81 FR 49336 - 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 144 (July 27, 2016)
Federal Register Volume 81, Issue 144 (July 27, 2016)
| Page Range | 49336-49341 | |
| FR Document | 2016-17676 |
[Federal Register Volume 81, Number 144 (Wednesday, July 27, 2016)] [Notices] [Pages 49336-49341] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-17676] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78390; File No. SR-BOX-2016-33] 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 July 21, 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 July 13, 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 to make changes to Section I (Exchange Fees for Non-Auction Transactions) on the BOX Market LLC (``BOX'') options facility. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's Internet Web site at http://boxexchange.com. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to make changes to Section I (Exchange Fees for Non-Auction Transactions). [[Page 49337]] Exchange Fees for Non-Auction Transactions The Exchange proposes to adjust certain fees for Non-Auction Transactions. Currently, for all non-auction transactions, fees and credits are assessed depending upon three factors: (i) The account type of the Participant submitting the order; (ii) whether the Participant is a liquidity provider or liquidity taker; and (iii) the account type of the contra party. Non-Auction Transactions in Penny Pilot Classes are assessed different fees or credits than Non-Auction Transactions in Non-Penny Pilot Classes. The current fees for Non-Auction Transactions are: -------------------------------------------------------------------------------------------------------------------------------------------------------- Penny pilot classes Non-penny pilot classes Account type Contra party --------------------------------------------------------------- Maker fee Taker fee Maker fee Taker fee -------------------------------------------------------------------------------------------------------------------------------------------------------- Public Customer................................ Public Customer........................ $0.00 $0.00 $0.00 $0.00 Professional Customer/Broker Dealer.... 0.00 0.00 0.00 0.00 Market Maker........................... 0.00 0.00 0.00 0.00 Professional Customer or Broker Dealer......... Public Customer........................ 0.60 0.50 0.95 1.07 Professional Customer/Broker Dealer.... 0.25 0.40 0.35 0.40 Market Maker........................... 0.25 0.44 0.35 0.44 Market Maker................................... Public Customer........................ 0.51 0.50 0.85 1.03 Professional Customer/Broker Dealer.... 0.00 0.05 0.00 0.10 Market Maker........................... 0.00 0.29 0.00 0.29 -------------------------------------------------------------------------------------------------------------------------------------------------------- First, the Exchange proposes to raise the fees assessed for Public Customers that make or take liquidity against all account types in in both Penny and Non-Penny Classes to $0.05 from $0.00. Next, the Exchange proposes to adjust the fees assessed for Professional Customers and Broker Dealers. In Penny Pilot Classes, the Exchange proposes to adjust the fees assessed for Professional Customers and Broker Dealers that take liquidity from all other Participants. Specifically, the Exchange proposes to lower the fee assessed to Professional Customers and Broker Dealers that take liquidity from Public Customers to $0.45 from $0.50. Further, the Exchange proposes to increase the fees assessed to Professional Customers and Broker Dealers that take liquidity from Professional Customers/Broker Dealers and Market Makers to $0.45 from $0.40 and $0.44, respectively. Additionally, the Exchange proposes to lower the fees assessed for Professional Customers and Broker Dealers making liquidity against Professional Customers and Broker Dealers and Market Makers in Penny Pilot Classes to $0.05 from $0.25. For Non-Penny Pilot Classes, the Exchange proposes to reduce the fees assessed for Professional Customers and Broker Dealers making liquidity against Non- Public Customers to $0.05 from $0.35. The Exchange also proposes to decrease the fees assessed for Professional Customers and Broker Dealers taking liquidity from Public Customers to $0.85 from $1.07. Lastly, with regard to Professional Customers/Broker Dealers taking liquidity from Professional Customers/Broker Dealers and Market Makers in Non-Penny Pilot Classes, the Exchange proposes to increase the fees assessed to $0.60 from $0.40 and $0.44, respectively. The Exchange then proposes to adjust the fees assessed for Market Makers in Non-Auction Transactions. First, the Exchange proposes to decrease the fees assessed on Market Makers making liquidity against a Public Customer to $0.27 from $0.51. With regard to Market Makers taking liquidity against Public Customers in Penny Pilot Classes, the Exchange proposes to decrease the fee to $0.43 from $0.50. Further, the Exchange proposes to increase the fee for Market Makers taking liquidity against Professional Customers and Broker Dealers in Penny Pilot Classes to $0.29 from $0.05. Lastly, the Exchange proposes to adjust the fees assessed to Market Makers in Non-Penny Pilot Classes. Specifically, the Exchange proposes to decrease the fee assessed to a Market Maker when making liquidity from a Public Customer in Non-Penny Pilot Classes to $0.65 from $0.85. In Non-Penny Pilot Classes, the Exchange proposes to decrease the fee assessed to Market Makers taking liquidity from a Public Customer to $0.80 from $1.03. Lastly, the Exchange proposes to increase the fees assessed to Market Makers taking liquidity from Professional Customers/Broker Dealers and Market Makers in Non-Penny Pilot Classes, to $0.40 from $0.10 and $0.29, respectively. The fees for Non-Auction Transactions will be as follows: -------------------------------------------------------------------------------------------------------------------------------------------------------- Penny pilot classes Non-penny pilot classes Account type Contra party --------------------------------------------------------------- Maker fee Taker fee Maker fee Taker fee -------------------------------------------------------------------------------------------------------------------------------------------------------- Public Customer................................ Public Customer........................ $0.05 $0.05 $0.05 $0.05 Professional Customer/Broker Dealer.... 0.05 0.05 0.05 0.05 Market Maker........................... 0.05 0.05 0.05 0.05 Professional Customer or Broker Dealer......... Public Customer........................ 