77 FR 210 pg. 65754 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Order Approving Proposed Rule Change Relating to the Complex Order Auction Process
Type: NOTICEVolume: 77Number: 210Page: 65754
Docket number: [Release No. 34-68096, File No. SR-C2-2012-030]
FR document: [FR Doc. 2012-26638 Filed 10-29-12; 8:45 am]
Agency: Securities and Exchange Commission
Official PDF Version: PDF Version
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68096, File No. SR-C2-2012-030]
Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Order Approving Proposed Rule Change Relating to the Complex Order Auction Process
October 24, 2012.
I. Introduction
On August 30, 2012, the C2 Options Exchange, Incorporated ("Exchange" or "C2") filed with the Securities and Exchange Commission ("Commission"), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 ("Act"),1and Rule 19b-4 thereunder,2a proposed rule change to modify C2 Rule 6.13(c), "Process for Complex Order RFR Auction," to: (i) Include the side of the market in the request for response ("RFR") message sent to Participants at the start of a Complex Order Auction ("COA"); and (ii) require responses to an RFR message ("RFR Responses") to be on the opposite side of the market from the order being auctioned in a COA. The proposed rule change was published for comment in the Federal Register on September 17, 2012.3The Commission received no comment letters regarding the proposal. This order approves the proposed rule change.
Footnotes:
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
3 See Securities Exchange Act Release No. 67828 (September 11, 2012), 77 FR 57173 ("Notice").
II. Description of the Proposal
COA is an automated RFR auction process for COA-eligible orders.4On receipt of a COA-eligible order and a request from the Participant representing the order that the order be subjected to a COA, C2 sends an RFR message to all Participants that have elected to receive RFR messages.5The RFR message identifies the component series, the size of the COA-eligible order, and any contingencies, if applicable, but not the side of the market ( i.e. whether the order is to buy or to sell).6Responders to the COA, who do not know the side of the market of the order being auctioned, may submit RFR Responses on both sides of the market.7Because RFR Responses on the same side of the market as the COA-eligible order cannot trade with the order and thus are unnecessary, C2's trading system automatically rejects these RFR Responses.8
Footnotes:
4 A "COA-eligible order" is a complex order that, as determined by the Exchange on a class-by-class basis, is eligible for a COA considering the order's marketability (defined as a number of ticks away from the current market), size, complex order type, and complex order origin ( i.e. non-broker-dealer public customer, broker-dealers that are not Market-Makers or specialist on an options exchange, and/or Market-makers or specialists on an options exchange). See C2 Rule 6.13(c)(1)(B).
5 See C2 Rule 6.13(c)(2).
6 See id.
7 See Notice, supra note 3, at 57174.
8 See id.
The Exchange proposes to amend C2 Rule 6.13(c) to: (i) Include the side of the market in the RFR message sent to Participants at the start of a COA; and (ii) require RFR Responses to be on the opposite side of the market from the order being auctioned in a COA. C2 believes that these proposed changes will make the COA process more efficient by eliminating the entry of unnecessary RFR Responses that cannot trade with the COA order.9C2 also believes that this increased efficiency could lead to more meaningful and competitively priced RFR Responses, which could result in better prices for customers.10
Footnotes:
9 See id.
10 See id.
III. Discussion
After careful consideration of the proposed rule change, the Commission finds that the proposal is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.11The Commission believes that the proposed rule change is consistent with Section 6(b) of the Act, in general, and Section 6(b)(5) of the Act,12in particular, in that it is designed 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 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. More specifically, the Commission believes that the proposal could improve the efficiency of the COA process by eliminating unnecessary RFR Responses, which otherwise would been rejected automatically by C2's trading system.
Footnotes:
11 In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).
12 15 U.S.C. 78f(b)(5).
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,13that the proposed rule change (SR-C2-2012-030) is approved.
Footnotes:
13 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14
Footnotes:
14 17 CFR 200.30-3(a)(12).
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-26638 Filed 10-29-12; 8:45 am]
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