80 FR 29109 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Regarding Limitation of Liability
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 97 (May 20, 2015)
Federal Register Volume 80, Issue 97 (May 20, 2015)
| Page Range | 29109-29114 | |
| FR Document | 2015-12144 |
[Federal Register Volume 80, Number 97 (Wednesday, May 20, 2015)] [Notices] [Pages 29109-29114] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-12144] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74964; File No. SR-C2-2015-010] Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Regarding Limitation of Liability May 14, 2015. 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 May 5, 2015, 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. --------------------------------------------------------------------------- \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 amend its Rule 6.42 governing Exchange liability and payments to Permit Holders \3\ in connection with certain types of losses that Permit Holders may allege arose out of the business conducted on or through the Exchange or in connection with the use of the Exchange's facilities. The Exchange also proposes conforming changes to Rules 2.2 and 6.44. 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's Public Reference Room. --------------------------------------------------------------------------- \3\ Permit Holders are also referred to in the Exchange Rules and herein this rule change filing as ``Participants.'' See e.g., the Rule 1.1 definition of ``Participant.'' --------------------------------------------------------------------------- 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 Statutory Basis for, the Proposed Rule Change 1. Purpose C2 proposes to amend Rule 6.42 to eliminate any implication of liability with respect to the Exchange and its subsidiaries or affiliates, or any of their directors, officers, committee members, other officials, employees, contractors, or agents, (including the Exchange, collectively, ``Covered Persons'') for losses arising out of the use or enjoyment of Exchange facilities. The proposed rule change is consistent with and supplements existing law, and would ensure that self-regulatory organizations (``SROs'') can operate within the sphere of their regulatory duties without fear of endless, costly litigation and potential catastrophic loss.\4\ As discussed below, the proposed rule change is also consistent with the rules of other exchanges limiting exchange liability (see, e.g., EDGA Exchange, Inc. (``EDGA'') Rule 11.14 BOX Options Exchange, LLC (``BOX'') Rule 7230, International Securities Exchange, LLC (``ISE'') Rule 705, and New York Stock Exchange LLC (``NYSE'') Rule 18). --------------------------------------------------------------------------- \4\ Courts have recognized the importance of protecting exchanges from such loss in deciding that SROs must be absolutely immune from civil actions for losses arising out of the SRO function. See Dexter v. Depository Trust & Clearing Corp., 406 F. Supp. 2d 260, 263 (S.D.N.Y. 2005) (absolute immunity possessed by SROs ``is an integral part of the American system of self- regulation''), aff'd 219 F. App'x 91 (2d Cir. 2007). Without such protection, an SRO's ``exercise of its quasi-governmental functions would be unduly hampered by disruptive and recriminatory lawsuits.'' D'Alessio v. NYSE, 258 F.3d 93, 105 (2d Cir. 2001). It is critical that SROs, which stand in the shoes of the SEC in performing their quasi-governmental regulatory function, be free from ``the fear of burdensome damage suits that would inhibit the exercise of their independent judgment.'' Dexter, 406 F.Supp. 2d at 263. --------------------------------------------------------------------------- Under C2's proposal, although the Exchange would not be liable for losses, it would have the discretion to compensate Permit Holders for losses alleged to have resulted from the Exchange's failure to correctly process an order or quote due to the acts or omissions of the Exchange or due to the failure of its systems or facilities (each, a ``Loss Event''), up to specified limits. The proposed rule change would also establish timeframes within which Permit Holders would be required to bring requests for compensation (and provide supporting documentation), provide factors the Exchange may consider in determining whether to provide compensation in response to such requests, and establish that the Exchange's determinations on compensation are final and not appealable. The proposed rule change would also provide that claims arising under a previous version of Rule 6.42 for losses occurring more than one year prior to July 1, 2015 (the ``Effective Date'') would not be considered valid, and that claims for any losses occurring prior to the Effective Date must be brought within one month of the Effective Date to be considered valid. Specific changes to Exchange Rules are discussed below. Proposed Amendment to Rule Title The proposed rule change would change the title of Rule 6.42 from ``Exchange Liability'' to ``Exchange Liability Disclaimers and Limitations.'' The proposed amendment to the Rule title would clarify that the Rule does not impose liability on the Exchange, but [[Page 29110]] rather disclaims Exchange liability for any losses that arise out of the use or enjoyment of the facilities afforded by the Exchange, any interruption in or failure or unavailability of any such facilities, or any action taken or omitted to be taken in respect to the business of the Exchange, the calculation or dissemination of specified values, or quotes or transaction reports for options or other securities (the ``General Disclaimer''). Proposed Amendments to Scope of General Disclaimer Proposed amendments to Rule 6.42(a) would clarify that ``contractors'' are included within the term ``Covered Persons,'' and are therefore included within the General Disclaimer. This proposed change is needed because the Exchange at times contracts with outside firms to provide products and services to the Exchange for use by Permit Holders in connection with regulated business conducted on or through the Exchange and that arise out of the use or enjoyment of the facilities afforded by the Exchange and/or the calculation or dissemination of specified values, or quotes or transaction reports for options or other securities. C2 notes that this proposed rule change is consistent with the exclusion from liability for contractors found in EDGA Rule 11.14, BOX Rule 7230 and ISE Rule 705. Proposed amendments to Rule 6.42(a) would also clarify that ``other officials'' of the Exchange or ``any subsidiaries or affiliates of the Exchange'' are included within the term ``Covered Persons,'' and are therefore included within the General Disclaimer. We note that this proposed rule change to include other officials and subsidiaries is consistent with the existing provisions of Rule 6.44.