80 FR 39169 - 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 130 (July 8, 2015)
Federal Register Volume 80, Issue 130 (July 8, 2015)
| Page Range | 39169-39172 | |
| FR Document | 2015-16653 |
[Federal Register Volume 80, Number 130 (Wednesday, July 8, 2015)] [Notices] [Pages 39169-39172] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-16653] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75350; File No. SR-BOX-2015-24] 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 July 1, 2015. Pursuant to Section 19(b)(1) under the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on June 29, 2015, BOX Options Exchange LLC (the ``Exchange'') filed with the Securities and Exchange Commission (the ``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). --------------------------------------------------------------------------- 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 July 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.A of the BOX Fee Schedule, Exchange Fees for Non-Auction Transactions. First, the Exchange proposes to amend certain 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 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 eliminate 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. Public Customers currently receive a $0.10 credit (Penny Pilot Classes) and $0.45 credit (Non-Penny Pilot Classes) when interacting with Professional Customers, Broker Dealers or Market Makers, regardless of whether they are adding or removing liquidity. The Exchange proposes to eliminate both these credits. These transactions will remain exempt from the Liquidity Fees and Credits outlined in Section II of the BOX Fee Schedule. The revised fee structure [[Page 39170]] 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 0.00 0.00 0.00 0.00 Customer/Broker Dealer. Market Maker.... 0.00 0.00 0.00 0.00 Professional Customer or Public Customer. 0.60 0.64 0.95 0.99 Broker Dealer. Professional 0.25 0.40 0.35 0.40 Customer/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 0.00 0.05 0.00 0.10 Customer/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 charged no fee 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 charged no fee. 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. In the Public Customer's Monthly ADV section the Exchange proposes to adjust the volume tiers and adopt different per contract rebates for Penny Pilot Classes and Non-Penny Pilot Classes. The new per contract rebates for 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 rebate ------------------------------- Public customer monthly ADV Penny pilot Non-penny classes pilot classes ------------------------------------------------------------------------ 65,001 contracts and greater............ ($0.40) ($0.70) 40,001 contracts to 65,000 contracts.... ($0.25) ($0.50) 15,001 contracts to 40,000 contracts.... ($0.15) ($0.40) 1 contract to 15,000 contracts.......... $0.00 $0.00 ------------------------------------------------------------------------ 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,\7\ 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. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Exchange believes amending the Non-Auction Transaction credits for Public Customers 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, and the Exchange believes it is now appropriate to eliminate the credits for Public Customers.\8\ 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 options markets.\9\ 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. --------------------------------------------------------------------------- \8\ See supra, note 6. Prior to adopting the Non-Auction Transaction fee structure, Public Customers were charged $0.07 for each Non-Auction transaction. \9\ 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 according to the account type of the Participant [[Page 39171]] 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 credits within the structure.\10\ 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. --------------------------------------------------------------------------- \10\ See supra, note 6. --------------------------------------------------------------------------- The Exchange believes that the proposed fees for Public Customers in Non-Auction Transactions are reasonable. Under the proposed Non- Auction Transaction fee structure Public Customers will never pay a fee for their Non-Auction transactions and may be eligible for a per contract rebate depending on their monthly ADV for all transactions executed on BOX. Therefore the Exchange believes that it is appropriate and therefore consistent with the Act to eliminate the credits for Public Customers in Section 1.A. The Exchange believes the Non-Auction transaction fees for Public Customers are reasonable as they are in line with the current fees assessed by other competing exchanges.