80 FR 29114 - Self-Regulatory Organizations; BOX Options Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule on the BOX Market, LLC Options Facility
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 97 (May 20, 2015)
Federal Register Volume 80, Issue 97 (May 20, 2015)
| Page Range | 29114-29118 | |
| FR Document | 2015-12173 |
[Federal Register Volume 80, Number 97 (Wednesday, May 20, 2015)] [Notices] [Pages 29114-29118] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-12173] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74957; File No. SR-BOX-2015-17] Self-Regulatory Organizations; BOX Options Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule on the BOX Market, LLC Options Facility May 13, 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 April 30, 2015, BOX Options Exchange LLC (the ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Exchange filed the proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal effective upon filing with the Commission. 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. \3\ 15 U.S.C. 78s(b)(3)(A)(ii). \4\ 17 CFR 240.19b-4(f)(2).*COM057* --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change The Exchange is filing with the Securities and Exchange Commission (``Commission'') a proposed rule change to amend the Fee Schedule on the BOX Market LLC (``BOX'') options facility. While changes to the fee schedule pursuant to this proposal will be effective upon filing, the changes will become operative on May 1, 2015. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's Internet Web site at http://boxexchange.com. 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 The Exchange proposes to make a number of changes to Section I of the BOX Fee Schedule (Exchange Fees). Non-Auction Transactions First, the Exchange proposes to amend certain fees and credits in the pricing model outlined in Section I.A. (Non-Auction Transactions).\5\ In this section, fees and credits are assessed depending on upon three factors: (i) The account type of the Participant submitting the order; (ii) whether the Participant is a liquidity provider or liquidity taker; and (iii) the account type of the contra party. Non-Auction Transactions in Penny Pilot Classes are assessed different fees or credits than Non-Auction Transactions in Non-Penny Pilot Classes. The Exchange recently adopted this pricing model \6\ and now proposes to amend certain fees and credits in this section. --------------------------------------------------------------------------- \5\ Non-Auction Transactions are those transactions executed on the BOX Book. \6\ See Securities Exchange Act Release No. 73547 (November 6, 2014), 79 FR 67520 (November 13, 2014)(Notice of Filing and Immediate Effectiveness of SR-BOX-2014-25). --------------------------------------------------------------------------- Specifically, the Exchange proposes to lower the Maker and Taker credits for Public Customers interacting with Professional Customers/ Broker Dealers or Market Makers in both Penny Pilot and Non-Penny Pilot Classes. Here, the Exchange proposes to lower the credit Public Customers receive when interacting with Professional Customers, Broker Dealers or Market Makers, regardless of whether they are adding or removing liquidity to $0.10 from $0.22 (Penny Pilot Classes) and to $0.45 from $0.57 (Non-Penny Pilot Classes). The Exchange also proposes to raise the Maker and Taker fees for Professional Customers or Broker Dealers in both Penny Pilot and Non- Penny Pilot Classes. Specifically, when a Professional Customer or Broker Dealer interacts with a Public Customer in a Penny Pilot Class, the Exchange proposes to raise this fee to $0.60 from $0.55 (making liquidity) and to $0.64 from $0.59 (taking liquidity). For Non-Penny Pilot Classes the Exchange proposes to raise the fees in this same type of interaction to $0.95 from $0.90 (making liquidity) and to $0.99 from $0.94 (taking liquidity). For when a Professional Customer or Broker Dealer interacts with another Professional Customer or Broker Dealer in Penny Pilot Classes, the Exchange proposes to raise these fees to $0.25 from $0.20 (making liquidity) and to $0.40 from $0.35 (taking liquidity). For Non-Penny Pilot Classes the Exchange proposes to raise the fees in this same type of interaction to $0.35 from $0.30 (making liquidity) and to $0.40 from $0.35 (taking liquidity). For when a Professional Customer or Broker Dealer interacts with a Market Maker in Penny Pilot Classes, the Exchange proposes to raise these fees to $0.25 from $0.20 (making liquidity) and to $0.44 from $0.39 (taking liquidity). For Non-Penny Pilot Classes the Exchange proposes to raise the fees in this same type of interaction to $0.35 from $0.30 (making liquidity) and $0.44 from $0.39 (taking liquidity). Finally, the Exchange proposes to lower fees to $0.00 from $0.10 for Market Makers interacting with other Market Makers in both Penny Pilot Classes and Non-Penny Pilot Classes. These transactions will remain exempt from the Liquidity Fees and Credits outlined in Section II of the BOX [[Page 29115]] Fee Schedule. The revised fee structure for Non-Auction Transactions will be as follows: ---------------------------------------------------------------------------------------------------------------- Penny pilot classes Non-penny pilot classes --------------------------------------------------- Account type Contra party Maker fee/ Taker fee/ Maker fee/ Taker fee/ credit credit credit credit ---------------------------------------------------------------------------------------------------------------- Public Customer..................... Public Customer....... $0.00 $0.00 $0.00 $0.00 Professional Customer/ ($0.10) ($0.10) ($0.45) ($0.45) Broker Dealer. Market Maker.......... ($0.10) ($0.10) ($0.45) ($0.45) Professional Customer or Broker Public Customer....... $0.60 $0.64 $0.95 $0.99 Dealer. Professional Customer/ $0.25 $0.40 $0.35 $0.40 Broker Dealer. Market Maker.......... $0.25 $0.44 $0.35 $0.44 Market Maker........................ Public Customer....... $0.51 $0.55 $0.85 $0.90 Professional Customer/ $0.00 $0.05 $0.00 $0.10 Broker Dealer. Market Maker.......... $0.00 $0.29 $0.00 $0.29 ---------------------------------------------------------------------------------------------------------------- For example, if a Public Customer submitted an order to the BOX Book in a Penny Pilot Class (making liquidity), the Public Customer would now be credited $0.10 if the order interacted with a Market Maker's order and the Market Maker (taking liquidity) would be charged $0.55. To expand on this example, if the Market Maker instead submitted an order to the BOX Book in a Penny Pilot Class (making liquidity), the Market Maker would be charged $0.51 if the order interacted with a Public Customer's order and the Public Customer (taking liquidity) would again be credited $0.10. In Section I.A.1., the Tiered Volume Rebate for Non-Auction Transactions, the Exchange gives a per contract rebate to Market Makers and Public Customers based on their average daily volume (``ADV'') considering all transactions executed on BOX by the Market Maker or Public Customer, respectively, as calculated at the end of each month. Specifically, the Exchange proposes to adjust the volume tiers and contract rebates in the Market Maker Monthly ADV section, as well certain contract rebates in the Public Customer Monthly ADV section. The new per contract rebate for Market Makers and Public Customers in Non-Auction Transactions as set forth in Section I.A.1. of the BOX Fee Schedule will now be as follows: ------------------------------------------------------------------------ Per contract Market maker monthly ADV rebate ------------------------------------------------------------------------ 40,001 contracts and greater............................ ($0.10) 25,001 contracts to 40,000 contracts.................... ($0.05) 10,001 contracts to 25,000 contracts.................... ($0.03) 1 contract to 10,000 contracts.......................... $0.00 ------------------------------------------------------------------------ ------------------------------------------------------------------------ Per contract Public customer monthly ADV rebate ------------------------------------------------------------------------ 35,001 contracts and greater............................ ($0.22) 15,001 contracts to 35,000 contracts.................... ($0.12) 5,001 contracts to 15,000 contracts..................... ($0.06) 1 contract to 5,000 contracts........................... $0.00 ------------------------------------------------------------------------ Auction Transactions The Exchange then proposes to amend Section I.B. (Auction Transactions)\7\ and establish separate fees for Facilitation and Solicitation Orders.\8\ The Exchange currently assesses per contract execution fee on all Primary Improvement Orders, Solicitation Orders and Facilitation Orders in Section I.B.1. based upon the Initiating Participant's monthly average daily volume (ADV) in the total contract quantity submitted for these orders. These fees range from $0.25 to $0.03 per contract depending on the ADV. --------------------------------------------------------------------------- \7\ Auction Transactions are those transactions executed through the Price Improvement Period (``PIP''), the Complex Order Price Improvement Period (``COPIP''), the Solicitation Auction mechanism, and the Facilitation Auction mechanism. \8\ Facilitation and Solicitation Orders are the matching contra orders submitted on the opposite side of the Agency Order. --------------------------------------------------------------------------- The Exchange now proposes to adopt a flat $0.25 fee for Facilitation and Solicitation Orders \9\ and remove these Orders from the tiered fee schedule for Initiating Participants. The Exchange also proposes to specify that the fees for these Orders will be capped at $25,000 per month. --------------------------------------------------------------------------- \9\ Public Customers are unable to submit Facilitation and Solicitation Orders on BOX. --------------------------------------------------------------------------- With this, the Exchange then proposes to amend the language in the Section I.B.1. tiered fee schedule to remove all references to the Facilitation and Solicitation Orders and specify that the tiered fee schedule will now only be applicable to Initiating Participants submitting Primary Improvement Orders through the PIP. Additionally, each Initiating Participant's monthly ADV will now only be based on the total contract quantity of Primary Improvement Orders submitted to the PIP as calculated at the end of each month. Other Finally, the Exchange is proposing to make additional non- substantive changes to the Fee Schedule. Specifically, the Exchange is renumbering certain footnotes, headings and internal references to accommodate the above proposed changes to the Fee Schedule. 2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act, in general, and Section 6(b)(4) and 6(b)(5)of the Act,\10\ in particular, in that it provides for the equitable allocation of reasonable dues, fees, and other charges among BOX Participants and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. The proposed changes will allow the Exchange to be competitive with other exchanges and to apply fees and credits in a manner that is equitable among all BOX Participants. Further, the Exchange operates within a highly competitive market in which market participants can readily direct order flow to any other competing exchange if they determine fees at a particular exchange to be excessive. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- Exchange Fees Non-Auction Transactions The Exchange believes amending the Non-Auction Transaction fees and credits is reasonable, equitable and not unfairly discriminatory. The fee structure for Non-Auction Transactions has been well received by Participants and the industry since it was adopted last year,\11\ and the Exchange believes it is now appropriate to adjust certain fees and credits. The proposed fee structure is intended to attract order flow to the Exchange by offering all market participants incentives to submit their Non-Auction orders to the Exchange. The practice of providing additional incentives to increase order flow is, and has been, a common practice in the [[Page 29116]] options markets.\12\ Further, the Exchange believes it is appropriate to provide incentives for market participants which will result in greater liquidity and ultimately benefit all Participants trading on the Exchange. --------------------------------------------------------------------------- \11\ See supra, note 6. \12\ See BATS Exchange, Inc. (``BATS'') BATS Options Exchange Fee Schedule ``Standard Rates''; Chicago Board Options Exchange, Inc. (``CBOE'') Fee Schedule ``Volume Incentive Program'' (page 4); ISE Gemini, LLC (``Gemini'') Schedule of Fees, Section I. Regular Order Fees and Rebates ``Penny Symbols and SPY, and Non-Penny Symbols'' (page 4); Miami International Securities Exchange, LLC (``MIAX'') Fee Schedule Section I(a)(i) ``Market Maker Transaction Fees'' and ``Market Maker Sliding Scale'', and Section I(a)(iii) ``Priority Customer Rebate Program''; NASDAQ OMX BX, Inc. (``BX Options'') Chapter XV, Section 2 BX Options Market--Fees and Rebates; NASDAQ OMX PHLX,(``PHLX''), Pricing Schedule Section B, ``Customer Rebate Program''; NASDAQ Stock Market LLC (``NOM'') Chapter XV, Section 2 NASDAQ Options Market--Fees and Rebates; NYSE Amex, Inc. (``AMEX'') Fee Schedule Section I.C. NYSE Amex Options Market Maker Sliding Scale--Electronic; and NYSE Arca, Inc (``Arca'') Options Fees and Charges, ``Customer and Professional Customer Monthly Posting Credit Tiers and Qualifications for Executions in Penny Pilot Issues''(page 4). --------------------------------------------------------------------------- The Exchange also believes it is equitable, reasonable and not unfairly discriminatory to assess fees and credits according to the account type of the Participant originating the order and the contra party. This fee structure has been in place on the Exchange since last year and the Exchange is simply adjusting certain fees and credits within the structure.\13\ The result of this structure is that a Participant does not know the fee it will be charged when submitting certain orders. Therefore, the Participant must recognize that it could be charged the highest applicable fee on the Exchange's schedule, which may, instead, be lowered or changed to a credit depending upon how the order interacts. --------------------------------------------------------------------------- \13\ See supra, note 6. --------------------------------------------------------------------------- The Exchange believes that the proposed fees and credits for Public Customers in Non-Auction Transactions are reasonable. Under the proposed fee structure Public Customers will either pay a Maker fee of $0.00 (when interacting with another Public Customer) or receive a Maker/Taker credit of $0.10 for Penny Pilot classes and $0.45 for Non- Penny Pilot classes when interacting with a Professional Customer, Broker Dealer or Market Maker. The Exchange believes the credits listed above are reasonable as they are in line with the current fees assessed by other competing exchanges.\14\ --------------------------------------------------------------------------- \14\ Many U.S. Options Exchanges do not differentiate their fees between auction and non-auction transactions. However, Public Customers are charged anywhere from $0.00 to $0.85 within the following options exchange fee schedules. See NASDAQ OMX BX (``BX'') Options Pricing, Chapter XV, Sec. 2; NYSE Arca Options (``Arca'') Fees and Charges page 3; International Securities Exchange (``ISE'') Schedule of Fees, Section I. --------------------------------------------------------------------------- The Exchange believes it is reasonable, equitable and not unfairly discriminatory to give Public Customers a credit when their orders execute against a non-Public Customer and, accordingly, charge non- Public Customers a higher fee when their orders execute against a Public Customer. The securities markets generally, and BOX in particular, have historically aimed to improve markets for investors and develop various features within the market structure for Public Customer benefit. Similar to the payment for order flow and other pricing models that have been adopted by the Exchange and other exchanges to attract Public Customer order flow, the Exchange increases fees to non-Public Customers in order to provide incentives for Public Customers. The Exchange believes that providing incentives for Non- Auction Transactions by Public Customers is reasonable and, ultimately, will benefit all Participants trading on the Exchange by attracting Public Customer order flow. The Exchange believes that charging Professional Customers and Broker Dealers higher fees than Public Customers for Non-Auction Transactions is equitable and not unfairly discriminatory. Professional Customers, while Public Customers by virtue of not being Broker Dealers, generally engage in trading activity more similar to Broker Dealer proprietary trading accounts. The Exchange believes that the higher level of trading activity from these Participants will draw a greater amount of BOX system resources, which the Exchange aims to recover its costs by assessing Professional Customers and Broker Dealers higher fees for transactions. The Exchange also believes it is equitable and not