81 FR 43322 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 7150 (Price Improvement Period (“PIP”)) To Establish the Quality Market Maker Allocation in a PIP Order
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 127 (July 1, 2016)
Federal Register Volume 81, Issue 127 (July 1, 2016)
| Page Range | 43322-43325 | |
| FR Document | 2016-15711 |
[Federal Register Volume 81, Number 127 (Friday, July 1, 2016)] [Notices] [Pages 43322-43325] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-15711] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78171; File No. SR-BOX-2016-25] Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 7150 (Price Improvement Period (``PIP'')) To Establish the Quality Market Maker Allocation in a PIP Order June 28, 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 June 15, 2016, 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 by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend BOX Rule 7150 (Price Improvement Period (``PIP'')) to establish the Quality Market Maker allocation in a PIP Order. 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 Exchange proposes to amend BOX Rule 7150 (Price Improvement Period (``PIP'')) to establish the Quality Market Maker allocation in a PIP Order. This is a competitive filing that is based on a proposal recently submitted by NASDAQ OMX BX, Inc. (``BX'') and approved by the Commission.\3\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 34-76301 (October 29, 2015), 80 FR 68347 (November 4, 2016) (Order Approving SR-BX- 2015-032). See also BX Rule BX Chapter VI, Sec. 9(ii)(E)(3). --------------------------------------------------------------------------- PIP The Exchange currently offers Participants the possibility of price improvement via its electronic auction process known as the PIP. The PIP has saved investors more than $722 million versus the prevailing NBBO since 2004. BOX believes that the proposed rule change will result in tighter and deeper markets, resulting in more liquidity on BOX. Current PIP Allocation At the conclusion of a PIP, the PIP Order is currently matched against the best prevailing quote(s) or order(s) on BOX (except any pre-PIP Broadcast proprietary quote or order from the Initiating Participant), in accordance with the priority algorithm described below, whether Improvement Order(s) \4\ or Unrelated Order(s) \5\ received by BOX, or Legging Orders \6\ generated during the PIP (excluding Unrelated Orders that were immediately executed during the interval of the PIP). Such orders may include agency orders on behalf of Public Customers, Market Makers at away exchanges and non-BOX Options Participant broker-dealers, as well as non-PIP proprietary orders submitted by Options Participants. --------------------------------------------------------------------------- \4\ See BOX Rule 7150(f)(1). \5\ See BOX Rule 7150(a)(1). \6\ See BOX Rule 7240(c). --------------------------------------------------------------------------- The Exchange's Rules currently provide the following allocations for when the total quantity of orders, quotes, Improvement Orders, Legging Orders and the Primary Improvement Order is greater than the quantity of the PIP Order at a given price level: Public Customer Allocation All orders, other than Legging Orders and the Primary Improvement Order, for the account of Public Customers, whether Improvement Orders or Unrelated Orders, including quotes and orders on the BOX Book \7\ prior to the PIP Broadcast, will be allocated for execution against the PIP Order first.\8\ Where there are multiple such orders for the account of Public Customers at the same price, the trade allocation will be by time priority. If, at the end of the Public Customer allocation, there remains any unallocated quantity of the PIP Order, the balance will be allocated to the Primary Improvement Order allocation described below. --------------------------------------------------------------------------- \7\ See BOX Rule 100(a)(10). \8\ See BOX Rule 7150(g)(1). --------------------------------------------------------------------------- Primary Improvement Order Allocation After the Public Customer allocation, the applicable trade allocation described below will be allocated to the Primary Improvement Order.\9\ After Public Customer Orders have been satisfied, the Initiating Participant's Primary Improvement Order retains priority for up to 40% of the remaining size of the PIP Order when the Primary Improvement Order matches any competing Improvement Orders and/or non- Public Customers' Unrelated Orders at the final price level. If the Primary Improvement Order has designated a [[Page 43323]] PIP Surrender Quantity, the Primary Improvement Order allocation will be reduced, if necessary, in accordance with the PIP Surrender Quantity.