0.60 0.45 0.95 0.85 Professional Customer/Broker Dealer.... 0.05 0.45 0.05 0.60 Market Maker........................... 0.05 0.45 0.05 0.60 Market Maker................................... Public Customer........................ 0.27 0.43 0.65 0.80 Professional Customer/Broker Dealer.... 0.00 0.29 0.00 0.40 Market Maker........................... 0.00 0.29 0.00 0.40 -------------------------------------------------------------------------------------------------------------------------------------------------------- [[Page 49338]] Tiered Volume Rebate for Non-Auction Transactions The Exchange proposes to amend Section I.A.1. of the BOX Fee Schedule, Tiered Volume Rebate for Non-Auction Transactions. Specifically, the Exchange proposes to specify that transactions in which a Public Customer is a contra party will be considered exempt from the Tiered Volume Rebate for Market Makers in Non-Auction Transactions.\5\ Additionally, the Exchange proposes to adjust certain rebates for Customers and Market Makers in Non-Auction Transactions. Specifically, for the Tiered Volume Rebate for Market Makers in Non- Auction Transactions, the Exchange proposes to increase the maker rebate in Tier 3 to $0.07 from $0.05, and also increase the maker rebate in Tier 4 to $0.15 from $0.10. --------------------------------------------------------------------------- \5\ As is the case today, Non-Auction Transactions that are not a result of a Market Maker quote will continue to be exempt from the Market Maker tiered volume rebate. --------------------------------------------------------------------------- The Exchange also proposes to adjust the rebates in the Tiered Volume Rebate for Public Customers in Non Auction Transactions. The current Tiered Volume Rebate for Public Customers in Non-Auction Transactions is as follows: -------------------------------------------------------------------------------------------------------------------------------------------------------- Per contact rebate Percentage thresholds of national --------------------------------------------------------------- Tier customer volume in multiply-listed Penny pilot classes Non-penny pilot classes options classes (monthly) --------------------------------------------------------------- Maker Taker Maker Taker -------------------------------------------------------------------------------------------------------------------------------------------------------- 1.............................................. 0.000%-0.129%.......................... $0.00 $0.00 $0.00 $0.00 2.............................................. 0.130%-0.339%.......................... (0.15) (0.15) (0.40) (0.40) 3.............................................. 0.340%-0.549%.......................... (0.25) (0.25) (0.50) (0.50) 4.............................................. 0.550% and Above....................... (0.40) (0.40) (0.90) (0.70) -------------------------------------------------------------------------------------------------------------------------------------------------------- Specifically, the Exchange proposes to reduce each of the maker and taker rebates in Tiers 2 through 4 of the Tiered Volume Rebate structure for Public Customers in both Penny Pilot Classes and Non- Penny Pilot Classes. The new per contract rebate for Public Customers in Non-Auction Transactions as set forth in Section I.A.1. of the BOX Fee Schedule will be as follows: -------------------------------------------------------------------------------------------------------------------------------------------------------- Per contact rebate Percentage thresholds of national --------------------------------------------------------------- Tier customer volume in multiply-listed Penny pilot classes Non-penny pilot classes options classes (monthly) --------------------------------------------------------------- Maker Taker Maker Taker -------------------------------------------------------------------------------------------------------------------------------------------------------- 1.............................................. 0.000%-0.129%.......................... $0.00 $0.00 $0.00 $0.00 2.............................................. 0.130%-0.339%.......................... (0.05) (0.05) (0.20) (0.20) 3.............................................. 0.340%-0.549%.......................... (0.15) (0.15) (0.30) (0.30) 4.............................................. 0.550% and Above....................... (0.25) (0.25) (0.50) (0.50) -------------------------------------------------------------------------------------------------------------------------------------------------------- 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. The proposed changes will allow the Exchange to be competitive with other exchanges and to apply fees and credits in a manner that is equitable among all BOX Participants. Further, the Exchange operates within a highly competitive market in which market participants can readily direct order flow to any other competing exchange if they determine fees at a particular exchange to be excessive. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- Non-Auction Transactions The Exchange believes it is equitable, reasonable and not unfairly discriminatory to assess fees according to the account type of the Participant originating the order and the contra party. This fee structure has been in place on the Exchange since 2014 and the Exchange is simply adjusting certain fees within the structure.\7\ The result of this structure is that a Participant does not know the fee it will be charged when submitting certain orders. Therefore, the Participant must recognize that it could be charged the highest applicable fee on the Exchange's schedule, which may, instead, be lowered depending upon how the order interacts. --------------------------------------------------------------------------- \7\ See Securities Exchange Release No. 73547 (November 6, 2014), 79 FR 67520 (November 13, 2014)(Notice of Filing and Immediate Effectiveness SR-BOX-2014-25). --------------------------------------------------------------------------- The Exchange believes raising the non-auction transaction fees for Public Customers making or taking liquidity in Penny and Non-Penny Pilot Classes to $0.05 from $0.00 is reasonable, equitable and not unfairly discriminatory. While the Exchange proposes to slightly raise the fees assessed to Public Customers for Non-Auction Transactions, the Public Customers may still receive the benefit of a volume based rebate, which in turn could offset the proposed $0.05 fee.\8\ Further, the Exchange notes that a higher fee of $0.07 was assessed for Public Customers in Non-Auction transactions on BOX in the past.