\5\ The term ``Covered Persons'' would also include such subsidiaries' and affiliates' directors, officers, committee members, other officials, employees, contractors, or agents. --------------------------------------------------------------------------- \5\ Exchange Rule 6.44 currently limits the rights of any Participant or any person associated with a Participant to institute a lawsuit or other legal proceeding against the Exchange or any director, officer, employee, agent or contractor or other official of the Exchange or any subsidiary of the Exchange for any actions taken or omitted to be taken in connection with the official business of the Exchange or any subsidiary, except to the extent such actions or omissions constitute violations of the federal securities laws for which a private right of action exist. The rule also permits appeals of Exchange disciplinary actions as provided in Exchange Rule. Proposed amendments to Rule 6.44 (discussed below) would clarify that this limitation applies to committee members and affiliates of the Exchange. --------------------------------------------------------------------------- The proposed rule change would also clarify that implicit in the General Disclaimer is the Exchange's disclaimer of any warranties, express or implied, with respect to the use or enjoyment of facilities afforded by the Exchange, including without limitation, of any data provided by the Exchange. The current language of the rule states that the Exchange does not warrant ``the use of any data transmitted or disseminated by or on behalf of the Exchange or any reporting authority designated by the Exchange, including but not limited to reports of transactions in or quotations for securities traded on the Exchange or underlying securities, or reports of interest rate measures or index values or related data.'' Under the proposed rule change, the Exchange would make explicit that the General Disclaimer is intended to contain within it a disclaimer of any warranties as to the use or enjoyment of the facilities offered by the Exchange. The proposed rule change would thereby clarify that such use or enjoyment of Exchange facilities by Permit Holders is provided ``as is,'' without specific warranties of merchantability or of fitness for a particular purpose. For the avoidance of doubt, the explicit list of the types of data for which the Exchange disclaims any warranties would also include, without limitation, ``any current or closing index value, any current or closing value of interest rate options, or any report of transactions in or quotations for options or other securities, including underlying securities.'' \6\ --------------------------------------------------------------------------- \6\ The Exchange also proposes to replace the phrase ``facilities or services'' with simply ``facilities'' in two locations within the existing text of Rule 6.42(a). The Exchange believes use of the term ``services'' is duplicative of the term ``facilities'' and is therefore unnecessary. --------------------------------------------------------------------------- The proposed rule change would also clarify that all limitations on liability and disclaimers within paragraph (a) of Rule 6.42 are in addition to, and not in limitation of, any limitations on liability otherwise existing under law. This proposed rule change is intended to ensure that the protection of Rule 6.42 does not circumscribe protections that otherwise would exist under the principles of law.\7\ This and other limitations on liability operate independently from, and in addition to, both the current and proposed amended versions of Rule 6.42 and C2's other rules. --------------------------------------------------------------------------- \7\ For example, as C2 is organized under Delaware law, the principals of Delaware law also apply. --------------------------------------------------------------------------- Proposed Limits on Discretionary Payments for Alleged Losses Currently, Rule 6.42(b) provides that whenever custody of an unexecuted order is transmitted by a Permit Holder to or through the Exchange's System or to any other automated facility of the Exchange whereby the Exchange assumes responsibility for the transmission or execution of the order, and provided that the Exchange has acknowledged receipt of such order, the Exchange's liability for the negligent acts or omissions of its employees or for the failure of its systems or facilities shall not exceed certain limits set forth in Rule 6.42(b). The Exchange first proposes to provide that Rule 6.42(b) applies to quotes as well as unexecuted orders. Additionally, the Exchange proposes to eliminate the word ``automated'' from ``automated facility of the Exchange'', as not all facilities of the Exchange may be considered automated and the Exchange did not intend to restrict the scope of rule as such. The Exchange also seeks to amend Rule 6.42(b) to explicitly provide that, although the Exchange would not be liable with respect to regulated Exchange business for losses that arise out of the use or enjoyment of the facilities afforded by the Exchange and/or the calculation or dissemination of specified values, or quotes or transaction reports for options or other securities, as provided in Rule 6.42(a),\8\ [[Page 29111]] the Exchange may make discretionary payments to Permit Holders for certain losses alleged to have occurred due to Loss Events. Specifically, the proposed rule change would permit the Exchange to make discretionary payments to Permit Holders for their losses alleged to have resulted from Loss Events up to the following limits. As to any one or more requests for compensation made by a single Permit Holder that arose out of one or more Loss Events occurring on a single trading day, the Exchange could compensate the Permit Holder up to but not exceeding the larger of $100,000 or the amount of any recovery obtained by the Exchange under applicable insurance maintained by the Exchange. As to the aggregate of all requests for compensation made by all Permit Holders that arose out of one or more Loss Events occurring: (i) On a single trading day, the Exchange could compensate the Permit Holders, in the aggregate, up to but not exceeding the larger of $250,000 or the amount of recovery obtained by the Exchange under any applicable insurance policy; and (ii) during a single calendar month, the Exchange could compensate the Permit Holders, in the aggregate, up to but not exceeding the larger of $500,000 or the amount of the recovery obtained by the Exchange under any applicable insurance maintained by the Exchange. The proposed rule change would also state that no request for compensation by a Permit Holder may be in an amount less than $100. Losses incurred on the same trading day and arising out of the same underlying act or omission of the Exchange or failure of the Exchange's systems or facilities may be aggregated to meet the $100 minimum.\9\ This is intended as a de minimis threshold to avoid requiring the Exchange to devote the resources to considering relatively small requests for payment. The proposed rule change also would state that nothing in Rule 6.42 would obligate the Exchange to seek recovery under any applicable insurance policy. The proposed changes to Rule 6.42(b) would therefore, consistent with Rule 6.42(a), permit the Exchange to make discretionary payments to Permit Holders to compensate them for such losses, up to specified limits, even though the Exchange would not be legally liable to pay for such losses. --------------------------------------------------------------------------- \8\ Specifically, Rule 6.42(a), as proposed to be amended, would provide as follows: Neither the Exchange nor any of its directors, officers, committee members, other officials, employees, contractors, or agents, nor any subsidiaries or affiliates of the Exchange or any of their directors, officers, committee members, other officials, employees, contractors, or agents (``Covered Persons'') shall be liable to Participants or to persons associated therewith for any loss, expense, damages or claims that arise out of the use or enjoyment of the facilities afforded by the Exchange, any interruption in or failure or unavailability of any such facilities, or any action taken or omitted to be taken in respect to the business of the Exchange except to the extent such loss, expense, damages or claims are attributable to the willful misconduct, gross negligence, bad faith or fraudulent or criminal acts of the Exchange or its officers, employees or agents acting within the scope of their