\10\ The balance will be allocated to the Market Maker allocation. --------------------------------------------------------------------------- \9\ See BOX Rule 7150(g)(2). \10\ See BOX Rule 7270(a)(3)(iii)(A). --------------------------------------------------------------------------- Market Maker Allocation After the Primary Improvement Order allocation, any remaining unallocated quantity of the PIP Order will be allocated to orders and quotes, including Improvement Orders and quotes and orders on the BOX Book prior to the PIP Broadcast for the account of Market Makers. Where there are orders and quotes for the accounts of more than one Market Maker at the same price, the trade allocation for Market Makers will be pro-rata.\11\ --------------------------------------------------------------------------- \11\ See BOX Rule 7150(g)(3). --------------------------------------------------------------------------- Proposal The Exchange proposes to establish the Quality Market Maker allocation after the Primary Improvement Order allocation and before the Market Maker allocation. As previously mentioned, the proposed rule change is based on, and substantially similar to, the rules of BX.\12\ In the allocation following the Primary Improvement Order, Market Makers that were quoting at a price that is equal to the NBBO on the opposite side of the market from the PIP Order at the time of initiation of the PIP Auction (``Quality Market Makers''),\13\ would have priority up to their quote size in the NBBO which was present when the PIP Auction was initiated (``QMM Eligibility Quantity'') at each price level at or better than such NBBO when the PIP Auction was initiated after Public Customers have received allocations. Quality Market Maker quotes will be allocated pro-rata. Quality Market Maker status is only valid for the duration of the particular PIP auction. Further, Non-Quality Market Makers and Quality Market Maker interest which exceeded their size in the QMM Eligibility Quantity would have priority at each price level at or better than the NBBO when the PIP Auction was initiated after Public Customer, Initiating Participants and Quality Market Makers have received allocations. Non-Quality Market Maker and Quality Market Maker interest which exceeded their displayed size of the QMM Eligibility Quantity will be allocated pro-rata. --------------------------------------------------------------------------- \12\ See supra note 3. The Exchange's proposal is based on BX's Priority Market Maker allocation round of their price improvement auction when size pro-rata is used for the auction's allocation method. \13\ The Exchange notes, as is the case with BX, the Exchange does not have non-displayed interest; therefore, there is no distinction in the proposed rule regarding the displayed NBBO versus non-displayed. --------------------------------------------------------------------------- Example #1 A PIP Order to buy 200 contracts of options instrument A is received. Assume the NBBO is 2.00-2.10 and Market Maker 1 is at the NBBO to sell 10 contracts at the start of the PIP. The following responses are received: Public Customer 1 to sell 20 at 2.08 Primary Improvement Order to sell 200 at 2.08 Market Maker 1 to sell 70 at 2.08 Market Maker 2 to sell 60 at 2.08 The PIP Order will be allocated in the following order: Round 1: Public Customer Allocation20 contracts at 2.08 to Public Customer 1 Round 2: Primary Improvement Order Allocation 72 contracts at 2.08 to the Primary Improvement Order (40% of the remaining quantity after Public Customer 1) Round 3: Quality Market Maker Allocation 10 contracts at 2.08 to Market Maker 1 as a QMM (During the QMM allocation round, the QMM is capped at the size of their quote at the NBBO at the start of the PIP. The QMM's allocation is at a price better than the NBBO at the start of the PIP.) Round 4: Market Maker Allocation 49 contracts at 2.08 to Market Maker 1 (Market Maker 1 is allocated during the Market Maker round any remaining quantity after the QMM allocation round) 49 contracts at 2.08 to Market Maker 2 Example #2 A PIP Order to buy 200 contracts of options instrument A is received. Assume the NBBO is 2.00-2.10 and Market Maker 1 is at the NBBO to sell 120 contracts at the start of