\9\ --------------------------------------------------------------------------- \8\ The Exchange notes that on a monthly basis, most Public Customers on the Exchange reach one of these volume based rebate tiers. \9\ See Securities Exchange Release No. 66979 (May 14, 2012), 77 FR 29740 (May 18, 2012) (Notice of Filing and Immediate Effectiveness SR-BOX-2012-002). --------------------------------------------------------------------------- The Exchange believes that the proposed fees for Professional [[Page 49339]] Customers and Broker Dealers in Non-Auction Transactions are reasonable. Under the proposed fee structure, a Professional Customer or Broker Dealer making liquidity and interacting with a Professional Customer, Broker Dealer or Market Marker will now be charged a fee of $0.05 in both Penny and Non-Penny Pilot Classes. If the Professional Customer or Broker Dealer is instead taking liquidity in the Penny Pilot, it will be charged $0.45 against any other Participant. If the Professional Customer or Broker Dealer is taking liquidity in the Non- Penny Pilot, it will be charged $0.85 if it interacts with a Public Customer or $0.60 if it interacts with a Professional Customer, Broker Dealer or a Market Maker. The Exchange believes that reducing the fee for making liquidity will promote liquidity on the Exchange, ultimately benefitting all Participants trading on BOX. Further, the Exchange believes the proposed fees are reasonable as they are in line with the current fees assessed by another competing exchange.\10\ --------------------------------------------------------------------------- \10\ See International Securities Exchange (``ISE'') Schedule of Fees, Section I. On ISE, Professional Customer and Broker Dealers in Penny Pilot Classes are charged a fee of $0.10 when making liquidity and a $0.45 fee when taking liquidity. See also NYSE Arca Options (``Arca'') Fees and Charges page 4. On Arca a Firm or Broker Dealer is charged $0.50 when making liquidity and $1.08 when taking liquidity in Non-Penny Pilot Issues, and $0.50 for taking liquidity in Penny Pilot Issues. --------------------------------------------------------------------------- The Exchange believes that charging Professional Customers and Broker Dealers higher fees than Public Customers for most of their Non- Auction Transactions is equitable and not unfairly discriminatory. Professional Customers, while Public Customers by virtue of not being Broker Dealers, generally engage in trading activity more similar to Broker Dealer proprietary trading accounts. The Exchange believes that the higher level of trading activity from these Participants will draw a greater amount of BOX system resources, which the Exchange aims to recover its costs by assessing Professional Customers and Broker Dealers higher fees for transactions. The Exchange notes that Professional Customers or Broker Dealers will now be charged the same rate as Public Customers when making liquidity against Professional Customers, Broker Dealers, and Market Makers in both Penny and Non-Penny Pilot Classes. The Exchange believes it is equitable and not unfairly discriminatory to assess the same low rate for these transactions on both Public Customers and Professional Customers/Broker Dealers to promote liquidity on the Exchange, ultimately benefitting all Participants trading on BOX. Further, the Exchange notes that Public Customers have the ability to achieve a rebate for their Non-Auction transactions, and Professional Customer or Broker Dealers do not. The Exchange believes that the proposed fees for Market Makers in Non-Auction Transactions are reasonable. With the proposed fee changes, a Market Maker making liquidity will now be charged a lower fee of $0.27 (Penny Pilot) and $0.65 (Non-Penny Pilot) for interacting with a Public Customer. Further, a Market Maker taking liquidity against a Public Customer will now be charged a lower fee of $0.43 in Penny Pilot Classes and a lower fee of $0.80 in Non-Penny Pilot Classes. If a Market Maker is taking liquidity in Penny and Non-Penny Pilot Classes and interacts with a Professional Customer, Broker Dealer or a Market Maker, they will now be charged a fee of $0.29 in Penny Pilot Classes and $0.40 in Non-Penny Pilot Classes. The Exchange believes the fees listed above are reasonable and appropriate as they are in line with what is currently charged by the industry.\11\ --------------------------------------------------------------------------- \11\ Id. On ISE and Arca, the general range for Market Maker fees is between $0.10 and $1.08. --------------------------------------------------------------------------- Further, the Exchange believes it is equitable and not unfairly discriminatory to charge the Market Maker less for making or taking liquidity than Professional Customers or Broker Dealers. Specifically, Market Makers have certain obligations that other Participants do not and can ultimately provide more value by directing liquidity to the Exchange, which the Exchange believes will benefit all Participants trading on BOX. Additionally, the Exchange believes that charging Market Makers who interact with Professional Customers/Broker Dealers and Market Makers in Penny and Non-Penny Pilot Classes less than Public Customers is reasonable. As discussed above, Market Makers have certain obligations that Public Customers do not and can provide value by directing more liquidity to the Exchange. The Exchange believes that charging Market Makers no fee for adding liquidity against Professional Customers, Broker Dealers and Market Makers will promote liquidity on the Exchange, ultimately benefitting all market participants. Further, the Exchange believes that charging Market Makers less than Public Customers when adding liquidity is reasonable, as other exchanges in the industry also treat Market Makers more favorably than a Public Customer for adding liquidity.\12\ Finally, the Exchange notes that Public Customers have the ability to obtain a higher per contract rebate than Market Makers under the Tiered Volume Rebates for Non- Auction Transactions.