83 FR 6280 - Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Schedule Concerning the Floor Broker SPX Surcharge

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 30 (February 13, 2018)

[Federal Register Volume 83, Number 30 (Tuesday, February 13, 2018)]
[Notices]
[Pages 6280-6281]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-02859]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82648; File No. SR-CBOE-2018-015]


Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Fees Schedule Concerning the Floor Broker SPX Surcharge

February 7, 2018.
    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 February 1, 2018, Cboe Exchange, Inc. (the ``Exchange'' or 
``Cboe Options'') 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 monthly fee of $3,000 per month 
for any Floor Broker Trading Permit Holder (``TPH'') that executes more 
than 20,000 SPX (including SPXW) contracts during the month (``FB SPX 
Surcharge''). Particularly, the Exchange proposes to adopt an exclusion 
for Multi-Class Broad-Based Index Option Spread Orders (``Multi-Class 
Spread Orders'').
    The text of the proposed rule change is also available on the 
Exchange's website (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 monthly fee of $3,000 per month 
for any Floor Broker Trading Permit Holder (``TPH'') that executes more 
than 20,000 SPX (including SPXW) contracts during the month (``FB SPX 
Surcharge''). Particularly, the Exchange proposes to adopt an exclusion 
for Multi-Class Broad-Based Index Option Spread Orders (``Multi-Class 
Spread Orders'').
    By way of background, Cboe Options Rule 24.19 permits the execution 
of Multi-Class Spread Orders, which are generally defined as orders to 
buy a stated number of contracts of a broad-based index option or 
exchange-traded fund (``ETF'')/exchange-traded note (``ETN'') option 
derived from a broad-based index and to sell an equal number, or an 
equivalent number of contracts of a different broad-based index option 
or ETF/ETN option derived from a broad-based index. These orders may be 
represented at the trading station of either option involved, subject 
to the conditions in Rule 24.19.\3\
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    \3\ See Cboe Options Rule 24.19.
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    The FB SPX Surcharge was not enacted with the intention of 
assessing it to Floor Brokers to whom it would only apply due to their 
execution of Multi-Class Spread Orders that included an SPX component. 
Rather, the surcharge was intended to be assessed on Floor Brokers that 
regularly execute SPX trades in the SPX trading crowd. In order to 
avoid being assessed the FB SPX Surcharge as a result of the execution 
of Multi-Class Spread Orders with an SPX component, the Exchange 
proposes to provide that Floor Brokers to which the FB SPX Surcharge is 
not otherwise applicable will not be assessed the FB SPX Surcharge if 
they only execute SPX open outcry transactions as part of a Multi-Class 
Spread Order. In order to identify those instances, the Exchange is 
proposing to require that Floor Brokers submit the Floor Broker SPX 
Surcharge Exclusion for Multi-Class Broad-Based Index Spread 
Transactions Form (the ``Form'') within three business days of 
execution of the applicable spread transaction(s).
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.\4\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \5\ 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,\6\ 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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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed rule change is reasonable 
because it allows Floor Brokers to whom the FB SPX Surcharge would 
apply only due to their execution of Multi-Class Spread Orders with an 
SPX component to avoid having to pay the surcharge. The proposed rule 
change is equitable and not unfairly discriminatory because the

[[Page 6281]]

FB SPX Surcharge is intended to be assessed on those Floor Brokers who 
regularly conduct open outcry transactions in SPX or SPX Weeklys (i.e., 
Floor Brokers who are engaging in regular SPX trades), since those 
Floor Brokers are engaging in transactions for which executing SPX 
trades is the primary purpose of such transactions (or are signing up 
to do so). Floor Brokers who only engage in SPX transactions through 
the execution of Multi-Class Spread Orders with an SPX component are 
not engaging in such transactions with primary purpose of executing an 
SPX order, but instead are just executing an SPX order as part of a 
larger Multi-Class Spread Order. Additionally, all Floor Brokers who 
only engage in SPX transactions through the execution of Multi-Class 
Spread Orders with an SPX component will have the opportunity to be 
excluded from the FB SPX Surcharge.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burdens on competition that are 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 that is not necessary or appropriate in furtherance of the 
purposes of the Act, because the proposed rule change provides Floor 
Brokers not engaged in regular SPX trades with an opportunity to be 
excluded from the FB SPX Surcharge, which is intended to be assessed on 
those Floor Brokers who engage in transactions for which executing SPX 
trades is the primary purpose of such transactions (or are signing up 
to do so). The Exchange does not believe that the proposed rule changes 
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 affects trading on the Exchange's trading 
floor. To the extent that the proposed changes make Cboe Options a more 
attractive marketplace for market participants at other exchanges, such 
market participants are welcome to become Cboe Options 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

    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-2018-015 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-2018-015. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-CBOE-2018-015 and should be submitted on 
or before March 6, 2018.

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-02859 Filed 2-12-18; 8:45 am]
 BILLING CODE 8011-01-P