unfairly discriminatory for BOX Market Makers to be assessed lower fees than Professional Customers and Broker Dealers for Non-Auction Transactions because of the significant contributions to overall market quality that Market Makers provide. Specifically, Market Makers can provide higher volumes of liquidity and lowering their fees will help attract a higher level of Market Maker order flow to the BOX Book and create liquidity, which the Exchange believes will ultimately benefit all Participants trading on BOX. The Exchange believes that the proposed fees and credits for Professional Customers, Broker Dealers and Market Makers in Non-Auction Transactions are reasonable. Under the proposed fee structure, a Professional Customer or Broker Dealer making liquidity and interacting with a Professional Customer, Broker Dealer or Market Marker will either be charged a fee of $0.25 for Penny Pilot Classes or $0.35 for Non-Penny Pilot Classes. If the Professional Customer or Broker Dealer is instead taking liquidity in either Penny Pilot or Non-Penny Pilot Classes, it will be charged $0.40 if it interacts with a Professional Customer or Broker Dealer and $0.44 if it interacts with a Market Maker. The Exchange believes the fees listed above are reasonable as they are in line with the current fees assessed by other competing exchanges.\15\ --------------------------------------------------------------------------- \15\ Id. Professional Customer and Broker Dealers are charged anywhere from $0.10 to $0.94 within the option exchange fee schedules referenced above. --------------------------------------------------------------------------- Similarly, in the proposed fee structure a Market Maker making liquidity in both Penny Pilot and Non-Penny Pilot Classes will now always be charged a fee of $0.00 for interacting with a Professional Customer/Broker Dealer or Market Maker. The Exchange believes the fees listed above are reasonable as they are in line with what is currently charged by the industry.\16\ --------------------------------------------------------------------------- \16\ See supra, note 13 [sic]. The general range for Market Maker fees is between $0.10 and $0.92 within the fee schedules referenced above. --------------------------------------------------------------------------- The Exchange believes it is reasonable, equitable and not unfairly discriminatory for Professional Customers and Broker Dealers to be charged higher fees for both making and taking liquidity when interacting with Public Customers. A Professional Customer or Broker Dealer interacting with a Public Customer will now be charged a $0.60 Maker fee or $0.64 Taker fee for Penny Pilot Classes and a $0.95 Maker fee or $0.99 Taker fee for Non-Penny Pilot Classes. The Exchange believes they are reasonable as they are in line when compared to similar fees in the options industry.\17\ Further, as stated above, the Exchange believes charging a higher fee for interactions with a Public Customer is equitable and not unfairly discriminatory because it allows the Exchange to incentivize Public Customer order flow by offering credits to Public Customers in Non-Auction Transactions. The Exchange believes that providing incentives for Non-Auction Transactions by Public Customers will benefit all Participants trading on the Exchange by attracting this Public Customer order flow. --------------------------------------------------------------------------- \17\ See supra, note 14. --------------------------------------------------------------------------- [[Page 29117]] The Exchange believes it is reasonable, equitable and not unfairly discriminatory for Professional Customers, Broker Dealers and Market Makers to be charged a higher fee for orders removing liquidity when compared to the fee they receive for orders that add liquidity. Charging a lower fee for orders that add liquidity will promote liquidity on the Exchange and ultimately benefit all participants on BOX. Further, the concept of incentivizing orders that add liquidity over orders that remove liquidity is commonly accepted within the industry as part of the ``Make/Take'' liquidity model.\18\ --------------------------------------------------------------------------- \18\ The ``Make/Take'' model is currently used by the International Securities Exchange LLC (``ISE') and NASDAQ OMX PHLX LLC (``PHLX''). --------------------------------------------------------------------------- The Exchange believes it is equitable and not unfairly discriminatory to charge the Professional Customer or Broker Dealer more for taking liquidity against a Market Maker than they are charged for taking liquidity against other Professional Customers or Broker Dealers. As stated above, the Exchange proposes to provide certain incentives to Market Makers because of the high volumes of liquidity they can provide and increasing fees for Professional Customers and Broker Dealers taking liquidity will allow the Exchange to offer these incentives, ultimately benefiting all Participants trading on BOX. Finally, the Exchange also believes it is reasonable to charge Professional Customers and Broker Dealers less for certain executions in Penny Pilot issues compared to Non-Penny Pilot issues because these classes are typically more actively traded; assessing lower fees will further incentivize order flow in Penny Pilot issues on the Exchange, ultimately benefiting all Participants trading on BOX. Additionally, the Exchange believes it is reasonable to give a greater credit to Public Customers for Non-Auction Transactions in Non-Penny Pilot issues as compared to Penny Pilot issues. Since these classes have wider spreads and are less actively traded, giving a larger credit will further incentivize Public Customers to trade in these classes, ultimately benefitting all Participants trading on BOX. Tiered Volume Rebate for Non-Auction