authority. Without limiting the generality of the foregoing, and subject to the same exception, no Covered Person shall have any liability to any person or entity for any loss, expense, damages or claims that result from any error, omission or delay in calculating or disseminating any current or closing index value, any current or closing value of interest rate options, or any reports of transactions in or quotations for options or other securities, including underlying securities. The Exchange makes no warranty, express or implied, as to results to be obtained by any person or entity from the use or enjoyment of the facilities afforded by the Exchange, including without limitation, of any data transmitted or disseminated by or on behalf of the Exchange or any reporting authority designated by the Exchange, including but not limited to any data described in the preceding sentence, and the Exchange makes no express or implied warranties of merchantability or fitness for a particular purpose or use with respect to any such data. The foregoing limitations of liability and disclaimers shall be in addition to, and not in limitation of, the provisions of Article Eighth of the Exchange's Certificate of Incorporation or any limitations otherwise available under law. \9\ For example, if a Permit Holder incurs a loss of $30 on one day due to a certain glitch in the Exchange's systems and a loss of $75 on the same day due to a separate unrelated glitch in the Exchange's systems, the Permit Holder could not request compensation for either loss. However, if for example, the Permit Holder incurs a loss of $105 on one day due to a certain glitch in the Exchange's system, the Permit Holder may request compensation. In this second example, the Permit Holder may request compensation even if such losses were incurred over a number of different transactions so long as it was the result of the same systems issue. --------------------------------------------------------------------------- Timeframes Within Which To Notify Exchange and Submit Requests Proposed new Rule 6.42(c) would establish timeframes within which a valid request for compensation must be brought under the Rule. Under the proposed rule change, notice of all requests would be required to be in writing and to be submitted to the Exchange no later than 12:00 p.m. Central Time on the next business day following the Loss Event giving rise to such request. All requests would be required to be in writing and to be submitted, along with supporting documentation, by 5:00 p.m. Central Time on the third business day following the Loss Event giving rise to each such request.\10\ Additional information related to the request as demanded by the Exchange is also required to be provided. The proposed rule change would also specify that the Exchange would not consider requests for which timely notice and submission had not been provided as required under amended Rule 6.42(c). --------------------------------------------------------------------------- \10\ Other exchanges have similar submission requirements. See, e.g., NYSE Rule 18--Compensation in Relation to Exchange System Failure, which provides in relevant part that NYSE members provide oral notice to NYSE's Division of Floor Operations by the market opening on the next business day following the system failure and written notice by the end of the third business day following the system failure (T+3). See also, ISE Rule 705(d)(3)--Limitation of Liability, which provides that all claims for compensation must be made in writing and submitted no later than the opening of trading on the next business day following the event that gave rise to such claim. --------------------------------------------------------------------------- The proposed provisions of new Rule 6.42(c) would benefit Permit Holders by providing them with clear timeframes within which to submit notices of requests, requests for compensation, and supporting documentation. The proposed changes would also provide the Exchange with certainty as to the deadlines by which notices of requests and completed requests would be required to be submitted in order for the Exchange to consider them for compensation under Rule 6.42. Exchange Treatment of Aggregate Requests Exceeding Maximum Amount Permitted To Be Paid Currently, Rule 6.42(c) provides that if all of the claims cannot be fully satisfied because in the aggregate they exceed the applicable maximum amount of liability provided in paragraph (b) [of Rule 6.42] [sic], then such maximum amount would be allocated among all such claims arising on a single trading day or during a single calendar month, as applicable, written notice of which has been given to the Exchange no later than the opening of trading on the next business day following the day on which the use or enjoyment of Exchange facilities giving rise to the claim occurred, based upon the proportion that each claim bears to the sum of all such claims. The Exchange proposes to amend existing Rule 6.42(c), which would be renumbered to Rule 6.42(d), to state that, ``if all of the timely requests submitted pursuant to paragraph (c) [of Rule 6.42] that are granted cannot be fully satisfied because in the aggregate they exceed the applicable maximum amount of payments authorized in paragraph (b) [of Rule 6.42], then such maximum amount shall be allocated among all such requests arising on a single trading day or during a single calendar month, as applicable, based upon the proportion that each such request bears to the sum of all such requests.'' The Exchange notes that it is proposing to replace the term ``claim'' with the term ``request'', as well as replace the reference to ``liability'' with ``payments authorized'' to eliminate any implication of liability with respect to the Exchange and other Covered Person resulting from the use or enjoyment of the facilities offered by the Exchange, any interruption in or failure or unavailability or any such facilities, or any action taken or omitted to be taken in respect of the business of the Exchange. Additionally, the Exchange notes that proposed Rule 6.42(d) would continue to provide a fair way of allocating the limited payment that the rule would permit the Exchange to make when the total amount of eligible requests exceed that maximum amount. The proposal would also revise the timeframe in which requests for payment must be made by a Permit Holder. Exchange Review of Timely Requests Proposed new Rule 6.42(e) would provide that the Exchange, in determining whether to make payment in response to a request for compensation, may determine whether the amount requested should be reduced based on the actions or inactions of the requesting Permit Holder. The proposed rule change would permit the Exchange to consider, without limitation, whether the actions or inactions of the Permit Holder contributed to the Loss Event; whether the Permit Holder made appropriate efforts to mitigate its loss; whether the Permit Holder realized any gains as a result of a Loss Event; whether the [[Page 29112]] losses of the Permit Holder, if any, were offset by hedges of positions either on the Exchange or on another affiliated or unaffiliated market; and whether the Permit Holder provided sufficient information to document the request and as demanded by the Exchange. Proposed Rule 6.42(e) would therefore provide reasonable factors that the Exchange may consider in determining whether to pay compensation in response to a request and in determining the amount of any such compensation.