81 FR 29584 - 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 (“BOX”) Options Facility
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 92 (May 12, 2016)
Federal Register Volume 81, Issue 92 (May 12, 2016)
| Page Range | 29584-29587 | |
| FR Document | 2016-11153 |
[Federal Register Volume 81, Number 92 (Thursday, May 12, 2016)] [Notices] [Pages 29584-29587] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-11153] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77778; File No. SR-BOX-2016-21] 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 (``BOX'') Options Facility May 6, 2016. 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 29, 2016, 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). --------------------------------------------------------------------------- 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 2, 2016. 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 amend the Fee Schedule for trading on BOX. [[Page 29585]] PIP and COPIP Transactions The Exchange first proposes to amend certain PIP and COPIP Transaction fees for Professional Customers, Broker Dealer and Market Makers in Section I.B of the BOX Fee Schedule. Specifically, the Exchange proposes to reduce the PIP and COPIP Order fees for Professional Customers and Broker Dealers from $0.37 to $0.15 and the PIP and COPIP Order Fees for Market Makers from $0.20 to $0.15. The revised pricing structure for PIP and COPIP Transactions will be as follows: ---------------------------------------------------------------------------------------------------------------- Account type ------------------------------------------------------------------------------- Professional Public customer customer Broker dealer Market maker ---------------------------------------------------------------------------------------------------------------- PIP Order or COPIP Order........ $0.00............. $0.15............. $0.15............. $0.15. Improvement Order in PIP or 0.15.............. 0.37.............. 0.37.............. 0.30. COPIP. Primary Improvement Order....... See Section I. B.1 See Section I. B.1 See Section I. B.1 See Section I. B.1. ---------------------------------------------------------------------------------------------------------------- The Exchange also proposes to make a clerical correction to Section I.B. of the BOX Fee Schedule. Specifically, the Primary Improvement Order row references ADV (Average Daily Volume). The Exchange no longer uses a Participant's ADV to determine volume based tiers for rebates and fees. Instead, the qualification thresholds are based on a percentage of the Participant's volume relative to the account type's overall total industry equity and ETF option volume. Therefore, the Exchange proposes to remove the reference ADV and only refer to Section I.B.1. BVR Under the BVR, the Exchange offers a tiered per contract rebate for all PIP Orders and COPIP orders of 100 contracts and under that do not trade solely with their contra order. Percentage thresholds are calculated on a monthly basis by totaling the Participant's PIP and COPIP volume submitted to BOX, relative to the total national Customer volume in multiply-listed options classes. The Exchange proposes to establish an additional tier within the BVR for percentage thresholds of 1.250% and above. Participants whose PIP and COPIP volume submitted to BOX, relative to the total national Customer volume in multiply-listed options classes, is 1.250% or above will receive a per contract rebate of $0.18 in PIP transactions and $0.06 in COPIP transactions. With this, the Exchange also proposes to adjust the threshold in Tier 4 to end at 1.249%. The new BVR set forth in Section I.B.2 of the BOX Fee Schedule will be as follows: ---------------------------------------------------------------------------------------------------------------- Percentage thresholds of Per contract rebate (all national customer volume in account types) Tier multiply-listed options classes ------------------------------- (monthly) PIP COPIP ---------------------------------------------------------------------------------------------------------------- 1............................................. 0.000% to 0.159%................ ($0.00) ($0.00) 2............................................. 0.160% to 0.339%................ (0.04) (0.02) 3............................................. 0.340% to 0.999%................ (0.11) (0.04) 4............................................. 1.000% to 1.249%................ (0.14) (0.06) 5............................................. 1.250% and Above................ (0.18) (0.06) ---------------------------------------------------------------------------------------------------------------- Complex Orders The Exchange then proposes to adjust certain fees within the Complex Order Pricing Structure in Section III.A. of the BOX Fee Schedule (All Complex Orders). The Exchange recently introduced a pricing structure where Complex Orders are assessed transaction fees and credits dependent 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.