Transactions BOX believes it is reasonable, equitable and not unfairly discriminatory to adjust the tiered volume based rebates for Market Makers and Public Customers in all Non-Auction Transactions. The volume thresholds and applicable rebates are meant to incentivize Public Customers and Market Makers to direct order flow to the Exchange to obtain the benefit of the rebate, which will in turn benefit all market participants by increasing liquidity on the Exchange. Other exchanges employ similar incentive programs; \19\ and the Exchange believes that the proposed changes to the volume thresholds and rebates are reasonable and competitive when compared to incentive structures at other exchanges. --------------------------------------------------------------------------- \19\ See Section B of the PHLX Pricing Schedule entitled ``Customer Rebate Program;'' ISE Gemini's Qualifying Tier Thresholds (page 6 of the ISE Gemini Fee Schedule); and CBOE's Volume Incentive Program (VIP). CBOE's Volume Incentive Program (``VIP'') pays certain tiered rebates to Trading Permit Holders for electronically executed multiply-listed option orders which include AIM orders. Note that some of these exchanges base these rebate programs on the percentage of total national Public Customer volume traded on their respective exchanges, which the Exchange is not proposing to do. --------------------------------------------------------------------------- The Exchange continues to believe it is equitable and not unfairly discriminatory to only have these rebate structures for Public Customers and Market Makers in Non-Auction transactions. The practice of incentivizing increased Public Customer order flow is common in the options markets. With this proposal, Public Customers benefit from the opportunity to obtain a higher rebate. Further, Market Makers can provide high volumes of liquidity and lowering their Non-Auction Transaction fees will potentially help attract a higher level of Market Maker order flow and create liquidity, which the Exchange believes will ultimately benefit all Participants trading on BOX. Auction Transactions The Exchange believes that establishing a flat $0.25 fee for all Facilitation and Solicitation Orders is reasonable, equitable and not unfairly discriminatory. While the proposal will potentially raise the fees for certain Participants submitting Facilitation and Solicitation Orders, the Exchange believes the fee is reasonable as it is equal to highest fee that Participants are currently charged for these Orders under the volume based tier schedule in Section I.B.1., and will also be capped at $25,000 for each Participant per month. Further, the fee cap will act as a volume based discount for any Participants who meet the cap each month. The Exchange believes the fee cap is reasonable as it is lower than similar fee caps at other options exchanges.\20\ Finally, the Exchange believes that a $0.25 fee for Facilitation and Solicitation Orders is equitable and not unfairly discriminatory as all Participants will be charged the same fee with the exception of Public Customers, who are not able to submit these Orders in the BOX trading system. --------------------------------------------------------------------------- \20\ See Section H of the ISE Fee Schedule ``Crossing Fee Caps.'' Transactions that are part of the origination or contra side of a Crossing Order (contracts that are submitted as part of a Facilitation, Solicitation, PIM, Block or QCC order) are capped at $75,000 per month. --------------------------------------------------------------------------- Finally, the Exchange believes that removing references to Facilitation and Solicitation Orders in the Tiered Fee Schedule in Section I.B.1. is reasonable, equitable and not unfairly discriminatory. The Exchange believes it is reasonable because Facilitation and Solicitation Orders will no longer be charged according to this section of the fee schedule, and therefore it is appropriate to both remove these references and specify that the monthly ADV will be now only be based on the total Primary Improvement Order contract quantity submitted to the PIP as calculated at the end of the month. The Exchange believes it is equitable and not unfairly discriminatory to remove these references as they apply equally to all Participants on BOX. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed adjustments to fees and rebates in the Non-Auction Transactions fee structure will not impose a burden on competition among various Exchange Participants. Rather, BOX believes that the changes will result in the Participants being charged appropriately for these transactions and are designed to enhance competition in Non-Auction transactions on BOX. Submitting an order is entirely voluntary and Participants can determine which type of order they wish to submit, if any, to the Exchange. Further, the Exchange believes that this proposal will enhance competition between exchanges because it is designed to allow the Exchange to better compete with other exchanges for order flow. The Exchange believes that adopting a flat fee for Facilitation and Solicitation Orders will not impose a burden on competition because all Participants will be affected to the same extent, with the exception of Public Customers who cannot submit these Orders in the BOX trading system. Finally, the Exchange notes that it operates in a highly competitive market in which market participants can [[Page 29118]] readily favor competing exchanges. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. 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)(ii) of the Exchange Act \21\ and Rule 19b-4(f)(2) thereunder,\22\ because it establishes or changes a due, or fee. --------------------------------------------------------------------------- \21\ 15 U.S.C. 78s(b)(3)(A)(ii). \22\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend the rule change if it appears to the Commission that the action is necessary or appropriate in the public interest, for the protection of investors, or would otherwise further 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. 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-BOX-2015-17 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BOX-2015-17. 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 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-BOX-2015-17, and should be submitted on or before June 10, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-12173 Filed 5-19-15; 8:45 am] BILLING CODE 8011-01-P