\11\ --------------------------------------------------------------------------- \11\ Another exchange considered similar factors in determining whether to pay compensation and in determining the amount of any such compensation. See, NYSE Rule 18, which provides in relevant part that the NYSE Compensation Review Panel in its review will determine whether the amount should be reduced based on the actions or inactions of the member organization, including whether the member organization made appropriate efforts to mitigate its loss. --------------------------------------------------------------------------- The Exchange represents that the determination to compensate a Permit Holder will be made on an equitable and non-discriminatory basis and without regard to the Exchange capacity of the Permit Holder, such as whether the Permit Holder is a Designated Primary Market-Maker. Additionally, the Exchange represents that the Exchange will maintain a record of Permit Holder requests including documentation detailing the Exchange's findings and details for approving or denying requests in accordance with its obligations under Section 17 of the Act. Finality of Exchange Determinations Under Rule Proposed new Rule 6.42(f) would provide that all determinations by the Exchange pursuant to Rule 6.42 shall be final and not subject to appeal under Chapter XIX of the Exchange Rules.\12\ The proposed rule would also provide that nothing in Rule 6.42, nor any payment made pursuant to Rule 6.42, shall in any way limit, waive, or proscribe any defenses a Covered Person may have to any claim, demand, liability, action or cause of action, whether such defense arises in law or equity, or whether such defense is asserted in a judicial, administrative, or other proceeding.\13\ These proposed changes are consistent with the discretionary nature of any payments that would be made under proposed Rule 6.42(b). --------------------------------------------------------------------------- \12\ The Exchange notes that another exchange has a similar provision indicating that all determinations are final. See, NYSE Rule 18, which provides in relevant part that all determinations made pursuant to NYSE Rule 18 by NYSE's Compensation Review Panel, CEO or his or her designee are final. \13\ Another exchange has a similar provision. See e.g., NASDAQ Stock Market LLC (``Nasdaq'') Rule 4626(b)(6), which provides that nothing in its Limitation of Liability rule shall waive Nasdaq's limitations on, or immunities from, liability as set forth in its Rules or agreements, or that otherwise apply as a matter of law. --------------------------------------------------------------------------- Treatment of Losses Occurring Prior to Effective Date of Rule Proposed new paragraph 6.42(g) would establish July 1, 2105, as the Effective Date of revised Rule 6.42. Under proposed paragraph 6.42(g), claims for liability under prior versions of Rule 6.42 would not be considered valid if brought with respect to any acts, omissions or transactions occurring more than one year prior to the Effective Date, or if brought more than one month after the Effective Date. Proposed Rule 6.42(g) would thereby provide certainty to the Exchange as to any expense it might incur due to losses arising due to Loss Events that occurred prior to the Effective Date of the proposed rule change, while also putting Permit Holders on notice that they must file any claims for such losses by a date certain. Deletion of Existing Interpretation Under Rule 6.42 The proposed rule change would delete existing interpretation .01 under Rule 6.42. Interpretation .01 disclaims The Options Clearing Corporation liability to Permit Holders and their associated persons with respect to their use, non-use or inability to use the linkage that was part of the old Options Intermarket Linkage Plan (the ``Old Linkage''). Because the Old Linkage is no longer operable, interpretation .01 is no longer necessary.\14\ --------------------------------------------------------------------------- \14\ The old Options Intermarket Linkage Plan was replaced by the Options Order Protection and Locked/Crossed Markets Plan in 2009. See Securities Exchange Act Release No. 60405 (July 30, 2009), 74 FR 39362 (August 6, 2009). --------------------------------------------------------------------------- Conforming Changes to Other Rules The proposed rule change would make conforming changes to Exchange Rules 2.2 and 6.44. Rule 2.2 requires a Permit Holder who fails to prevail in lawsuit or other legal proceeding instituted against the Exchange or certain related parties to pay for the Exchange's reasonable costs of defending such lawsuit or proceeding if those costs exceed $50,000. Rule 6.44 limits the legal proceedings a Permit Holder may bring against the Exchange and certain related persons for actions or omissions. Under the proposed amendments to Rule 2.2, contractors would be included within the list of related parties protected by that rule, just as they would be included as Covered Persons under proposed Rule 6.42. As stated above, this proposed change is necessary because the Exchange at times contracts with outside firms to provide products or services to Permit Holders in connection with regulated business conducted on or through the Exchange and that arise out of the use or enjoyment of the facilities afforded by the Exchange and/or the calculation or dissemination of specified values, or quotes or transaction reports for options or other securities. In addition, under the proposed amendments to Rule 2.2, other officials and contractors of the Exchange and any subsidiaries and affiliates of the Exchange and any such subsidiaries' and affiliates' directors, officers, committee members, other officials, employees, contractors, or agents would be explicitly identified/included within the list of related parties protected by the rule,\15\ just as they are proposed to be specifically identified/included within the list of Covered Persons under Rule 6.42. Committee members and affiliates of the Exchange and any subsidiaries' and affiliates' directors, officers, committee members, other officials, employees, contractors and agents would also be explicitly identified/included within the list of related parties under Rule 6.44.\16\ These changes are intended to conform the text of the three rules and to include affiliates within all three rules.\17\ Moreover, under the proposed amendments to Rule 6.44, committee members would be explicitly identified/included within the list of related parties protected by the rule, just as they are already specifically identified/included within the list of Covered [[Page 29113]] Persons under existing Rule 6.42 and the similar provision in Rule 2.2. This change is intended to conform the rule text of the three rules. Finally, under the proposed amendments to Rule 6.44, the title to the rule will be revised.