\11\ --------------------------------------------------------------------------- \11\ 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. --------------------------------------------------------------------------- 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 Public Customers in Non-Auction Transactions. The volume thresholds and applicable rebates are meant to incentivize Public Customers 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; \12\ 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. --------------------------------------------------------------------------- \12\ 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 offer these rebate structures to Public Customers in Non-Auction transactions. The practice of incentivizing increased Public Customer order flow is common in the options markets. The Exchange believes the proposed changes to the tiers and per contract rebates are reasonable, as Public Customers will benefit from the opportunity to obtain a greater rebate in most situations. For example, under the current schedule a Public Customer with an ADV of 17,000 would receive a per contract rebate of $0.12. Under the proposed schedule this same Public Customer would receive a per contract rebate of $0.15 for Penny Pilot Classes and $0.40 for Non-Penny Pilot Classes. The Exchange believes it is reasonable to offer a higher per contract rebate for transactions in Penny Pilot Classes [sic] compared to Non-Penny Pilot Classes [sic] because Non-Penny Pilot Classes are typically less actively traded and have wider spreads. The Exchange believes that offering a higher rebate will incentivize Public Customer order flow in Non-Penny Pilot issues on the Exchange, ultimately benefitting all Participants trading 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. 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 \13\ and Rule 19b-4(f)(2) thereunder,\14\ because it establishes or changes a due, or fee. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(3)(A)(ii). \14\ 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-2015-24 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-2015-24. 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 [[Page 39172]] 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-2015-24, and should be submitted on or before July 29, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-16653 Filed 7-7-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 130 / Wednesday, July 8, 2015 / Notices 39169
which they principally trade. 2015–049), as modified by Amendment II. Self-Regulatory Organization’s
Additionally, price information on Nos. 1 and 2 thereto, be, and it hereby Statement of the Purpose of, and
Swaps, commodity-linked notes, is, approved. Statutory Basis for, the Proposed Rule
Forwards, and non-exchange traded For the Commission, by the Division of Change
investment companies will be available Trading and Markets, pursuant to delegated In its filing with the Commission, the
from major broker-dealer firms or authority.25
Exchange included statements
through subscription services, such as Robert W. Errett, concerning the purpose of and basis for
Bloomberg, Markit, and Thomson Deputy Secretary. the proposed rule change and discussed
Reuters, which can be accessed by [FR Doc. 2015–16652 Filed 7–7–15; 8:45 am] any comments it received on the
entities that have entered into an BILLING CODE 8011–01–P proposed rule change. The text of these
authorized participant agreement with
statements may be examined at the
the Trust and other investors.
In addition to the information set places specified in Item IV below. The
SECURITIES AND EXCHANGE Exchange has prepared summaries, set
forth in the Prior Release, the Exchange COMMISSION
represents that: (i) FINRA, on behalf of forth in Sections A, B, and C below, of
the Exchange, will communicate as [Release No. 34–75350; File No. SR–BOX– the most significant aspects of such
needed regarding trading information it 2015–24] statements.
can obtain relating to exchange-traded A. Self-Regulatory Organization’s
Self-Regulatory Organizations; BOX
or centrally-cleared equity securities Statement of the Purpose of, and
Options Exchange LLC; Notice of
and assets held by a Fund or its Statutory Basis for, the Proposed Rule
Filing and Immediate Effectiveness of
Subsidiary, as applicable, which Change
a Proposed Rule Change To Amend
include exchange-traded Commodity-
the Fee Schedule on the BOX Market 1. Purpose
Related Assets and exchange-traded or
LLC Options Facility
centrally-cleared Commodity-Linked The Exchange proposes to make a
Instruments, with other markets and July 1, 2015. number of changes to Section I.A of the
other entities that are members of the Pursuant to Section 19(b)(1) under the BOX Fee Schedule, Exchange Fees for
ISG; (ii) FINRA may obtain trading Securities Exchange Act of 1934 (the Non-Auction Transactions.
information regarding trading in ‘‘Act’’),1 and Rule 19b–4 thereunder,2 First, the Exchange proposes to
exchange-traded equity securities and notice is hereby given that on June 29, amend certain credits in the pricing
other assets held by each Fund and each 2015, BOX Options Exchange LLC (the model outlined in Section I.A. (Non-
Subsidiary, as applicable, from such ‘‘Exchange’’) filed with the Securities Auction Transactions).5 In this section,
markets and other entities; and (iii) the and Exchange Commission (the fees and credits are assessed depending
Exchange may obtain information ‘‘Commission’’) the proposed rule on upon three factors: (i) The account
regarding trading in exchange-traded change as described in Items I, II, and type of the Participant submitting the
equity securities and other assets held III below, which Items have been order; (ii) whether the Participant is a
by each Fund and each Subsidiary from prepared by the Exchange. The liquidity provider or liquidity taker; and
such markets and other entities (as long Exchange filed the proposed rule change (iii) the account type of the contra party.
