Daily Rules, Proposed Rules, and Notices of the Federal Government
The Exchange proposes to amend its 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.
The Exchange proposes to amend its Network Access Port fees. Currently, the Exchange only offers 1 Gigabit Ethernet ("1 Gbps") network access connectivity. However, as of December 1, 2012, the Exchange is moving its trading systems over to the Equinix NY4 facility ("NY4"). In addition to 1 Gbps network access, NY4 has capacity to accommodate 10 Gigabit Ethernet ("10 Gbps") network access. The Exchange would like to make such a connection available to CBOE market participants. However, the equipment and infrastructure necessary to provide the 10 Gbps connection is more expensive than that necessary to provide a 1 Gbps connection. As such, the Exchange proposes to adopt a $3,000 per month fee for access to a 10 Gbps Network Access Port ($6,000 for Sponsored Users). CBOE market participants will be able to elect to connect to CBOE's trading system via either a 1 Gbps or 10 Gbps Network Access port. Regardless of which is chosen, the Network Access Port fee will be assessed for each port that provides direct access to CBOE's trading system. The Exchange currently charges a different rate for regular access and Sponsored User access, and merely proposes to increase the rates in equal proportion.
Following the move to NY4, CBOE will be retaining some trading systems in Chicago (the "Disaster Recovery Systems") in case of the occurrence of some kind of disaster which prevents NY4 from operating. These Disaster Recovery Systems can be accessed via Network Access Ports in Chicago (the "Disaster Recovery Network Access Ports"). CBOE market participants may maintain Disaster Recovery Network Access Ports in order to be able to connect to the Disaster Recovery Systems in case of such disaster. The fee for a Disaster Recovery Network Access Port will be $250 per month ($500 for Sponsored Users; for connectivity fees, CBOE charges twice the rate for Sponsored Users as for regular access, and therefore merely proposes to apply the same concept to the new Disaster Recovery Network Access Port fees). This amount will allow CBOE to maintain the Disaster Recovery Network Access Ports in case they become necessary.
The Exchange also proposes to amend the reference in its Fees Schedule to its 1-Gbps Network Access Port. Currently, that port fee is listed as for "1 Gigabyte". However, "Gigabyte" is not the correct term ("Gigabit" is the correct term) to refer to that manner of access. The Exchange proposes to replace the word "Gigabyte" with "Gbps", which is the abbreviation of the term "Gigabit", in order to use the correct terminology.
The proposed change is to take effect on December 1, 2012.
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.
Assessing a higher fee for 10 Gbps connectivity than for 1 Gbps connectivity is reasonable because 10 Gbps connectivity is more robust than 1 Gbps connectivity, and is equitable and not unfairly discriminatory because 10 Gbps connectivity requires more costly equipment and maintenance, and the Exchange must recoup the costs related to providing 10 Gbps connectivity. Further, CBOE market participants may still elect for the less-expensive 1 Gbps connectivity. Finally, the amount of the fee for 10 Gbps connectivity is less than the amount of the fees for 10 Gbps connectivity assessed by other exchanges.
The fee for Disaster Recovery Network Access Ports is reasonable because it will allow CBOE to maintain those ports in case of necessity. The fee for Disaster Recovery Network Access Ports is equitable and not unfairly discriminatory because it will be applied equally to all CBOE market participants wishing to maintain a connection to the Disaster Recovery Systems via a Disaster Recovery Network Access Port (except Sponsored Users).
Assessing higher fees for Sponsored Users is equitable and not unfairly discriminatory because Sponsored Users are able to access the Exchange and use the equipment provided without possessing a trading permit. As such, CBOE Trading Permit Holders who have a trading permit will have a higher level of commitment to transacting business on CBOE and using Exchange facilities than Sponsored Users. Finally, these differences in the amounts for Sponsored Users and regular users maintain the same proportional difference as that for other connectivity fees.
Amending the references in the Fees Schedule to its 1-Gbps Network Access Port from "1 Gigabyte" to "1 Gbps" removes impediments to and to perfects the mechanism for a free and open market and a national market system, and, in general, protects investors and the public interest by eliminating any confusion that could be caused due to the use of inaccurate terminology.
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.