
[Federal Register Volume 78, Number 17 (Friday, January 25, 2013)]
[Notices]
[Pages 5527-5529]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01490]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68696; File No. SR-CBOE-2013-005]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to the BBO Data Feed for CBOE Listed 
Options and a BBO Data Feed for Flexible Exchange Options

January 18, 2013.
    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 January 11, 2013, 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 identify certain additional market data 
made available by Market Data Express, LLC (``MDX''), an affiliate of 
CBOE, as part of the BBO Data Feed for CBOE listed options (``BBO Data 
Feed'') and as a separate data feed. 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.

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

[[Page 5528]]

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 purpose of the proposed rule change is to reflect MDX's current 
practice of making certain additional market data available as part of 
the BBO Data Feed \3\ and as a separate data feed.
---------------------------------------------------------------------------

    \3\ The BBO Data Feed and the fees charged by MDX for the BBO 
Data Feed were established in March 2011. See Securities Exchange 
Act Release No. 63997 (March 1, 2011), 76 FR 12388 (March 7, 2011).
---------------------------------------------------------------------------

    The BBO Data Feed is a real-time, low latency data feed that 
includes CBOE ``BBO data'' and last sale data.\4\ The BBO and last sale 
data contained in the BBO Data Feed is identical to the data that CBOE 
sends to the Options Price Reporting Authority (``OPRA'') for 
redistribution to the public.\5\
---------------------------------------------------------------------------

    \4\ The BBO Data Feed includes the ``best bid and offer,'' or 
``BBO'', consisting of all outstanding quotes and standing orders at 
the best available price level on each side of the market, with 
aggregate size (``BBO data,'' sometimes referred to as ``top of book 
data''). Data with respect to executed trades is referred to as 
``last sale'' data.
    \5\ The Exchange notes that MDX makes available to ``Customers'' 
the BBO data and last sale data that is included in the BBO Data 
Feed no earlier than the time at which the Exchange sends that data 
to OPRA. A ``Customer'' is any entity that receives the BBO Data 
Feed directly from MDX's system and then distributes it either 
internally or externally to Subscribers. A ``Subscriber'' is a 
person (other than an employee of a Customer) that receives the BBO 
Data Feed from a Customer for its own internal use.
---------------------------------------------------------------------------

    The BBO Data Feed also includes certain data that is not included 
in the data sent to OPRA, namely, totals of customer versus non-
customer contracts at the BBO, All-or-None contingency orders priced 
better than or equal to the BBO, and BBO data and last sale data for 
complex strategies (e.g., spreads, straddles, buy-writes, etc.). MDX 
charges Customers a ``direct connect fee'' of $3,500 per connection per 
month and a ``per user fee'' of $25 per month per ``Authorized User'' 
or ``Device'' for receipt of the BBO Data Feed by Subscribers.\6\ 
Either a CBOE Trading Permit Holder or a non-CBOE Trading Permit Holder 
may be a Customer. All Customers are assessed the same fees.
---------------------------------------------------------------------------

    \6\ An ``Authorized User'' is defined as an individual user (an 
individual human being) who is uniquely identified (by user ID and 
confidential password or other unambiguous method reasonably 
acceptable to MDX) and authorized by a Customer to access the BBO 
Data Feed supplied by the Customer. A ``Device'' is defined as any 
computer, workstation or other item of equipment, fixed or portable, 
that receives, accesses and/or displays data in visual, audible or 
other form.
---------------------------------------------------------------------------

