Daily Rules, Proposed Rules, and Notices of the Federal Government
The Exchange is proposing to amend its Fees Schedule as it relates to the PULSe workstation. The text of the proposed rule change is availableon the Exchange's Web site
In its filing with the Commission, CBOE 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 examined at the places specified in Item IV below. CBOE has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements.
The purpose of this proposed rule change is to adopt a PULSe routing fee for executions of orders on CBOE and CBOE Stock Exchange, LLC ("CBSX," CBOE's stock execution facility) that originate from non-Trading Permit Holder ("TPH") PULSe workstations. The Exchange is also proposing some non-substantive changes to the fees schedule text to clarify the existing operation of the Routing Intermediary fee. These changes, which are described in more detail below, will be effective October 3, 2011.
By way of background, the PULSe workstation is a front-end order entry system designed for use with respect to orders that may be sent to the trading systems of CBOE and CBSX. In addition, the PULSe workstation provides a user with the capability to send options orders to other U.S. options exchanges and stock orders to other U.S. stock exchanges and trading centers ("away-market routing").
The first purpose of this proposed rule change is to adopt a CBOE/CBSX Routing fee. This fee would be payable by a TPH that makes the PULSe workstation available to non-TPHs and would only be applicable for routing to CBOE/CBSX from such non-TPH PULSe workstations. The fee would be $0.02 per contract or share equivalent for the first 1 million contracts or share equivalent executed in a month on CBOE/CBSX that originate from the non-TPH PULSe workstations made available by the TPH, and $0.03 per contract or share equivalent for each additional contract or share equivalent executed on CBOE/CBSX in the same month from the non-TPH PULSe workstations made available by the TPH.
The CBOE/CBSX Routing fee will allow for the recoupment of the costs of developing, maintaining, and supporting the PULSe workstation and for income from the value-added services being provided through use of the PULSe workstation. The Exchange believes the fee structure represents an equitable allocation of reasonable fees in that the same fees will be applicable to all TPHs that make PULSe workstations available to non-TPHs. The Exchange also believes that the establishment of the fee, which is payable by TPHs only for transactions originating from non-TPH workstations, is equitable and not unfairly discriminatory because non-TPHs are able to obtain the benefits of utilizing the PULSe workstation--including the ability to route orders to the Exchange--without becoming a TPH (and incurring the associated costs of TPH membership). In addition, the Exchange believes that the $0.02/$0.03 CBOE/CBSX Routing fee is reasonable and appropriate in light of the facts that it is small in relation to the total costs typically incurred in routing and executing orders and that the amount is comparable to the Exchange's existing Routing Intermediary fee for away-market routing. The Exchange notes that the lower $0.02 rate for the first 1 million contracts or share equivalent (as compared to the $0.03 rate for each additional contract or share equivalent) is reasonable in that it is designed to help attract and encourage use of the PULSe workstation. The Exchange also notes that use of the PULSe workstation, and the routing technology available through the PULSe workstation, are not compulsory. The service is offered as a convenience and is not the exclusive means available to send or route orders to CBOE or CBSX (or another market).
The second purpose of this proposed rule change is to revise and expand on the description in the Fees Schedule text of the "Routing Intermediary" fee.
The proposed rule change is consistent with Section 6(b) of the Act,
With respect to the CBOE/CBSX Routing fee in particular, the Exchange believes that the establishment of the CBOE/CBSX Routing fee, which is payable by TPHs only for transactions originating from non-TPH workstations, is equitable and not unfairly discriminatory because, from the TPH perspective, as indicated above, the same fees are applicable to all TPHs that make the PULSe workstation available to non-TPHs. In addition, because non-TPHs are able to obtain the benefits of utilizing the PULSe workstation--including the ability to route orders to the Exchange--without becoming a TPH (and incurring the associated costs of TPH membership), the Exchange believes it is equitable and not unfairly
CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of purposes of the Act.
No written comments were solicited or received with respect to the proposed rule change.
The proposed rule change is designated by the Exchange as establishing or changing a due, fee, or other charge, thereby qualifying for effectiveness on filing pursuant to Section 19(b)(3)(A)(ii) of the Act
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.
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:
* Use the Commission's Internet comment form (
* Send an e-mail to
* Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.