\18\ --------------------------------------------------------------------------- \15\ Specifically, the phrase ``the Exchange or any of its directors, officers, committee members, employees or agents'' is proposed to be replaced with the phrase ``the Exchange or any of its directors, officers, committee members, other officials, employees, contractors, or agents, or any subsidiaries or affiliates of the Exchange or any of their directors, officers, committee members, other officials, employees, contractors, or agents'' in Rule 2.2. \16\ Specifically, the phrase ``the Exchange or any director, officer, employee, contractor, agent or other official of the Exchange or any subsidiary of the Exchange'' is proposed to be replaced with the phrase ``the Exchange or any of its directors, officers, committee members, other officials, employees, contractors, or agents, or any subsidiaries or affiliates of the Exchange or any of their directors, officers, committee members, other officials, employees, contractors, or agents'' in Rule 6.44. \17\ The Commission notes C2's statement of the purpose of its proposed rule change is to eliminate any implication of liability for losses arising out of the use or enjoyment of Exchange facilities consistent with existing law where courts have recognized the importance of protecting exchanges from liability in the context of matters arising out of the SRO function. See supra note 4 and accompanying text. \18\ Specifically, the title ``Legal Proceedings Against the Exchange and its Directors, Officers, Employees, Contractors or Agents'' is proposed to be changed to simply ``Legal Proceedings Against the Exchange.'' --------------------------------------------------------------------------- 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the ``Act'') \19\ in general and furthers the objectives of Section 6(b)(5) of the Act \20\ in particular, which requires that the rules of an exchange be designed to promote just and equitable principles of trade, to remove impediments to and to perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. In particular, the proposal would amend Exchange Rule 6.42 to eliminate any implication of liability with respect to the Exchange and other Covered Person resulting from the use or enjoyment of the facilities offered by the Exchange, any interruption in or failure or unavailability or any such facilities, or any action taken or omitted to be taken in respect of the business of the Exchange. The proposed rule change is consistent with and supplements existing law, and would assist the Exchange in fulfilling its role as a national securities exchange by avoiding the risk of tempering this critical regulatory function to avoid the disruption and expense of unnecessary litigation or potential catastrophic loss. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78f(b). \20\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The proposal would also permit the Exchange to compensate Permit Holders for their losses incurred due to a Loss Event, even though the Exchange would not have legal liability for those losses. The proposed rule change would therefore facilitate the ability of the Exchange to make discretionary payments to redress a situation in which Permit Holders suffer losses due to a Loss Event. As stated above, the Exchange represents that the determination to compensate a Permit Holder will be made on an equitable and non-discriminatory basis without regard to the Exchange capacity of the Permit Holder, such as whether the Permit Holder is a Designated Primary Market-Maker. The Exchange therefore believes the proposed rule change is consistent with the Act, and Section 6(b)(5) of the Act in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and to perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange also believes these policies would promote fairness in the national market system. The proposed rule change would allow C2 to address Permit Holder requests for compensation under various circumstances and would allow C2 to act in a fashion similar to many of its competitors. As stated above, several exchanges have substantially similar rules to those proposed here, and the Exchange believes that the proposed rule change would place C2 in a similar position to address Permit Holder requests.\21\ The Exchange believes that to the extent there are any differences, such differences are not substantive and are still consistent with the scope of prior self-regulatory organization rulemaking. --------------------------------------------------------------------------- \21\ See BOX Rule 7230 and EDGA Rule 11.14; see also Nasdaq Rule 4626, ISE Rule 705, and BATS Exchange, Inc. Rule 11.16. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that this proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. As stated above, the Exchange believes that these policies would promote fairness in the national market system. The proposed rule change would allow C2 to address Permit Holder requests for compensation under various circumstances and would allow C2 to act in a fashion similar to many of its competitors. In addition, as stated above, several exchanges have substantially similar rules to those proposed here, except as otherwise noted, and the Exchange believes that the proposed rule change would place C2 in a similar position to address Permit Holder requests.\22\ --------------------------------------------------------------------------- \22\ Id. --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) 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 \23\ and Rule 19b- 4(f)(6) \24\ 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 will institute proceedings to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \23\ 15 U.S.C. 78s(b)(3)(A). \24\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b- 4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. --------------------------------------------------------------------------- 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 CommentsUse the Commission's Internet comment form http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-C2-2015-010 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-C2-2015-010. 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 [[Page 29114]] 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 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-C2-2015-010, and should be submitted on or before June 10, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\25\ --------------------------------------------------------------------------- \25\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-12144 Filed 5-19-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 97 / Wednesday, May 20, 2015 / Notices 29109
total annual compliance burden is solicit comments on the proposed rule loss.4 As discussed below, the proposed
estimated to be 60 hours per year based change from interested persons. rule change is also consistent with the
on two respondents. The approximate rules of other exchanges limiting
I. Self-Regulatory Organization’s
compliance cost per hour is $380, exchange liability (see, e.g., EDGA
Statement of the Terms of Substance of
resulting in a total internal cost of Exchange, Inc. (‘‘EDGA’’) Rule 11.14
the Proposed Rule Change
compliance for these respondents of BOX Options Exchange, LLC (‘‘BOX’’)
$22,800 per year (60 hours @$380 per The Exchange proposes to amend its Rule 7230, International Securities
hour). Rule 6.42 governing Exchange liability Exchange, LLC (‘‘ISE’’) Rule 705, and
An agency may not conduct or and payments to Permit Holders 3 in New York Stock Exchange LLC
sponsor, and a person is not required to connection with certain types of losses (‘‘NYSE’’) Rule 18).
respond to, a collection of information that Permit Holders may allege arose out Under C2’s proposal, although the
under the PRA unless it displays a of the business conducted on or through Exchange would not be liable for losses,
currently valid OMB control number. the Exchange or in connection with the it would have the discretion to
The public may view background use of the Exchange’s facilities. The compensate Permit Holders for losses
documentation for this information Exchange also proposes conforming alleged to have resulted from the
collection at the following Web site: changes to Rules 2.2 and 6.44. The text Exchange’s failure to correctly process
www.reginfo.gov. Comments should be of the proposed rule change is available an order or quote due to the acts or
directed to: (i) Desk Officer for the on the Exchange’s Web site (http:// omissions of the Exchange or due to the
Securities and Exchange Commission, www.cboe.com/AboutCBOE/ failure of its systems or facilities (each,
Office of Information and Regulatory CBOELegalRegulatoryHome.aspx), at a ‘‘Loss Event’’), up to specified limits.