\5\ --------------------------------------------------------------------------- \5\ See Securities Exchange Act Release No. 77568 (April 8, 2016), 81 FR 22151 (April 14, 2016) (SR-BOX-2016-15). --------------------------------------------------------------------------- The Exchange now proposes to adjust certain fees and rebates within the new pricing structure. Specifically, the Exchange proposes to replace the $0.10 credit applied to Market Makers, Professional Customer and Broker Dealers making liquidity against a Public Customer in Penny Pilot Classes. The Exchange proposes to instead assess Professional Customers or Broker Dealers $0.45 and Market Makers $0.40 when their Penny Pilot Complex Order makes liquidity against a Public Customer Complex Order. For Complex Orders in Non-Penny Pilot Classes, the Exchange proposes to replace the $0.10 credit applied to Market Makers, Professional Customer and Broker Dealers making liquidity against a Public Customer. The Exchange proposes to instead assess Professional Customers and Broker Dealers $0.80 and Market Makers $0.75 when their Non-Penny Pilot Complex Order makes liquidity against a Public Customer Complex Order. The revised Complex Order Pricing Structure will be as follows: [[Page 29586]] ---------------------------------------------------------------------------------------------------------------- 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 (0.35) (0.35) (0.70) (0.70) Customer/Broker Dealer. Market Maker.... (0.35) (0.35) (0.70) (0.70) Professional Customer or Public Customer. 0.45 0.45 0.80 0.80 Broker Dealer. Professional (0.10) 0.30 (0.10) 0.45 Customer/Broker Dealer. Market Maker.... (0.10) 0.30 (0.10) 0.45 Market Maker.................. Public Customer. 0.40 0.40 0.75 0.75 Professional (0.10) 0.30 (0.10) 0.45 Customer/Broker Dealer. Market Maker.... (0.10) 0.30 (0.10) 0.45 ---------------------------------------------------------------------------------------------------------------- For example, if a Market Maker's Complex Order in a Penny Pilot Class interacted with a Public Customer's Complex Order, regardless of whether the Complex Order was making or taking liquidity, the Market Maker would now be charged $0.40 and the Public Customer would be credited $0.35. 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,\6\ 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. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Exchange believes that reducing the PIP and COPIP Order Fees to $0.15 for Market Makers, Professional Customers and Broker Dealers is reasonable. Reducing these fees is meant to encourage auction order flow to the Exchange, which will benefit all market participants on the Exchange. BOX believes the $0.15 fee is equitable and not unfairly discriminatory, as it applies to all Market Marker, Professional Customers and Broker Dealers submitting PIP and COPIP Orders to these auction mechanisms. Further, the Exchange believes it is equitable and not unfairly discriminatory to charge Public Customers less than Non- Public Customers for their PIP and COPIP Orders. The practice of incentivizing increased Public Customer order flow is common in the options markets. The Exchange believes the proposed amendments to the BVR in Section I.B.2 of the BOX Fee Schedule are reasonable, equitable and non- discriminatory. The BVR was adopted to attract Public Customer order flow to the Exchange by offering these Participants incentives to submit their PIP and COPIP Orders to the Exchange and the Exchange believes it is appropriate to now amend the BVR. The Exchange believes it is equitable and not unfairly discriminatory to establish an additional tier within the BVR, as all Participants have the ability to qualify for a rebate, and rebates are provided equally to qualifying Participants. Finally, the Exchange believes it is reasonable and appropriate to continue to provide incentives for Public Customers, which will result in greater liquidity and ultimately benefit all Participants trading on the Exchange. BOX believes it is reasonable, equitable and not unfairly discriminatory to adjust the monthly Percentage Thresholds of National Customer Volume in Multiply-Listed Options Classes. The volume thresholds and applicable rebates are meant to incentivize Participants 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,\7\ 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. --------------------------------------------------------------------------- \7\ 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). --------------------------------------------------------------------------- The Exchange believes amending the Complex Order pricing structure is reasonable, equitable and not unfairly discriminatory. The fee structure for Complex Orders was recently adopted and the Exchange believes it is now appropriate to adjust certain fees and credits. The Complex Order fee structure is generally intended to attract order flow to the Exchange by offering all market participants incentives to submit their Complex Orders to the Exchange. The Exchange believes that the proposed fees for Professional Customers, Broker Dealers and Market Makers interacting with Public Customer Complex Orders are reasonable. A Professional Customer or Broker Dealer interacting against a Public Customer will now be charged $0.45 in Penny Pilot Classes and $0.80 Non-Penny Pilot Classes, regardless if it is making or taking liquidity. A Market Maker interacting against a Public Customer will now be charged $0.40 in Penny Pilot Classes and $0.75 Non-Penny Pilot Classes, regardless of whether it is making or taking liquidity. The Exchange believes these proposed Complex Order fees remain competitive when compared to the Complex Order fees on another exchange.