80 FR 43803 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Pilot Programs That Permit the Exchange To Have No Minimum Size Requirement for Orders Entered Into the PIP and COPIP

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 141 (July 23, 2015)

[Federal Register Volume 80, Number 141 (Thursday, July 23, 2015)]
[Notices]
[Pages 43803-43805]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-18033]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75480; File No. SR-BOX-2015-27]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Extend the Pilot Programs That Permit the Exchange To Have No Minimum 
Size Requirement for Orders Entered Into the PIP and COPIP

July 17, 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 July 16, 2015, BOX Options Exchange LLC (the ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared

[[Page 43804]]

by the self-regulatory organization. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Interpretive Material to Rule 7150 
(Price Improvement Period ``PIP'') and Interpretive Material to Rule 
7245 (Complex Order Price Improvement Period ``COPIP'') to extend the 
pilot programs that permit the Exchange to have no minimum size 
requirement for orders entered into the PIP (``PIP Pilot Program'') and 
COPIP (``COPIP Pilot Program''). 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 self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
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 purpose of the proposed rule change is to extend the PIP and 
COPIP Pilot Programs for an additional twelve months or until the date 
on which the pilot programs are approved on a permanent basis, 
whichever is earlier. The PIP and COPIP Pilot Programs allow the 
Exchange to have no minimum size requirement for orders entered into 
the PIP \3\ and the COPIP.\4\ The Exchange has been providing certain 
data to the Commission during the PIP and COPIP Pilot Programs. The 
proposed rule change retains the text of IM-7150-1 to Rule 7150 and IM-
7245-1 to Rule 7245; and seeks to extend the operation of the PIP and 
COPIP Pilot Programs until July 18, 2016.
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    \3\ The PIP Pilot Program is currently set to expire on July 18, 
2015. See Securities Exchange Act Release Nos. 66871 (April 27, 
2012) 77 FR 26323 (May 3, 2012) (File No.10-206, In the Matter of 
the Application of BOX Options Exchange LLC for Registration as a 
National Securities Exchange Findings, Opinion, and Order of the 
Commission), 67255 (June 26, 2012) 77 FR 39315 (July 2, 2013) (SR-
BOX-2012-009)(Notice of Filing and Immediate Effectiveness of a 
Proposal To Extend a Pilot Program That Permits BOX to Have No 
Minimum Size Requirement for Orders Entered Into the Price 
Improvement Period), 69846 (June 25, 2013) 78 FR 39365 (July 1, 
2013) (SR-BOX-2013-33) (Notice of Filing and Immediate Effectiveness 
of a Proposal To Extend a Pilot Program That Permits BOX to Have No 
Minimum Size Requirement for Orders Entered Into the Price 
Improvement Period), 72545 (July 7, 2014) 79 FR 40182 (July 11, 
2014) (SR-BOX-2014-19) (Notice of Filing and Immediate Effectiveness 
of a Proposed Rule Change to amend Interpretive Material to Rule 
7150 (Price Improvement Period ``PIP'') and Interpretive Material to 
Rule 7245 (Complex Order Price Improvement Period ``COPIP''), 73314 
(October 7, 2014) 79 FR 61682 (October 14, 2014) (SR-BOX-2014-23) 
(Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Extend the Pilot Programs That Permit the Exchange To Have 
No Minimum Size Requirement for Orders Entered Into the PIP (``PIP 
Pilot Program'') and COPIP (``COPIP Pilot Program'') Until December 
18, 2014), and 73831 (December 12, 2014) 79 FR 75211 (December 17, 
2014) (SR-BOX-2014-27) (Notice of Filing and Immediate Effectiveness 
of a Proposed Rule Change To Amend Interpretive Material to Rule 
7150 and Interpretive Material to Rule 7245 To Extend the Pilot 
Period That Permit the Exchange To Have No Minimum Size Requirement 
for Orders Entered Into the PIP and COPIP Until July 18, 2015).
    \4\ The COPIP Pilot Program is currently set to expire on July 
18, 2015. See Securities Exchange Act Release Nos. 71148 (December 
19, 2013) 78 FR 78437 (December 26, 2013) (Notice of Filing of 
Amendment Nos. 1 and 2 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment Nos. 1 and 2, to 
Permit Complex Orders to Participate in Price Improvement Periods), 
72545 (July 7, 2014) 79 FR 40182 (July 11, 2014) (SR-BOX-2014-19) 
(Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change to amend Interpretive Material to Rule 7150 (Price 
Improvement Period ``PIP'') and Interpretive Material to Rule 7245 
(Complex Order Price Improvement Period ``COPIP''), and 73314 
(October 7, 2014) 79 FR 61682 (October 14, 2014) (SR-BOX-2014-23) 
(Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change To Extend the Pilot Programs That Permit the Exchange To Have 
No Minimum Size Requirement for Orders Entered Into the PIP (``PIP 
Pilot Program'') and COPIP (``COPIP Pilot Program'') Until December 
18, 2014) and 73831 (December 12, 2014) 79 FR 75211 (December 17, 
2014) (SR-BOX-2014-27) (Notice of Filing and Immediate Effectiveness 
of a Proposed Rule Change To Amend Interpretive Material to Rule 
7150 and Interpretive Material to Rule 7245 To Extend the Pilot 
Period That Permit the Exchange To Have No Minimum Size Requirement 
for Orders Entered Into the PIP and COPIP Until July 18, 2015).
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    The Exchange notes that the PIP and COPIP Pilot Programs permit 
Participants to trade with their customer orders that are less than 50 
contracts. In particular, any order entered into the PIP is guaranteed 
an execution at the end of the auction at a price at least equal to the 
national best bid or offer. Any order entered into the COPIP is 
guaranteed an execution at the end of the auction at a price at least 
equal to or better than the cNBBO,\5\ cBBO \6\ and BBO on the Complex 
Order Book for the Strategy at the time of commencement.
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    \5\ As defined in BOX Rule 7240(a)(3), the term ``cNBBO'' means 
the best net bid and offer price for a Complex Order Strategy based 
on the NBBO for the individual options components of such Strategy.
    \6\ As defined in BOX Rule 7240(a)(1), the term ``cBBO'' means 
the best net bid and offer price for a Complex Order Strategy based 
on the BBO on the BOX Book for the individual options components of 
such Strategy.
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    The Exchange believes that extending the pilot period is 
appropriate because it will allow the Exchange the Commission 
additional time to analyze data regarding the PIP and COPIP Pilot 
Programs that the Exchange has committed to provide. As such, the 
Exchange believes that it is appropriate to extend the current 
operation of the Pilot Programs. In further support of this proposed 
rule change, the Exchange will submit to the Commission data from the 
PIP and COPIP Pilot Programs. Further, the Exchange represents that it 
will provide certain additional data requested by the Commission 
regarding trading in the PIP and COPIP Auctions for the six (6) month 
period from January 1, 2015 through June 30, 2015. The Exchange agrees 
to provide this data by January 18, 2015 and to make a summary of the 
data provided to the Commission publically available. The Exchange 
continues to believe that there remains meaningful competition for all 
size orders and there is significant price improvement for all orders 
executed through the PIP and COPIP; and that there is an active and 
liquid market functioning on the Exchange outside the PIP and COPIP 
auctions. The Exchange believes the additional data will substantiate 
the Exchange's belief and provide further evidence in support of 
permanent approval of the PIP and COPIP Pilot Programs.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Act,\7\ in general, and Section 
6(b)(5) of the Act,\8\ in particular, in that it is designed to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing

[[Page 43805]]

information with respect to, and facilitating transactions in 
securities, to remove impediments to and perfect the mechanism for a 
free and open market and a national market system and, in general, to 
protect investors and the public interest. The Exchange believes that 
the data demonstrates that there is sufficient investor interest and 
demand to extend the PIP and COPIP Pilot Programs for an additional 
twelve months or until the date on which the pilot programs are 
approved on a permanent basis, whichever is earlier. The Exchange 
represents that the PIP and COPIP Pilot Programs are designed to create 
tighter markets and ensure that each order receives the best possible 
price.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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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. Specifically, the Exchange 
believes that, by extending the expiration of the PIP and COPIP Pilot 
Programs, the proposed rule change will allow additional time to 
analyze data regarding the PIP and COPIP Pilot Programs that the 
Exchange has committed to provide.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

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) of the Act \9\ and Rule 19b-4(f)(6) \10\ thereunder because 
the proposal does not: (i) Significantly affect the protection of 
investors or the public interest; (ii) impose any significant burden on 
competition; and (iii) by its terms, become operative for 30 days from 
the date on which it was filed, or such shorter time as the Commission 
may designate if consistent with the protection of investors and the 
public interest.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to 
give the Commission written notice of the Exchange's intent to file 
the proposed rule change, along with a brief description and text of 
the proposed rule change, at least five business days prior to the 
date of filing of the proposed rule change, or such shorter time as 
designated by the Commission. The Exchange has satisfied this 
requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \12\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay 
period because the current pilot programs are set to expire on July 18, 
2015. The Exchange noted that such waiver will permit the pilot 
programs to continue without interruption.
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest, as 
it will allow the pilot programs to continue uninterrupted, thereby 
avoiding any potential investor confusion that could result from a 
temporary interruption in the pilot programs. For these reasons, the 
Commission designates the proposed rule change to be operative on July 
18, 2015.\14\
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    \14\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission 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 Comments

     Use 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-2015-27 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BOX-2015-27. 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-2015-27, and should be 
submitted on or before August 13, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-18033 Filed 7-22-15; 8:45 am]
BILLING CODE 8011-01-P