Affairs, Office of Management and the Exchange’s Office of the Secretary, The proposed rule change would also
Budget, Room 10102, New Executive and at the Commission’s Public establish timeframes within which
Office Building, Washington, DC 20503, Reference Room. Permit Holders would be required to
or by sending an email to: Shagufta_ bring requests for compensation (and
Ahmed@omb.eop.gov; and (ii) Pamela II. Self-Regulatory Organization’s provide supporting documentation),
Dyson, Director/Chief Information Statement of the Purpose of, and provide factors the Exchange may
Officer, Securities and Exchange Statutory Basis for, the Proposed Rule consider in determining whether to
Commission, c/o Remi Pavlik-Simon, Change provide compensation in response to
100 F Street NE., Washington, DC In its filing with the Commission, the such requests, and establish that the
20549, or by sending an email to: PRA_ Exchange included statements Exchange’s determinations on
Mailbox@sec.gov. Comments must be concerning the purpose of and basis for compensation are final and not
submitted to OMB within 30 days of the proposed rule change and discussed appealable. The proposed rule change
this notice. any comments it received on the would also provide that claims arising
Dated: May 14, 2015. proposed rule change. The text of these under a previous version of Rule 6.42
Robert W. Errett, statements may be examined at the for losses occurring more than one year
places specified in Item IV below. The prior to July 1, 2015 (the ‘‘Effective
Deputy Secretary.
Exchange has prepared summaries, set Date’’) would not be considered valid,
[FR Doc. 2015–12152 Filed 5–19–15; 8:45 am]
forth in sections A, B, and C below, of and that claims for any losses occurring
BILLING CODE 8011–01–P
the most significant aspects of such prior to the Effective Date must be
statements. brought within one month of the
Effective Date to be considered valid.
SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s Specific changes to Exchange Rules are
COMMISSION Statement of the Purpose of, and discussed below.
[Release No. 34–74964; File No. SR–C2– Statutory Basis for, the Proposed Rule
2015–010] Change Proposed Amendment to Rule Title
1. Purpose The proposed rule change would
Self-Regulatory Organizations; C2 change the title of Rule 6.42 from
Options Exchange, Incorporated; C2 proposes to amend Rule 6.42 to ‘‘Exchange Liability’’ to ‘‘Exchange
Notice of Filing and Immediate eliminate any implication of liability Liability Disclaimers and Limitations.’’
Effectiveness of a Proposed Rule with respect to the Exchange and its The proposed amendment to the Rule
Change Regarding Limitation of subsidiaries or affiliates, or any of their title would clarify that the Rule does not
Liability directors, officers, committee members, impose liability on the Exchange, but
other officials, employees, contractors,
May 14, 2015.
or agents, (including the Exchange, 4 Courts have recognized the importance of
Pursuant to Section 19(b)(1) of the collectively, ‘‘Covered Persons’’) for protecting exchanges from such loss in deciding
Securities Exchange Act of 1934 (the losses arising out of the use or that SROs must be absolutely immune from civil
‘‘Act’’),1 and Rule 19b–4 thereunder,2 actions for losses arising out of the SRO function.
enjoyment of Exchange facilities. The See Dexter v. Depository Trust & Clearing Corp.,
notice is hereby given that on May 5, proposed rule change is consistent with 406 F. Supp. 2d 260, 263 (S.D.N.Y. 2005) (absolute
2015, C2 Options Exchange, and supplements existing law, and immunity possessed by SROs ‘‘is an integral part of
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’) would ensure that self-regulatory the American system of self-regulation’’), aff’d 219
filed with the Securities and Exchange F. App’x 91 (2d Cir. 2007). Without such protection,
organizations (‘‘SROs’’) can operate an SRO’s ‘‘exercise of its quasi-governmental
mstockstill on DSK4VPTVN1PROD with NOTICES
Commission (the ‘‘Commission’’) the within the sphere of their regulatory functions would be unduly hampered by disruptive
proposed rule change as described in duties without fear of endless, costly and recriminatory lawsuits.’’ D’Alessio v. NYSE,
Items I and II below, which Items have litigation and potential catastrophic 258 F.3d 93, 105 (2d Cir. 2001). It is critical that
been prepared by the Exchange. The SROs, which stand in the shoes of the SEC in
performing their quasi-governmental regulatory
Commission is publishing this notice to 3 Permit Holders are also referred to in the function, be free from ‘‘the fear of burdensome
Exchange Rules and herein this rule change filing damage suits that would inhibit the exercise of their
1 15 U.S.C. 78s(b)(1). as ‘‘Participants.’’ See e.g., the Rule 1.1 definition independent judgment.’’ Dexter, 406 F.Supp. 2d at
2 17 CFR 240.19b–4. of ‘‘Participant.’’ 263.