\8\ --------------------------------------------------------------------------- \8\ Comparative Complex Order fees at another exchanges [sic] range from $0.30 [sic] to $0.88. See Section II of the International Securities Exchange (``ISE'') Schedule of Fees entitled ``Complex Order Fees and Rebates.'' --------------------------------------------------------------------------- The Exchange believes that charging Professional Customers and Broker Dealers higher fees than Public Customers for Complex Orders 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 (submitting more than 390 standard orders per day on average). The Exchange believes that the higher level of trading activity from these Participants will draw a greater amount of BOX system resources than that of non-professional, Public Customers. Because this higher level of trading activity will result in greater ongoing operational costs, 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 [[Page 29587]] Professional Customers and Broker Dealers for certain Complex Order executions 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. As such, the Exchange believes it is appropriate that Market Makers be charged lower transaction fees than Professional Customers and Broker Dealers for certain Complex Order executions. The Exchange also believes it is reasonable, equitable and not unfairly discriminatory to charge Non-Public Customers a higher fee when their Complex Order interacts with a Public Customer's Complex Order, when compared to the fee assessed when their Complex Order interacts with a Non-Public Customer's Complex Order. To attract Public Customer order flow, Public Customers are given credit when their Complex Order executes against a non-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 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 to provide incentives for Public Customers. The Exchange believes that providing incentives for Complex Orders by Public Customers is reasonable and, ultimately, will benefit all Participants trading on the Exchange by attracting Public Customer order flow. Finally, the Exchange also believes it is reasonable to charge Professional Customers, Broker Dealers, and Market Makers 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. 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 is simply proposing to reduce PIP and COPIP Order fees and establish a new qualification tier in the BVR. The Exchange believes doing so will increase intermarket and intramarket competition by incenting Participants to direct their order flow to the exchange, which benefits all participants by providing more trading opportunities and improves competition on the Exchange. The Exchange also believes amending certain Complex Order fees and credits will enhance competition between exchanges because it is designed to allow the Exchange to better compete with other exchanges for Complex Order flow. Finally, the Exchange notes that it operates in a highly competitive market in which market participants can 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 \9\ and Rule 19b-4(f)(2) thereunder,\10\ because it establishes or changes a due, or fee. --------------------------------------------------------------------------- \9\ 15 U.S.C. 78s(b)(3)(A)(ii). \10\ 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-2016-21 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-2016-21. 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-2016-21, and should be submitted on or before June 2, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\11\ --------------------------------------------------------------------------- \11\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-11153 Filed 5-11-16; 8:45 am] BILLING CODE 8011-01-P
![29584 Federal Register / Vol. 81, No. 92 / Thursday, May 12, 2016 / Notices
with the guidance of ANSI/ANS 15.16– announced on the NRC public meeting ‘‘Act’’),1 and Rule 19b–4 thereunder,2
1982, ‘‘Emergency Planning for Web site on July 7, 2015 (ADAMS notice is hereby given that on April 29,
Research Reactors’’, the operations Accession No. ML15188A344). A notice 2016, BOX Options Exchange LLC (the
boundary is defined as the EPZ of GEH’s request to release the 247- ‘‘Exchange’’) filed with the Securities
boundary for each reactor facility. For hectare (610-acre) parcel and the public and Exchange Commission
the NTR, the operations boundary is meeting, including a request for (‘‘Commission’’) the proposed rule
defined by the portions of Building 105 comment, was also published in the Tri- change as described in Items I, II, and
occupied by NTR facilities. The NRC Valley Herald, Livermore, CA on July III below, which Items have been
staff has concluded that the 15, 2015 (ADAMS Accession No. prepared by the Exchange. The
environmental impacts of reducing the ML15292A519). The NRC staff Exchange filed the proposed rule change
licensed site would be similarly published a notice of the receipt of pursuant to Section 19(b)(3)(A)(ii) of the
bounded and that there would be no GEH’s request, including a request for Act,3 and Rule 19b–4(f)(2) thereunder,4
environmental impact associated with comment, in the Federal Register on which renders the proposal effective
the continued operation of the NTR in July 20, 2015 (80 FR 42846). The NRC upon filing with the Commission. The
relation to the proposed release of the staff conducted the public meeting in Commission is publishing this notice to
247-hectare (610-acre) parcel. Pleasanton, CA on July 22, 2015. A solicit comments on the proposed rule
The shutdown, defueled testing summary of the public meeting, which change from interested persons.