the PIP. The following responses are received: Public Customer 1 to sell 10 at 2.08 Primary Improvement Order to sell 200 at 2.08 Market Maker 1 to sell 80 at 2.08 Market Maker 2 to sell 60 at 2.08 Market Maker 3 to sell 60 at 2.08 The PIP Order will be allocated in the following order: Round 1: Public Customer Allocation 10 contracts at 2.08 to Public Customer 1 Round 2: Primary Improvement Order Allocation 76 contracts at 2.08 to the Primary Improvement (40% of the remaining quantity after Public Customer 1) Round 3: Quality Market Maker Allocation 80 contracts to Market Maker 1 at 2.08 as a QMM (Market Maker 1's quote at the NBBO at the start of the PIP exceeds their PIP response, therefore the allocation is capped at the size of their PIP response instead of the size of their quote at the NBBO at the start of the PIP. The QMM's allocation is at a price better than the NBBO at the start of the PIP.) Round 4: Market Maker Allocation 17 contracts to Market Maker 2 at 2.08 and 17 contracts to Market Maker 3 at 2.08 (Market Makers 2 and 3 receive a pro-rata allocation of the remainder of the contracts because there is insufficient size to satisfy the full quantity of their responses) Example #3 A PIP Order to sell 100 contracts of options instrument A is received. Assume the NBBO is 1.00--1.10 and Market Maker 1 is at the NBBO to buy 120 contracts at the start of the PIP. The following responses are received: Primary Improvement Order to buy 100 at 1.02 Market Maker 1 to buy 100 at 1.02 Market Maker 2 to buy 80 at 1.02 Market Maker 3 to buy 20 at 1.02 Broker Dealer 1 to buy 50 at 1.02 The PIP Order will be allocated in the following order: Round 1: Primary Improvement Order Allocation 40 contracts at 1.02 to the Primary Improvement Order (40% of the remaining quantity after Public Customer (none in this example)) Round 2: Quality Market Maker Allocation 60 contracts to Market Maker 1 at 1.02 as a QMM (Market Maker 1's quote at the NBBO at the start of the PIP exceeds their PIP response, therefore the eligible allocation is capped at the size of their PIP response instead of the size of their quote at the NBBO at the start of the PIP. The QMM's allocation is at a price better than the NBBO at the start of the PIP.) Example #4--Multiple Market Makers quoting at the NBBO A PIP Order to sell 250 contracts of options instrument A is received. Assume the NBBO is 1.00--1.10 and, at the start of the PIP, Market Maker 1 is at the NBBO to buy 100 contracts and Market Maker 2 is at the NBBO to buy [[Page 43324]] 100 contracts. The following responses are received: Public Customer 1 to buy 40 at 1.02 Primary Improvement Order to buy 250 at 1.02 Market Maker 1 to buy 80 at 1.02 Market Maker 2 to buy 80 at 1.02 Market Maker 3 to buy 50 at 1.02 Broker Dealer 1 to buy 10 at 1.02 The PIP Order will be allocated in the following order: Round 1: Public Customer Allocation 40 contracts at 1.02 to Public Customer 1 Round 2: Primary Improvement Order Allocation 84 contracts at 1.02 to the Primary Improvement Order (40% of the remaining quantity after Public Customer 1) Round 3: Quality Market Maker Allocation 63 contracts at 1.02 to Market Maker 1 as a QMM and 63 contracts at 1.02 to Market Maker 2 as a QMM (Market Maker 1 and 2 are allocated pro-rata since both had quotes at the NBBO at that start of the PIP and both responded to the PIP. Their eligible allocation is capped at the size of their response to the PIP because their quote at the NBBO at the start of the PIP exceeded their responses. The QMM's allocation is at a price better than the NBBO at the start of the PIP.) Note--when there are multiple QMMs, allocation in the QMM round will be determined based on pro-rata using the size of the QMMs quote at the NBBO at the start of the auction. 2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Securities Exchange Act of 1934 (the ``Act''),\14\ in general, and Section 6(b)(5) of the Act,\15\ in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. In particular, the Exchange believes that the proposed Quality Market Maker allocation may encourage Market Makers to quote at the NBBO with additional size and thereby result in tighter and deeper markets, resulting in more liquidity on BOX. Specifically, by offering BOX Market Makers the ability to receive priority in the proposed allocation during the PIP auction, a BOX Market Maker may be encouraged to quote outside of the PIP auction at the their best and most aggressive prices with additional size. BOX believes that this incentive may result in a narrowing of quotes and thus further enhance BOX's overall market quality. Within the PIP auction, BOX believes that the proposed allocation may encourage BOX Market Makers to compete vigorously to provide the opportunity for price improvement in a competitive auction process. Additionally, the Exchange believes that providing the Quality Market Maker allocation at price levels better than the NBBO at the start of the PIP will incentivize quoting on BOX. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b). \15\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- 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. In this regard, and as indicated above, the Exchange notes that the rule change is being proposed as a competitive response to a filing submitted by BX that was recently approved by the Commission.\16\ --------------------------------------------------------------------------- \16\ See supra, note 3. --------------------------------------------------------------------------- The Exchange does not believe that providing BOX Market Makers with an opportunity to receive priority allocation will create an undue burden on intra-market competition. BOX Market Makers have obligations to the market unlike other market participants.\17\ The allocation seeks to reward BOX Market Makers with an opportunity to receive additional allocations. --------------------------------------------------------------------------- \17\ See BOX Rule 8040. --------------------------------------------------------------------------- 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 Because the proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\ --------------------------------------------------------------------------- \18\ 15 U.S.C. 78s(b)(3)(A). \19\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b- 4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. --------------------------------------------------------------------------- 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-2016-25 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-2016-25. 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 [[Page 43325]] 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-2016-25, and should be submitted on or before July 22, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-15711 Filed 6-30-16; 8:45 am] BILLING CODE 8011-01-P
![43322 Federal Register / Vol. 81, No. 127 / Friday, July 1, 2016 / Notices
comments more efficiently, please use change as described in Items I and II Current PIP Allocation
only one method. The Commission will below, which Items have been prepared At the conclusion of a PIP, the PIP
post all comments on the Commission’s by the self-regulatory organization. The Order is currently matched against the
Internet Web site (http://www.sec.gov/ Commission is publishing this notice to best prevailing quote(s) or order(s) on
rules/sro.shtml). Copies of the solicit comments on the proposed rule BOX (except any pre-PIP Broadcast
submission, all subsequent change from interested persons. proprietary quote or order from the
amendments, all written statements Initiating Participant), in accordance
with respect to the proposed rule I. Self-Regulatory Organization’s
Statement of the Terms of Substance of with the priority algorithm described
change that are filed with the below, whether Improvement Order(s) 4
Commission, and all written the Proposed Rule Change
or Unrelated Order(s) 5 received by
communications relating to the The Exchange proposes to amend BOX, or Legging Orders 6 generated
proposed rule change between the BOX Rule 7150 (Price Improvement during the PIP (excluding Unrelated
Commission and any person, other than Period (‘‘PIP’’)) to establish the Quality Orders that were immediately executed
those that may be withheld from the Market Maker allocation in a PIP Order. during the interval of the PIP). Such
public in accordance with the The text of the proposed rule change is orders may include agency orders on
provisions of 5 U.S.C. 552, will be available from the principal office of the behalf of Public Customers, Market
available for Web site viewing and Exchange, at the Commission’s Public Makers at away exchanges and non-BOX
printing in the Commission’s Public Reference Room and also on the Options Participant broker-dealers, as
Reference Section, 100 F Street NE., Exchange’s Internet Web site at http:// well as non-PIP proprietary orders
Washington, DC 20549–1090 on official boxexchange.com. submitted by Options Participants.