![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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![29116 Federal Register / Vol. 80, No. 97 / Wednesday, May 20, 2015 / Notices
options markets.12 Further, the The Exchange believes it is Professional Customers, Broker Dealers
Exchange believes it is appropriate to reasonable, equitable and not unfairly and Market Makers in Non-Auction
provide incentives for market discriminatory to give Public Customers Transactions are reasonable. Under the
participants which will result in greater a credit when their orders execute proposed fee structure, a Professional
liquidity and ultimately benefit all against a non-Public Customer and, Customer or Broker Dealer making
Participants trading on the Exchange. accordingly, charge non-Public liquidity and interacting with a
The Exchange also believes it is Customers a higher fee when their Professional Customer, Broker Dealer or
equitable, reasonable and not unfairly orders execute against a Public Market Marker will either be charged a
discriminatory to assess fees and credits Customer. The securities markets fee of $0.25 for Penny Pilot Classes or
according to the account type of the generally, and BOX in particular, have $0.35 for Non-Penny Pilot Classes. If the
Participant originating the order and the historically aimed to improve markets Professional Customer or Broker Dealer
contra party. This fee structure has been for investors and develop various is instead taking liquidity in either
in place on the Exchange since last year features within the market structure for Penny Pilot or Non-Penny Pilot Classes,
and the Exchange is simply adjusting Public Customer benefit. Similar to the it will be charged $0.40 if it interacts
certain fees and credits within the payment for order flow and other with a Professional Customer or Broker
structure.13 The result of this structure pricing models that have been adopted Dealer and $0.44 if it interacts with a
is that a Participant does not know the by the Exchange and other exchanges to Market Maker. The Exchange believes
fee it will be charged when submitting attract Public Customer order flow, the the fees listed above are reasonable as
certain orders. Therefore, the Participant Exchange increases fees to non-Public they are in line with the current fees
must recognize that it could be charged Customers in order to provide assessed by other competing
the highest applicable fee on the incentives for Public Customers. The exchanges.15
Exchange’s schedule, which may, Exchange believes that providing Similarly, in the proposed fee
instead, be lowered or changed to a incentives for Non-Auction structure a Market Maker making
credit depending upon how the order Transactions by Public Customers is liquidity in both Penny Pilot and Non-
interacts. reasonable and, ultimately, will benefit Penny Pilot Classes will now always be
The Exchange believes that the all Participants trading on the Exchange charged a fee of $0.00 for interacting
proposed fees and credits for Public by attracting Public Customer order
Customers in Non-Auction Transactions with a Professional Customer/Broker
flow. Dealer or Market Maker. The Exchange
are reasonable. Under the proposed fee The Exchange believes that charging
structure Public Customers will either believes the fees listed above are
Professional Customers and Broker reasonable as they are in line with what
pay a Maker fee of $0.00 (when Dealers higher fees than Public
interacting with another Public is currently charged by the industry.16
Customers for Non-Auction
Customer) or receive a Maker/Taker The Exchange believes it is
Transactions is equitable and not
credit of $0.10 for Penny Pilot classes reasonable, equitable and not unfairly
unfairly discriminatory. Professional
and $0.45 for Non-Penny Pilot classes discriminatory for Professional
Customers, while Public Customers by
when interacting with a Professional Customers and Broker Dealers to be
virtue of not being Broker Dealers,
Customer, Broker Dealer or Market charged higher fees for both making and
generally engage in trading activity
Maker. The Exchange believes the taking liquidity when interacting with
more similar to Broker Dealer
credits listed above are reasonable as Public Customers. A Professional
proprietary trading accounts. The
they are in line with the current fees Customer or Broker Dealer interacting
Exchange believes that the higher level
assessed by other competing with a Public Customer will now be
of trading activity from these
exchanges.14 charged a $0.60 Maker fee or $0.64
Participants will draw a greater amount
Taker fee for Penny Pilot Classes and a
of BOX system resources, which the
12 See BATS Exchange, Inc. (‘‘BATS’’) BATS $0.95 Maker fee or $0.99 Taker fee for
Exchange aims to recover its costs by
Options Exchange Fee Schedule ‘‘Standard Rates’’; Non-Penny Pilot Classes. The Exchange
Chicago Board Options Exchange, Inc. (‘‘CBOE’’) assessing Professional Customers and
believes they are reasonable as they are
Fee Schedule ‘‘Volume Incentive Program’’ (page 4); Broker Dealers higher fees for
ISE Gemini, LLC (‘‘Gemini’’) Schedule of Fees, in line when compared to similar fees
transactions.
