Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to amend the Inactivity Fee on 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 self-regulatory organization 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 those 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 parts of such statements.
CBSX imposes an inactivity fee of $5,000 per month on any CBSX Trading Permit Holder that trades less than an average of 100,000 shares per day over a calendar month period. CBSX imposes this fee because CBSX may only issue a finite number of Trading Permits, and when permits are occupied by users that do not engage in meaningful trading on CBSX, this could occur at the expense of a potential permit holder that might be willing to add meaningful liquidity to the CBSX marketplace.
CBSX proposes to delay the imposition of the Inactivity Fee on a CBSX Trading Permit Holder until the calendar month following the first full calendar month after the effective date of the Trading Permit. For example, if the effective date of a Trading Permit is August 15, then the Exchange may not impose the Inactivity Fee on the holder of that permit until October, since September is the first full calendar month after the Trading Permit's effective date. Under this proposal, all new CBSX Trading Permit Holders will have at least one calendar month to connect to CBSX before they may be assessed the Inactivity Fee.
CBSX also proposes to provide a CBSX Trading Permit Holder that incurs the Inactivity Fee with an opportunity to have the fee withdrawn. If a CBSX Trading Permit Holder incurs the Inactivity Fee for a calendar month period but trades at least an average of 200,000 shares per day (equal to the minimum trading level for the month plus the minimum trading level for the previous month for which the fee was incurred) over the following calendar month period, then CBSX will rescind the fee for the previous calendar month period. For example, if a CBSX Trading Permit Holder trades an average of 75,000 shares per day in August and the Exchange imposes the $5,000 Inactivity Fee on the holder, but the holder then trades an average of 250,000 shares per day in September, CBSX will rescind the Inactivity Fee for August. CBSX believes this provision is appropriate because it allows CBSX Trading Permit Holders to not be penalized for a single lower-volume month if they are able to “make up” for the volume during the following month.
The proposed rule change will take effect on October 1, 2011.
The proposed rule change is consistent with Section 6(b) of the Act
The proposal to delay the imposition of the Inactivity Fee is reasonable because it provides new CBSX Trading Permit Holders with sufficient time to connect to CBSX without incurring the Inactivity Fee, during which time they are not yet able to engage in meaningful trading on CBSX. Additionally, this proposal is equitable and not unfairly discriminatory because it applies to all new CBSX Trading Permit Holders and provides each of them with at least one calendar month to connect to CBSX before being subject to the Inactivity Fee.
The proposal to provide a CBSX Trading Permit Holder that incurs the Inactivity Fee with an opportunity to have the fee withdrawn is certainly reasonable because it creates a circumstance in which a CBSX Trading Permit Holder can avoid paying a fee. Further, this proposal is equitable and not unfairly discriminatory because it provides this opportunity to all CBSX Trading Permit Holders that incur the Inactivity Fee.
CBOE does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the 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
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.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.