\13\ --------------------------------------------------------------------------- \12\ See Arca Fees and Charges page 4. On Arca, a Market Maker making liquidity in Penny Pilot Classes receives a rebate of $0.28 where a Public Customer making liquidity in Penny Pilot Classes receives a lower rebate of $0.25. See also C2 Options Exchange. Incorporated (``C2'') Fee Schedule Section 1. Similar to Arca, Market Makers on C2 who are making liquidity in Penny Pilot Classes receive a rebate of $0.40 where Public Customers making liquidity in Penny Pilot Classes receive a lower rebate of $0.37. \13\ Under the proposed Tiered Volume Rebates in Section I.A.1 Public Customers can receive a maximum per contract rebate of up to $0.25 for Penny Pilot Classes and $0.50 in Non-Penny Pilot Classes. Market Makers can only receive a maximum rebate of $0.15, regardless of class. --------------------------------------------------------------------------- The Exchange believes it is reasonable, equitable and not unfairly discriminatory for Professional Customers, Broker Dealers and Market Makers to be charged higher fees when interacting with Public Customers than interacting with other Participants on BOX. The Exchange believes they are reasonable as they are in a similar range with the fees in the options industry.\14\ Further, as stated above, the Exchange believes charging a higher fee for interactions with a Public Customer when compared to interactions with other Participants is equitable and not unfairly discriminatory because it allows the Exchange to incentivize Public Customer order flow by offering low fees and rebate potential to Public Customers in Non-Auction Transactions. The Exchange believes that providing these incentives for Non-Auction Transactions by Public Customers will benefit all Participants trading on the Exchange by attracting this Public Customer order flow. --------------------------------------------------------------------------- \14\ See supra note 6 [sic]. --------------------------------------------------------------------------- The Exchange believes it is reasonable, equitable and not unfairly discriminatory that Professional Customers, Broker Dealers and Market Makers be charged a higher fee for certain orders removing liquidity, when compared to the fee they receive for orders that add liquidity. Charging a lower fee for orders that add liquidity will promote liquidity on the Exchange and ultimately benefit all participants on BOX. Further, the concept of incentivizing orders that add liquidity over orders that remove liquidity is commonly accepted within the industry as part of the ``Make/Take'' liquidity model. Finally, the Exchange also believes it is reasonable to charge Professional Customers and Broker Dealers and Market Makers less for certain [[Page 49340]] 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. Tiered Volume Rebate for Non-Auction Transactions BOX believes it is reasonable, equitable and not unfairly discriminatory to adjust certain rebates in the volume based thresholds for Market Makers and Public Customers in all Non-Auction Transactions. The volume thresholds and applicable rebates are meant to incentivize Public Customers and Market Makers to direct order flow to the Exchange to obtain the benefit of the rebate, which will in turn benefit all market participants by increasing liquidity on the Exchange. Other exchanges employ similar incentive programs; \15\ 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. --------------------------------------------------------------------------- \15\ See Section B of the PHLX Pricing Schedule entitled ``Customer Rebate Program;'' ISE Gemini's Qualifying Tier Thresholds (page 6 of the ISE Gemini Fee Schedule); and CBOE's Volume Incentive Program (VIP). CBOE's Volume Incentive Program (``VIP'') pays certain tiered rebates to Trading Permit Holders for electronically executed multiply-listed option orders which include AIM orders. --------------------------------------------------------------------------- With regard to the Public Customer Tiered Volume Rebate for Non- Auction Transactions, the Exchange believes it is reasonable to offer a higher per contract rebate for transactions in Non-Penny Pilot Classes compared to Penny Pilot Classes because Non-Penny Pilot Classes are typically less actively traded and have wider spreads. The Exchange believes that offering a higher rebate will incentivize Public Customer order flow in Non-Penny Pilot issues on the Exchange, ultimately benefitting all Participants trading on BOX. The Exchange believes it is reasonable to increase the rebates in Tiers 3 and 4 of the Tiered Volume Rebate for Market Makers making liquidity in Non-Auction Transactions. The rebates are meant to incentivize Market Makers to direct order flow to the Exchange to obtain the benefit of the rebate, which will in turn benefit all market participants by increasing liquidity on the Exchange. The Exchange continues to believe it is equitable and not unfairly discriminatory to only have these rebate structures for Public Customers and Market Makers in Non-Auction transactions. The practice of incentivizing increased Public Customer and Market Maker order flow is common in the options markets. While the Exchange proposes to decrease the Public Customer rebates in Penny and Non-Penny Pilot Classes, the Exchange believes that Public Customers will still benefit from the opportunity to obtain a rebate. As discussed above, most Public Customers currently achieve a volume based rebate in their Non- Auction transactions, which will offset any exchange fees they are assessed in Section I.A of the BOX Fee Schedule. Additionally, the Exchange believes that Market Makers can provide high volumes of liquidity and lowering certain Market Maker Non-Auction Transaction fees and raising certain maker rebates in the Tiered Volume Rebates for Market Makers in Non-Auction Transactions will potentially help attract a higher level of Market Maker order flow and create liquidity, which the Exchange believes will ultimately benefit all Participants trading on BOX. Lastly, the Exchange believes that exempting transactions where a Public Customer is a contra party from the Market Maker Tiered Volume Rebate is reasonable, equitable and not unfairly discriminatory. BOX provides these volume based rebates to incentivize Market Makers to direct order flow to the Exchange to obtain the benefit of the rebate, which will in turn benefit all market participants by increasing liquidity on the Exchange. The Exchange believes by providing a rebate to transactions that do not have a Public Customer as the contra party will further encourage Market Makers to quote. Further, the Exchange believes that Public Customer interaction does not need further encouragement within the BOX fee schedule. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed adjustments to fees in the Non-Auction Transactions fee structure will not impose a burden on competition among various Exchange Participants. Rather, BOX believes that the changes will result in the Participants being charged appropriately for these transactions and are designed to enhance competition in Non-Auction transactions on BOX. Submitting an order is entirely voluntary and Participants can determine which type of order they wish to submit, if any, to the Exchange. Further, the Exchange believes that this proposal will enhance competition between exchanges because it is designed to allow the Exchange to better compete with other exchanges for order flow. The Exchange believes that amending the proposed rebate structure for Customer and Market Maker Non-Auction Transactions will not impose a burden on competition among various Exchange Participants. The Exchange believes that the proposed changes will result in Customers and Market Makers being rebated appropriately for these transactions. Further, the Exchange believes that this proposal will enhance competition between exchanges because it is designed to allow the Exchange to better compete with other exchanges for order flow. 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 \16\ and Rule 19b-4(f)(2) thereunder,\17\ because it establishes or changes a due, or fee. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78s(b)(3)(A)(ii). \17\ 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. [[Page 49341]] 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-2016-33 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-2016-33. 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-2016-33, and should be submitted on or before August 17, 2016. --------------------------------------------------------------------------- \18\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\18\ Robert W. Errett, Deputy Secretary. [FR Doc. 2016-17676 Filed 7-26-16; 8:45 am] BILLING CODE 8011-01-P
![49336 Federal Register / Vol. 81, No. 144 / Wednesday, July 27, 2016 / Notices
Amendment Nos. 1 and 2, is consistent All submissions should refer to File No. ‘‘Act’’),1 and Rule 19b–4 thereunder,2
with Sections 6(b)(4), (5), or (8) 77 or any SR–NYSEArca–2016–19. This file notice is hereby given that on July 13,
other provision of the Act, or the rules number should be included on the 2016, BOX Options Exchange LLC (the
and regulations thereunder. Although subject line if email is used. To help the ‘‘Exchange’’) filed with the Securities
there does not appear to be any issue Commission process and review your and Exchange Commission
relevant to approval or disapproval comments more efficiently, please use (‘‘Commission’’) the proposed rule
which would be facilitated by an oral only one method. The Commission will change as described in Items I, II, and
presentation of views, data, and post all comments on the Commission’s III below, which Items have been
arguments, the Commission will Internet Web site (http://www.sec.gov/ prepared by the Exchange. The
consider, pursuant to Rule 19b–4 under rules/sro.shtml). Copies of the Exchange filed the proposed rule change
the Act,78 any request for an submission, all subsequent pursuant to Section 19(b)(3)(A)(ii) of the
opportunity to make an oral amendments, all written statements Act,3 and Rule 19b–4(f)(2) thereunder,4
presentation.79 with respect to the proposed rule
which renders the proposal effective
Interested persons are invited to change that are filed with the
upon filing with the Commission. The
submit written data, views, and Commission, and all written
communications relating to the Commission is publishing this notice to
arguments regarding whether the
proposed rule change between the solicit comments on the proposed rule
proposal, as modified by Amendment
Nos. 1 and 2, should be approved or Commission and any person, other than change from interested persons.
disapproved by August 17, 2016. Any those that may be withheld from the I. Self-Regulatory Organization’s
person who wishes to file a rebuttal to public in accordance with the Statement of the Terms of the Substance
any other person’s submission must file provisions of 5 U.S.C. 552, will be of the Proposed Rule Change
that rebuttal by August 31, 2016. In light available for Web site viewing and
of the concerns raised by the proposed printing in the Commission’s Public The Exchange is filing with the
rule change, as discussed above, the Reference Room, 100 F Street NE., Securities and Exchange Commission
Commission invites additional comment Washington, DC 20549 on official (‘‘Commission’’) a proposed rule change
on the proposed rule change, as business days between the hours of to amend the Fee Schedule to make
modified by Amendment Nos. 1 and 2, 10:00 a.m. and 3:00 p.m. Copies of such changes to Section I (Exchange Fees for
as the Commission continues its filing also will be available for Non-Auction Transactions) on the BOX
analysis of the proposed rule change’s inspection and copying at the principal Market LLC (‘‘BOX’’) options facility.
consistency with Sections 6(b)(4), (5) office of the Exchange. All comments The text of the proposed rule change is
and (8),80 or any other provision of the received will be posted without change; available from the principal office of the
Act, or the rules and regulations the Commission does not edit personal Exchange, at the Commission’s Public
thereunder. The Commission asks that identifying information from Reference Room and also on the
commenters address the sufficiency and submissions. You should submit only
Exchange’s Internet Web site at http://
merit of the Exchange’s statements in information that you wish to make
boxexchange.com.
support of the proposed rule change, as available publicly. All submissions
modified by Amendment Nos. 1 and 2, should refer to File No. SR–NYSEArca– II. Self-Regulatory Organization’s
in addition to any other comments they 2016–19, and should be submitted by Statement of the Purpose of, and
may wish to submit about the proposed August 17, 2016. Rebuttal comments Statutory Basis for, the Proposed Rule
rule change. should be submitted by August 31, Change
Comments may be submitted by any 2016.
of the following methods: For the Commission, by the Division of In its filing with the Commission, the
Trading and Markets, pursuant to delegated Exchange included statements
Electronic Comments authority.81 concerning the purpose of and basis for
• Use the Commission’s Internet Robert W. Errett, the proposed rule change and discussed
comment form (http://www.sec.gov/ Deputy Secretary. any comments it received on the
rules/sro.shtml); or [FR Doc. 2016–17674 Filed 7–26–16; 8:45 am] proposed rule change. The text of these
• Send an email to rule-comments@ BILLING CODE 8011–01–P
statements may be examined at the
sec.gov. Please include File No. SR– places specified in Item IV below. The
NYSEArca–2016–19 on the subject line. Exchange has prepared summaries, set
Paper Comments SECURITIES AND EXCHANGE forth in Sections A, B, and C below, of
COMMISSION the most significant aspects of such
• Send paper comments in triplicate statements.