facility, the GETR, NRC License TR–1, includes copies of the presentations
Docket 50–70 is not the subject of any made and a copy of the transcript of the I. Self-Regulatory Organization’s
license amendment request. The GETR meeting, is available in ADAMS at Statement of the Terms of the Substance
is in SAFSTOR status. The GETR Accession No. ML15260A199. No of the Proposed Rule Change
license does not contain a site comments were made on the Federal
description and as such, there is no Rulemaking Web site, or were received The Exchange is filing with the
need to amend the GETR license to by mail or email, and all questions Securities and Exchange Commission
reflect the release of the 247-hectare asked at the meeting were answered in (‘‘Commission’’) a proposed rule change
(610-acre) parcel. In any event, the NRC the meeting. to amend the Fee Schedule on the BOX
staff considers this EA to encompass Market LLC (‘‘BOX’’) options facility.
and bound any environmental impacts III. Finding of No Significant Impact While changes to the fee schedule
resulting from the proposed release of The NRC staff has prepared this EA as pursuant to this proposal will be
the 247-hectare (610-acre) parcel in part of its review of the proposed action. effective upon filing, the changes will
relation to the ongoing shutdown, On the basis of this EA, the NRC finds become operative on May 2, 2016. The
SAFSTOR status of the GETR. that there are no significant text of the proposed rule change is
environmental impacts from the available from the principal office of the
Environmental Impacts of the
proposed action, and that preparation of Exchange, at the Commission’s Public
Alternatives to the Proposed Action
an environmental impact statement is Reference Room and also on the
As an alternative to the proposed not warranted. Accordingly, the NRC Exchange’s Internet Web site at http://
action, the NRC staff considered denial has determined that a finding of no boxexchange.com.
of the proposed release of the 247- significant impact (FONSI) is
hectare (610-acre) parcel (i.e., the ‘‘no- appropriate. In accordance with 10 CFR II. Self-Regulatory Organization’s
action’’ alternative). Denial of the 51.32(a)(4), this FONSI incorporates the Statement of the Purpose of, and
request would result in the 247-hectare EA set forth in this notice by reference. Statutory Basis for, the Proposed Rule
(610-acre) parcel remaining part of the Change
Dated at Rockville, Maryland, this 4th day
licensed site and subject to NRC of May 2016.
jurisdiction. As the licensee has no need In its filing with the Commission, the
For the Nuclear Regulatory Commission. Exchange included statements
for the parcel, its current use as a site
for cattle grazing would most likely John R. Tappert, concerning the purpose of and basis for
continue. As there is no policy or Director, Division of Decommissioning, the proposed rule change and discussed
regulatory reason for the NRC to require Uranium Recovery, and Waste Programs, any comments it received on the
Office of Nuclear Material Safety and proposed rule change. The text of these
a licensee to retain land that is not Safeguards.
radiologically impacted and for which statements may be examined at the
[FR Doc. 2016–11206 Filed 5–11–16; 8:45 am] places specified in Item IV below. The
the licensee has no further operational
need, the no-action alternative is not BILLING CODE 7590–01–P Exchange has prepared summaries, set
further considered. forth in Sections A, B, and C below, of
the most significant aspects of such
Conclusion SECURITIES AND EXCHANGE statements.