as such markets and other entities are pursuant to Section 19(b)(3)(A)(ii) of the Non-Auction Transactions in Penny
members of ISG or have in place a Act,3 and Rule 19b–4(f)(2) thereunder,4 Pilot Classes are assessed different fees
comprehensive surveillance sharing which renders the proposal effective or credits than Non-Auction
agreement with the Exchange). The upon filing with the Commission. The Transactions in Non-Penny Pilot
Exchange has a general policy Commission is publishing this notice to Classes. The Exchange recently adopted
prohibiting the distribution of material, solicit comments on the proposed rule this pricing model 6 and now proposes
non-public information by its change from interested persons. to amend certain credits in this section.
employees. Specifically, the Exchange proposes to
The Commission notes that, beyond I. Self-Regulatory Organization’s
Statement of the Terms of the Substance eliminate the Maker and Taker credits
the changes described herein, the
of the Proposed Rule Change for Public Customers interacting with
Exchange represents that there are no
Professional Customers/Broker Dealers
changes to any other information The Exchange is filing with the or Market Makers in both Penny Pilot
included in the Prior Release, and all Securities and Exchange Commission and Non-Penny Pilot Classes. Public
other facts presented and (‘‘Commission’’) a proposed rule change Customers currently receive a $0.10
representations made in the Prior to amend the Fee Schedule on the BOX credit (Penny Pilot Classes) and $0.45
Release remain true and in effect. The Market LLC (‘‘BOX’’) options facility. credit (Non-Penny Pilot Classes) when
Commission further notes that the While changes to the fee schedule interacting with Professional Customers,
Funds and the Shares must comply with pursuant to this proposal will be Broker Dealers or Market Makers,
the requirements of Nasdaq Rule 5735 to effective upon filing, the changes will regardless of whether they are adding or
be initially and continuously listed and become operative on July 1, 2015. The removing liquidity. The Exchange
traded on the Exchange. This approval text of the proposed rule change is proposes to eliminate both these credits.
order is based on all of the Exchange’s available from the principal office of the
representations and description of the These transactions will remain
Exchange, at the Commission’s Public exempt from the Liquidity Fees and
Funds, including those set forth above, Reference Room and also on the Credits outlined in Section II of the BOX
srobinson on DSK5SPTVN1PROD with NOTICES
in the Prior Release, and in the Notice. Exchange’s Internet Web site at http:// Fee Schedule. The revised fee structure
IV. Conclusion boxexchange.com.
5 Non-Auction Transactions are those transactions
It is therefore ordered, pursuant to 25 17 CFR 200.30–3(a)(12). executed on the BOX Book.
Section 19(b)(2) of the Act,24 that the 1 15 U.S.C. 78s(b)(1). 6 See Securities Exchange Act Release No. 73547
proposed rule change (SR–NASDAQ– 2 17 CFR 240.19b–4.
(November 6, 2014), 79 FR 67520 (November 13,
3 15 U.S.C. 78s(b)(3)(A)(ii).
2014) (Notice of Filing and Immediate Effectiveness
24 15 U.S.C. 78s(b)(2). 4 17 CFR 240.19b–4(f)(2). of SR–BOX–2014–25).
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originating the order and the contra believes that the proposed changes to C. Self-Regulatory Organization’s
party. This fee structure has been in the volume thresholds and rebates are Statement on Comments on the
place on the Exchange since last year reasonable and competitive when Proposed Rule Change Received From
and the Exchange is simply adjusting compared to incentive structures at Members, Participants, or Others
certain credits within the structure.10 other exchanges. No written comments were either
The result of this structure is that a The Exchange continues to believe it solicited or received.