to Brent J. Fields, Secretary, Securities [Release No. 34–78390; File No. SR–BOX–
and Exchange Commission, 100 F Street A. Self-Regulatory Organization’s
2016–33]
NE., Washington, DC 20549–1090. Statement of the Purpose of, and
Self-Regulatory Organizations; BOX Statutory Basis for, the Proposed Rule
77 15 U.S.C. 78f(b)(4), (b)(5) and (b)(8). Options Exchange LLC; Notice of Change
78 17 CFR 240.19b–4.
Filing and Immediate Effectiveness of 1. Purpose
79 Section 19(b)(2) of the Act, as amended by the
a Proposed Rule Change To Amend
Securities Act Amendments of 1975, Pub. L. 94–29
sradovich on DSK3GMQ082PROD with NOTICES
(June 4, 1975), grants to the Commission flexibility
the Fee Schedule on the BOX Market The Exchange proposes to make
to determine what type of proceeding—either oral LLC (‘‘BOX’’) Options Facility changes to Section I (Exchange Fees for
or notice and opportunity for written comments— Non-Auction Transactions).
is appropriate for consideration of a particular July 21, 2016.
proposal by a self-regulatory organization. See Pursuant to Section 19(b)(1) of the 1 15 U.S.C. 78s(b)(1).
Securities Act Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No.
Securities Exchange Act of 1934 (the 2 17 CFR 240.19b–4.
75, 94th Cong., 1st Sess. 30 (1975). 3 15 U.S.C. 78s(b)(3)(A)(ii).
80 15 U.S.C. 78f(b)(4), (b)(5) and (b)(8). 81 17 CFR 200.30–3(a)(57). 4 17 CFR 240.19b–4(f)(2).
VerDate Sep<11>2014 17:01 Jul 26, 2016 Jkt 238001 PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 E:\FR\FM\27JYN1.SGM 27JYN1](https://thefederalregister.org/doc/81_FR_49480/page/1.svg)
![Federal Register / Vol. 81, No. 144 / Wednesday, July 27, 2016 / Notices 49339
Customers and Broker Dealers in Non- Participants trading on BOX. Further, liquidity.12 Finally, the Exchange notes
Auction Transactions are reasonable. the Exchange notes that Public that Public Customers have the ability to
Under the proposed fee structure, a Customers have the ability to achieve a obtain a higher per contract rebate than
Professional Customer or Broker Dealer rebate for their Non-Auction Market Makers under the Tiered
making liquidity and interacting with a transactions, and Professional Customer Volume Rebates for Non-Auction
Professional Customer, Broker Dealer or or Broker Dealers do not. Transactions.13
Market Marker will now be charged a The Exchange believes that the The Exchange believes it is
fee of $0.05 in both Penny and Non- proposed fees for Market Makers in reasonable, equitable and not unfairly
Penny Pilot Classes. If the Professional Non-Auction Transactions are discriminatory for Professional
Customer or Broker Dealer is instead reasonable. With the proposed fee Customers, Broker Dealers and Market
taking liquidity in the Penny Pilot, it changes, a Market Maker making Makers to be charged higher fees when
will be charged $0.45 against any other liquidity will now be charged a lower interacting with Public Customers than
Participant. If the Professional Customer fee of $0.27 (Penny Pilot) and $0.65 interacting with other Participants on
or Broker Dealer is taking liquidity in (Non-Penny Pilot) for interacting with a BOX. The Exchange believes they are
the Non-Penny Pilot, it will be charged Public Customer. Further, a Market reasonable as they are in a similar range
$0.85 if it interacts with a Public Maker taking liquidity against a Public with the fees in the options industry.14
Customer or $0.60 if it interacts with a Customer will now be charged a lower Further, as stated above, the Exchange
Professional Customer, Broker Dealer or fee of $0.43 in Penny Pilot Classes and believes charging a higher fee for
a Market Maker. The Exchange believes a lower fee of $0.80 in Non-Penny Pilot interactions with a Public Customer
that reducing the fee for making Classes. If a Market Maker is taking when compared to interactions with
liquidity will promote liquidity on the liquidity in Penny and Non-Penny Pilot other Participants is equitable and not
Exchange, ultimately benefitting all Classes and interacts with a Professional unfairly discriminatory because it
Participants trading on BOX. Further, Customer, Broker Dealer or a Market allows the Exchange to incentivize
the Exchange believes the proposed fees Maker, they will now be charged a fee Public Customer order flow by offering
are reasonable as they are in line with of $0.29 in Penny Pilot Classes and low fees and rebate potential to Public
the current fees assessed by another $0.40 in Non-Penny Pilot Classes. The Customers in Non-Auction
competing exchange.10 Exchange believes the fees listed above Transactions. The Exchange believes
The Exchange believes that charging are reasonable and appropriate as they that providing these incentives for Non-
Professional Customers and Broker are in line with what is currently Auction Transactions by Public
Dealers higher fees than Public Customers will benefit all Participants
charged by the industry.11
Customers for most of their Non- trading on the Exchange by attracting
Auction Transactions is equitable and Further, the Exchange believes it is this Public Customer order flow.