business days between the hours of The Exchange’s Rules currently
10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s
Statement of the Purpose of, and provide the following allocations for
filing also will be available for when the total quantity of orders,
inspection and copying at the NYSE’s Statutory Basis for, the Proposed Rule
Change quotes, Improvement Orders, Legging
principal office. All comments received Orders and the Primary Improvement
will be posted without change; the In its filing with the Commission, the Order is greater than the quantity of the
Commission does not edit personal self-regulatory organization included PIP Order at a given price level:
identifying information from statements concerning the purpose of,
submissions. You should submit only Public Customer Allocation
and basis for, the proposed rule change
information that you wish to make and discussed any comments it received All orders, other than Legging Orders
available publicly. All submissions on the proposed rule change. The text and the Primary Improvement Order, for
should refer to File Number SR– of these statements may be examined at the account of Public Customers,
NYSEMKT–2016–61 and should be the places specified in Item IV below. whether Improvement Orders or
submitted on or before July 22,2016. The self-regulatory organization has Unrelated Orders, including quotes and
For the Commission, by the Division of prepared summaries, set forth in orders on the BOX Book 7 prior to the
Trading and Markets, pursuant to delegated Sections A, B, and C below, of the most PIP Broadcast, will be allocated for
authority.16 significant aspects of such statements. execution against the PIP Order first.8
Robert W. Errett, Where there are multiple such orders for
Deputy Secretary. A. Self-Regulatory Organization’s the account of Public Customers at the
[FR Doc. 2016–15715 Filed 6–30–16; 8:45 am]
Statement of the Purpose of, and same price, the trade allocation will be
Statutory Basis for, the Proposed Rule by time priority. If, at the end of the
BILLING CODE 8011–01–P
Change Public Customer allocation, there
1. Purpose remains any unallocated quantity of the
SECURITIES AND EXCHANGE PIP Order, the balance will be allocated
COMMISSION The Exchange proposes to amend to the Primary Improvement Order
BOX Rule 7150 (Price Improvement allocation described below.
[Release No. 34–78171; File No. SR–BOX– Period (‘‘PIP’’)) to establish the Quality
2016–25] Primary Improvement Order Allocation
Market Maker allocation in a PIP Order.
Self-Regulatory Organizations; BOX This is a competitive filing that is based After the Public Customer allocation,
Options Exchange LLC; Notice of on a proposal recently submitted by the applicable trade allocation described
Filing and Immediate Effectiveness of NASDAQ OMX BX, Inc. (‘‘BX’’) and below will be allocated to the Primary
a Proposed Rule Change To Amend approved by the Commission.3 Improvement Order.9 After Public
Rule 7150 (Price Improvement Period PIP Customer Orders have been satisfied,
(‘‘PIP’’)) To Establish the Quality the Initiating Participant’s Primary
Market Maker Allocation in a PIP Order The Exchange currently offers Improvement Order retains priority for
Participants the possibility of price up to 40% of the remaining size of the
June 28, 2016. improvement via its electronic auction PIP Order when the Primary
Pursuant to Section 19(b)(1) of the process known as the PIP. The PIP has Improvement Order matches any
Securities Exchange Act of 1934 (the saved investors more than $722 million competing Improvement Orders and/or
‘‘Act’’),1 and Rule 19b–4 thereunder,2 versus the prevailing NBBO since 2004. non-Public Customers’ Unrelated Orders
asabaliauskas on DSK3SPTVN1PROD with NOTICES
notice is hereby given that on June 15, BOX believes that the proposed rule at the final price level. If the Primary
2016, BOX Options Exchange LLC (the change will result in tighter and deeper Improvement Order has designated a
‘‘Exchange’’) filed with the Securities markets, resulting in more liquidity on
and Exchange Commission BOX. 4 See BOX Rule 7150(f)(1).
(‘‘Commission’’) the proposed rule 5 See BOX Rule 7150(a)(1).
6 See BOX Rule 7240(c).
3 See Securities Exchange Act Release No. 34–
16 17 CFR 200.30–3(a)(12). 7 See BOX Rule 100(a)(10).