Participant does not know the fee it will is equitable and not unfairly
be charged when submitting certain discriminatory to offer these rebate III. Date of Effectiveness of the
orders. Therefore, the Participant must structures to Public Customers in Non- Proposed Rule Change and Timing for
recognize that it could be charged the Auction transactions. The practice of Commission Action
highest applicable fee on the Exchange’s incentivizing increased Public Customer The foregoing rule change has become
schedule, which may, instead, be order flow is common in the options effective pursuant to Section
lowered or changed to a credit markets. The Exchange believes the 19(b)(3)(A)(ii) of the Exchange Act 13
depending upon how the order proposed changes to the tiers and per and Rule 19b–4(f)(2) thereunder,14
interacts. contract rebates are reasonable, as because it establishes or changes a due,
The Exchange believes that the Public Customers will benefit from the or fee.
proposed fees for Public Customers in opportunity to obtain a greater rebate in At any time within 60 days of the
Non-Auction Transactions are most situations. For example, under the filing of the proposed rule change, the
reasonable. Under the proposed Non- current schedule a Public Customer Commission summarily may
Auction Transaction fee structure Public with an ADV of 17,000 would receive a temporarily suspend the rule change if
Customers will never pay a fee for their per contract rebate of $0.12. Under the it appears to the Commission that the
Non-Auction transactions and may be proposed schedule this same Public action is necessary or appropriate in the
eligible for a per contract rebate Customer would receive a per contract public interest, for the protection of
depending on their monthly ADV for all rebate of $0.15 for Penny Pilot Classes investors, or would otherwise further
transactions executed on BOX. and $0.40 for Non-Penny Pilot Classes. the purposes of the Act. If the
Therefore the Exchange believes that it The Exchange believes it is reasonable Commission takes such action, the
is appropriate and therefore consistent to offer a higher per contract rebate for Commission shall institute proceedings
with the Act to eliminate the credits for transactions in Penny Pilot Classes [sic] to determine whether the proposed rule
Public Customers in Section 1.A. The compared to Non-Penny Pilot Classes should be approved or disapproved.
Exchange believes the Non-Auction [sic] because Non-Penny Pilot Classes
IV. Solicitation of Comments
transaction fees for Public Customers are typically less actively traded and
are reasonable as they are in line with have wider spreads. The Exchange Interested persons are invited to
the current fees assessed by other believes that offering a higher rebate submit written data, views, and
competing exchanges.11 will incentivize Public Customer order arguments concerning the foregoing,
flow in Non-Penny Pilot issues on the including whether the proposed rule
Tiered Volume Rebate for Non-Auction Exchange, ultimately benefitting all change is consistent with the Act.
Transactions Participants trading on BOX. Comments may be submitted by any of
BOX believes it is reasonable, the following methods:
B. Self-Regulatory Organization’s
equitable and not unfairly Electronic Comments
Statement on Burden on Competition
discriminatory to adjust the tiered
volume based rebates for Public The Exchange does not believe that • Use the Commission’s Internet
Customers in Non-Auction the proposed rule change will impose comment form (http://www.sec.gov/
Transactions. The volume thresholds any burden on competition not rules/sro.shtml); or
necessary or appropriate in furtherance • Send an email to rule-comments@
and applicable rebates are meant to
of the purposes of the Act. sec.gov. Please include File Number SR–
incentivize Public Customers to direct
The Exchange believes that the BOX–2015–24 on the subject line.
order flow to the Exchange to obtain the
benefit of the rebate, which will in turn proposed adjustments to fees and Paper Comments
benefit all market participants by rebates in the Non-Auction Transactions
fee structure will not impose a burden • Send paper comments in triplicate
increasing liquidity on the Exchange. to Secretary, Securities and Exchange
Other exchanges employ similar on competition among various Exchange
Participants. Rather, BOX believes that Commission, 100 F Street NE.,
incentive programs; 12 and the Exchange Washington, DC 20549–1090.
