
[Federal Register Volume 78, Number 23 (Monday, February 4, 2013)]
[Notices]
[Pages 7837-7840]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-02297]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68751; File No. SR-C2-2013-005]


Self-Regulatory Organizations; C2 Options Exchange, Incorporated; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Amending the Fees Schedule

January 29, 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 18, 2013, C2 Options Exchange, Incorporated (the 
``Exchange'' or ``C2'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I and II 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 Fees Schedule. The text of the 
proposed rule change is provided below.
(additions are italicized; deletions are [bracketed])
* * * * *

C2 OPTIONS EXCHANGE, INCORPORATED

FEES SCHEDULE

JANUARY 18[1], 2013

* * * * *

[[Page 7838]]

3. Access Fees

------------------------------------------------------------------------
              Type of permit                       Cost per month
------------------------------------------------------------------------
Market-Maker Permit.......................  $5,000.
Electronic Access Permit..................  $1,000.
SPXPM Tier Appointment....................  $4,000 (waived through March
                                             31, 2013).
------------------------------------------------------------------------

    Market-Maker Permit- Entitles the holder to act as a Market-Maker. 
This permit provides an appointment credit of 1.0, a quoting and order 
entry bandwidth allowance, up to three logins and Trading Permit Holder 
status. The quoting bandwidth allowance for a Market-Maker Permit is 
equivalent to a maximum of 156,000,000 quotes over the course of a 
trading day.
    Electronic Access Permit- Entitles the holder to access to the 
Exchange. Holders must be broker-dealers registered with the Exchange 
and are allowed to submit orders to the Exchange. The EAP provides an 
order entry bandwidth allowance, up to three logins and Trading Permit 
Holder status.
    SPXPM Tier Appointment- In order for a Market-Maker Permit to be 
used to act as a Market-Maker in SPXPM, the Trading Permit Holder must 
obtain an SPXPM Tier Appointment (Registration) for that Market-Maker 
Permit. The SPXPM Tier Appointment fee will be assessed to any Market-
Maker Permit Holder that has an SPXPM Tier Appointment at any time 
during a calendar month.
    Access fees are non-refundable and are assessed through the 
integrated billing system during the first week of the following month. 
If a Trading Permit is issued during a calendar month after the first 
trading day of the month, the access fee for the Trading Permit for 
that calendar month is prorated based on the remaining trading days in 
the calendar month. Trading Permits will be renewed automatically for 
the next month unless the Trading Permit Holder submits written 
notification to the Registration Services Department by the 25th day of 
the prior month (or the preceding business day if the 25th is not a 
business day) to cancel the Trading Permit effective at or prior to the 
end of the applicable month. If cancellation of a Trading Permit is 
effective prior to the end of the applicable month, and the cancelling 
Trading Permit Holder later requests issuance of the same type of 
Trading Permit for the remainder of that month, the Exchange may issue 
the same type of Trading Permit (provided that a Trading Permit is 
available) but will not impose the additional prorated access fee for 
that month.
* * * * *
    The text of the proposed rule change is also available on the 
Exchange's Web site (http://www.c2exchange.com/ Legal/), 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 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fees Schedule.\3\ More 
specifically, the Exchange is proposing to make changes to the section 
``Access Fees.'' Pursuant to that section, the Exchange charges a 
Trading Permit Holder a monthly fee to use a Trading Permit, the amount 
of which fee is based on the type of Trading Permit.
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    \3\ See Exchange Rule 2.1, which authorizes fees to Participants 
to be ``fixed from time to time by the Exchange.''
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    Currently, the Exchange charges the following access fees:

------------------------------------------------------------------------
              Type of permit                       Cost per month
------------------------------------------------------------------------
Market-Maker Permit \4\...................  $5,000.
Electronic Access Permit \5\..............  1,000.
SPXPM Tier Appointment \6\................  4,000 (waived through March
                                             31, 2013).
------------------------------------------------------------------------

    Pursuant to the Fees Schedule, the Exchange assesses the access 
fees in arrears during the first week of the following month. For 
example, a Trading Permit Holder will be billed in February for use of 
a Trading Permit in January. The Fees Schedule further provides that if 
a Trading Permit is issued during a calendar month after the first 
trading day of the month, the access fee for the Trading Permit for 
that calendar month is prorated based on the remaining trading days in 
the calendar month. A Trading Permit will be renewed automatically for 
the next month unless the Trading Permit Holder submits written 
notification to the Registration Services Department by the 25th day of 
the prior month (or the preceding business day if the 25th is not a 
business day) to cancel the Trading Permit effective at or prior to the 
end of the applicable month.
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    \4\ A Market-Maker Permit entitles the holder to act as a 
Market-Maker. This permit provides an appointment credit of 1.0, a 
quoting and order entry bandwidth allowance, up to three logins and 
Trading Permit Holder status. The quoting bandwidth allowance for a 
Market-Maker Permit is equivalent to a maximum of 156,000,000 quotes 
over the course of a trading day.
    \5\ An Electronic Access Permit entitles the holder to access 
the Exchange. Holders must be broker-dealers registered with the 
Exchange and are allowed to submit orders to the Exchange. The 
permit provides an order entry bandwidth allowance, up to three 
logins and Trading Permit Holder status.
    \6\ An SPXPM Tier Appointment must be obtained by a Market-Maker 
for its Market-Maker Permit in order for the Market-Maker to act as 
a Market-Maker in SPXPM. The SPXPM Tier Appointment fee will be 
assessed to any Market-Maker that has an SPXPM Tier Appointment at 
any time during a calendar month.
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    Under the Fees Schedule, if a Trading Permit Holder cancels a 
Trading Permit effective prior to the end of the applicable month, the 
Trading Permit Holder will still be assessed the full access fee for 
that month (the same amount it would pay if the Trading Permit Holder 
had cancelled the Trading Permit effective at the end of the month). 
However, if the Trading Permit Holder later requests that the Exchange 
issue the same type of Trading Permit for the remainder of that same 
month, pursuant to the Fees Schedule, the Exchange will assess a 
prorated access fee based on the remaining trading days in that month. 
Thus, the Trading Permit Holder would be double-paying the access fee 
for that remaining portion of the month.
    The purpose of the proposed rule change is to prevent a Trading 
Permit Holder from double-paying a portion of the monthly access fee in 
this situation. The proposed rule change amends the Access Fees section 
of the Fees Schedule to provide that if cancellation of a Trading 
Permit is effective prior to the end of the applicable month, and the 
cancelling Trading Permit Holder later requests issuance of the same 
type of Trading Permit for the remainder of that same month, the 
Exchange may issue the same type of Trading Permit (assuming one is 
available) \7\ but will not