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![Federal Register / Vol. 80, No. 97 / Wednesday, May 20, 2015 / Notices 29111
the Exchange may make discretionary discretionary payments to Permit such claims arising on a single trading
payments to Permit Holders for certain Holders to compensate them for such day or during a single calendar month,
losses alleged to have occurred due to losses, up to specified limits, even as applicable, written notice of which
Loss Events. Specifically, the proposed though the Exchange would not be has been given to the Exchange no later
rule change would permit the Exchange legally liable to pay for such losses. than the opening of trading on the next
to make discretionary payments to business day following the day on
Timeframes Within Which To Notify
Permit Holders for their losses alleged to which the use or enjoyment of Exchange
Exchange and Submit Requests
have resulted from Loss Events up to the facilities giving rise to the claim
following limits. As to any one or more Proposed new Rule 6.42(c) would occurred, based upon the proportion
requests for compensation made by a establish timeframes within which a that each claim bears to the sum of all
single Permit Holder that arose out of valid request for compensation must be such claims. The Exchange proposes to
one or more Loss Events occurring on a brought under the Rule. Under the amend existing Rule 6.42(c), which
single trading day, the Exchange could proposed rule change, notice of all would be renumbered to Rule 6.42(d), to
compensate the Permit Holder up to but requests would be required to be in state that, ‘‘if all of the timely requests
not exceeding the larger of $100,000 or writing and to be submitted to the submitted pursuant to paragraph (c) [of
the amount of any recovery obtained by Exchange no later than 12:00 p.m. Rule 6.42] that are granted cannot be
the Exchange under applicable Central Time on the next business day fully satisfied because in the aggregate
insurance maintained by the Exchange. following the Loss Event giving rise to they exceed the applicable maximum
As to the aggregate of all requests for such request. All requests would be amount of payments authorized in
compensation made by all Permit required to be in writing and to be paragraph (b) [of Rule 6.42], then such
Holders that arose out of one or more submitted, along with supporting maximum amount shall be allocated
Loss Events occurring: (i) On a single documentation, by 5:00 p.m. Central among all such requests arising on a
trading day, the Exchange could Time on the third business day single trading day or during a single
compensate the Permit Holders, in the following the Loss Event giving rise to calendar month, as applicable, based
aggregate, up to but not exceeding the each such request.10 Additional upon the proportion that each such
larger of $250,000 or the amount of information related to the request as request bears to the sum of all such
recovery obtained by the Exchange demanded by the Exchange is also requests.’’ The Exchange notes that it is
under any applicable insurance policy; required to be provided. The proposed proposing to replace the term ‘‘claim’’
and (ii) during a single calendar month, rule change would also specify that the with the term ‘‘request’’, as well as
the Exchange could compensate the Exchange would not consider requests replace the reference to ‘‘liability’’ with
Permit Holders, in the aggregate, up to for which timely notice and submission ‘‘payments authorized’’ to eliminate any
but not exceeding the larger of $500,000 had not been provided as required implication of liability with respect to
or the amount of the recovery obtained under amended Rule 6.42(c). the Exchange and other Covered Person
by the Exchange under any applicable The proposed provisions of new Rule resulting from the use or enjoyment of
insurance maintained by the Exchange. 6.42(c) would benefit Permit Holders by the facilities offered by the Exchange,
The proposed rule change would also providing them with clear timeframes any interruption in or failure or
state that no request for compensation within which to submit notices of unavailability or any such facilities, or
by a Permit Holder may be in an amount requests, requests for compensation, and any action taken or omitted to be taken
less than $100. Losses incurred on the supporting documentation. The in respect of the business of the
same trading day and arising out of the proposed changes would also provide Exchange.
same underlying act or omission of the the Exchange with certainty as to the Additionally, the Exchange notes that
Exchange or failure of the Exchange’s deadlines by which notices of requests proposed Rule 6.42(d) would continue
systems or facilities may be aggregated and completed requests would be to provide a fair way of allocating the
to meet the $100 minimum.9 This is required to be submitted in order for the limited payment that the rule would
intended as a de minimis threshold to Exchange to consider them for permit the Exchange to make when the
avoid requiring the Exchange to devote compensation under Rule 6.42. total amount of eligible requests exceed
the resources to considering relatively Exchange Treatment of Aggregate that maximum amount. The proposal
small requests for payment. The Requests Exceeding Maximum Amount would also revise the timeframe in
proposed rule change also would state Permitted To Be Paid which requests for payment must be
that nothing in Rule 6.42 would obligate made by a Permit Holder.
the Exchange to seek recovery under Currently, Rule 6.42(c) provides that
if all of the claims cannot be fully Exchange Review of Timely Requests
any applicable insurance policy. The
proposed changes to Rule 6.42(b) would satisfied because in the aggregate they Proposed new Rule 6.42(e) would
therefore, consistent with Rule 6.42(a), exceed the applicable maximum amount provide that the Exchange, in
permit the Exchange to make of liability provided in paragraph (b) [of determining whether to make payment
Rule 6.42] [sic], then such maximum in response to a request for
of the Exchange’s Certificate of Incorporation or any
amount would be allocated among all compensation, may determine whether
limitations otherwise available under law. the amount requested should be
9 For example, if a Permit Holder incurs a loss of 10 Other exchanges have similar submission
reduced based on the actions or
$30 on one day due to a certain glitch in the requirements. See, e.g., NYSE Rule 18—
Exchange’s systems and a loss of $75 on the same Compensation in Relation to Exchange System inactions of the requesting Permit
day due to a separate unrelated glitch in the Failure, which provides in relevant part that NYSE Holder. The proposed rule change
mstockstill on DSK4VPTVN1PROD with NOTICES
Exchange’s systems, the Permit Holder could not members provide oral notice to NYSE’s Division of would permit the Exchange to consider,
request compensation for either loss. However, if Floor Operations by the market opening on the next without limitation, whether the actions
for example, the Permit Holder incurs a loss of $105 business day following the system failure and
on one day due to a certain glitch in the Exchange’s written notice by the end of the third business day or inactions of the Permit Holder
system, the Permit Holder may request following the system failure (T+3). See also, ISE contributed to the Loss Event; whether
compensation. In this second example, the Permit Rule 705(d)(3)—Limitation of Liability, which the Permit Holder made appropriate
Holder may request compensation even if such provides that all claims for compensation must be
losses were incurred over a number of different made in writing and submitted no later than the
efforts to mitigate its loss; whether the
transactions so long as it was the result of the same opening of trading on the next business day Permit Holder realized any gains as a
systems issue. following the event that gave rise to such claim. result of a Loss Event; whether the
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![29114 Federal Register / Vol. 80, No. 97 / Wednesday, May 20, 2015 / Notices
communications relating to the solicit comments on the proposed rule recently adopted this pricing model 6
proposed rule change between the change from interested persons. and now proposes to amend certain fees
Commission and any person, other than and credits in this section.