not unfairly discriminatory. Professional equitable and not unfairly The Exchange believes it is
Customers, while Public Customers by discriminatory to charge the Market reasonable, equitable and not unfairly
virtue of not being Broker Dealers, Maker less for making or taking discriminatory that Professional
generally engage in trading activity liquidity than Professional Customers or Customers, Broker Dealers and Market
more similar to Broker Dealer Broker Dealers. Specifically, Market Makers be charged a higher fee for
proprietary trading accounts. The Makers have certain obligations that certain orders removing liquidity, when
Exchange believes that the higher level other Participants do not and can compared to the fee they receive for
of trading activity from these ultimately provide more value by orders that add liquidity. Charging a
Participants will draw a greater amount directing liquidity to the Exchange, lower fee for orders that add liquidity
of BOX system resources, which the which the Exchange believes will will promote liquidity on the Exchange
Exchange aims to recover its costs by benefit all Participants trading on BOX. and ultimately benefit all participants
assessing Professional Customers and Additionally, the Exchange believes on BOX. Further, the concept of
Broker Dealers higher fees for that charging Market Makers who incentivizing orders that add liquidity
transactions. interact with Professional Customers/ over orders that remove liquidity is
The Exchange notes that Professional Broker Dealers and Market Makers in commonly accepted within the industry
Customers or Broker Dealers will now Penny and Non-Penny Pilot Classes less as part of the ‘‘Make/Take’’ liquidity
be charged the same rate as Public than Public Customers is reasonable. As model.
Customers when making liquidity discussed above, Market Makers have Finally, the Exchange also believes it
against Professional Customers, Broker certain obligations that Public is reasonable to charge Professional
Dealers, and Market Makers in both Customers do not and can provide value Customers and Broker Dealers and
Penny and Non-Penny Pilot Classes. by directing more liquidity to the Market Makers less for certain
The Exchange believes it is equitable Exchange. The Exchange believes that
and not unfairly discriminatory to charging Market Makers no fee for 12 See Arca Fees and Charges page 4. On Arca, a
assess the same low rate for these adding liquidity against Professional Market Maker making liquidity in Penny Pilot
transactions on both Public Customers Customers, Broker Dealers and Market Classes receives a rebate of $0.28 where a Public
Customer making liquidity in Penny Pilot Classes
and Professional Customers/Broker Makers will promote liquidity on the receives a lower rebate of $0.25. See also C2
Dealers to promote liquidity on the Exchange, ultimately benefitting all Options Exchange. Incorporated (‘‘C2’’) Fee
Exchange, ultimately benefitting all market participants. Further, the Schedule Section 1. Similar to Arca, Market Makers
Exchange believes that charging Market on C2 who are making liquidity in Penny Pilot
Classes receive a rebate of $0.40 where Public
sradovich on DSK3GMQ082PROD with NOTICES
10 See International Securities Exchange (‘‘ISE’’)
Makers less than Public Customers Customers making liquidity in Penny Pilot Classes
Schedule of Fees, Section I. On ISE, Professional when adding liquidity is reasonable, as
Customer and Broker Dealers in Penny Pilot Classes receive a lower rebate of $0.37.
are charged a fee of $0.10 when making liquidity other exchanges in the industry also 13 Under the proposed Tiered Volume Rebates in
and a $0.45 fee when taking liquidity. See also treat Market Makers more favorably than Section I.A.1 Public Customers can receive a
NYSE Arca Options (‘‘Arca’’) Fees and Charges page maximum per contract rebate of up to $0.25 for
a Public Customer for adding Penny Pilot Classes and $0.50 in Non-Penny Pilot
4. On Arca a Firm or Broker Dealer is charged $0.50
when making liquidity and $1.08 when taking Classes. Market Makers can only receive a
liquidity in Non-Penny Pilot Issues, and $0.50 for 11 Id. On ISE and Arca, the general range for maximum rebate of $0.15, regardless of class.
taking liquidity in Penny Pilot Issues. Market Maker fees is between $0.10 and $1.08. 14 See supra note 6 [sic].
VerDate Sep<11>2014 17:01 Jul 26, 2016 Jkt 238001 PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 E:\FR\FM\27JYN1.SGM 27JYN1](https://thefederalregister.org/doc/81_FR_49480/page/4.svg)
![Federal Register / Vol. 81, No. 144 / Wednesday, July 27, 2016 / Notices 49341
IV. Solicitation of Comments For the Commission, by the Division of Exchange has prepared summaries, set
Trading and Markets, pursuant to delegated forth in sections A, B, and C below, of
Interested persons are invited to authority.18 the most significant aspects of such
submit written data, views, and Robert W. Errett, statements.
arguments concerning the foregoing, Deputy Secretary.
including whether the proposed rule A. Self-Regulatory Organization’s
[FR Doc. 2016–17676 Filed 7–26–16; 8:45 am]
change is consistent with the Act. Statement of the Purpose of, and the
BILLING CODE 8011–01–P
Statutory Basis for, the Proposed Rule
Comments may be submitted by any of
Change
the following methods:
SECURITIES AND EXCHANGE 1. Purpose
Electronic Comments COMMISSION The Exchange proposes to list and
• Use the Commission’s Internet [Release No. 34–78385; File No. SR– trade the Shares of each Fund under
comment form (http://www.sec.gov/ NASDAQ–2016–103] Nasdaq Rule 5745, which governs the
rules/sro.shtml); or listing and trading of exchange-traded
Self-Regulatory Organizations; The managed fund shares, as defined in
• Send an email to rule-comments@ Nasdaq Stock Market LLC; Notice of Nasdaq Rule 5745(c)(1), on the
sec.gov. Please include File Number SR– Filing of Proposed Rule Change, as Exchange.3 Each Fund listed below will
BOX–2016–33 on the subject line. Modified by Amendment No. 1 Thereto, be advised by an investment adviser
Paper Comments to List and Trade Exchange-Traded registered under the Investment
Managed Funds Advisers Act of 1940 (‘‘Adviser’’), as
• Send paper comments in triplicate described below. Each Fund will be
July 21, 2016.