The NRC staff has concluded that the COMMISSION
proposed action will not significantly A. Self-Regulatory Organization’s
[Release No. 34–77778; File No. SR–BOX– Statement of the Purpose of, and
impact the quality of the human 2016–21]
environment, and that the proposed Statutory Basis for, the Proposed Rule
action is the preferred alternative. Self-Regulatory Organizations; BOX Change
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Agencies and Persons Consulted Options Exchange LLC; Notice of 1. Purpose
Filing and Immediate Effectiveness of
The NRC contacted the California a Proposed Rule Change To Amend The Exchange proposes to amend the
Department of Public Health concerning the Fee Schedule on the BOX Market Fee Schedule for trading on BOX.
this request. There were no comments, LLC (‘‘BOX’’) Options Facility
concerns or objections from the State 1 15 U.S.C. 78s(b)(1).
official. May 6, 2016. 2 17 CFR 240.19b–4.
A public meeting to obtain comments Pursuant to Section 19(b)(1) of the 3 15 U.S.C. 78s(b)(3)(A)(ii).
on the release approval request was Securities Exchange Act of 1934 (the 4 17 CFR 240.19b–4(f)(2).
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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/Broker Dealer ........................... (0.35) (0.35) (0.70) (0.70)
Market Maker ................................................................. (0.35) (0.35) (0.70) (0.70)
Professional Cus- Public Customer ............................................................ 0.45 0.45 0.80 0.80
tomer or Broker
Dealer.
Professional Customer/Broker Dealer ........................... (0.10) 0.30 (0.10) 0.45
Market Maker ................................................................. (0.10) 0.30 (0.10) 0.45
Market Maker ....... Public Customer ............................................................ 0.40 0.40 0.75 0.75
Professional Customer/Broker Dealer ........................... (0.10) 0.30 (0.10) 0.45
Market Maker ................................................................. (0.10) 0.30 (0.10) 0.45
For example, if a Market Maker’s submit their PIP and COPIP Orders to The Exchange believes that the
Complex Order in a Penny Pilot Class the Exchange and the Exchange believes proposed fees for Professional
interacted with a Public Customer’s it is appropriate to now amend the BVR. Customers, Broker Dealers and Market
Complex Order, regardless of whether The Exchange believes it is equitable Makers interacting with Public
the Complex Order was making or and not unfairly discriminatory to Customer Complex Orders are
taking liquidity, the Market Maker establish an additional tier within the reasonable. A Professional Customer or
would now be charged $0.40 and the BVR, as all Participants have the ability Broker Dealer interacting against a
Public Customer would be credited to qualify for a rebate, and rebates are Public Customer will now be charged
$0.35. provided equally to qualifying $0.45 in Penny Pilot Classes and $0.80
Participants. Finally, the Exchange Non-Penny Pilot Classes, regardless if it
2. Statutory Basis believes it is reasonable and appropriate is making or taking liquidity. A Market
The Exchange believes that the to continue to provide incentives for Maker interacting against a Public
proposal is consistent with the Public Customers, which will result in Customer will now be charged $0.40 in
requirements of Section 6(b) of the Act, greater liquidity and ultimately benefit Penny Pilot Classes and $0.75 Non-
in general, and Section 6(b)(4) and all Participants trading on the Exchange. Penny Pilot Classes, regardless of
6(b)(5)of the Act,6 in particular, in that BOX believes it is reasonable, whether it is making or taking liquidity.
it provides for the equitable allocation equitable and not unfairly The Exchange believes these proposed
of reasonable dues, fees, and other discriminatory to adjust the monthly Complex Order fees remain competitive
charges among BOX Participants and Percentage Thresholds of National when compared to the Complex Order
other persons using its facilities and Customer Volume in Multiply-Listed fees on another exchange.8
does not unfairly discriminate between Options Classes. The volume thresholds The Exchange believes that charging
customers, issuers, brokers or dealers. and applicable rebates are meant to Professional Customers and Broker
The Exchange believes that reducing incentivize Participants to direct order Dealers higher fees than Public
the PIP and COPIP Order Fees to $0.15 flow to the Exchange to obtain the Customers for Complex Orders is
for Market Makers, Professional benefit of the rebate, which will in turn equitable and not unfairly
Customers and Broker Dealers is benefit all market participants by discriminatory. Professional Customers,
reasonable. Reducing these fees is meant increasing liquidity on the Exchange. while Public Customers by virtue of not
to encourage auction order flow to the Other exchanges employ similar being Broker Dealers, generally engage
Exchange, which will benefit all market incentive programs,7 and the Exchange in trading activity more similar to
participants on the Exchange. BOX believes that the proposed changes to Broker Dealer proprietary trading
believes the $0.15 fee is equitable and the volume thresholds and rebates are accounts (submitting more than 390
not unfairly discriminatory, as it applies reasonable and competitive when standard orders per day on average).
