CFR 200.30–3(a)(12). dockets, including the name of the
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Document Created: 2018-02-01 14:59:42
Document Modified: 2018-02-01 14:59:42
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 82 FR 3379 |
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