the changes will result in the
10 See supra, note 6. Participants being charged appropriately All submissions should refer to File
11 Many U.S. Options Exchanges do not for these transactions and are designed Number SR–BOX–2015–24. This file
differentiate their fees between auction and non- to enhance competition in Non-Auction number should be included on the
auction transactions. However, Public Customers
transactions on BOX. Submitting an subject line if email is used. To help the
are charged anywhere from $0.00 to $0.85 within Commission process and review your
the following options exchange fee schedules. See order is entirely voluntary and
NASDAQ OMX BX (‘‘BX’’) Options Pricing, Chapter Participants can determine which type comments more efficiently, please use
XV, Sec. 2; NYSE Arca Options (‘‘Arca’’) Fees and of order they wish to submit, if any, to only one method. The Commission will
Charges page 3; International Securities Exchange
the Exchange. Further, the Exchange post all comments on the Commission’s
(‘‘ISE’’) Schedule of Fees, Section I. Internet Web site (http://www.sec.gov/
12 See Section B of the PHLX Pricing Schedule believes that this proposal will enhance
srobinson on DSK5SPTVN1PROD with NOTICES
entitled ‘‘Customer Rebate Program;’’ ISE Gemini’s competition between exchanges because rules/sro.shtml). Copies of the
Qualifying Tier Thresholds (page 6 of the ISE it is designed to allow the Exchange to submission, all subsequent
Gemini Fee Schedule); and CBOE’s Volume better compete with other exchanges for amendments, all written statements
Incentive Program (VIP). CBOE’s Volume Incentive with respect to the proposed rule
Program (‘‘VIP’’) pays certain tiered rebates to order flow.
Trading Permit Holders for electronically executed
change that are filed with the
multiply-listed option orders which include AIM national Public Customer volume traded on their
13 15 U.S.C. 78s(b)(3)(A)(ii).
orders. Note that some of these exchanges base respective exchanges, which the Exchange is not
these rebate programs on the percentage of total proposing to do. 14 17 CFR 240.19b–4(f)(2).
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Commission, and all written I. Self-Regulatory Organization’s investors.4 Chair White specifically
communications relating to the Statement of the Terms of Substance of noted possible solutions to include
proposed rule change between the the Proposed Rule Change frequent batch auctions designed to
Commission and any person, other than minimize speed advantages.5
CHX proposes to adopt and amend Consistent with Chair White’s
those that may be withheld from the rules to implement CHX SNAPSM, an
public in accordance with the statement, the Exchange proposes
intra-day and on-demand auction SNAP, an innovative solution that
provisions of 5 U.S.C. 552, will be service. The text of this proposed rule
available for Web site viewing and deemphasizes speed as a hallmark of its
change is available on the Exchange’s functionality, which will operate
printing in the Commission’s Public Web site at http://www.chx.com/rules/ consistently with Regulation NMS 6 and
Reference Room, 100 F Street NE., proposed_rules.htm, at the principal Rule 201 of Regulation SHO or
Washington, DC 20549 on official office of the Exchange, and at the applicable exemptive relief.7 As
business days between the hours of Commission’s Public Reference Room. discussed in detail below, the SNAP
10:00 a.m. and 3:00 p.m. Copies of such Cycle has several characteristics
II. Self-Regulatory Organization’s
filing also will be available for Statement of the Purpose of, and specifically designed to minimize speed
inspection and copying at the principal Statutory Basis for, the Proposed Rule advantages, which include, among other
office of the Exchange. All comments Change things, the following:
received will be posted without change; • SNAP Cycles will never be
the Commission does not edit personal In its filing with the Commission, the scheduled and will always be driven by
identifying information from self-regulatory organization included market demand for bulk trading in a
submissions. You should submit only statements concerning the purpose of, security.
information that you wish to make and basis for, the proposed rule change • The order acceptance period for
available publicly. All submissions and discussed any comments it received SNAP Eligible Orders will always be
on the proposed rule change. The text randomized.
should refer to File Number SR–BOX–
2015–24, and should be submitted on or
of those statements may be examined at • Order cancellations during a SNAP
the places specified in Item IV below. Cycle will be prohibited.
before July 29, 2015. The Exchange has prepared summaries, • New order modifiers, such as SNAP
For the Commission, by the Division of set forth in sections A, B and C below, Auction Only Order—Pegged, will
Trading and Markets, pursuant to delegated of the most significant parts of such permit market participants to take
authority.15 statements. advantage of the most recent market
Robert W. Errett, data in competitively pricing their
A. Self-Regulatory Organization’s
Deputy Secretary. SNAP Eligible Orders, regardless of
Statement of the Purpose of, and the
their respective speed capabilities.