76301 (October 29, 2015), 80 FR 68347 (November
1 15 U.S.C. 78s(b)(1). 8 See BOX Rule 7150(g)(1).
4, 2016) (Order Approving SR–BX–2015–032). See
2 17 CFR 240.19b–4. also BX Rule BX Chapter VI, Sec. 9(ii)(E)(3). 9 See BOX Rule 7150(g)(2).
VerDate Sep<11>2014 19:05 Jun 30, 2016 Jkt 238001 PO 00000 Frm 00141 Fmt 4703 Sfmt 4703 E:\FR\FM\01JYN1.SGM 01JYN1](https://thefederalregister.org/doc/81_FR_43449/page/1.svg)
![Federal Register / Vol. 81, No. 127 / Friday, July 1, 2016 / Notices 43325
proposed rule change between the I. Self-Regulatory Organization’s $0.01 for all quotations in options series
Commission and any person, other than Statement of the Terms of Substance of that are quoted at less than $3 per
those that may be withheld from the the Proposed Rule Change contract and $0.05 for all quotations in
public in accordance with the The Exchange proposes to amend options series that are quoted at $3 per
provisions of 5 U.S.C. 552, will be Rule 7260 by extending the Penny Pilot contract or greater. QQQQ, SPY, and
available for Web site viewing and Program through December 31, 2016. IWM will continue to be quoted in $0.01
printing in the Commission’s Public The text of the proposed rule change is increments for all options series.
Reference Room, 100 F Street NE., The Exchange may replace, on a semi-
available from the principal office of the
Washington, DC 20549 on official annual basis, any Pilot Program classes
Exchange, at the Commission’s Public
that have been delisted on the second
business days between the hours of Reference Room and also on the
trading day following July 1, 2016. The
10:00 a.m. and 3:00 p.m. Copies of such Exchange’s Internet Web site at http://
Exchange notes that the replacement
filing also will be available for boxexchange.com.
classes will be selected based on trading
inspection and copying at the principal II. Self-Regulatory Organization’s activity for the six month period
office of the Exchange. All comments Statement of the Purpose of, and beginning December 1, 2015 and ending
received will be posted without change; Statutory Basis for, the Proposed Rule May 31, 2016 for the July 2016
the Commission does not edit personal Change replacements. The Exchange will
identifying information from employ the same parameters to
submissions. You should submit only In its filing with the Commission, the
self-regulatory organization included prospective replacement classes as
information that you wish to make approved and applicable under the Pilot
statements concerning the purpose of,
available publicly. All submissions Program, including excluding high-
and basis for, the proposed rule change
should refer to File Number SR–BOX– priced underlying securities. The
and discussed any comments it received
2016–25, and should be submitted on or Exchange will distribute a Regulatory
on the proposed rule change. The text
before July 22, 2016. of these statements may be examined at Circular notifying Participants which
For the Commission, by the Division of the places specified in Item IV below. replacement classes shall be included in
Trading and Markets, pursuant to delegated The self-regulatory organization has the Penny Pilot Program.
authority.20 BOX is specifically authorized to act
prepared summaries, set forth in
jointly with the other options exchanges
Robert W. Errett, sections A, B, and C below, of the most
participating in the Pilot Program in
Deputy Secretary. significant aspects of such statements.
identifying any replacement class.