to all Market Marker, Professional compared to incentive structures at The Exchange believes that the higher
Customers and Broker Dealers other exchanges. level of trading activity from these
submitting PIP and COPIP Orders to The Exchange believes amending the Participants will draw a greater amount
these auction mechanisms. Further, the Complex Order pricing structure is of BOX system resources than that of
Exchange believes it is equitable and not reasonable, equitable and not unfairly non-professional, Public Customers.
unfairly discriminatory to charge Public discriminatory. The fee structure for Because this higher level of trading
Customers less than Non-Public Complex Orders was recently adopted activity will result in greater ongoing
Customers for their PIP and COPIP and the Exchange believes it is now operational costs, the Exchange aims to
Orders. The practice of incentivizing appropriate to adjust certain fees and recover its costs by assessing
increased Public Customer order flow is credits. The Complex Order fee Professional Customers and Broker
common in the options markets. structure is generally intended to attract Dealers higher fees for transactions.
The Exchange believes the proposed order flow to the Exchange by offering The Exchange also believes it is
asabaliauskas on DSK3SPTVN1PROD with NOTICES
amendments to the BVR in Section I.B.2 all market participants incentives to equitable and not unfairly
of the BOX Fee Schedule are reasonable, submit their Complex Orders to the discriminatory for BOX Market Makers
equitable and non-discriminatory. The Exchange. to be assessed lower fees than
BVR was adopted to attract Public
7 See Section B of the PHLX Pricing Schedule 8 Comparative Complex Order fees at another
Customer order flow to the Exchange by
entitled ‘‘Customer Rebate Program;’’ ISE Gemini’s exchanges [sic] range from $0.30 [sic] to $0.88. See
offering these Participants incentives to Qualifying Tier Thresholds (page 6 of the ISE Section II of the International Securities Exchange
Gemini Fee Schedule); and CBOE’s Volume (‘‘ISE’’) Schedule of Fees entitled ‘‘Complex Order
6 15 U.S.C. 78f(b)(4) and (5). Incentive Program (VIP). Fees and Rebates.’’
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Professional Customers and Broker Exchange is simply proposing to reduce Comments may be submitted by any of
Dealers for certain Complex Order PIP and COPIP Order fees and establish the following methods:
executions because of the significant a new qualification tier in the BVR. The
contributions to overall market quality Exchange believes doing so will Electronic Comments
that Market Makers provide. increase intermarket and intramarket • Use the Commission’s Internet
Specifically, Market Makers can provide competition by incenting Participants to comment form (http://www.sec.gov/
higher volumes of liquidity and direct their order flow to the exchange, rules/sro.shtml); or
lowering their fees will help attract a which benefits all participants by
higher level of Market Maker order flow providing more trading opportunities • Send an email to rule-comments@
to the BOX Book and create liquidity, and improves competition on the sec.gov. Please include File Number SR–
which the Exchange believes will Exchange. The Exchange also believes BOX–2016–21 on the subject line.
ultimately benefit all Participants amending certain Complex Order fees Paper Comments
trading on BOX. As such, the Exchange and credits will enhance competition
believes it is appropriate that Market between exchanges because it is • Send paper comments in triplicate
Makers be charged lower transaction designed to allow the Exchange to better to Secretary, Securities and Exchange
fees than Professional Customers and compete with other exchanges for Commission, 100 F Street NE.,
Broker Dealers for certain Complex Complex Order flow. Washington, DC 20549–1090.