[FR Doc. 2015–16653 Filed 7–7–15; 8:45 am] Statutory Basis for, the Proposed Rule As such, the Exchange proposes to
BILLING CODE 8011–01–P Change adopt Article 18, Rule 1 (SNAP) to
1. Purpose outline the proposed SNAP Cycle;
amend Article 1, Rule 2 (Order Types,
SECURITIES AND EXCHANGE The Exchange proposes to adopt and
Modifiers and Related Terms) to adopt
COMMISSION amend rules to implement CHX
several new order modifiers related to
SNAPSM (Sub-second Non-displayed
SNAP; and amend Article 20, Rule 8
[Release No. 34–75346; File No. SR–CHX– Auction Process), an innovative intra-
(Operation of the Matching System) to
2015–03] day and on-demand auction service that
support a new order ranking plan for
could occur numerous times throughout
SNAP executions. The Exchange also
Self-Regulatory Organizations; a regular trading session 3 at the request
proposes to amend various other rules
Chicago Stock Exchange, Inc.; Notice of Participants seeking to trade
to harmonize with SNAP.
of Filing of Proposed Rule Change To securities in bulk. SNAP Cycles are
Implement CHX SNAPSM, an Intra-Day designed to transition seamlessly from, 4 See Mary Jo White, Chair, Securities and
and On-Demand Auction Service and back to, automated trading in the Exchange Commission, Speech at Sandler O’Neil &
subject security, and to occur Partners L.P. Global Exchange and Brokerage
July 1, 2015. simultaneously with automated trading Conference (June 5, 2014).
5 See id.
Pursuant to Section 19(b)(1) of the in the subject security elsewhere in the
6 17 CFR 242.611.
Securities Exchange Act of 1934 national market system. SNAP is 7 17 CFR 242.201. As discussed in detail below,
designed to address a specific market
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 SNAP executions may be delayed up to 200
need for bulk trading of securities on an milliseconds from the market snapshot utilized for
notice is hereby given that on June 23,
exchange, which will operate efficiently determining the single auction price (i.e., SNAP
2015, the Chicago Stock Exchange, Inc. within the national market system. Price), if the SNAP Price would require, among
(‘‘CHX’’ or ‘‘Exchange’’) filed with the On June 5, 2014, Chair White noted,
other things, the routing of one or more orders to
Securities and Exchange Commission away markets for Rule 611 of Regulation NMS
among other things, that a key question compliance purposes. See infra Section 5. The
(‘‘SEC’’ or ‘‘Commission’’) the proposed concerning trading venues is whether purpose of the routing delay is to give away markets
rule change as described in Items I, II, they have sufficient opportunity and sufficient to time to respond to the routed orders,
and III below, which Items have been so that any unexecuted routed orders would be
flexibility to innovate successfully with included in the SNAP execution within the
prepared by the Exchange. The initiatives that seek to deemphasize Matching System. However, the SNAP execution
srobinson on DSK5SPTVN1PROD with NOTICES
Commission is publishing this notice to speed as a key to trading success in delay may render the national best bid ascertained
solicit comments on the proposed rule order to further serve the interests of from the aforementioned market snapshot no longer
‘‘current,’’ as required during a short sale price test
change from interested persons. restriction in a covered security, pursuant to Rule
3 CHX Article 20, Rule 1(b) provides that the 201(b)(1)(i) of Regulation SHO. Accordingly, the
15 17
‘‘regular trading session—shall begin at 8:30 a.m. Exchange will be submitting separately a request for
CFR 200.30–3(a)(12).
and shall end at 3:00 p.m. each day for all no-action relief or exemptive relief from certain
1 15 U.S.C. 78s(b)(1).
securities.’’ All times are in central time, unless requirements of Rule 201 of Regulation SHO to
2 17 CFR 240.19b–4. noted otherwise. address this issue.
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Document Created: 2018-02-23 09:12:32
Document Modified: 2018-02-23 09:12:32
| 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 39169 |
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