    MDX currently makes available two additional sets of data as part 
of the BBO Data Feed at no additional charge to Customers. 
Specifically, the BBO Data Feed also includes (i) BBO data and last 
sale data for Flexible Exchange (``FLEX'') options traded on the CBOE 
FLEX Hybrid Trading System,\7\ including BBO data and last sale data 
for FLEX complex strategies (collectively, ``FLEX BBO data''), and (ii) 
expected opening price (``EOP'') and expected opening size (``EOS'') 
information that is disseminated prior to the opening of the market and 
during trading rotations (collectively, ``EOP/EOS data''). EOP/EOS data 
is calculated by the CBOE Hybrid Trading System based on resting orders 
in the Book that remain from the prior business day and any orders and 
quotes submitted before the opening.\8\ The EOP is the price at which 
the greatest number of orders and quotes in the Book are expected to 
trade.\9\
---------------------------------------------------------------------------

    \7\ See Chapter 24.B of CBOE Rules.
    \8\ See CBOE Rule 6.2B(a)(ii) (``Hybrid Opening System''). The 
Exchange has filed a separate proposed rule change to amend CBOE 
Rule 6.2B(a)(ii) to provide that such pre-opening information will 
be disseminated to users that have elected to receive such 
information and to remove the existing reference to such pre-opening 
information being disseminated to market participants (as defined in 
CBOE Rules 6.45A and 6.45B). See SR-CBOE-2013-006.
    \9\ Id.
---------------------------------------------------------------------------

    MDX also makes the FLEX BBO data available as a separate data feed 
at no charge to any Customer that wishes to subscribe to only that 
data. EOP/EOS data is not offered separate from the BBO Data Feed.
1. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the provisions of Section 6 of the Securities Exchange Act of 1934 (the 
``Act'') \10\ in general and with Section 6(b)(5) of the Act \11\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, promote just and equitable principles 
of trade, to foster cooperation and coordination with persons engaged 
in 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, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) and (5). [sic]
---------------------------------------------------------------------------

    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations and broker-dealers increased authority and flexibility to 
offer new and unique market data to the public. It was believed that 
this authority would expand the amount of data available to consumers, 
and also spur innovation and competition for the provision of market 
data. The Exchange believes that the proposed rule change is in keeping 
with those principles by promoting increased transparency through the 
dissemination of more useful proprietary data and also by clarifying 
its availability to market participants.
    Additionally, the Exchange believes the proposed rule change would 
not permit unfair discrimination because the BBO Data Feed, including 
FLEX BBO data and EOP/EOS data, and the separate FLEX BBO data feed are 
made equally available by MDX to any market participant that wishes to 
subscribe to them. The Exchange notes that other exchanges make 
information relating to the market opening available to members and 
non-members.\12\
---------------------------------------------------------------------------

    \12\ See e.g., Securities Exchange Act Release No. 66967 (May 
11, 2012), 77 FR 29440 (May 17, 2012) (SR-PHLX-2012-60); and 
Securities Exchange Act Release No. 67720 (August 23, 2012), 77 FR 
52769 (August 30, 2012) (SR-NYSEARCA-2012-89). In addition, the 
Nasdaq Options Market (``NOM'') disseminates certain pre-opening 
order imbalance information every five seconds for a period of time 
prior to the open and this information is made available via 
subscription. See NOM Chapter VI, Section 8(b)(1) and Chapter XV, 
Section 4(e); see also http://www.nasdaqtrader.com/trader.aspx?id=openclose.
---------------------------------------------------------------------------

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

    The Exchange 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 believes the 
BBO Data Feed, including FLEX BBO data and EOP/EOS data, and the 
separate FLEX BBO data feed offered by MDX will help attract new users 
and new order flow to the Exchange, thereby improving the Exchange's 
ability to compete in the market for options order flow and executions.

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.

[[Page 5529]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not:
    A. Significantly affect the protection of investors or the public 
interest;
    B. Impose any significant burden on competition; and
    C. Become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \13\ and 
Rule 19b-4(f)(6) \14\ thereunder.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of this 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.

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 rule-comments@sec.gov. Please include 
File Number SR-CBOE-2013-005 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2013-005. 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 offices 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-2013-005, 
and should be submitted on or before February 15, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-01490 Filed 1-24-13; 8:45 am]
BILLING CODE 8011-01-P