I. Self-Regulatory Organization’s
those that may be withheld from the Specifically, the Exchange proposes to
Statement of the Terms of the Substance
public in accordance with the lower the Maker and Taker credits for
of the Proposed Rule Change
provisions of 5 U.S.C. 552, will be Public Customers interacting with
available for Web site viewing and The Exchange is filing with the Professional Customers/Broker Dealers
printing in the Commission’s Public Securities and Exchange Commission or Market Makers in both Penny Pilot
Reference Room, 100 F Street NE., (‘‘Commission’’) a proposed rule change and Non-Penny Pilot Classes. Here, the
Washington, DC 20549 on official to amend the Fee Schedule on the BOX Exchange proposes to lower the credit
business days between the hours of Market LLC (‘‘BOX’’) options facility. Public Customers receive when
10:00 a.m. and 3:00 p.m. Copies of such While changes to the fee schedule interacting with Professional Customers,
filing also will be available for pursuant to this proposal will be Broker Dealers or Market Makers,
inspection and copying at the principal effective upon filing, the changes will regardless of whether they are adding or
office of the Exchange. All comments become operative on May 1, 2015. The removing liquidity to $0.10 from $0.22
received will be posted without change; text of the proposed rule change is (Penny Pilot Classes) and to $0.45 from
the Commission does not edit personal available from the principal office of the $0.57 (Non-Penny Pilot Classes).
identifying information from Exchange, at the Commission’s Public The Exchange also proposes to raise
submissions. You should submit only Reference Room and also on the the Maker and Taker fees for
information that you wish to make Exchange’s Internet Web site at http:// Professional Customers or Broker
available publicly. All submissions boxexchange.com. Dealers in both Penny Pilot and Non-
should refer to File Number SR–C2– Penny Pilot Classes. Specifically, when
2015–010, and should be submitted on II. Self-Regulatory Organization’s a Professional Customer or Broker
or before June 10, 2015. Statement of the Purpose of, and Dealer interacts with a Public Customer
For the Commission, by the Division of Statutory Basis for, the Proposed Rule in a Penny Pilot Class, the Exchange
Trading and Markets, pursuant to delegated Change proposes to raise this fee to $0.60 from
authority.25 $0.55 (making liquidity) and to $0.64
In its filing with the Commission, the
Robert W. Errett, from $0.59 (taking liquidity). For Non-
Exchange included statements
Deputy Secretary. Penny Pilot Classes the Exchange
concerning the purpose of and basis for
[FR Doc. 2015–12144 Filed 5–19–15; 8:45 am] proposes to raise the fees in this same
the proposed rule change and discussed
BILLING CODE 8011–01–P type of interaction to $0.95 from $0.90
any comments it received on the
(making liquidity) and to $0.99 from
proposed rule change. The text of these
$0.94 (taking liquidity). For when a
statements may be examined at the
SECURITIES AND EXCHANGE Professional Customer or Broker Dealer
places specified in Item IV below. The
COMMISSION interacts with another Professional
Exchange has prepared summaries, set
Customer or Broker Dealer in Penny
[Release No. 34–74957; File No. SR–BOX– forth in Sections A, B, and C below, of
2015–17] Pilot Classes, the Exchange proposes to
the most significant aspects of such
raise these fees to $0.25 from $0.20
statements.
Self-Regulatory Organizations; BOX (making liquidity) and to $0.40 from
Options Exchange, LLC; Notice of A. Self-Regulatory Organization’s $0.35 (taking liquidity). For Non-Penny
Filing and Immediate Effectiveness of Statement of the Purpose of, and Pilot Classes the Exchange proposes to
a Proposed Rule Change To Amend Statutory Basis for, the Proposed Rule raise the fees in this same type of
the Fee Schedule on the BOX Market, Change interaction to $0.35 from $0.30 (making
LLC Options Facility liquidity) and to $0.40 from $0.35
1. Purpose
(taking liquidity). For when a
May 13, 2015. Professional Customer or Broker Dealer
The Exchange proposes to make a
Pursuant to Section 19(b)(1) of the number of changes to Section I of the interacts with a Market Maker in Penny
Securities Exchange Act of 1934 (the BOX Fee Schedule (Exchange Fees). Pilot Classes, the Exchange proposes to
‘‘Act’’),1 and Rule 19b-4 thereunder,2 raise these fees to $0.25 from $0.20
notice is hereby given that on April 30, Non-Auction Transactions (making liquidity) and to $0.44 from
2015, BOX Options Exchange LLC (the $0.39 (taking liquidity). For Non-Penny
‘‘Exchange’’) filed with the Securities First, the Exchange proposes to
amend certain fees and credits in the Pilot Classes the Exchange proposes to
and Exchange Commission raise the fees in this same type of
(‘‘Commission’’) the proposed rule pricing model outlined in Section I.A.
(Non-Auction Transactions).5 In this interaction to $0.35 from $0.30 (making
change as described in Items I, II, and liquidity) and $0.44 from $0.39 (taking
III below, which Items have been section, fees and credits are assessed
depending on upon three factors: (i) The liquidity).
prepared by the Exchange. The Finally, the Exchange proposes to
Exchange filed the proposed rule change account type of the Participant
submitting the order; (ii) whether the lower fees to $0.00 from $0.10 for
pursuant to Section 19(b)(3)(A)(ii) of the Market Makers interacting with other
Act,3 and Rule 19b–4(f)(2) thereunder,4 Participant is a liquidity provider or
liquidity taker; and (iii) the account type Market Makers in both Penny Pilot
which renders the proposal effective Classes and Non-Penny Pilot Classes.
mstockstill on DSK4VPTVN1PROD with NOTICES
upon filing with the Commission. The of the contra party. Non-Auction
These transactions will remain
Commission is publishing this notice to Transactions in Penny Pilot Classes are
exempt from the Liquidity Fees and
assessed different fees or credits than
Credits outlined in Section II of the BOX
25 17 CFR 200.30–3(a)(12). Non-Auction Transactions in Non-
1 15 U.S.C. 78s(b)(1). Penny Pilot Classes. The Exchange 6 See Securities Exchange Act Release No. 73547
2 17 CFR 240.19b–4.
(November 6, 2014), 79 FR 67520 (November 13,
3 15 U.S.C. 78s(b)(3)(A)(ii). 5 Non-Auction Transactions are those transactions 2014)(Notice of Filing and Immediate Effectiveness
4 17 CFR 240.19b–4(f)(2). executed on the BOX Book. of SR–BOX–2014–25).
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Document Created: 2018-02-21 10:29:39
Document Modified: 2018-02-21 10:29:39
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 29109 |
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