[FR Doc. 2016–15711 Filed 6–30–16; 8:45 am] A. Self-Regulatory Organization’s
2. Statutory Basis
BILLING CODE 8011–01–P Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule The Exchange believes that the
Change proposal is consistent with the
SECURITIES AND EXCHANGE requirements of section 6(b) of the Act,4
1. Purpose in general, and section 6(b)(5) of the
COMMISSION
The Exchange proposes to extend the Act,5 in particular, in that it is designed
[Release No. 34–78172; File No. SR–BOX– effective time period of the Penny Pilot to prevent fraudulent and manipulative
2016–24] Program that is currently scheduled to acts and practices, to promote just and
expire on June 30, 2016, until December equitable principles of trade, to foster
Self-Regulatory Organizations; BOX 31, 2016.3 The Penny Pilot Program cooperation and coordination with
Options Exchange LLC; Notice of permits certain classes to be quoted in persons engaged in facilitating
Filing and Immediate Effectiveness of penny increments. The minimum price transactions in securities, and to remove
a Proposed Rule Change To Amend variation for all classes included in the impediments to and perfect the
Rule 7260 by Extending the Penny Penny Pilot Program, except for mechanism of a free and open market
Pilot Program Through December 31, PowerShares QQQ Trust (‘‘QQQQ’’)®, and a national market system, and, in
SPDR S&P 500 Exchange Traded Funds general protect investors and the public
2016
(‘‘SPY’’), and iShares Russell 2000 Index interest.
June 28, 2016. Funds (‘‘IWM’’), will continue to be In particular, the proposed rule
change, which extends the Penny Pilot
Pursuant to section 19(b)(1) of the 3 The Penny Pilot Program has been in effect on until December 31, 2016 and changes
Securities Exchange Act of 1934 the Exchange since its inception in May 2012. See the dates for replacing Penny Pilot
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Securities Exchange Act Release Nos. 66871 (April
issues that were delisted to the second
27, 2012), 77 FR 26323 (May 3, 2012) (File No. 10–
notice is hereby given that on June 13, 206, In the Matter of the Application of BOX trading day following July 1, 2016, will
2016, BOX Options Exchange LLC (the Options Exchange LLC for Registration as a enable public customers and other
‘‘Exchange’’) filed with the Securities National Securities Exchange Findings, Opinion, market participants to express their true
and Exchange Commission and Order of the Commission), 67328 (June 29,
2012), 77 FR 40123 (July 6, 2012) (SR–BOX–2012–
prices to buy and sell options for the
(‘‘Commission’’) the proposed rule 007), 68425 (December 13, 2012), 77 FR 75234 benefit of all market participants. This
change as described in Items I, and II (December 19, 2013) (SR–BOX–2012–021), 69789 is consistent with the Act.
below, which Items have been prepared (June 18, 2013), 78 FR 37854 (June 24, 2013) (SR–
B. Self-Regulatory Organization’s
asabaliauskas on DSK3SPTVN1PROD with NOTICES
BOX–2013–31), 71056 (December 12, 2013), 78 FR
by the self-regulatory organization. The 76691 (December 18, 2013) (SR–BOX–2013–56), Statement on Burden on Competition
Commission is publishing this notice to 72348 (June 9, 2014), 79 FR 33976 (June 13, 2014)
solicit comments on the proposed rule (SR–BOX–2014–17), 73822 (December 11, 2014), 79 The Exchange does not believe that
from interested persons. FR 75606 (December 18, 2014) (SR–BOX–2014–29), the proposed rule change will impose
and 75295 (June 25, 2015), 80 FR 37690 (July 1, any burden on competition not
2015) (SR–BOX–2015–23). The extension of the
effective date and the revision of the date to replace
necessary or appropriate in furtherance
20 17 CFR 200.30–3(a)(12).
issues that have been delisted are the only changes
1 15 U.S.C. 78s(b)(1). 4 15
to the Penny Pilot Program being proposed at this U.S.C. 78f(b).
2 17 CFR 240.19b–4. time. 5 15 U.S.C. 78f(b)(5).
VerDate Sep<11>2014 19:05 Jun 30, 2016 Jkt 238001 PO 00000 Frm 00144 Fmt 4703 Sfmt 4703 E:\FR\FM\01JYN1.SGM 01JYN1](https://thefederalregister.org/doc/81_FR_43449/page/4.svg)
Document Created: 2016-07-14 11:38:10
Document Modified: 2016-07-14 11:38:10
| 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 43322 |
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