Section I. Regular Order Fees and Rebates ‘‘Penny
The Exchange also believes it is in the options industry.17 Further, as
Symbols and SPY, and Non-Penny Symbols’’ (page stated above, the Exchange believes
4); Miami International Securities Exchange, LLC equitable and not unfairly
(‘‘MIAX’’) Fee Schedule Section I(a)(i) ‘‘Market discriminatory for BOX Market Makers charging a higher fee for interactions
Maker Transaction Fees’’ and ‘‘Market Maker to be assessed lower fees than with a Public Customer is equitable and
Sliding Scale’’, and Section I(a)(iii) ‘‘Priority
Professional Customers and Broker not unfairly discriminatory because it
Customer Rebate Program’’; NASDAQ OMX BX, allows the Exchange to incentivize
Inc. (‘‘BX Options’’) Chapter XV, Section 2 BX Dealers for Non-Auction Transactions
Options Market—Fees and Rebates; NASDAQ OMX because of the significant contributions Public Customer order flow by offering
PHLX,(‘‘PHLX’’), Pricing Schedule Section B, to overall market quality that Market credits to Public Customers in Non-
‘‘Customer Rebate Program’’; NASDAQ Stock
Makers provide. Specifically, Market Auction Transactions. The Exchange
Market LLC (‘‘NOM’’) Chapter XV, Section 2 believes that providing incentives for
NASDAQ Options Market—Fees and Rebates; NYSE Makers can provide higher volumes of
Amex, Inc. (‘‘AMEX’’) Fee Schedule Section I.C. liquidity and lowering their fees will Non-Auction Transactions by Public
NYSE Amex Options Market Maker Sliding Scale— help attract a higher level of Market Customers will benefit all Participants
Electronic; and NYSE Arca, Inc (‘‘Arca’’) Options
Maker order flow to the BOX Book and trading on the Exchange by attracting
Fees and Charges, ‘‘Customer and Professional this Public Customer order flow.
Customer Monthly Posting Credit Tiers and create liquidity, which the Exchange
mstockstill on DSK4VPTVN1PROD with NOTICES
Qualifications for Executions in Penny Pilot believes will ultimately benefit all
Issues’’(page 4). 15 Id. Professional Customer and Broker Dealers
Participants trading on BOX.
13 See supra, note 6. are charged anywhere from $0.10 to $0.94 within
14 Many U.S. Options Exchanges do not
The Exchange believes that the the option exchange fee schedules referenced
differentiate their fees between auction and non- proposed fees and credits for above.
16 See supra, note 13 [sic]. The general range for
auction transactions. However, Public Customers
are charged anywhere from $0.00 to $0.85 within XV, Sec. 2; NYSE Arca Options (‘‘Arca’’) Fees and Market Maker fees is between $0.10 and $0.92
the following options exchange fee schedules. See Charges page 3; International Securities Exchange within the fee schedules referenced above.
NASDAQ OMX BX (‘‘BX’’) Options Pricing, Chapter (‘‘ISE’’) Schedule of Fees, Section I. 17 See supra, note 14.