Order executions. Finally, the Exchange notes that it
The Exchange also believes it is operates in a highly competitive market All submissions should refer to File
reasonable, equitable and not unfairly in which market participants can Number SR–BOX–2016–21. This file
discriminatory to charge Non-Public readily favor competing exchanges. In number should be included on the
Customers a higher fee when their such an environment, the Exchange subject line if email is used. To help the
Complex Order interacts with a Public must continually review, and consider Commission process and review your
Customer’s Complex Order, when adjusting, its fees and credits to remain comments more efficiently, please use
compared to the fee assessed when their competitive with other exchanges. For only one method. The Commission will
Complex Order interacts with a Non- the reasons described above, the post all comments on the Commission’s
Public Customer’s Complex Order. To Exchange believes that the proposed Internet Web site (http://www.sec.gov/
attract Public Customer order flow, rule change reflects this competitive rules/sro.shtml). Copies of the
Public Customers are given credit when environment. submission, all subsequent
their Complex Order executes against a
non-Public Customer. The securities C. Self-Regulatory Organization’s amendments, all written statements
markets generally, and BOX in Statement on Comments on the with respect to the proposed rule
particular, have historically aimed to Proposed Rule Change Received From change that are filed with the
improve markets for investors and Members, Participants, or Others Commission, and all written
develop various features within the communications relating to the
No written comments were either proposed rule change between the
market structure for Public Customer
solicited or received. Commission and any person, other than
benefit. Similar to payment for order
flow and other pricing models that have III. Date of Effectiveness of the those that may be withheld from the
been adopted by the Exchange and other Proposed Rule Change and Timing for public in accordance with the
exchanges to attract Public Customer Commission Action provisions of 5 U.S.C. 552, will be
order flow, the Exchange increases fees available for Web site viewing and
to non-Public Customers to provide The foregoing rule change has become
effective pursuant to Section printing in the Commission’s Public
incentives for Public Customers. The Reference Room, 100 F Street NE.,
Exchange believes that providing 19(b)(3)(A)(ii) of the Exchange Act 9 and
Rule 19b–4(f)(2) thereunder,10 because Washington, DC 20549 on official
incentives for Complex Orders by Public business days between the hours of
Customers is reasonable and, ultimately, it establishes or changes a due, or fee.
At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of such
will benefit all Participants trading on filing also will be available for
the Exchange by attracting Public filing of the proposed rule change, the
Commission summarily may inspection and copying at the principal
Customer order flow. office of the Exchange. All comments
Finally, the Exchange also believes it temporarily suspend the rule change if
it appears to the Commission that the received will be posted without change;
is reasonable to charge Professional
action is necessary or appropriate in the the Commission does not edit personal
Customers, Broker Dealers, and Market
public interest, for the protection of identifying information from
Makers less for certain executions in
Penny Pilot issues compared to Non- investors, or would otherwise further submissions. You should submit only
Penny Pilot issues because these classes the purposes of the Act. If the information that you wish to make
are typically more actively traded; Commission takes such action, the available publicly. All submissions
assessing lower fees will further Commission shall institute proceedings should refer to File Number SR–BOX–
incentivize order flow in Penny Pilot to determine whether the proposed rule 2016–21, and should be submitted on or
issues on the Exchange, ultimately should be approved or disapproved. before June 2, 2016.
benefiting all Participants trading on IV. Solicitation of Comments For the Commission, by the Division of
asabaliauskas on DSK3SPTVN1PROD with NOTICES
BOX. Trading and Markets, pursuant to delegated
Interested persons are invited to authority.11
B. Self-Regulatory Organization’s submit written data, views, and
Statement on Burden on Competition Robert W. Errett,
arguments concerning the foregoing,
The Exchange does not believe that including whether the proposed rule Deputy Secretary.
the proposed rule change will impose change is consistent with the Act. [FR Doc. 2016–11153 Filed 5–11–16; 8:45 am]
any burden on competition not BILLING CODE 8011–01–P
necessary or appropriate in furtherance 9 15 U.S.C. 78s(b)(3)(A)(ii).
of the purposes of the Act. The 10 17 CFR 240.19b–4(f)(2). 11 17 CFR 200.30–3(a)(12).
VerDate Sep<11>2014 17:02 May 11, 2016 Jkt 238001 PO 00000 Frm 00066 Fmt 4703 Sfmt 9990 E:\FR\FM\12MYN1.SGM 12MYN1](https://thefederalregister.org/doc/81_FR_29676/page/4.svg)
Document Created: 2016-05-12 01:08:02
Document Modified: 2016-05-12 01:08:02
| 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 | 81 FR 29584 |
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