[[Page 7839]]

impose the additional prorated access fee for the remainder of that 
month.\8\ The proposed rule change results in a Trading Permit Holder 
that cancels a Trading Permit prior to the end of the month but then 
has the same type of Trading Permit issued during that same month 
paying the same monthly access fee amount as it would if it had 
cancelled its Trading Permit effective at the end of a month.
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    \7\ The Exchange will determine whether to issue a Trading 
Permit to the Trading Permit Holder in the same manner that it 
issues any Trading Permit pursuant to Rule 3.1, including subject to 
any announced limit on the number of Trading Permits that may be 
issued.
    \8\ The proposed rule change does not change the amounts of the 
access fees imposed on Trading Permit Holders for the use of Trading 
Permits.
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    For example, if a Trading Permit Holder cancels a Market-Maker 
Permit effective January 18, 2013, but upon request of the Trading 
Permit Holder issues [sic] a Maker-Maker [sic] Permit effective January 
23, 2013, the Trading Permit Holder will be billed a total of $5,000 
for use of the Market-Maker Permit during January (which will be billed 
during the first week of February).\9\ Without the proposed rule 
change, the Trading Permit Holder would be billed $5,000 for use of the 
Market-Maker Permit for the trading days in January through January 18 
plus a prorated amount of $1,666.67 for use of the Market-Maker Permit 
for the trading days in January between January 23 and January 31. 
Thus, with the proposed rule change, the Trading Permit Holder will pay 
the same amount in access fees for January as it would if it had 
cancelled the Market-Maker Permit effective at the end of January.
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    \9\ At that point, the Trading Permit will be subject to the 
auto-renewal provision described above unless the Trading Permit 
Holder requests that the Trading Permit not be automatically renewed 
at the end of the applicable month.
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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.\10\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \11\ 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 facilitation 
[sic] 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 the Section 6(b)(5) \12\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers. The Exchange also believes the 
proposed rule change is consistent with Section 6(b)(4) of the Act,\13\ 
which provides that Exchange rules may 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ Id.
    \13\ 15 U.S.C. 78f(b)(4).
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    In particular, the proposed rule change is equitable and not 
unfairly discriminatory as it applies to all Trading Permit Holders 
that cancel a Trading Permit effective prior to the end of a month and 
request issuance of the same type of Trading Permit during that same 
month. The Exchange believes the proposed rule change protects 
investors and the public interest, as it prevents a Trading Permit 
Holder from paying the monthly access fee twice during the same month 
for a Trading Permit in the event that the Trading Permit Holder 
cancels the Trading Permit effective prior to the end of the month but 
later requests issuance of the same type of Trading Permit during that 
month. The Exchange believes that the proposed rule change is fair and 
reasonable, because it results in a Trading Permit Holder that cancels 
a Trading Permit prior to the end of the month but then has the same 
type of Trading Permit issued that month paying the same amount in 
access fees for that month as a Trading Permit Holder that cancels a 
Trading Permit effective at the end of a month. A Trading Permit Holder 
is able to trade the same amount in either situation; therefore, the 
Exchange believes it is reasonable that the Trading Permit Holder pay 
the same amount in either situation.

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

    C2 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 proposed rule change 
applies in the same manner to all Trading Permit Holders that request 
the issuance of a Trading Permit during the same month they cancelled 
the same type of Trading Permit. Additionally, the proposed rule change 
results in a Trading Permit Holder that cancels a Trading Permit 
effective prior to the end of the month but then has the same type of 
Trading Permit issued that same month paying the same amount in access 
fees as a Trading Permit Holder that cancels a Trading Permit effective 
at the end of a month. Thus, these Trading Permit Holders would pay the 
same access fee during the month for the same allowable trading 
activity in each situation. The proposed rule change does not change 
the amounts of the access fees imposed on Trading Permit Holders for 
the use of Trading Permits.

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 \14\ and paragraph (f) of Rule 19b-4 \15\ 
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 shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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 rule-comments@sec.gov. Please include 
File Number SR-C2-2013-005 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.


[[Page 7840]]


All submissions should refer to File Number SR-C2-2013-005. 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 office. 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-C2-2013-005, and should be 
submitted on or before February 25, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-02297 Filed 2-1-13; 8:45 am]
BILLING CODE 8011-01-P