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![29118 Federal Register / Vol. 80, No. 97 / Wednesday, May 20, 2015 / Notices
readily favor competing exchanges. In All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2
such an environment, the Exchange Number SR–BOX–2015–17. This file notice is hereby given that on May 6,
must continually review, and consider number should be included on the 2015, NASDAQ OMX BX, Inc. (‘‘BX’’ or
adjusting, its fees and credits to remain subject line if email is used. To help the ‘‘Exchange’’) filed with the Securities
competitive with other exchanges. For Commission process and review your and Exchange Commission (‘‘SEC’’ or
the reasons described above, the comments more efficiently, please use ‘‘Commission’’) the proposed rule
Exchange believes that the proposed only one method. The Commission will change as described in Items I and II,
rule change reflects this competitive post all comments on the Commission’s below, which Items have been prepared
environment. Internet Web site (http://www.sec.gov/ by the Exchange. The Commission is
rules/sro.shtml). Copies of the
C. Self-Regulatory Organization’s publishing this notice to solicit
submission, all subsequent
Statement on Comments on the comments on the proposed rule change
amendments, all written statements
Proposed Rule Change Received From with respect to the proposed rule from interested persons.
Members, Participants, or Others change that are filed with the I. Self-Regulatory Organization’s
No written comments were either Commission, and all written Statement of the Terms of Substance of
solicited or received. communications relating to the the Proposed Rule Change
proposed rule change between the
III. Date of Effectiveness of the Commission and any person, other than The Exchange proposes to update the
Proposed Rule Change and Timing for those that may be withheld from the public disclosure of the sources of data
Commission Action public in accordance with the that BX utilizes when performing (1)
The foregoing rule change has become provisions of 5 U.S.C. 552, will be order handling and execution; (2) order
effective pursuant to Section available for Web site viewing and routing; and (3) related compliance
19(b)(3)(A)(ii) of the Exchange Act 21 printing in the Commission’s Public processes.
and Rule 19b–4(f)(2) thereunder,22 Reference Room, 100 F Street NE.,
Washington, DC 20549 on official The text of the proposed rule change
because it establishes or changes a due,
or fee. business days between the hours of is below. Proposed new language is
At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of such italicized; proposed deletions are
filing of the proposed rule change, the filing also will be available for bracketed.
Commission summarily may inspection and copying at the principal * * * * *
temporarily suspend the rule change if office of the Exchange. All comments
received will be posted without change; 4759. Data Feeds Utilized
it appears to the Commission that the
action is necessary or appropriate in the the Commission does not edit personal [BX shall publicly disclose the
public interest, for the protection of identifying information from proprietary and network processor feeds
investors, or would otherwise further submissions. You should submit only
utilized by the System for the handling,
the purposes of the Act. If the information that you wish to make
routing, and execution of orders, as well
Commission takes such action, the available publicly. All submissions
should refer to File Number SR–BOX– as for the regulatory compliance
Commission shall institute proceedings
2015–17, and should be submitted on or processes related to those functions.
to determine whether the proposed rule
before June 10, 2015. This information shall be displayed on
should be approved or disapproved.
www.nasdaqtrader.com, and it shall be
IV. Solicitation of Comments For the Commission, by the Division of
Trading and Markets, pursuant to delegated
updated promptly each time BX
Interested persons are invited to authority.23 determines to add, subtract, or
submit written data, views, and Robert W. Errett, otherwise modify a data source.]
arguments concerning the foregoing, Deputy Secretary. The BX System utilizes the below
including whether the proposed rule [FR Doc. 2015–12173 Filed 5–19–15; 8:45 am] proprietary and network processor feeds
change is consistent with the Act. BILLING CODE 8011–01–P utilized by the System for the handling,
Comments may be submitted by any of routing, and execution of orders, as well
the following methods: as for the regulatory compliance
Electronic Comments SECURITIES AND EXCHANGE processes related to those functions. The
COMMISSION Secondary Source of data is utilized
• Use the Commission’s Internet
[Release No. 34–74962; File No. SR–BX– only in emergency market conditions
comment form (http://www.sec.gov/
2015–026] and only until those emergency
rules/sro.shtml); or
conditions are resolved.
• Send an email to rule-comments@ Self-Regulatory Organizations;
sec.gov. Please include File Number SR– NASDAQ OMX BX, Inc.; Notice of Filing
BOX–2015–17 on the subject line. and Immediate Effectiveness of
Paper Comments Proposed Rule Change To Update the
Public Disclosure of Sources of Data
• Send paper comments in triplicate BX Utilizes
to Secretary, Securities and Exchange
Commission, 100 F Street NE., May 14, 2015.
mstockstill on DSK4VPTVN1PROD with NOTICES
Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
21 15 U.S.C. 78s(b)(3)(A)(ii). 1 15 U.S.C. 78s(b)(1).
22 17 CFR 240.19b–4(f)(2). 23 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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Document Created: 2018-02-21 10:29:23
Document Modified: 2018-02-21 10:29:23
| 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 29114 |
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