Daily Rules, Proposed Rules, and Notices of the Federal Government
The Exchange proposes to amend the CBOE Stock Exchange ("CBSX") Fees Schedule. The text of the proposed rule change is available on the Exchange's Web site (
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.
CBSX proposes to amend its Fees Schedule. Starting on September 10, 2012, CBSX will begin to implement the functionality that will allow CBSX Traders to send silent orders, silent-mid orders, silent-post-mid orders, and silent-mid-seeker orders to CBSX.
The Maker fee for adding liquidity using a silent order will be $0.0018 per share, same as the regular Maker rate (though not subject to the reduced fee tiers for adding increasing amounts of liquidity in one day). The Taker rebate for removing silent order liquidity will be $0.0014 per share. The Maker fee for adding liquidity using a silent-mid or silent-post-mid order will be $0.0008 per share. The Taker rebate for removing silent-mid or silent-post-mid liquidity will be $0.0004 per share. The purpose of the new Maker fees is to incentivize passive liquidity provision using the silent, silent-mid, and silent-post-mid order types. The purpose of the new Taker rebates is to incentivize routing to the Exchange for the purpose of removing liquidity. The fees proposed for adding and rebates for removing liquidity are both intended to compliment the existing maker-taker fee structure and to improve realized prices and price discovery on the Exchange by efficiently and predictably allocating the economics specifically for each form of liquidity provision, and to incentivize participants to route orders to the Exchange in the first instance.
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.
The amount of the proposed Taker rebate for removing silent order liquidity is reasonable because it will allow market participants removing silent order liquidity to receive a rebate (and not pay a fee) for doing so. The proposed Taker rebate is equitable and not unfairly discriminatory because such undisplayed orders do not transparently improve the prices available within the market, while displayed orders do. As such, the pricing is designed to promote the use of and interaction with displayed liquidity more than undisplayed liquidity. Further, the Taker rebate for silent orders will apply to all market participants trading silent orders.
The amount of the proposed Maker fee for adding liquidity using a silent-mid or silent-post-mid order is reasonable because it is lower than the amount of the fee for other Maker orders. This is equitable and not unfairly discriminatory because the liquidity is priced at the midpoint of the NBBO, and therefore the fee will be less. This offers the remover of liquidity significant price improvement. Further, the Maker [sic] proposed Maker fee for adding liquidity using a silent-mid or silent-post-mid order will apply to all market participants adding liquidity using a silent-mid or silent-post-mid order.
The amount of the proposed Taker rebate for removing silent-mid or silent-post-mid liquidity is reasonable because it will allow market participants removing silent order liquidity to receive a rebate (and not pay a fee) for doing so. The proposed Taker rebate for removing silent-mid or silent-post-mid liquidity is equitable and not unfairly discriminatory because the trade will result in an improved price over the
Assessing different fees for orders priced $1 or greater than for such orders priced less than $1 is equitable and not unfairly discriminatory because since orders priced less than $1 can be entered in sub-penny increments (four-decimal increments), the Exchange believes that employing Maker-Taker pricing similar to that employed for orders priced $1 or greater would not be effective given a market participant's ability to more-transparently and finitely establish prices in the book. Further, CBSX already assesses different fees for other orders priced $1 or greater than for the same orders priced less than $1.
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 neither solicited nor received comments on the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)
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 email to
* Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.