to Secretary, Securities and Exchange actively managed and will pursue
Commission, 100 F Street NE., Pursuant to Section 19(b)(1) of the various principal investment strategies,
Securities Exchange Act of 1934 as noted below.4
Washington, DC 20549–1090.
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
All submissions should refer to File notice is hereby given that on July 13, Ivy NextSharesTM
Number SR–BOX–2016–33. This file 2016, The Nasdaq Stock Market LLC Ivy NextSharesTM (the ‘‘Trust’’) is
number should be included on the (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the registered with the Commission as an
subject line if email is used. To help the Securities and Exchange Commission open-end investment company and has
Commission process and review your (‘‘SEC’’ or ‘‘Commission’’) the proposed filed a registration statement on Form
comments more efficiently, please use rule change as described in Items I and N–1A (‘‘Registration Statement’’) with
only one method. The Commission will II below, which Items have been the Commission.5 Each of the following
post all comments on the Commission’s prepared by the Exchange. On July 14, Funds is a series of the Trust.6
Internet Web site (http://www.sec.gov/ 2016, the Exchange filed Amendment Ivy Investment Management Company
rules/sro.shtml). Copies of the No. 1 to the proposed rule change, (‘‘IICO’’ or the ‘‘Adviser’’) will be the
submission, all subsequent which amended and replaced the adviser to the Funds. IICO is not a
amendments, all written statements original filing in its entirety. The registered broker-dealer, although it is
Commission is publishing this notice to affiliated with a broker-dealer. IICO has
with respect to the proposed rule
solicit comments on the proposed rule implemented a fire wall with respect to
change that are filed with the
change, as modified by Amendment No. its affiliated broker-dealer regarding
Commission, and all written 1 thereto, from interested persons. access to information concerning the
communications relating to the composition and/or changes to each
proposed rule change between the I. Self-Regulatory Organization’s
Fund’s portfolio.7 In the future event
Commission and any person, other than Statement of the Terms of Substance of
those that may be withheld from the the Proposed Rule Change 3 The Commission approved Nasdaq Rule 5745 in
public in accordance with the The Exchange proposes to list and Securities Exchange Act Release No. 34–73562
provisions of 5 U.S.C. 552, will be trade under Nasdaq Rule 5745 (Nov. 7, 2014), 79 FR 68309 (Nov. 14, 2014) (SR–
NASDAQ–2014–020).
available for Web site viewing and (Exchange-Traded Managed Fund 4 Additional information regarding the Funds will
printing in the Commission’s Public Shares (‘‘NextShares’’)) the common be available on one of two free public Web sites
Reference Room, 100 F Street NE., shares (‘‘Shares’’) of the exchange- (www.ivyinvestments.com or www.nextshares.com,
traded managed funds described herein as indicated more fully below), as well as in the
Washington, DC 20549 on official Registration Statement for the Funds.
business days between the hours of (each, a ‘‘Fund,’’ and collectively, the 5 See Registration Statement on Form N–1A for
10:00 a.m. and 3:00 p.m. Copies of such ‘‘Funds’’). the Trust dated April 18, 2016 (File Nos. 333–
filing also will be available for 210814 and 811–23155).
II. Self-Regulatory Organization’s 6 The Commission has issued an order granting
inspection and copying at the principal Statement of the Purpose of, and the Trust and certain affiliates exemptive relief
office of the Exchange. All comments Statutory Basis for, the Proposed Rule under the Investment Company Act. See Investment
received will be posted without change; Change Company Act Release No. 31816 (Sept. 9, 2015)
the Commission does not edit personal (File No. 812–14526).
In its filing with the Commission, the 7 An investment adviser to an open-end fund is
identifying information from Exchange included statements required to be registered under the Investment
submissions. You should submit only concerning the purpose of and basis for Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
information that you wish to make result, the Adviser and its related personnel are
sradovich on DSK3GMQ082PROD with NOTICES
the proposed rule change and discussed subject to the provisions of Rule 204A–1 under the
available publicly. All submissions any comments it received on the Advisers Act relating to codes of ethics. This Rule
should refer to File Number SR–BOX– proposed rule change. The text of these requires investment advisers to adopt a code of
2016–33, and should be submitted on or statements may be examined at the ethics that reflects the fiduciary nature of the
before August 17,2016. relationship to clients as well as compliance with
places specified in Item IV below. The other applicable securities laws. Accordingly,
procedures designed to prevent the communication
1 15 U.S.C. 78s(b)(1). and misuse of non-public information by an
18 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. Continued
VerDate Sep<11>2014 17:01 Jul 26, 2016 Jkt 238001 PO 00000 Frm 00134 Fmt 4703 Sfmt 4703 E:\FR\FM\27JYN1.SGM 27JYN1](https://thefederalregister.org/doc/81_FR_49480/page/6.svg)
Document Created: 2018-02-08 08:02:38
Document Modified: 2018-02-08 08:02:38
| 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 49336 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR